camelot_10-k.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
FOR
ANNUAL AND TRANSITIONAL REPORTS UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
(MARK
ONE)
x ANNUAL REPORT UNDER
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
FISCAL YEAR ENDED DECEMBER 31, 2008
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
COMMISSION
FILE NUMBER: 000-30785
CAMELOT
ENTERTAINMENT GROUP, INC.
(EXACT
NAME OF SMALL BUSINESS REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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52-2195605
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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CAMELOT ENTERTAINMENT GROUP,
INC.
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8001
Irvine Center Drive Suite 400
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Irvine,
CA 92618
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(Address
of principal executive offices) (Zip Code)
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(949)
754-3030
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Registrant's
telephone number, including area
code
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SECURITIES
REGISTERED UNDER SECTION 12(B) OF THE ACT:
NONE
SECURITIES
REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
(TITLE OF
CLASS)
COMMON
STOCK, PAR VALUE $0.001
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 x No o
Check if
no disclosure of delinquent filers in response to Item 405 of Regulation S-B is
contained in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
As of
December 31, 2008, the total issued and outstanding common stock of the
Registrant is 1,563,977,942 shares, of which 308,334 shares are being held in
reserve, resulting in 1,563,669,608 total common shares outstanding. The
approximate aggregate market value of 937,397,690 Common Stock shares held by
non-affiliates of the Registrant, based on 1,563,699,608 total outstanding
shares less 590,301,918 shares held by affiliates, calculated at a market
price of $.0001, had a market value of $59,030 as of December 31, 2008. Total
market value of all outstanding shares was $156,367 as of December 31,
2008.
Of the
1,563,699,608 total Common Stock shares outstanding, 374,934,406 shares were
restricted. 1,188,735,202 shares were classified as
non-restricted. As of December 31, 2008, there were 723,581,263
shares held in CEDE, also known as the public float. There were an additional
308,334 shares issued, but not outstanding, held in reserve for financing
activities.
On
December 31, 2008, the Registrant had outstanding 1,563,699,608 shares of Common
Stock, $0.001 par value. The Registrant had outstanding 21,695,521 shares of
Preferred Stock, $0.001 par value.
As of
April 15, 2009, the Registrant had 8,155,354,212 shares issued and outstanding,
of which 8,155,045,878 shares of Common Stock were outstanding, having a $0.001
par value and 21,695,521 shares of Preferred Stock were issued and outstanding,
having a $0.001 par value.
The
Registrant's revenues for the year ended December 31, 2008 were $0.
DOCUMENTS
INCORPORATED BY REFERENCE: SEE ITEM 13
TABLE OF
CONTENTS
FORM 10-K
ANNUAL REPORT
FISCAL
YEAR ENDED DECEMBER 31, 2008
CAMELOT
ENTERTAINMENT GROUP, INC.
ITEM
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Page
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PART
I
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1
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1.
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Description
of Business
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1
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2.
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Description
of Properties
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32
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3.
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Legal
Proceedings
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32
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4.
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Submission
of Matters to a Vote of Security Holders
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32
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PART
II
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32
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5.
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Market
for Common Equity and Related Stockholder Matters
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32
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6.
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Management's
Discussion and Analysis
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40
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7.
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Financial
Statements
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54
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8.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures
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54
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8A.
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Controls
and Procedures
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54
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PART
III
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55
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9.
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Directors,
Executive Officers, Promoters and Control Persons
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55
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10.
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Executive
Compensation
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56
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11.
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Security
Ownership of Certain Beneficial Owners and Management
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58
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12.
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Certain
Relationships and Related Transactions
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62
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13.
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Exhibits
and Reports on Form 8-K
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63
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14.
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Principal
Accountant Fees and Services
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66
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F-1
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Financial
Statements with Footnotes
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F-1
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S-1
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Signatures
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S-1
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THIS
REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND WITHIN THE MEANING OF
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH ARE
SUBJECT TO THE "SAFE HARBOR" CREATED BY THOSE SECTIONS. THESE FORWARD-LOOKING
STATEMENTS INCLUDE BUT ARE NOT LIMITED TO STATEMENTS CONCERNING OUR BUSINESS
OUTLOOK OR FUTURE ECONOMIC PERFORMANCE; ANTICIPATED PROFITABILITY, REVENUES,
EXPENSES OR OTHER FINANCIAL ITEMS; AND STATEMENTS CONCERNING ASSUMPTIONS MADE OR
EXCEPTIONS AS TO ANY FUTURE EVENTS, CONDITIONS, PERFORMANCE OR OTHER MATTERS
WHICH ARE "FORWARD-LOOKING STATEMENTS" AS THAT TERM IS DEFINED UNDER THE FEDERAL
SECURITIES LAWS. ALL STATEMENTS, OTHER THAN HISTORICAL FINANCIAL INFORMATION,
MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. THE WORDS "BELIEVES", "PLANS",
"ANTICIPATES", "EXPECTS", AND SIMILAR EXPRESSIONS HEREIN ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS, UNCERTAINTIES, AND OTHER FACTORS, WHICH WOULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE STATED IN SUCH STATEMENTS. FORWARD-LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "FACTORS THAT MAY
AFFECT FUTURE RESULTS," AND ELSEWHERE IN THIS REPORT, AND THE RISKS DISCUSSED IN
THE COMPANY'S OTHER SEC FILINGS.
PART
I
ITEM
1. DESCRIPTION OF BUSINESS
Our
Business
Camelot
Entertainment Group, Inc. (the “Company” or “Camelot”), a Delaware corporation,
is a film, television, digital media and entertainment company. Camelot
Entertainment Group has limited operations and thus we are classified as a
development stage company. Due to the unexpected termination of our agreement to
develop Camelot Studios at ATEP in August, 2008, we have been in the process of
restructuring our organization in order to focus on our core business
objectives, which include the development, production and distribution of
feature film, television, home video and digital media production. As a result,
during the third and fourth quarters of 2008, our operations were severely
limited as we went through the restructuring process. We did not
generate any revenues during 2008, and due to our limited operations and the
long-term revenue cycle of the film business in general, we do not expect to
generate any significant revenues in 2009. Our ability to develop sustained
operations and to generate revenues is to a great extent dependent upon
successful completion of our planned funding activities during 2009 and beyond.
Failure to complete our funding objectives as discussed herein could have a
material adverse effect on our ability to sustain our limited
operations.
We
believe that the direction the Company is now taking will allow us to fully
implement our business plan and as a result make progress toward sustaining
operations in 2009. Our business model classifies our planned operations into
the following three major divisions:
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·
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Camelot
Film and Media Group, consisting principally of feature film, television,
home video, and digital media production and
distribution;
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·
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Camelot
Studio Group, consisting principally of site acquisition, design,
development and operation of Camelot Studio locations domestically and
internationally;
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·
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Camelot
Production Services Group, consisting principally of consulting,
education, finance, production support and technology
services.
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At
December 31, 2008, we had reduced our corporate staff to a total of
3 full time and part time employees and approximately 4 consultants which
provides services to the Company on an as needed basis. The Company also retains
independent contractors on a project by project basis to reduce our overhead.
While our main activity during the past three years had been centered within our
Camelot Studio Group division, during the 3rd and
4th
quarter of 2008 we refocused our development activities within our Camelot Film
and Media Group division. While we continued to pursue potential studio sites
within our Camelot Studio Group division, we have had very limited operations in
our Camelot Production Services Group division during 2008. We reduced the size
of our physical office space, moving our headquarters to Irvine, California
during the first quarter of 2009.
Camelot
is being built utilizing four steps that are critical to our development as a
film, television, digital media and entertainment company:
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·
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Opportunity,
which leads to Success
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These
four steps are the cornerstones to our foundation as we continue to develop and
implement our business model. Our business plan provides a strategy where
our parent company and our divisions all come together under a truly unique
business model whose vision is to transform Hollywood by building a different
kind of motion picture studio through redefining the development, finance,
production and distribution process. To achieve our goals, we must remain
true to our vision and be successful in obtaining the necessary financing. If we
fail to do either one, we may not be able to fully implement our business plan
and that would have a material adverse effect on our ability to develop and
sustain operations.
For
convenience, the terms the “Company,” “Camelot” and the “Registrant” are used in
this report to refer to both the parent company and collectively to the parent
company and the divisions and/or subsidiaries through which its various
businesses are conducted or are planned to be conducted in the future, unless
the context otherwise requires. As a development stage company, our operations
to date have been limited and as a result Camelot has generated only limited
revenues from inception through December 31, 2008.
ITEM 1. DESCRIPTION OF BUSINESS -
continued
Caution
Concerning Forward-Looking Statements and Risk Factors
This
Annual Report on Form 10-K includes certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on management’s current expectations or beliefs and
are subject to uncertainty and changes in circumstances. Actual results may vary
materially from the expectations contained herein due to changes in economic,
business, competitive, technological, strategic and/or regulatory factors, and
other factors affecting the operation of the businesses of Camelot. For more
detailed information about these factors, and risk factors with respect to the
Company’s operations, see “Risk Factors,” and “Management’s Discussion and
Analysis of Results of Operations and Financial Condition — Caution
Concerning Forward-Looking Statements” below. Camelot is under no obligation to
(and expressly disclaims any obligation to) update or alter its forward-looking
statements, whether as a result of new information, subsequent events or
otherwise.
Available
Information and Website
The
Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and any amendments to such reports filed with
or furnished to the Securities and Exchange Commission (“SEC”) pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), are available free of charge on the Company’s website at
www.camelotfilms.com as
soon as reasonably practicable after such reports are electronically filed with
the SEC. They can also be found on the SEC website at www.sec.gov.
Business
Development
Camelot
Films®, Inc., now a subsidiary of the Company, was originally founded in 1978 by
our current Chairman, Robert P. Atwell, as a feature film production and film
finance management company. Camelot Films was originally incorporated in
Delaware and had offices in London, England, Los Angeles, California and New
York, New York. Between 1978 and 1988, Camelot Films was actively involved in
the development, finance and production of independent feature films. Between
1988 and 2003, Camelot Films was primarily active in the development and
financial structuring of independent feature films and the ongoing development
of its Camelot Production Model (“CPM”). Beginning in 2003, Camelot became
active once again in the production and distribution of independent feature
films, along with its development and finance activities.
On
October 1, 1999, the Company’s predecessor corporate entity was incorporated in
Delaware as Dstage.com, Inc.
On March
31, 2003, the operations of Camelot Films were absorbed into the Company as part
of a corporate restructuring. As a result of this restructuring, the Company’s
new management team, headed by Mr. Atwell, adopted a new business model to
pursue the development, production, marketing and distribution of motion
pictures.
On April
16th, 2004, the Company officially changed its name to Camelot Entertainment
Group, Inc.
Our
initial business development plan was to become a vertically integrated media
enterprise that creatively conceptualizes, finances, produces, and distributes
original entertainment content across various media, including motion pictures,
television, interactive gaming, radio and a multitude of digital media
channels. Through the absorption of Camelot Films and the
establishment of key operating divisions, including Camelot Distribution Group
Inc., a Nevada corporation, we began to implement our new business model of
acquiring, developing, producing, marketing and distributing motion pictures,
television and digital media on a limited basis.
During
2004 and 2005, we formally acquired our three Camelot Films subsidiaries,
Camelot Films, Inc., a Nevada corporation, Camelot Films, Inc., a California
corporation, and Camelot Films, Inc., a Delaware corporation. We established a
family film subsidiary, Ferris Wheel Films, Inc., a Nevada corporation. In
September 2005, we established Camelot Studio Group with the responsibility of
acquiring, designing, developing and operating our planned major studio
complexes. Also in September 2005, we began the process of assessing the
feasibility of an educational studio complex in Tustin, California. Designed to
be a state-of-the-art education and technology campus with an emphasis on film,
television and digital media, the project known as the “Advanced Technology and
Education Park”, which will be the home for “Camelot Studios at ATEP”, is now in
the entitlement process.
During
fiscal year 2006, with the emergence of our studio group operations, we decided
to implement a corporate structure that would feature the parent company,
Camelot Entertainment Group, Inc., and three subsidiaries, Camelot Film and
Media Group, Camelot Studio Group and Camelot Production Services Group. By
establishing three top-level divisions, we expect to be able to streamline our
management efforts in the future, concentrate cost centers and expand revenue
potential.
During
fiscal year 2007, our efforts were focused on our first major studio complex
through our Camelot Studio Group division and on the continuing development of
projects through our Camelot Film and Media Group division. We also continued to
make progress toward the planned launch of our various divisions described
herein.
During
fiscal year 2008, our efforts to develop our first major studio complex through
the Camelot Studio Group division were put on hold due in part to the credit
crunch and economic downturn. In August, 2008, our first major studio
project, Camelot Studios at ATEP, was unexpectedly terminated. As a result, we
began the process of restructuring our limited operations, which to date have
not produced any significant revenues. We continued to make progress in our
Camelot Film and Media Group division with the recent addition of Mr. H. Kaye
Dyal as head of production for Camelot Features and also in the other divisions
as we continue to work on the development of the Camelot business model. We have
refocused our efforts on the development, financing, production and distribution
of several projects in our Camelot Film and Media Group division. In addition,
negotiations continued on several potential acquisitions for Camelot, which we
expect will move forward as current economic conditions improve. While we have
refocused our efforts on Camelot Film and Media Group, we still are pursuing
several projects in our Camelot Studio Group division, in addition to our
ongoing activities in our Camelot Production Services Group division. During the
third and fourth quarter of 2008, we had limited and minimal operations as we
went through the restructuring process. Our stock price continued to drop,
resulting in significant increases in the amount of stock being issued for
funding, services and other consideration.
ITEM 1. DESCRIPTION OF BUSINESS -
continued
Business
of the Issuer
Our
Structure
We are
comprised of the following three top-level divisions that can act in concert on
our projects or autonomously as circumstances warrant. Historically, our
activity in Camelot Film and Media Group (“CFG”) and Camelot Production Services
Group (“CPS”) has been limited. Our main activity had been in our Camelot Studio
Group (“CSG”) division. Currently, our main activity is in our CFG division,
although we continue to make progress in our CSG division. We also expect
increased activity during 2009 in our CPS division. As we progress through the
implementation of our business model, each of our divisions are expected to
become fully operational. This process is expected to take approximately three
to five years (to be fully operational).
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§
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Camelot
Film and Media Group (“CFG”)
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Camelot
Studio Group (“CSG”)
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§
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Camelot
Production Services Group (“CPS”)
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Camelot Film and Media Group
is expected to be responsible for all content production and distribution. It
plans to be organized into nine divisional units:
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Camelot
Films®
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Camelot
Features
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Camelot
Television Group
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Camelot
Urban Entertainment
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Camelot
Latin Entertainment
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Ferris
Wheel Films
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Camelot
Gaming
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Camelot
Digital Entertainment (formerly Camelot Digital
Media)
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Camelot
Distribution Group
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Camelot Studio Group is solely
focused on the development, financing, design, planning, building, completion
and operation of our major production studio projects. The studio group includes
the following three divisions:
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§
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Camelot
Development Group, LLC
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Camelot
Studio Operations
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Camelot
Studios Financial Group
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Camelot Production Services
Group is expected to be comprised of ten divisional units:
§ Camelot
Entertainment Financial Group
§ Camelot
Studio Services
§ Camelot
Technology Group
§ Camelot
Entertainment Consulting Group
§ Camelot
Post Production
§ Camelot
Event Management
§ Camelot
University
§ Camelot
Sales and Marketing
§ Camelot
Merchandising
§ Camelot
Web
Camelot Entertainment
Group
Our
parent Company, Camelot Entertainment Group, along with its three main
divisions, Camelot Film and Media Group, Camelot Studio Group and Camelot
Production Services Group, all come together under a truly unique business model
whose vision is to transform Hollywood by building a different kind of motion
picture studio through redefining the development, finance, production and
distribution process. Focusing on higher quality, lower costs productions,
utilizing in-house distribution expertise, maximizing profits through innovative
fiscal disciplines, embracing education and digital technology, establishing
creative and physical infrastructures and creating, controlling and monetizing
content, Camelot is in the process of modernizing the original studio
system.
ITEM 1. DESCRIPTION OF BUSINESS -
continued
Camelot Entertainment Group -
continued
Our
unique business model, which we are planning to apply for a business process
patent on, has been thirty years in the making. Its primary goal is simple: to
create a world where filmmaking dreams come true. Each step of the process is
critical to achieving success, providing creative and financial opportunity
while meeting the increasing world-wide demand for quality content. To achieve
success, the Company is focused on creating, developing, controlling and
monetizing the content; acquiring, building and exploiting library assets; and
acquiring, developing, building and operating studios domestically and
internationally. The underlying principal of our business model is education.
Through education comes infrastructure, which leads to utilization, which in
turn provides opportunity, which eventually leads to success.
There are
four main business principles that matriculate through each of Camelot’s three
main divisions: Financial Transparency, Full-Time Employment, Stock Ownership
and Revenue Sharing. Each of these supplies the foundation from which the
Company is implementing its business strategy as it pursues success in the film,
television and digital media marketplace.
Camelot Film and Media
Group
Our core
business model, while going through different structures during the years, has
remained basically the same since the inception of Camelot Films in 1978:
modernize in a creative and fiscally responsible way the development, production
and distribution of feature films. While in recent years our business model has
matured to include television and digital media, the foundation of our business
model remains entrenched in the motion picture industry.
We
currently have the following pictures in production:
Title
Damn
Right I’m Mad
This full
length documentary production is the first production undertaken by Camelot
Urban Entertainment, a division of Camelot Film and Media Group. The current
version of the film is in post production with additional material expected to
be added in 2009. The documentary is a multi-year project. It is being directed
by Omar McGee, who has been working with us to establish Camelot Urban
Entertainment. We expect to commence distribution of the film in
2010.
We
currently have the following pictures in various stages of
pre-production:
Title
Girls Day
Out
Iceman
Kimberly
Drake
The Great
Night
Eyes of
the Red Skull
Invincible
Raising
Hell
Go For
It
We
currently are considering, negotiating agreements or have in development the
following feature film projects:
Title
Mexican
Alarm Clock
Gracelawn
Hard to
Kill
Digby,
the Gunpowder Plotters Legacy
Dying to
Live
Back to
Life
Will
Triumph Fights Alone
The Black
Mask*
Mad, Mad
Mary Jane*
King
Baby*
In the
Shadow of Wings*
A Rose
for Emily*
The Kiss
Off*
*Through
Media Financial Partners, Inc.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Camelot
Films®
Camelot
Films is home to our unique “Camelot Production Model”, also known as “CPM”.
Formerly referred to as the “Camelot Studio Model”, or “CSM”, the advent of our
Camelot Studio Group division in 2005 necessitated a name change for this
different approach to the development, production and distribution of feature
films. The CPM provides for multiple feature films to be produced in annualized
schedules known as “Slates”. The CPM incorporates the basic features
previously described, including financial transparency, full time employment,
stock ownership and revenue sharing. The CPM offers maximum flexibility, cost
reductions, increased productivity, embraces new technologies and provides
education and employment opportunities.
With
proposed annualized budgets and a production schedule that would propose
multiple feature films being produced in a short-term period (“Slates”), Camelot
Films takes the best of the old studio system, and merges it into the 21st
century. By proposing to eliminate many of the old studio system drawbacks, such
as long term, non-negotiable actor contracts which tied an actor to a single
studio for years, and by incorporating new business methods and technologies,
such as creative freedom and digital, Camelot Films is designed to provide the
filmmaker with the tools necessary to develop, produce and distribute their
projects, either through Camelot Films® or through another entity with the
assistance of Camelot.
Robert P.
Atwell, our Chairman, currently oversees this division.
Camelot
Features
A
traditional production company, Camelot Features offers complete script
development, full packaging services, co-productions and through Camelot
Production Services Group financial structuring. Industry veteran H. Kaye Dyal
was recently named Head of Production for Camelot Features. Camelot Features is
currently developing a slate of small to mid-range budget features (see table
above). Camelot Features also incorporates elements of the CPM described above.
The division will also establish production company incubators to assist new
production entities.
Camelot
Television Group
The
newest addition to the Camelot family, Camelot Television Group plans to be
active in pilot production, series development, providing show running services
and transitioning television programming into syndication. The division will
also establish production company incubators to assist new production entities.
Industry veteran Doug Warner is assisting us in developing this
division.
Camelot
Urban Entertainment
Camelot
Urban Entertainment, headed by Omar McGee, is developing, producing and
distributing entertainment aimed at the urban marketplace, a fast growing
segment of the entertainment industry. It plans to produce features, television,
documentaries, music and live events. The division will also establish
production company incubators to assist new production entities. The divisions
first feature documentary, “Damn Right I’m Mad”, is currently in post
production.
Camelot
Latin Entertainment
As with
Camelot Urban Entertainment, the Latin entertainment consumer market is growing
rapidly, creating demand and opportunity for filmmakers in that industry
sector. Our proposed Camelot Latin Entertainment division plans to
develop, produce and distribute entertainment aimed at the Latin marketplace, a
fast growing segment of the entertainment industry. It plans to produce
features, television, documentaries, music and live events. The division also
plans to establish production company incubators to assist new production
entities. Industry veteran Doug Warner is also assisting us with this
division.
Ferris
Wheel Films
Ferris
Wheel Films is our family entertainment division, concentrating specifically on
entertainment product suitable for all ages and especially directed at families.
Ferris Wheel plans to concentrate initially on features, television and
documentaries. The division also plans to establish production
company incubators to assist new production entities. We are currently searching
for someone to head up this division.
Camelot
Gaming
Gaming
has become a major ancillary market in the motion picture business. Movies are
made into games, and games are made into movies. Once established, Camelot
Gaming plans to become very active in this market segment, acquiring,
developing, producing and distributing 2D and 3D games, interactive gaming and
all other formats, including VOD gaming and internet gaming. The division also
plans to develop games based on television shows and television shows based on
games. Camelot Gaming also plans to develop new forms of digital media based on
games. We are currently searching for someone to head up this
division.
Camelot
Digital Entertainment
Formerly
known as Camelot Digital Media, Camelot Digital Entertainment plans to become a
major part of the Company’s operating structure. Camelot Digital Entertainment
plans to focus on content and the digital delivery systems, including cell
phones, portable email devices, internet phones, MP3 players, internet, internet
2 and wireless applications which will deliver the content to consumers. We are
currently searching for someone to head up this division.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Camelot
Distribution Group
Camelot
Distribution Group is expected to be responsible for all distribution activities
of the Company, including all film, television and digital media productions.
This division plans to handle domestic, international, theatrical, DVD, cable,
satellite, ancillary markets, network television, syndication, direct
distribution, wireless distribution, PPV, VOD and digital downloads. In
addition, this division plans to have regional distribution centers both
domestically and internationally, strategically located to provide customer
service to theater owners, distribution retail outlets and consumers. In the
United States, the regional centers are planned to be located in California,
Nevada, Louisiana, Florida, North Carolina, Alabama, New Mexico, Illinois,
Michigan, New York, Texas and the state of Washington. Internationally, these
centers are planned for Belgium, Germany, London, Beijing, Singapore, Tokyo,
Sydney, Vancouver, Toronto, Dubai and in Latin America. These distribution
centers are expected to provide critical support and customer service to our
planned distribution operations throughout the world. With an average of 70% of
all film industry revenues generated internationally, the global nature of our
business requires ongoing diligence and support. DVD, which has matured into a
steady, albeit slower growth segment of the market, should receive a shot in the
arm in 2009 with the high definition player battle between Blue-Ray and HD
finally over, with the HD format abandoned and Blue-Ray now the singular
technology in the marketplace. As video on demand (“VOD”) and other direct to
consumer technology gain a larger market share, as theaters become all digital
and upon the arrival of digital distribution to the theaters and other public
venues, customer service will be a key component in our potential success.
Industry veteran Chris Davis is assisting us in this division.
Camelot Studio
Group
Camelot
Studio Group is responsible for the development, financing, design, planning,
construction and operation of our major physical studio projects. The division
has three sub-divisions, including Camelot Development Group, LLC, Camelot
Studio Operations and Camelot Studio Financial Group. Utilizing the latest
technology, Camelot Studio Group plans to develop a series of major motion
picture studios both domestically and internationally from which the Company
plans to produce slates of films, television and digital media productions. The
studios are critical to the production process, as they allow the creative teams
to control the production environment, which in turns provides the opportunity
for higher quality productions. The studios also plan to have the ability to
generate revenues from non-film activity, including events. Company Chairman
Robert P. Atwell currently oversees this division. The Company is actively
searching for an industry veteran to assume the day to day responsibility for
this division.
The
planned studios are the backbone of our planned education integration into the
filmmaking process. By providing fully integrated educational opportunities at
the studios, production infrastructure can be developed, which in time should
lead to utilization and additional opportunity. The planned studios are expected
to provide the space where students and professionals can work side by side. In
a rapidly changing technology landscape, the students in some cases actually
become the teachers, and the teachers (the professionals) become the students.
This and other factors provide a unique opportunity for all involved. This
unique relationship should provide student employment, job training and an
innovative integration of students into the workforce.
The
studio designs plan to feature large, functional stages, including some of the
world’s largest stages, and a minimum of 12 stages per location. Modern advances
in studio technology are expected to be incorporated into the studio design,
including digital video walls, retractable roofs, water tanks and mechanized
lighting grids.
The
following sites and locations have been selected as initial sites for Camelot
Studio Group facilities.
Current Camelot Studio Group
Project Locations
Domestic
Orange
County, California
San
Diego, California
Las
Vegas, Nevada
New
Orleans, Louisiana
Miami,
Florida
Detroit,
Michigan
International
Canada
England
Belgium
Germany
China
Dubai
ITEM 1. DESCRIPTION
OF BUSINESS - continued
Camelot Development Group -
continued
Our
Camelot Development Group division is responsible for property acquisition,
studio development, entitlements, project design, project financing, site
management and acquisition of existing studios. Each project is expected to have
its own development entity to implement the specific studio
project.
Camelot
Development Group plans to establish similar development entities in areas where
additional studio sites are anticipated to be located, including an Orange
County site, Los Angeles, Las Vegas, New Orleans, Florida, Michigan, North
Carolina, Alabama, New Mexico, Europe, Latin America, United Kingdom, Asia,
Australia, Canada, Chicago, New York, Texas, Washington, Reno and
Dubai.
Camelot
Studio Operations
Camelot
Studio Operations responsibility is to oversee the operation of the physical
studios. This division will identify and retain experienced studio operators for
each site, identify potential revenue sources, work with the local operators in
minimizing costs while maximizing profits, insure aggressive community relation
activities at each location, oversee governmental relations and work to sustain
growth for the studio operations.
Camelot
Studio Financial Group
The
financial arm of Camelot Studio Group, this division is expected to be
responsible for identifying and securing fiscal resources, both public and
private, for the Camelot Studio Group projects. In addition, the financial group
could assist Camelot in identifying profitable venture opportunities for studio
group operations. The financial group is expected to arrange for and/or provide
land acquisition costs, studio financing, incubator financing, studio
acquisition financing, studio related financing and establishing fiscal
operating procedures.
Camelot Production Services
Group
The third
major division of Camelot, Camelot Production Services Group is expected to
provide the underlying fabric that supports all of the Company’s operations
while hopefully establishing individual revenue sources from each of its planned
sub-divisions. The production services group is expected to be comprised of
Camelot Studio Services, Camelot Technology Group, Camelot Entertainment
Consulting Group, Camelot Post Production, Camelot Event Management, Camelot
University, Camelot Sales and Marketing, Camelot Merchandising and Camelot Web.
While the other two major divisions, Camelot Film Group and Camelot Studio
Group, are specific in their respective institutional responsibilities, Camelot
Production Services Group should have a wide variety of responsibilities which
will interact with the other major divisions, providing services and support. We
are currently searching for someone to head up this division.
To that
extent, the production services group plans to provide production and related
services to the motion picture, television, radio and music activities of
Camelot, provide production and related services to third-party companies in the
motion picture, television, radio and music industry and provide innovative
fiscal tools for Camelot and its affiliates. In addition, the production
services group will research, develop and deploy new technologies, provide
consulting services to third-party production companies, distributors and
industry professionals and oversee post production activities of
Camelot.
The
production services group will also provide event management services, establish
Camelot University on the studio sites, establish, implement and manage sales
and marketing, merchandising and web activities.
This
division will be the last of the three major divisions to become fully
operational. Aspects of the planned operations are already underway, as they are
intertwined with our Camelot Film and Media Group and Camelot Studio Group
activities.
Camelot
Entertainment Financial Group
Our
financial group is expected to oversee all of the financing activities for the
Company. The financial group plans to provide financial services to Camelot,
secure funding for Camelot film, television and digital media projects, oversee
the financial transparency aspects of our business model and oversee collection
of accounts receivable.
In
addition, Camelot Entertainment Financial Group plans to establish, develop and
implement our “Late Stage Bridge Financing Fund” or “LSB”, which will provide
late stage bridge financing for bank or equivalent financed projects with
accelerated or delayed start dates that have a need for this type of short term
financing.
Camelot
Studio Services
Our
studio services department plans to provide studio services, including
equipment, expendables, location, transportation and logistical support to
Camelot Studio Group. In addition, studio services hopes to provide these
services through Camelot Studio Group to third-party productions. This
department is expected to establish revenue producing activities utilizing
Camelot assets and will provide equipment, transportation and logistical support
to Camelot (in addition to those services provided to Camelot Studio
Group).
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Camelot
Technology Group
Camelot
Technology Group plans to provide Camelot with the latest pre-production
technology, including pre-visualization software, production, post production
and distribution technologies, including digital delivery systems. This
department is expected to also research and develop
new technologies for Camelot and the entertainment industry. Currently, Camelot
is involved with various digital consortiums, SMPTE, NAB and other entities that
are actively pursuing digital technology. In addition, our technology group is
expected to be responsible for the technical side of our corporate
communications, which will become a critical component of our future operations
as we expand.
Camelot
Entertainment Consulting Group
Our
consulting group is expected to provide film, television and digital media
consultation services to third-party production companies, distributors and
industry professionals. The group plans to provide banks, funds and other
financial institutions with fiscal consultation specifically related to the
film, television and digital media industry.
Camelot
Post Production
Our post
production department will be responsible for providing Camelot Film and Media
Group with the best post production capabilities available in order to meet
their post production requirements. This department plans to utilize the latest
technology available to support the production process, working with such
companies as Avid and Apple (Final Cut). It will provide sound, special effects,
ADR, editing, digital interface and other digital applications, music and
deliverables.
Camelot
Event Management
Our event
management company will have the responsibility of securing contracts to manage
film markets and festivals worldwide. In addition, the department plans to
provide consulting services to existing festivals and markets, organize and
manage Camelot events, outsource its services for third-party events and manage
corporate travel for the Company.
Camelot
University Division
Our
educational division, currently known as Camelot University, is expected to be
responsible for all of our educational activities, curriculum, disciplines,
integration and interaction with our educational partners. Education is imbedded
in our business foundation and is a critical component of our business model. In
the future, this division plans to establish a world class college and/or
university to provide the traditional and non-traditional education with our
education partners. In addition, we plan to establish “Camelot College of the
Arts”, specifically for motion picture, television and digital media
development, production and distribution.
Camelot
University is expected to be responsible for our innovative integration of
students into the film, television and digital media industry through our
physical studios and other programs, providing job training, infrastructure
establishment, student employment, business community education partnerships and
career opportunities for our students.
Camelot
Sales and Marketing
Our sales
and marketing department plans to establish, implement and manage sales and
marketing activity for the Company, overseeing those efforts in each of our
three main divisions, Camelot Film Group, Camelot Studio Group and Camelot
Production Services Group. They are expected to be responsible for providing
materials, developing and implementing promotional campaigns, press relations,
investor relations, advertising, printing, one-sheets, press packets and on-line
marketing material. Our sales and marketing team, when fully staffed, plans to
work closely with our merchandising and web departments, all critical elements
of our business model.
Camelot
Merchandising
The
merchandising department would be responsible for all of the Company’s
promotional products, promotional tie-ins, clothing, hats, jackets, fleece,
etc., poster, cups, toys, memorabilia, product placement and product tie-ins.
Working with our web department, Camelot merchandising will be expected to
establish our planned on-line retail store and future retail
outlets.
Camelot
Web
Our web
division is expected to be responsible for our web sites, IPTV, on-line store,
technical support, internet services, hardware and software support, blogs, chat
rooms, email and all other activities associated with the internet and
computers. Our web department plans to work closely with our technology group
planning and implementing our web related activities.
Recent
Developments
During
fiscal year 2008, our efforts to develop our first major studio complex through
the Camelot Studio Group division were put on hold due in part to the credit
crunch and economic downturn. As a result, our operations were
severely limited. We did not generate any revenues during 2008. During the third
and fourth quarter of 2008, we began the process of restructuring the Company,
making several changes including reduction of staff and downsizing of our
physical office. We continue to make progress in our Camelot Film and Media
Group division with the recent addition of Mr. H. Kaye Dyal as head of
production for Camelot Features and also in the other divisions as we continue
to work on the development of the Camelot business model. We redirected our
focus away from the studio development to concentrate on the development,
financing, production and distribution of several projects in our Camelot Film
and Media Group division. In addition, negotiations continued on several
potential acquisitions for Camelot, which we expect will move forward as current
economic conditions improve.
ITEM
1. DESCRIPTION OF BUSINESS
- continued
Recent
Developments - continued
We also
continued to develop various potential feature films during 2008 within our
Camelot Film and Media Group division. Camelot Urban Entertainment, part of our
film group division, began production on its first feature length documentary,
“Damn Right I’m Mad”. The project, currently in post production, is
expected to be completed in 2009.
In
addition, we continued to explore funding options with various domestic and
international resources currently being developed by our management team. The
international regions currently being explored include Europe, specifically
Belgium, Germany and the United Kingdom, and the Far East, specifically
China.
Principal
Products or Services and Their Markets
Although our operations have been limited, our focus during the first put
of 2008 had been on our Camelot Studio Group projects, while our long term plans
focus on the proposed development, production, marketing and distribution of
original motion pictures, television and digital media. Within Camelot Film and
Media Group, our objective is to develop, produce, market and distribute
multiple pictures, television product and various forms of digital media
annually across various genres and budget ranges through our various divisions
which comprise Camelot Film and Media Group. Camelot Films® continues
to provide the foundation upon which all of our various film, television and
digital media divisions plan to operate. By incorporating our truly unique
business model, which stresses four main objectives: financial transparency,
full time employment, stock ownership and revenue sharing; we are hoping to
redefine the development, finance, production, and distribution process. In
doing so, we plan to produce higher quality, lower cost productions to meet the
growing appetite for content worldwide. Our plan is to market and distribute all
of our production through our Camelot Distribution subsidiary, thereby keeping
as much control as possible over the revenues generated by our
productions.
The
development, finance, production and distribution process for film, television
and digital media can have a lengthy workflow cycle. The process is inherently
risky. It consumes significant cash and personnel resources. While we are going
through this process, we are slowly developing the other areas of our business,
Camelot Studio Group and Camelot Production Services Group. All three divisions
are critical to our success. It will take at least three to five years to become
fully operational, depending upon the successful completion of our planned
financing activities. If our funding plans are delayed or do not materialize, we
may never become fully operational, or if we do, it could take significantly
longer than three to five years.
Key
Additional Components of the Camelot Production Model (“CPM”)
Camelot
Films is home to our unique “Camelot Production Model”, also known as “CPM”. The
CPM provides for multiple feature films to be produced in annualized schedules
known as “Slates”. The CPM plan incorporates the basic features
previously described, including financial transparency, full time employment,
stock ownership and revenue sharing. The CPM plan expects to offer maximum
flexibility, cost reductions, increased productivity, embraces new technologies
and provides education and employment opportunities.
With
annualized budgets and Slates, Camelot Films plans to take the best of the old
studio system, and merge it into the 21st
century. By eliminating many of the old studio system drawbacks, such as long
term, non-negotiable actor contracts which tied an actor to a single studio for
years, and by incorporating new business methods and technologies, such as
creative freedom and digital, Camelot Films is designed to provide the filmmaker
with the tools necessary to develop, produce and distribute their projects,
either through Camelot Films or through another entity with the assistance of
Camelot.
The
following additional components are a crucial part of the CPM:
Cash
Component
Our plan
is to raise sufficient capital to finance the next three to five years of
operations, production and distribution activities, the time period management
feels it will take for us to realize ongoing revenues substantial enough to
maintain monthly operating, production and distribution expenses. We plan to
file a S-1 registration statement during the second and third quarters of 2009.
We will not be able to commence our plan to develop, produce, market and
distribute multiple pictures annually until we have raised the necessary
capital. In the event we are unable to secure this funding on a timely basis,
our ability to implement our plan would be jeopardized. See “Risk
Factors”.
Deferment
Component
In
addition to reasonable cash payments on budgeted line items, a majority of line
items in the budgets will also have a deferment component. In addition to cash
payments, each individual and vendor would receive a deferment, or delayed
payment, which we anticipate to pay out of revenues generated by our films. By
fully disclosing all financial elements in connection with the pictures, which
we call financial transparency, we believe that the deferment component can
become a trusted and reliable source of payment for our employees and
vendors.
Camelot
Production Services Group Contribution Component
We
anticipate providing each film produced by us certain items in the budget that
normally would have to be either rented or purchased from a third party vendor.
These “in-kind” contributions may include cameras, lights, grip and electrical
equipment, vehicles, legal and accounting services, certain executive producer
and producer services, production and location offices and other goods and
services to be determined on a film by film basis.
ITEM
1. DESCRIPTION OF BUSINESS
- continued
Camelot
Entertainment Group Common Stock Component
We plan
to issue every individual working on our films shares of our common stock as
part of their compensation package or vendor contract. We anticipate that this
common stock component will enhance each individual or vendor’s consideration to
such an extent that these individuals and entities will continue to work with us
within the parameters of our budget model.
Key
Components of the Production Process
The key
components of motion picture production are generally viewed as consisting of
development, pre-production, production or principal photography,
post-production, marketing and distribution. While these terms are used in
similar ways by many major studios and independent productions, the relative
resources of the parties involved in producing an original motion picture have a
meaningful impact on both the scale and scope of the specific activities these
components are comprised of. For example, in a major studio production, the
post-production phase may include use of numerous special effects professionals
and companies, composers and music editors, in addition to other personnel. This
is in contrast to many independent productions that might be able to fit a music
editor into their budget, but may not be able to afford hiring a composer to
create an original score, much less an orchestra to perform and record the
score. Similarly, many independent productions might not be able to afford
hiring a leading special effects company for months at a time, but may be able
to fit some stock special effects footage into a production or hire an editor
that also has some experience with editing special effects. As our business
model depends to a large extent on our ability to efficiently mitigate some of
these differences, our description of the motion picture production process
includes certain references to our perception of differences between major
studio productions and independent productions.
Development
In
general, the development phase of motion picture production begins with
converting a concept or literary work into a script. In certain cases, a
completed script, or screenplay, may already exist, and require a studio or
independent producer to acquire rights to the script. Such rights could be an
outright purchase of a literary work or an option to purchase the literary work
or script. In the case of a major studio, the next steps in the development
phase of a motion picture could often involve developing a budget, getting
contingent commitments from talent such as directors and cast members, and
assessing the overall creative potential of the project. Independent productions
generally conduct similar activities; the key difference is often that an
independent producer has substantially less financial and human resources with
which to execute these activities. As a result, certain independent productions
must seek external financing from private investment sources to enable shaping
the motion picture concept into an attractive package that could hopefully
result in raising additional funds needed to actually produce the motion
picture.
In the
case of studios and independent production companies, their staffs actively seek
and participate in the acquisition of completed scripts or developing scripts
into motion picture projects, usually with either in-house producers or
non-affiliated producers whose specific projects they desire to produce. Once
the screenplay or story rights have been secured, talent is lined up, a budget
and production schedule has been created, the package is presented to
decision-makers at the studio or independent production company that either
approves the project, or “greenlights” the project, or declines the project. If
the project is approved, it moves into the pre-production phase.
The
decision whether to “greenlight,” or proceed with production of, a film is a
diligent process that typically involves numerous key executives of a major
studio, in contrast to an independent company where possibly the entire process
might be handled by just one person. Generally, the production division presents
projects to a committee comprised of the heads of a studio’s production,
distribution, home entertainment, international, legal and finance departments.
In this process, scripts are discussed for both artistic merit and commercial
viability. The committee considers the entire package, including the script, the
talent that may be attached or pursued and the production division’s initial
budget. They also discuss talent and story elements that could make the product
more successful. Next, the heads of domestic and international distribution
prepare estimates of projected revenues and the costs of marketing and
distributing the film. The studio’s finance and legal professionals review all
of the projections, and the committee decides whether the picture is worth
pursuing by balancing the risk of a production against its potential for
financial success. The studio may seek to mitigate the financial risk associated
with film production by negotiating co-production agreements, pre-selling
international distribution rights and capitalizing on government subsidies and
tax credits. In addition, a studio might attempt to minimize its production
exposure by structuring deals with talent that provide for them to participate
in the financial success of the motion picture in exchange for reducing up-front
payments.
Pre-Production
In
general, the pre-production phase of motion picture production involves
executing binding engagements of creative personnel, scouting and securing
locations for principal photography, firming up the filming schedule and budget,
and taking all other steps necessary to facilitate actual filming during the
production, or principal photography, phase.
Production/Principal
Photography
Principal
photography, or production, is the phase where actual filming of the motion
picture takes place. The actors, producers, directors, staff, locations and
equipment that were engaged and planned for in the pre-production phase must be
brought together to create the primary film footage that should enable a
meaningful creative work to be edited into a quality finished product. While the
planning that took place during the pre-production phase is a critical success
factor, a large amount of uncertainties exist that can positively, or
negatively, impact outcomes of the production phase. For example, weather may
cause delays in the shooting schedule, talent may become injured or sick and the
director may not be able to extract the quality of performances desired from
actors. In the case of a major studio production, access to capital may enable
more resources to be deployed to mitigate these risks. In the case of an
independent production, these uncontrollable factors may be more likely to
result in the failure to complete a motion picture of the quality envisioned
during the pre-production phase.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Post-Production
Following
the last date of principal photography, the film footage produced during that
phase enters the post-production phase. Post-production is the phase where the
film footage captured in the production phase is enhanced and edited into a form
that should, hopefully, strike a cord with the target audience upon release of
the completed motion picture. This phase includes activities such as adding
voices as needed, opticals, music, special effects, soundtracks, and even
additional film footage. These elements must be brought together symbiotically,
to create a completed negative ready to be converted into release prints. This
phase has a substantial impact on how an audience perceives the work that was
performed during the principal photography phase. For instance, although the
performances of actors and directors may have been excellent during the
principal photography phase, if the sound, sequence of visuals and events are
not brought together in the proper manner, the end result may not be
artistically or commercially viable. For major studios, hiring the best
available consultants, editors or other parties to remedy, at least partially,
such an outcome can often mitigate such an event. Few independent productions
can access such resources without exceeding the projected revenues required to
deliver a potential return to their investors.
Studio
Facilities
Currently,
we rent studio space on an as-needed basis. We may own and operate
additional studio facilities in the future.
The Motion Picture
Industry
The
motion picture industry consists of two principal activities: production and
distribution. Production involves the development, financing and production of
feature-length motion pictures. Distribution involves the promotion and
exploitation of motion pictures throughout the world in a variety of media,
including theatrical exhibition, home entertainment, television and other
ancillary markets.
General
Statistics
According
to the Motion Picture Association’s U.S. Theatrical Market: 2008
Statistics, worldwide box office reached $28.1 billion, a 5.2% increase
over 2007. Overall domestic box office revenue was approximately
$9.8 billion in 2008. This represents a 1.7% increase in total domestic box
office compared to 2007 statistics. Global box office reached an all-time high
with its $28.1 billion in 2008, with 65% of the global box office generated
internationally, up from 51% in 2001. Domestic movie goers purchased 1.364
billion theater tickets in 2008, a slight .02.6% decrease over 2007. Although it
fluctuates from year to year (including a moderate decline from 2004 to 2005,
followed by steady increases through 2007), the domestic motion picture industry
has grown in revenues and attendance over the past 15 years, with box office
receipts up 111% ($4.563 billion in 1992) and admissions up 27.4% from 1992 to
2007. During the first quarter of 2009, domestic box office set records in
revenue and admissions, reversing a trend that had seen admissions decrease
every year since 1999. Worldwide appetite for filmed entertainment continues to
escalate, as seen in the increased international percentage of total world-wide
box office. Domestically, filmed entertainment has historically performed well
during recessionary periods, and the current numbers continue to reinforce that
fact.
There
were 610 feature films released in 2008, up from 599 in 2007. 27%, or 162, of
those were released by the major studios. 444, or 73%, were released by
independent distributors. That represents a 3% increase over 2007 for the
independents. 3 movies earned more than $300,000,000 at the US box office in
2008, 3 earned between $200,000,000 and $300,000,000, and 14 earned between
$100,000,000 and $199,000,000.
50% of
all movies released theatrically were rated PG-13. 30% were rated PG, 15% were
rated R and 5% were rated G.
Competition
The U.S.
motion picture industry can be divided into major studios and independent
companies, with the major studios and independents affiliated with them
historically accounting for a large majority of the number of theatrical
releases. The major studios are The Walt Disney Company (including Buena Vista,
Touchstone and Miramax Films), Paramount Pictures Corporation (including
DreamWorks), Sony Pictures Entertainment, Inc. (including Columbia Pictures and
MGM), Twentieth Century Fox Film Corp., NBC Universal (including Universal
Studios and Universal Focus) and Warner Bros. (including Turner, New Line Cinema
and Castle Rock Entertainment). The major studios are typically large
diversified corporations that have strong relationships with creative talent,
exhibitors and others involved in the entertainment industry, and have global
film production and distribution capabilities.
Historically,
the major studios have produced and distributed the majority of high grossing
theatrical motion pictures released annually in the United States. In addition,
most of the studios have created or accumulated substantial and valuable motion
picture libraries that generate significant revenues. These revenues can provide
the major studios with a stable source of earnings that partially offsets the
variations in the financial performance of their current motion picture releases
and other aspects of their motion picture operations.
The
independent companies generally have more limited production and distribution
capabilities than do the major studios. While certain independent companies may
produce as many films as a major studio in any year, independent motion pictures
typically have lower negative costs and are not as widely released as motion
pictures produced and distributed by the major studios. Additionally, the
independent companies may have limited or no internal distribution capability
and may rely on the major studios for distribution and financing. There are
exceptions to this, including Lionsgate Films, a major independent that has
continued to experience significant growth since 2005.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Competition - continued
Competitor
Film and Television Companies 2008
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Major
Parent
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Divisions
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Universal
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Focus
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Rogue
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NBC
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Telemundo
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USA
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Sci
Fi
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Bravo
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Sony
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Columbia
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MGM
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UA
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Sony
Classics
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Screen
Gems
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TriStar
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Destination
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Paramount
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DreamWorks
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Vantage
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P.
Classics
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Nickelodeon
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CBS
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BET
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Comedy
C
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Warner
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New
Line
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Telepicture
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Castle
Rock
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W.
Independent
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Picturehouse
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HBO
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W.
Premier
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Disney
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Buena
Vista
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Touchstone
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Miramax
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Hollywood
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Pixar
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ABC
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Spyglass
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Fox
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Fox
Searchlight
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Faith
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Atomic
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Fox
TV
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Telecolombia
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Independents
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Divisions
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Camelot
Ent Gp
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Camelot
Films
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Camelot
Features
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Camelot
Urban
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Ferris
Wheel
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Weinstein
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Dimension
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Nu
Image
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Millennium
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First
Look
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Yari
Film Group
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Lionsgate
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Ghost
House
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Mandate
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Newmarket
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RKO
Radio Pictures
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Roseblood
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IFC
Films
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Samuel
Goldwyn
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2929
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Magnolia
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Truly
Indie
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HDNet
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HDNet
Films
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Landmark
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Palm
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Tartan
Films
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ThinkFilm
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Troma
Entertainment
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Giant
Screen Films
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Others
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CBS
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Cable
and Satellite
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Smaller
Independents
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Despite
the limited resources generally available to independent studios, independent
films have gained wider market approval and increased share of overall box
office receipts in recent years. Past successful independent films such as My Big Fat Greek Wedding, Bend It
Like Beckham, Saw and Crash highlight moviegoers’
willingness to support high quality and/or commercial motion pictures despite
limited pre-marketing and production budgets.
Product Life
Cycle
Successful
motion pictures may continue to play in theaters for more than three months
following their initial release. Concurrent with their release in the United
States, motion pictures are generally released in Canada and may also be
released in one or more other foreign markets. After the initial theatrical
release, distributors seek to maximize revenues by releasing movies in
sequential release date windows, which are generally exclusive against other
non-theatrical distribution channels:
Typical Film Release
Windows*
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Months
After
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Approximate
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Release
Period
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Initial
Release
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Release
Period
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Theatrical
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—
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0-3 months
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Home
video/ DVD (1st cycle)
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3-6 months
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1-3 months
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Pay-per-transaction
(pay per-view and video-on-demand)
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4-8 months
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3-4 months
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Pay
television
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9-12 months
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18 months
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Network
or basic cable
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27-30 months
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48-72 months
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Syndication
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48-70 months
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12-72 months
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Licensing
and merchandising
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Concurrent
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Ongoing
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All
international releases
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Concurrent
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Ongoing
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*
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These
patterns may not be applicable to every film, and may change with the
emergence of new technologies. Does not include day and date release
patterns.
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ITEM 1. DESCRIPTION OF BUSINESS -
continued
Production
The
production of a motion picture begins with the screenplay adaptation of a
popular novel or other literary work acquired by the producer of the motion
picture or the development of an original screenplay based upon a story line or
scenario conceived or acquired by the producer. In the development phase, the
producer may seek production financing and tentative commitments from a
director, the principal cast members and other creative personnel. A proposed
production schedule and budget are prepared. At the end of this phase, the
decision is made whether or not to “greenlight,” or approve for production, the
motion picture.
After
greenlighting, pre-production of the motion picture begins. In this phase, the
producer engages creative personnel to the extent not previously committed,
finalizes the filming schedule and production budget, obtains insurance or self
insures and secures completion guaranties, if necessary. Moreover, the producer
establishes filming locations, secures any necessary studio facilities and
stages and prepares for the start of actual filming.
Principal
photography, or the actual physical principal production and filming of the
screenplay, generally extends on the average from four to 16 weeks, with some
schedules extending out as much as 52 weeks, depending upon such factors as
budget, location, weather and complications inherent in the
screenplay.
Following
completion of principal photography, the motion picture enters what is typically
referred to as post-production. In this phase, the motion picture is edited,
opticals, dialogue, music and any special effects are added, and voice, effects
and music soundtracks and pictures are synchronized. This results in the
production of the negative from which release prints of the motion picture are
made. Major studios and independent film companies hire editors, composers and
special effects technicians on the basis of their suitability for a particular
picture.
The
production and marketing of theatrical motion pictures at the studio level
requires substantial capital. The costs of producing and marketing motion
pictures have increased substantially in recent years. These costs may continue
to increase in the future at rates greater than normal inflation, thereby
increasing the costs to us of our motion pictures. Production costs and
marketing costs are generally rising at a faster rate than increases in either
domestic admissions to movie theaters or admission ticket prices, leaving all
producers of motion pictures more dependent on other media, such as home
entertainment, television, and foreign markets.
Distribution
The
distribution of a motion picture involves the licensing of the picture for
distribution or exploitation in various markets, both domestically and
internationally, pursuant to a release pattern. These markets include theatrical
exhibition, non-theatrical exhibition (which includes airlines, hotels and armed
forces facilities), home entertainment (including rental and sell-through of
video and DVD), presentation on television (including pay-per-view, pay,
network, syndication and basic cable) and marketing of the other rights in the
picture and underlying literary property, which may include publishing,
merchandising and soundtracks. The domestic and international markets generally
follow the same release pattern, with the starting date of the release in the
international market varying from being concurrent with the domestic theatrical
release to being as long as nine months afterwards. A motion picture typically
is distributed by a major studio or one or more distributors that acquire rights
from a studio or other producer in one or more markets or media or a combination
of the foregoing.
Both
major studios and independent film companies often acquire pictures for
distribution through a customary industry arrangement known as a “negative
pickup,” under which the studio or independent film company agrees before
commencement of or during production to acquire from a production company all
domestic rights, and in some cases some or all of the foreign rights, to a film
upon completion of production, and also acquire completed films, as well as all
associated obligations.
Movie
Remain a Hot Ticket
According
to the Motion Picture Association of America, the motion picture industry has
continued to experience significant growth worldwide over the past five decades,
although certain aspects of the industry have matured in recent years, such as
DVD.
Between
1953 and 2008, a span of 55 years, the U.S. Box Office has gone from $1.34
billion in gross receipts in 1953 to the all time high of $9.8 billion in
2008.
All of
the international regions saw significant growth between July 2006 and July
2007. Europe, the Middle East and Africa saw an increase of 15%. Asia-Pacific
saw an increase of 15%. Latin America’s theatrical market increased 17%. Europe,
the Middle East and Africa (“EMEA”) comprised more than half of the $16.33
billion international box office, accounting for 49.6% of the total with $8.11
billion in receipts. Asia-Pacific box office finished strong with $6.32 billion
between July 2006 and July 2007. These trends are expected to continue in
2009.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Movie Remain a Hot Ticket -
continued
Worldwide
admissions bounced back in 2006, reaching an all-time high of 7.81 billion movie
tickets after a 4% increase. The growth was driven primarily by Asia Pacific’s
5% gain to 4.81 billion tickets and EMEA’s 4% gain to 1.1 billion
tickets.
The
number of theatrical screens in the U.S. increased less than 1% to 40,194 in
2008. This follows a 2.1% increase in screens between 2005 and 2007 and a 9.7%
increase between 2003 and 2007. Of the 40,194 screens in the U.S., 39,476 were
indoor screens, while 718 were drive-in screens. The number of drive in screens
decreased by 12 screens between 2007 and 2008. This follows an increase by 21
screens between 2005 and 2007. The number of drive in screens reached an all
time low of 601 in 2004, followed by an increase to 709 screens in 2005. In
comparison, in 1986 there were 2,818 drive-in screens in the US.
Digital
screens continued their rapid growth in 2008 with the number of worldwide
digital screens climbing 33% to 8,614 screens. To put this number of digital
screens in a better perspective, in 1999 there were 12 digital screens
worldwide. 5,474 digital screens representing 64% of all digital screens are in
the U.S.
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§
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In
2008, the number of moviegoers dropped 2.6% over the previous year, with
1,364,000,000 admissions. In 2007, the number of moviegoers had reached
its highest point in five years, topping 1,400,000,000
admissions.
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§
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For
the past eight years, each U.S. resident attended an average of at least
5.5 movies per year. In 2007, the average was 6.0, up from 4.4 in 1985. In
2005, the average was 5.4. Admissions per capita reached an all time high
of 6.2 in 2002.
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§
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The
average annual admission price for 2008 was $7.18, up 4.4% over the
previous year.
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§
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The
average box office revenue for all new film releases was $16.1 million in
2007, compared to $15.4 million in 2006 and $16.7 million in
2005. The average box office revenue for major studio film
releases was $45.7 million in 2007, compared to $40.2 million in 2006 and
$39.7 million in 2005.
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§
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The
average budget of a major studio film in 2007 was $70.8 million. In 1983,
the average was $11.9 million. The average marketing budget was $35.9
million in 2007, as compared to $34.5 million in 2006. In 1983, the
average was $5.2 million. As a comparison, in 2001 the average
budget was $47.7 million. The average marketing budget was $31 million in
2001.
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§
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The
total average cost to produce and launch a studio film in 2007 was $106.6
million compared to $100.3 million in 2006. In 1983, the total average
cost to produce and launch a studio film was $17.1 million. As
a comparison, the average total cost was $78.7 million in
2001.
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§
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Between
1993 and 1999, the average budget of a studio film increased 97.7%, from
$29.9 million in 1993 to $51.5 million in 1999.
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§Between 2001 and
2007, the average budget of a studio film increased 48.4% from $47.7
million in 2001 to $70.8 million in
2007.
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§
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The
average budget of a major studio subsidiary/classic or
specialty/independent type film (i.e. Fox Searchlight, New Line, Fine
Line, Miramax, Sony Pictures Classics, and Lionsgate etc.) in 2007 was
$49.2 million. The average marketing cost was $25.7 million. The combined
negative and marketing costs was $74.8 million., contributing to a 54%
increase in combined negative and marketing costs when compared to 2006,
when the combined costs was $48.5 million. The average cost in 2003 was
$46.9 million, a 154.9% increase over the 1999 average of $18.4 million
and a 37.7% increase over 2002’s average of $34 million. The average
marketing budget was $15.2 million in 2005.The average marketing budget
was $11.4 million in 2004. The average marketing budget was $14.7 million
in 2003. In 1999, the average was $6.5
million.
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§
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The
total average cost to produce and launch a major studio subsidiary or
specialty/independent type film in 2007 was $74.8 million, the highest
ever. In 1999, the total average cost to produce and launch a major studio
subsidiary or specialty/independent type film was $24.9
million.
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§
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Between
1986 and 2007, there was a 75.2% increase in the total number of screens.
There was a 95.2% increase in the number of indoor screens and a 74.3%
decrease in the number of drive-in
screens.
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§
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Between
2006 and 2007 the total number of theaters in the U.S. decreased by 1.2%.
Between 2000 and 2004, the total number of theaters in the U.S. decreased
by 2.1%. Between 1994 and 2004 the total number of theaters in the U.S.
increased by 38%.
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§
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In
2007, there were 6,277 total theaters in the U.S. 1,748 of the theaters
had single screens. 2,296 theaters had 2 to 7 screens. 1,617 theaters had
8 to 15 screens and 616 theaters had more than 16 screens, a 4.2% increase
in megaplexes screens. In 2006, there were 6,356 total theaters in the
U.S. 1,742 of the theaters had single screens. 2,362 theaters had 2 to 7
screens. 1,661 theaters had 8 to 15 screens and 591 theaters had more than
16 screens. In 2004, there were 6,012 total theaters in the U.S. 5,620
were indoor theaters, 392 were drive-in theaters. In 1980, there were
17,590 total theaters, with 14,029 indoor and 3,561 drive-in
theaters.
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ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Movie Remain a Hot Ticket
- continued
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§
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In
2007, approximately 36% of the screens were miniplexes (2 to 7 screens),
28% were single screen, 26% were multiplexes (8 to 15 screens) and 10%
were megaplexes (16 or more screens). In 2006, approximately 37% of the
screens were miniplexes (2 to 7 screens), 27% were single screen, 27% were
multiplexes (8 to 15 screens) and 9% were megaplexes (16 or more
screens).
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§
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In
2007, preliminary estimates show a total of 357,300 employees in the U.S.
motion picture industry and associated fields. Of that number, 192,800 are
involved in production and services, with 136,200 in the theater and
video/DVD rental sector and 28,300 employed in related fields. In 2006,
there were a a total of 354,400 employees in the U.S. motion picture
industry and associated fields. Of that number, 192,200 were involved in
production and services, with 133,700 in the theater and video/DVD rental
sector and 28,500 employed in related
fields.
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§
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In
2007, the number of cable and satellite television stations eclipsed 400.
Between 1990 and 2004, the number of cable and satellite television
channels increased 372% from 60 cable channels in 1990 to 324 cable and
satellite channels in 2004.
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§
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Total
rental and sell-through of motion picture video DVDs to dealers in the
United States decreased from 1,309.2 billion units in 2007 to 1,255.8
billion in 2006, a decrease of 4.1%, reflecting the stagnant growth in DVD
use by consumers, due in part to format confusion between Blue-Ray and HD
DVD formats. Previously, this sector had been robust. Since 2002, this
sector has seen an increase of 113.9% in DVD sales to dealers. Total
rental and sell-through of motion picture video DVDs to dealers in the
United States increased from 1,292.9 billion units in 2005 to 1,324.7
billion in 2006, an increase of 2.5%, reflecting at the time the continued
growth in DVD use by consumers.
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§
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Total
sales of motion picture video cassettes to dealers in the United States
decreased from 7.4 million in 2006 to 300,000 in 2007, a 95.4% decrease.
Total sales had previously decreased from 48.7 million in 2005 to 7.4
million in 2006, a 84.8% decrease. This followed a 61.2% decrease between
2005 and 2004.
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§
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There
are currently over 84,000 titles available on DVD, a 19% increase over
2006. In 2006, there were 68,000 titles available on DVD, a 51% increase
over 2005. In 1999, there were 5,000.
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§
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There
were 12,050 new titles available on DVD during 2007, a 11.4% decrease from
2006, when there were 13,604 new titles available. This is the second
consecutive year that the number of new titles has decreased. In 2005,
there were 13,922 new titles
available.
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§
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In
2007, 21,200,000 DVD players were purchased by retailers, a 7.4% increase
over 2006, when 19,800,000 were purchased. In 2006, 19,800,000
DVD players were purchased by retailers, a 23% increase over 2005, when
16,100,000 were purchased.
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§
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In
2007, 33,500,000 DVD players were sold to U.S. consumers, a decrease of
1.19% from 2003, when 33,900,000 were sold. In 2006, 33,900,000 DVD
players were sold to U.S. consumers, a decrease of 1.45% from 2003, when
34,400,000 were sold.
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§
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The
average price of a DVD title in 2007 was $22.11. The average price of a
DVD title in 2006 was $22.29. In 2003 the average was $20.15. In 1999 the
average was $25.53.
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§
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The
average price of a DVD player in 2007 was $72. The average price of a DVD
player in 2006 was $100. In 2002 the average was
$136.
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§
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Factory
sales of digital TV sets and displays continue to rise, with 27.1 million
units sold in 2007, compared to 4.1 million units sold in 2002. The
average unit has dropped in price from $1,540 in 2002 to $954 in 2007.
Total sales in 2007 reached $25.866 billion. In 2003, total sales were
$8.692 billion. 23.9 million units were sold in 2006. The average unit
price was $989 in 2006. Total sales in 2006 reached $23.661
billion.
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§
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In
the U.S., of the 114.9 million homes accounted for in 2007, 112.8 million,
or 98.2%, have television. Of the 112.8 million homes that have
television, 98 million, or 86.9%, have DVD players. That represents an
increase of 5% over 2006, and 50.6% increase since 2002. In comparison,
86.9 million homes have internet access, an increase of 3% over 2006. 60.8
million homes have broadband services, an increase of 15% over
2006.
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§
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34.4
million homes, or 30.5% of the 114.9 million homes with television, have
basic cable. That represents a decrease of 3.9% from 2006. 34.8 million
have pay cable services, a decrease of 2.2% from
2006.
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§
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Preliminary
reports show that at the end of 2006, 33.2 million homes subscribed to
digital cable, a 4.7% increase over 2006. 29.6 million homes have
satellite service, a 8% increase over
2006.
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§
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Video
on Demand (“VOD”), an advanced pay-per-view programming service which
enables viewers to order and watch movies on demand and to pause, rewind
or fast-forward them, according to 2007 preliminary numbers, is available
in 31 million households, or approximately 27.5% of homes with
televisions. That represents a 7.3% increase over
2006.
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ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Movie Remain a Hot Ticket -
continued
Admissions,
box office receipts, DVD sales, VOD sales and increases in cable and satellite
home penetration all are positive signs for our industry. As the demand
continues to increase, as each of the markets continue to mature, the need for
an educated, experienced and skilled workforce rises. However, despite the
attractiveness this growth suggests, the motion picture business remains a very
risky industry. Studios and independent producers must be able to finance a
project, complete production, execute a successful distribution strategy, obtain
favorable press and compete with an unknown quantity of competing releases.
These are just some of the factors that impact the commercial success or failure
of a film, television or digital media project.
Cost
Structure
General
In the
motion picture industry, the largest component of the cost of producing a motion
picture generally is the negative cost, which includes the “above-the-line” and “below-the-line” costs of
producing the film. Above-the-line costs are costs related to the acquisition of
picture rights and the costs associated with the producer, the director, the
writer and the principal cast. Below-the-line costs are the remaining costs
involved in producing the picture, such as film studio rental, principal
photography, sound and editing.
Distribution
expenses consist primarily of the costs of advertising and preparing release
prints. The costs of advertising associated with a major domestic theatrical
motion picture release are significant and typically involve national and target
market media campaigns, as well as public appearances of a film’s stars. These
advertising costs are separate from the advertising costs associated with other
domestic distribution channels and the international market.
The major
studios generally fund production costs from cash flow generated by motion
picture and related distribution activities or bank and other financing methods.
The independent production companies typically use a plethora of creative
financing techniques to fund production. Over the past decade, expenses in the
motion picture industry have increased rapidly as a result of increased
production costs and distribution expenses. Additionally, each of the major
studios must fund substantial overhead costs, consisting primarily of salaries
and related costs of the production, distribution and administrative staffs, as
well as facilities costs and other recurring overhead. Independent production
companies, while usually not faced with major overhead costs, nevertheless have
to function outside the studio system and as a result in many cases they do not
have access to the studio structure, which can make the process of getting a
specific film made more difficult and, in some isolated instances, more
expensive.
Collective Bargaining Agreements
Feature
films produced by the major studios and independent production companies in the
United States generally employ actors, writers and directors who are members of
the Screen Actors Guild, Writers Guild of America and Directors Guild of
America, respectively, pursuant to industry-wide collective bargaining
agreements. The collective bargaining agreement with the Writers Guild of
America was recently renegotiated following a four month work stoppage between
November 2007 and February 2008. The collective bargaining agreement with the
Screen Actors Guild expired on June 30, 2008. Talks continue as of April 15,
2009. The Directors Guild of America collective bargaining agreement expired on
June 30, 2008. Many productions also employ members of a number of other labor
organizations including, without limitation, the International Alliance of
Theatrical and Stage Employees and the International Brotherhood of Teamsters.
The collective bargaining agreement with Teamsters Local 399, which represents
significant numbers of persons within the motion picture industry, expires on
July 31, 2008 and the collective bargaining agreement with the International
Alliance of Theatrical and Stage Employees expires on July 31, 2010. A strike by
one or more of the unions that provide personnel essential to the production of
motion pictures could delay or halt our ongoing production activities. Such a
halt or delay, depending on the length of time involved, could cause delay or
interruption in our release of new motion pictures and thereby could adversely
affect our potential future cash flow and revenues.
Industry
Compensation Arrangements
Most of
the creative and production personnel that work on a movie are short-term
employees or "for hire"
contractors who are compensated for their services at a predetermined
rate. It is also customary in the motion picture industry to pay contingent
compensation over and above these fees to certain key employees and
contractors.
Three
customary contingent compensation arrangements in the industry
include:
1.
Fixed
Deferrals
Key
creative personnel, including the director, producer, writer and actors, often
negotiate fixed deferral payments of flat fees tied to a film's financial
returns. This is a major component of our business model.
2. Residual
Payments
The
principal collective bargaining organizations for personnel within the movie
industry are: the Directors Guild of America, or DGA; the Writer's Guild of
America, or WGA; the Screen Actors Guild, or SAG; the American Federation of
Musicians, or AFM; and the International Alliance of Theatrical Stage Employees,
or IATSE. When a movie producer involves members of these organizations in a
film, they are required to comply with certain residual payment obligations.
These obligations are set forth in agreements between these organizations and
the Alliance of Motion Picture and Television Producers (“AMPTP”) (which
represents the major studios) and provide that a percentage of a film's gross
revenues in certain markets must be paid to these organizations for the benefit
of their members. As an example, SAG currently requires payment of between 4.5%
and 5.4% of the gross revenue attributable to videocassette exploitation and
3.6% of television exploitation, with no residuals due for theatrical
exploitation. We may be required to accrue and pay standard residual payments
based on the collective bargaining agreements associated with one of our
creative teams. These residual payments are based upon gross revenues in certain
markets and may therefore, depending upon our distribution arrangements, reduce
our revenues in various markets and release windows.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Industry Compensation Arrangements -
continued
3.
Profit
Participations
The last
form of contingent compensation is a "profit participation", which
entitles the recipient to additional compensation based on the financial
performance of a particular motion picture. Granting profit participation to
certain key creative personnel is common for both larger studio films as well as
smaller independent films. For independent movies, this form of contingent
compensation is critical to attract quality creative personnel who work for less
upfront compensation than they otherwise might receive on a larger, more costly
movie. By paying this contingent compensation, producers are able to attract
these high quality creative personnel while simultaneously reducing the upfront
costs.
Profit
Participations Are Typically "Gross" or "Net"
Gross
profit participation, granted in extremely rare cases where the importance of
the actor or director is critical, is calculated based on gross revenues before
any costs (such as, distribution fees, financing costs and other corporate
costs) are deducted.
Net
profit participation is far more common, and is the arrangement we plan to use
in order to pay a portion of the contingent compensation. Net profit
participation is calculated based on net revenues after deducting certain costs
of a film, including distribution fees, financing costs and general corporate
expenses.
Thus,
gross profit participation receives a percentage of the first dollar received by
a film before any costs are deducted, while net profit participation receives a
percentage of revenue remaining after certain costs are deducted. It is the
industry standard that the producers retain any remaining percentages in the net
participation pool.
Our
planned contingent compensation arrangements require performance of duties under
applicable contracts and can be forfeited in the event of non-performance or
other circumstances. In the instance of forfeiture, this compensation could be
granted to other persons who make up the production or management
team.
Distribution
Methods of the Products or Services
Marketing
and Distribution
The key
components of motion picture distribution include licensing the film for
exploitation in the United States and internationally, marketing the film to and
working with exhibitors, promoting the film to and working with members of the
entertainment press and marketing the film to the general public. The
distribution process involves additional complexities and uncertainties beyond
those incurred in producing the motion picture, along with the related capital
requirements. As a result, most independent productions rely on agreements with
the distribution arms of major studios, sales agents engaged to market the film
to a distributor, independent distributors, or a similar partnership arrangement
that essentially engages the distribution expertise of a third party to get
their production to market.
One of
the major roles of a distributor, in addition to their relationships with
theatrical and non-theatrical outlets, is the ability of these parties to
measure the expected demand for a given motion picture. This is a critical
function, because ideally such assessment should help determine an effective
advertising and print budget for the project. A motion picture release print is
the media that in most cases is used by exhibitors and theaters to present the
motion picture to their patrons. The projected demand for a film project can
directly influence the number of prints made, which is important because each
print is rather costly. Similarly, the number and types of geographic locations,
or markets, the film could be released in normally influences the mix and cost
of advertising expenditures. Although the MPAA did not release costs for 2008,
according to the MPAA, the average print and advertising costs per release per
member totaled $35.9 million in 2007. Combining this total with the $70.8
million reported average 2007 MPAA member costs to produce film, or motion
picture negative, results in an average production and distribution cost of
$106.6 million. When one considers that the average box office revenue per
release for these members was only $32.7 million in 2006, and for all new
releases the average was $15.8 million, the financial risks of distributing and
producing a motion picture should become clearer. Very few independent
productions have direct access to such capital, making their reliance on
distributors and distribution partners essential.
In
general, an independent production attempts to enter into an agreement with a
sales agent, or distributor, by which the distributor plans to market the film
to outlets and consumers. The amount of the distributor’s fee, and therefore the
amount of remaining profits, if any, is largely dependent on the films
anticipated gross receipts, and how contract terms define the gross receipts. As
a result, such fees can vary greatly depending on the nature of the distribution
contract as well as the scale and timing of gross receipts. Under some
arrangements fees can be as low as 12.5%, in others 35%, or even
higher.
In most
cases, the distributor offers to pay for prints and advertising, sparing the
independent production these up front, fixed costs and the associated risk.
However, as the film generates gross receipts, the distributor has the ability
to offset the percentage of such receipts otherwise payable to the independent
production by the amount expended for prints and advertisements until the
distributor has recouped such amount. Such arrangements are sometimes referred
to as a net agreement, or net deal. In other cases, an independent production
may negotiate to receive its share of the proceeds as gross receipts
materialize. Under this type of arrangement, the distributor might still pay for
prints and advertising, but might take a higher share of the gross receipts than
otherwise payable under a net agreement.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Foreign
Distribution
Foreign
distribution is generally taken care of by a distributor which coordinates
worldwide sales in all territories and media. Overseas film sales companies rely
on local subdistributors to physically deliver the motion picture and related
marketing materials and to collect revenues from local exhibitors and other
local distributors of the film. Typically, the territorial rights for a specific
medium such as television exhibition are sold for a "cycle" of approximately
seven years to fifteen years, and in some cases even longer, after which the
rights become available for additional cycles.
Foreign
distribution is normally handled in one of the following ways:
1. Sales
Agency Representation. A Sales Agent undertakes to represent and license a
motion picture in all markets and media on a best-efforts basis, with no
guarantees or advances, for a fee ranging from 12.5% to 25%, and typically for a
term ranging from seven to fifteen years.
2.
Distribution. A distributor may provide the producer of the film a guarantee of
a portion of the budget of the project. This guarantee may be in the form of a
bank commitment to the producer, secured by license agreements with foreign
licensees, which is used by the producer to finance the production.
Typically,
a distributor would receive a distribution fee ranging from 12.5% to 35% over a
term ranging from 15 years to perpetuity. In addition, the distributor may
negotiate, or otherwise acquire, a profit participation in the film
project.
Once the
rights to a picture are obtained (either as sales agent or distributor with
minimum guarantee), the distributor then seeks to license its rights to
subdistributors in the territories for which it has acquired distribution
rights.
In
general, the grant of rights to the subdistributors includes all media in their
respective territories other than satellite, although satellite is included in
some subdistributors' territories.
The
subdistributor in each territory generally pays for its distribution rights with
a down payment at the time the contract is executed with the balance due upon
delivery of the picture to the subdistributor. In some cases, payments may be
extended over a longer period of time, especially when the production does not
live up to the expectations of the subdistributor. Delivery normally occurs upon
the distributor’s acceptance of the master negative and its obtaining access to
certain items necessary for the distribution of the film. In some instances, the
subdistributors' obligations for the payment due on delivery can be secured by a
letter of credit.
Most
films are sold either directly to a buyer that has a pre-existing relationship
with the distributor, or at one of the several film markets that take place
throughout the world. Although there are a number of film markets each quarter,
historically, major sales take place primarily at the MIF in Cannes, France each
May and at the American Film Market in Los Angeles, each November.
In
general, after cash advances to a subdistributor, if any, are recouped, the
distributor applies the distribution receipts from its subdistributors first to
the payment of commissions due to the distributor, then second to the recovery
of certain distribution expenses, then to the reimbursement of the distributor
for its minimum guarantee or advance, if any, and then finally any remaining
distribution receipts are shared by the distributor and the producer according
to the percentages negotiated in the agreement between the distributor and the
producer.
Status
of any Publicly Announced New Product or Service
We did not announce any new product or
service during 2008.
Competitive
Business Conditions and the Small Business Issuer’s Competitive Position in the
Industry and Methods of Competition
Competitive
Strengths
To achieve our goals of becoming a leading independent producer and
distributor of feature films, television and digital media, we plan to exploit
our competitive advantages, which we believe includes our experience in
developing, preparing, producing, finishing, marketing and distributing films
with a economically feasible budget, independent films utilizing a unique an
efficient business model that attempts to minimize costs while maximizing
quality and ultimately attracting the broadest possible consumer base for our
productions. We believe that once our initial slate of pictures begins to reach
market, our reputation and ability to produce and distribute quality films at
the lowest possible price while at the same time maximizing economic potential
for all those working with us should make us an attractive place for independent
filmmakers, whether new or experienced, whether young or old.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Competitive
Strengths - continued
Our
disciplined approach to the development, preparation, production,
post-production, marketing and distribution of feature film content should
hopefully enable us to establish and maintain a distinct competitive advantage.
By seeking to minimize the financial risks often associated with film
production, by incorporating “financial transparency”, marketing and
distribution by negotiating co-production agreements, pre-selling international
distribution rights, capitalizing on government subsidies and tax credits,
structuring efficient production schedules and crafting agreements with key
talent attracted to the films we develop and produce, we plan to provide a
unique environment where independent film can flourish, albeit in a fiscally
responsible manner. In each production, we plan to attempt to minimize our
financial exposure by structuring deals with talent that provide for their
participation in the financial success of the motion picture in exchange for
reduced up-front payments. Although the steps that we take to manage these risks
may, in some cases, limit the potential revenues of a particular project, we
believe that our approach to the motion picture business creates operating and
financial stability for us.
Competition
We face
competition from companies within the entertainment business and from
alternative forms of leisure entertainment, such as travel, sporting events,
outdoor recreation and other cultural activities. We compete with the major
studios, numerous independent motion picture and television production
companies, television networks and pay television systems for the acquisition of
literary and film properties, the services of performing artists, directors,
producers and other creative and technical personnel and production financing.
In addition, our motion pictures compete for audience acceptance and exhibition
outlets with motion pictures produced and distributed by other companies. As
mentioned above, we compete with major domestic film studios which are
conglomerate corporations with assets and resources substantially greater than
ours, including several specialty or classic divisions.
Those
companies we compete with include, at the major studio level, Universal and its
subsidiaries, Focus, USA Films, Rogue and NBC; Sony, and its divisions Columbia,
MGM, UA, Sony Classics, Screen Gems, TriStar and Destination; Paramount and its
subsidiaries DreamWorks, Vantage, Paramount Classics and Go Fish; Warner and its
divisions New Line, HBO, Castle Rock, Warner Independent and Picturehouse;
Disney and its subsidiaries Buena Vista, Touchstone, Miramax, Hollywood
Pictures, Pixar and ABC; and Fox and its divisions Fox Searchlight, Faith,
Atomic and Fox TV.
At the
independent level, in addition to some of the divisions and subsidiaries of the
majors, we compete with companies such as The Weinstein Company and its
Dimension label, Jerry Bruckheimer Films, Nu Image and its subsidiaries
Millennium Films and First Look Studio, Yari Film Group, Lionsgate, Newmarket,
RKO Radio Pictures, IFC, Samuel Goldwyn, 2929 Entertainment and its Magnolia
label, ThinkFilm, Troma Entertainment and others. In addition, we compete with
CBS, Cable and Satellite companies and many smaller independent production
companies and distributors.
Predicting
the success of a motion picture is difficult and highly subjective, as it is not
possible to accurately predict audience acceptance of a particular motion
picture. Our strategy is to assemble a creative team, screenplay and cast that
we believe has the potential for commercial success. In order to evaluate our
potential to obtain distribution and appeal to an audience, we will attempt to
use the following criteria: an exceptional story, compelling character roles,
recognizable actors and actresses, an established and respected director,
experienced producer, and a relatively low production budget.
The
success of any of our motion pictures is dependent not only on the quality and
acceptance of a particular picture, but also on the quality and acceptance of
other competing motion pictures released into the marketplace at or near the
same time. The number of films released by our competitors, particularly the
other major film studios, in any given period may create an oversupply of
product in the market, thereby potentially reducing our share of gross box
office admissions and making it more difficult for our films to
succeed.
With
respect to our domestic theatrical releasing operations, a substantial majority
of the motion picture screens in the United States typically are committed at
any one time to films distributed nationally by the major film studios, which
generally buy large amounts of advertising on television and radio and in
newspapers and can command greater access to available screens. Although some
movie theaters specialize in the exhibition of independent, specialized motion
pictures and art-house films, there is intense competition for screen
availability for these films as well. Given the substantial number of motion
pictures released theatrically in the United States each year, competition for
exhibition outlets and audiences is intense.
Competition
is also intense in supplying motion pictures and other programming for the pay
television, syndicated television and home video markets. Numerous organizations
with which we expect to compete with also distribute to the pay television,
syndicated television and home video markets have significantly greater
financial and other resources than us.
In addition, there also have been rapid technological changes over the
past fifteen years. Although technological developments have resulted in the
creation of additional revenue sources from the licensing of rights with respect
to new media, these developments also have resulted in increased popularity and
availability of alternative and competing forms of leisure time entertainment
including pay/cable television programming and home entertainment equipment such
as DVD’s, videocassettes, interactive games and computer/internet
use.
The entertainment industry in general, and the motion picture industry in
particular, are continuing to undergo significant changes, primarily due to
these technological developments. For example, as motion pictures begin to be
distributed using emerging technologies such as digital delivery, the internet
and online services, the ability to protect intellectual property rights in
motion pictures could be threatened by advances in technology that enable
digital piracy. This is because digital formats currently do not contain
mechanisms for tracking the source or ownership of digital content. As a result,
users may be able to download and distribute unauthorized or “pirated” copies of
copyrighted motion pictures over the internet. In addition, there could be
increased proliferation of devices capable of making unauthorized copies of
motion pictures. As long as pirated content is available to download digitally,
many consumers may choose to digitally download such pirated motion pictures
rather than paying for legitimate motion pictures. Digital piracy of our films
may adversely impact the gross receipts received from the
exploitation of such films. Due to this rapid growth of technology and with it,
piracy, as well as shifting consumer tastes and the popularity and availability
of other forms of entertainment, it is impossible to predict the overall effect
these factors could have on the potential revenue and profitability of
feature-length motion pictures.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
The
Major Studios and the Independents
The major studios, which historically have produced and distributed the vast
majority of high-grossing theatrical motion pictures released annually in the
United States, are typically large, diversified corporations that have strong
relationships with creative talent, television broadcasters and channels,
internet service providers, movie theater owners and others involved in the
entertainment industry. The major studios also typically have extensive national
or worldwide distribution organizations and own extensive motion picture
libraries. Motion picture libraries, consisting of motion picture copyrights and
distribution rights owned or controlled by a film company, can be valuable
assets capable of generating revenues from worldwide commercial exploitation in
existing media and markets, and potentially in future media and markets
resulting from new technologies and applications.
The major
studios also may own or be affiliated with companies that own other
entertainment related assets such as music and merchandising operations and
theme parks. The major studios' motion picture libraries and other entertainment
assets may provide a stable source of earnings which can offset the variations
in the financial performance of their new motion picture releases and other
aspects of their motion picture operations.
During
the past 15 years, independent production and distribution companies, many with
financial and other ties to the major studios, have played an important role in
the production and distribution of motion pictures for the worldwide feature
film market.
These
companies include:
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Miramax
Films Corporation, now owned by The Walt Disney Company, which produced
Chicago , The Hours, Gangs of New York,
Scary Movie , the Scream film series,
Shakespeare in Love
and Chocolat
;
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New
Line Cinema Corporation/Fine Line Features, now owned by AOL/Time Warner,
which produced the Lord
of the Rings series, the Austin Powers films,
The Mask, Teenage Mutant
Ninja Turtles and the Nightmare on Elm Street
series;
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U.S.A
Films (formerly October Films and now owned by Vivendi/Universal), which
produced Traffic,
Secrets & Lies and Breaking the Waves
together with Gramercy Pictures, which produced Dead Man Walking and
Fargo , is part
of U.S.A Films and U.S.A Network;
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As a
result of consolidation in the domestic motion picture industry, a number of
previously independent producers and distributors have been acquired or are
otherwise affiliated with major studios. However, there are also a large number
of other production and distribution companies that produce and distribute
motion pictures that have not been acquired or become affiliated with the major
studios.
These companies include:
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Lion's
Gate Films, which produced and distributed Narc, Frailty, Monster's Ball
and American
Psycho ; and its subsidiary, Artisan Entertainment Inc., which
distributed Boat Trip,
National Lampoon's Van Wilder and The Blair Witch Project
.
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The
Weinstein Company, founded by the Weinstein brothers, who formerly
controlled and founded Miramax.
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In contrast to the major studios, independent production and distribution
companies generally produce and distribute fewer motion pictures and do not own
production studios, national or worldwide distribution organizations, associated
businesses or extensive film libraries which can generate gross revenues
sufficient to offset overhead, service debt or generate significant cash
flow.
The motion picture industry is a world-wide industry. In addition to the
production and distribution of motion pictures in the United States, motion
picture distributors generate substantial revenues from the exploitation of
motion pictures internationally. In recent years, there has been a substantial
increase in the amount of filmed entertainment revenue generated by U.S. motion
picture distributors from foreign sources.
International revenues of motion picture distributors from filmed
entertainment grew from approximately $1.1 billion in 1990 to approximately
$17.1 billion in 2007. This growth has been due to a number of factors,
including the general worldwide acceptance of, and demand for, motion pictures
produced in the United States, the privatization of many foreign television
industries, the emergence of VOD, growth in the number of foreign households
with videocassette and DVD players and growth in the number of foreign theater
screens.
Many countries and territories, such as Australia, Canada, China, France,
Germany, Hong Kong, India, Italy, Japan, Russia, Spain and the United Kingdom
have substantial indigenous film industries. As in the United States, in a
number of these countries the film industry, and in some cases, the
entertainment industry, in general, is dominated by a small number of companies
that maintain large and diversified production and distribution
operations.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
The
Major Studios and the Independents - continued
However,
like in the United States, in most of these countries, there are also smaller,
independent, motion picture production and distribution companies. Foreign
distribution companies not only distribute motion pictures produced in their
countries or regions but also films licensed or sub-licensed from United States
production companies and distributors.
In addition, film companies in many foreign countries produce films not
only for local distribution, but also for export to other countries, including
the United States. While some foreign language films and foreign
English-language films appeal to a wide U.S. audience, most foreign language
films distributed in the United States are released on a limited basis because
they draw a specialized audience.
The
Smaller Independents
Independent production companies generally avoid incurring overhead costs
as substantial as those incurred by the major studios by hiring creative and
other production personnel and retaining the other elements required for
pre-production, principal photography and post-production activities on a
picture-by-picture basis.
As a result, these companies do not own sound stages and related
production facilities, and, accordingly, do not have the fixed payroll, general
administrative and other expenses resulting from ownership and operation of a
studio.
Independent production companies also may finance their production
activities on a picture-by-picture basis. Sources of funds for independent
production companies include bank loans, pre-licensing of distribution rights,
foreign government subsidies, equity offerings and joint ventures. Independent
production companies generally attempt to obtain all or a substantial portion of
their financing of a motion picture prior to commencement of principal
photography, at which point substantial production costs begin to be incurred
and require payment.
As part of obtaining financing for its films, an independent production
company often is required by its lenders and distributors who advance production
funds to obtain a completion bond or production completion insurance from an
acceptable completion guarantor which names the lenders and applicable
distributors as beneficiaries. The guarantor assures the completion of the
particular motion picture on a certain date.
If the motion picture cannot be completed for the agreed upon budgeted
cost, the completion guarantor is obligated to pay the additional costs
necessary to complete the picture by the agreed upon delivery date. If the
completion guarantor fails to timely complete and deliver the motion picture on
or before the agreed upon delivery date, the completion guarantor is required to
pay the lenders and distributor, if applicable, an amount equal to the aggregate
amount the lenders and distributor have loaned or advanced to the independent
producer.
In connection with the production and distribution of a motion picture,
major studios and independent production companies generally grant contractual
rights to actors, directors, screenwriters, owners of rights and other creative
and financial contributors to share in net revenues from a particular motion
picture. Except for the most sought-after talent, these third-party
participations are generally payable after all distribution fees, marketing
expenses, direct production costs and financing costs are recovered in
full.
The
Guilds
Major studios and independent film companies in the United States
typically incur obligations to pay residuals to various guilds and unions
including the Screen Actors Guild, the Directors Guild of America and the
Writers Guild of America. Residuals are payments required to be made on a
picture-by-picture basis by the motion picture producer to the various guilds
and unions arising from the exploitation of a motion picture in markets other
than the primary intended market. Residuals are calculated as a percentage of
the gross revenues derived from the exploitation of the picture in these
ancillary markets.
The guilds and unions typically obtain a security interest in all of the
producer's rights in the motion picture being exploited to ensure satisfaction
of the residuals obligation. This security interest usually is subordinate to
the security interest of the lenders financing the production cost of the motion
picture, and the completion bond company guaranteeing completion of the motion
picture.
Under a producer's agreement with the guilds and unions, the producer may
transfer the obligation to pay the residuals to a distributor if the distributor
assumes the obligation to make the residual payment. If the distributor does not
assume those obligations, the producer is obligated to pay those
residuals.
Intellectual
Property
We regard
patents and trademarks as valuable assets and believe that trademarks are an
important factor in marketing our products. Camelot Films®, our feature film
production division, is a registered trademarked brand. We are in the process of
patenting our unique business model.
Copyright
protection is a serious problem in the videocassette and DVD distribution
industry because of the ease with which cassettes and DVDs may be duplicated. In
the past, certain countries permitted video pirating to such an extent that many
companies did not consider these markets viable for distribution. Our management
believes that with new technology, including anti-piracy technology we expect to
license in the near future, the problem should be less critical in the future.
In the event it is necessary, we could initiate legal action to enforce
copyright protection.
ITEM 1. DESCRIPTION OF BUSINESS -
continued
The
Completion Bond
In order
to minimize the risk of budget overruns and to add an additional level of
protection for us, a completion bond, also known as a completion guaranty, is
expected to be required for each production. A completion bond is a form of
insurance which provides that, should the producers of a film run into
significant problems completing the film, the bond company would:
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advance
any sums in excess of the budget required to complete and deliver the
film;
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complete
and deliver the film itself; or
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shut-down
the production and repay the financier all monies spent thus far to
produce the film.
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In
addition to ensuring that the film is completed within budget, the bond company
should also be responsible for ensuring that the film is delivered within a
pre-determined schedule, follows the script and is technically suitable for
exhibition in theaters. The bond company usually places certain restrictions and
limitations on us to ensure that the production is following a pre-determined
schedule. For example, the completion bond agreement normally contains a cash
flow schedule that sets forth the timing and amounts of cash advances required
to finance production of the film. We expect to be required to deposit funds in
a specific production account in accordance with this cash flow
schedule.
Fees for
the completion bond are normally paid out of a particular’s film budget. These
fees, or premiums, can range anywhere from 2.5% to 6% of a specific budget. When
higher rates are charged, it usually reflects the level of risk involved with a
film as determined by the bond company. In most cases, if a high fee is charged
initially, the agreement with the bond company will normally contain a rebate
provision that kicks in if the bond is not called. We plan to negotiate with a
completion bond company to insure our entire slate of films, which will
hopefully minimize the costs while standardizing the production requirements as
deemed applicable by the bond company.
The
completion bond company could have the right to take over a production if they
determine that the film is significantly behind schedule or over budget, or that
the production is otherwise not proceeding in a satisfactory manner. This could
include the right to replace any member of the production team. The involvement
of the completion bond company comes to an end when the film is delivered, or
production monies are refunded, in accordance with the terms and conditions of
the specific completion bond.
In order
to receive a completion bond from a reputable company, we normally have to
submit a budget, script, shooting schedule and other production elements for
their analysis and approval. Typically, a completion bond cannot be issued until
all material aspects of the production have been determined, such as final
locations, cast and crew. These aspects are normally determined throughout the
pre-production phase.
A
completion bond is usually subject to a number of important limitations and
normally does not reimburse us for losses that result from certain occurrences,
including, but not limited to, distribution expenses; residual payments due to
creative guilds, such as the Screen Actors Guild; gross or net profit
participations granted as contingent compensation to actors or production
personnel; elements of the film that are not included in the approved
screenplay, budget or production schedule; insolvency; illegal or fraudulent
acts; violation of any collective bargaining agreements; failure to obtain any
necessary rights to use copyrighted works, such as music; failure to obtain
required insurance coverage; failure to fulfill any conditions required by cast
members that causes them to abandon their commitment to the film; currency
fluctuations in the event the film is produced in another country, such as
Canada; natural disasters; acts of war; or other force majeure
events.
Sources
and Availability of Raw Materials and the Names of Principal
Suppliers
During the
production process, we utilize a number of raw materials contained in such items
such as props, make-up, wardrobe, electrical supplies and equipment,
construction supplies and equipment, as well as materials from almost every
industry. These raw materials are readily available from a wide range of sources
and suppliers throughout the world. We plan to identify principal suppliers once
we begin the production process.
Dependence
on One or a Few Major Customers
We do not plan to
depend on any one customer. As we expect to market and distribute our planned
films directly to the public, we should not be dependent on one or a few major
customers, rather we should be entirely dependent on the willingness of the
public to purchase our entertainment product.
Patents,
Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor
Contracts
Camelot
Films®, our feature film production division, is a registered trademarked brand
and is registered with the United States Patent and Trademark Office. The
trademarks “Camelot Entertainment Group” “Camelot Film Group” “Camelot Film and
Media Group,” “Camelot Features”, “Camelot Television Group”, “Ferris Wheel
Films”, “Camelot Gaming”, “Camelot Digital Media”, “Camelot Distribution Group”,
“Camelot Studio Group”, “Camelot Production Services Group”, “Camelot Studio
Model”, “Camelot Production Model”, “Camelot Urban Entertainment”, “Camelot
Latin Entertainment”, “Camelot University”, “Camelot College of the Arts”,
“Camelot Technology” and “Camelot Merchandising” are expected to be
filed and/or are in the process of being field with the United States Patent and
Trademark Office. We are also in the process of patenting our unique business
model.
The Company plans to copyright and own all motion pictures that it
makes. This should result in the Company building a library of its own product
over time.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Need
for any Government Approval of Principal Products or Services
Distribution
rights to motion pictures are granted legal protection under the copyright laws
of the United States and most foreign countries. These laws provide substantial
civil and criminal sanctions for unauthorized duplication and exhibition of
motion pictures. Motion pictures, musical works, sound recordings, art work,
still photography and motion picture properties are separate works subject to
copyright under most copyright laws, including the United States Copyright Act
of 1976, as amended. We are aware of reports of extensive unauthorized
misappropriation of videocassette rights to motion pictures which may include
motion pictures distributed by us. Motion picture piracy is an industry-wide
problem. The Motion Picture Association of America, an industry trade
association, operates a piracy hotline and investigates all reports of such
piracy. Depending upon the results of investigations, appropriate legal action
may be brought by the owner of the rights. Depending upon the extent of the
piracy, the Federal Bureau of Investigation may assist in these investigations
and related criminal prosecutions.
Motion
picture piracy is also an international problem. Motion picture piracy is
extensive in many parts of the world, including South America, Asia including
Korea, China and Taiwan, the countries of the former Soviet Union and other
former Eastern bloc countries. In addition to the Motion Picture Association,
the Motion Picture Export Association, the American Film Marketing Association
and the American Film Export Association monitor the progress and efforts made
by various countries to limit or prevent piracy. In the past, these various
trade associations have enacted voluntary embargoes of motion picture exports to
certain countries in order to pressure the governments of those countries to
become more aggressive in preventing motion picture piracy. In addition, the
United States government has publicly considered trade sanctions against
specific countries that do not prevent copyright infringement of United States
produced motion pictures. We cannot assure you that voluntary industry embargoes
or United States government trade sanctions will be enacted. If enacted, these
actions could impact the amount of revenue that we realize from the
international exploitation of motion pictures depending upon the countries
subject to and the duration of such action. If not enacted or if other measures
are not taken, the motion picture industry as a whole, and our business in
particular, may continue to lose an indeterminate amount of revenues as a result
of motion picture piracy.
The Code
and Ratings Administration of the Motion Picture Association assigns ratings
indicating age-group suitability for theatrical distribution of motion pictures.
We plan to submit our motion pictures for these ratings. In certain
circumstances, motion pictures that we plan to submit for rating might receive
restrictive ratings, including, in some circumstances, the most restrictive
rating which prohibits theatrical attendance by persons below the age of
seventeen. Unrated motion pictures, or motion pictures receiving the most
restrictive rating, may not be exhibited in certain movie theaters or in certain
locales, thereby potentially reducing the total revenues generated by these
films. United States television stations and networks, as well as foreign
governments, impose additional restrictions on the content of motion pictures
which may restrict in whole or in part theatrical or television exhibition in
particular territories. In 1997, the major broadcast networks and the major
television production companies implemented a system to rate television
programs. This television rating system has not had a material adverse effect on
the motion pictures distributed by us. However, the possibility exists that the
sale of theatrical motion pictures for broadcast on domestic free television may
become more difficult because of potential advertiser unwillingness to purchase
advertising time on television programs that are rated for limited audiences. We
cannot assure you that current and future restrictions on the content of motion
pictures may not limit or adversely affect our ability to exploit certain motion
pictures in particular territories and media.
United
States television stations and networks as well as foreign governments impose
content restrictions on motion pictures that may restrict in whole or in part
exhibition on television or theaters in a particular territory. There can be no
assurance that such restrictions will not limit or alter our ability to exhibit
certain motion pictures in such media or markets or that the cost to edit a
particular motion picture would be prohibitive, thereby eliminating a possible
revenue source for the motion picture.
Effect
of Existing or Probable Governmental Regulations on the Business
We expect
to be subject to various federal, state and local laws, rules and regulations
affecting our affiliates and operations. We and each of our potential partners
may be subject to various licensing regulation and reporting requirements by
numerous governmental authorities which may include internet (domestic and
worldwide) oversight regulations, production, manufacturing, OSHA, securities,
banking, insurance, building, land use, industrial, environmental protection,
health and safety and fire agencies in the state or municipality in which each
business is located. Difficulties in obtaining or failures to obtain the
necessary approvals, licenses or registrations, and unforeseen changes in
government regulations directly affecting the internet could delay or prevent
the development or operation of a given business.
In 1994,
the U.S. was unable to reach agreement with its major international trading
partners to include audiovisual works, such as television programs and motion
pictures, under the terms of the World Trade Organization. The failure to
include audiovisual works under GATT allows many countries (including members of
the European Union, which currently consists of Austria, Belgium, Denmark,
Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, The Netherlands,
Portugal, Spain, Sweden and the United Kingdom) to continue enforcing quotas
that restrict the amount of U.S. produced product which may be aired on
television in such countries. The European Union Council of Ministers has
adopted a directive requiring all member states of the European Union to enact
laws specifying that broadcasters must reserve, where practicable, a majority of
their transmission time (exclusive of news, sports, game shows and advertising)
for European works. The directive must be implemented by appropriate legislation
in each member country. Under the directive, member states remain free to
require broadcasters under their jurisdiction to comply with stricter rules.
Several countries (including France, Italy and Korea) also have quotas on the
theatrical exhibition of motion pictures.
ITEM
1. DESCRIPTION OF BUSINESS
- continued
Effect
of Existing or Probable Governmental Regulations on the Business - continued
In
addition, France requires that original French programming constitute a required
portion of all programming aired on French television. These quotas generally
apply only to television programming and not to theatrical exhibition of motion
pictures, but quotas on the theatrical exhibition of motion pictures could also
be enacted in the future. We cannot assure you that additional or more
restrictive theatrical or television quotas will not be enacted or that
countries with existing quotas will not more strictly enforce such quotas.
Additional or more restrictive quotas or more stringent enforcement of existing
quotas could materially and adversely affect our business by limiting our
ability to fully exploit our rights in motion pictures internationally and,
consequently, to assist or participate in the financing of these motion
pictures.
Privacy
Issues
Both
Congress and the Federal Trade Commission are considering regulating the extent
to which companies should be able to use and disclose information they obtain
online from consumers. If any regulations are enacted, internet companies may
find some marketing activities restricted. Also, the European Union has directed
its member nations to enact much more stringent privacy protection laws than are
generally found in the United States and has threatened to prohibit the export
of some personal data to United States companies if similar measures are not
adopted. Such a prohibition could limit the growth of foreign markets for United
States internet companies. The Department of Commerce is negotiating with the
Federal Trade Commission to provide exemptions from the European Union
regulations, but the outcome of these negotiations is uncertain.
Effects
of Government Regulations on Business Government Regulation and Legal
Uncertainties
In the
United States and most countries in which we plan to conduct our major
operations, we are not currently subject to direct regulation other than
pursuant to laws applicable to businesses generally. Adverse changes in the
legal or regulatory environment relating to the interactive online services,
venture formation and internet industry in the United States, Europe, Japan or
elsewhere could have a material adverse effect on our business, financial
condition and operating results. A number of legislative and regulatory
proposals from various international bodies and foreign and domestic governments
in the areas of telecommunication regulation, access charges, encryption
standards, content regulation, consumer protection, intellectual property,
privacy, electronic commerce, and taxation, among others, are now under
consideration. We are unable at this time to predict which, if any, of such
proposals may be adopted and, if adopted, whether such proposals would have an
adverse effect on our business, financial condition and operating results. As
internet commerce continues to grow, the risk that federal, state or foreign
agencies could adopt regulations covering issues such as user privacy, pricing,
content and quality of products and services, increases. It is possible that
legislation could expose companies involved in electronic commerce to liability,
which could limit the growth of electronic commerce generally. Legislation could
dampen the growth in internet usage and decrease its acceptance as a
communications and commercial medium. If enacted, these laws, rules or
regulations could limit the market for our services.
Research
and Development Activities
Our
research and development activities include implementation of our business
model, acquisition of scripts, development of scripts, and all other aspects of
the development process relating to the development, pre-production, production,
post-production, marketing and distribution of feature films. We estimate that
approximately forty per cent of management’s time has been spent conducting
research and development activities during the past two years. In addition, we
have been expanding our research and development activities to include
preparations for our studio projects.
Costs
and Effects of Compliance with Environmental Laws
In
implementing our plans as a producer and distributor of feature films, it is
possible that during the physical production stage we may have to comply with
certain environmental laws, depending in part on where the productions are
filmed and what type of equipment, vehicles and props are utilized. The specific
costs associated to compliance with environmental laws are unknown at this time.
However, in the event we would be required to absorb additional costs on any
given film that was not anticipated, these costs could have a material adverse
effect on the budget of a film and the additional costs that might be incurred
in order to comply with environmental laws and regulations could force us to
alter or otherwise change the production schedule. This could cause a film to go
over budget, cause delays and disrupt the entire production process, resulting
in cost overruns that might be difficult to recoup once the film is
distributed.
Employees
As of
December 31, 2008, we have three full and part time employees. One of our staff
members, an officer of our company, spends 100% of his time on matters relating
to our company. The other staff members spend anywhere from 10% to 50% of their
time on matters relating to our business. We also retain consultants and
independent contractors on a “as need” basis.
Risk
Factors
Ability
to Achieve Profitable Operations
Our
operations to date have been limited. Our focus had been on our Camelot Studio
Group division, which has limited our ability to fully implement our other major
divisions. The development and implementation of our business model is a long
term process. The normal fiscal cycle of a feature film does not typically
generate revenues for 18 to 24 months. Subsequent to that, the fiscal life cycle
of a feature film is close to 7 years initially, with affiliate, residual and
syndication revenues continuing for years. As of December 31, 2008, we do not
have any projects in production. Our first studio facility, Camelot Studios at
ATEP, the project was terminated in September 2008. As a result of our long
sales cycles, it is difficult to determine with any certainty how our short term
financial picture will evolve. In the near term, we expect operating costs to
continue to exceed funds generated from operations. As a result, we expect to
continue to incur operating losses and while we have resources available to grow
our business in 2009, we may not have sufficient funds to grow our business in
the future. We can give no assurance that we will achieve profitability or be
capable of sustaining profitable operations. As a result, operations in the
future could require a significant increase in the use of working
capital.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risk
Factors - continued
Ability
to Achieve Profitable Operations -
continued
To
successfully grow the individual divisions of the business, we must begin to
devote the time necessary to fully implement their respective business models,
decrease our cash burn rate over time, begin to generate revenues in order to
improve our cash position and establish ongoing revenues in each division, and
succeed in our ability to raise additional capital through a combination of
primarily public or private equity offering or strategic alliances. We also
depend on certain consultants and our executives, and the loss of any of those
consultants or executives, may harm our business.
We
have a limited operating history as a motion picture, television and digital
media company in which to evaluate our business
As
Camelot Entertainment Group, we have a limited operating history as a motion
picture, television and digital media company. To date, we have generated no
revenues and a limited operating history as a motion picture company upon which
an evaluation of our future success or failure can be made. Our primary focus
had been the development of Camelot Studios at ATEP and to a lesser scale
project development within Camelot Film and Media Group. As a result, many of
our planned divisions are not operational or have very limited operations as of
December 31, 2008. While current company assets and financial commitments are
suitable for the projected financial needs forecast during 2009, we do not know
at this time the outlook for 2010 and beyond. No assurances of any nature can be
made to investors that the company will be profitable. There can be no
assurances that our management will be successful in managing the Company as a
motion picture, television and digital media company.
We
have incurred significant and continuing losses and may not be able to generate
revenues to sustain our operations
We have
incurred net losses of approximately $428,575 and $2,103,235 respectively in
2008 and 2007, and have an accumulated deficit of $16,705,021 at December 31,
2008, with losses during the past two years primarily the result of our
financial commitment to the development of Camelot Studios at ATEP and the
development of projects for Camelot Film and Media Group.
We will
continue to have a high level of operating expenses and will be required to make
significant up-front expenditures in connection with the commencement of
income-generating activities (including, but not limited to, salaries of
executive, marketing and other personnel). We expect to incur additional losses
until such time as we are able to fully implement our new business model and
generate sufficient revenues to finance our operations and the costs of
expansion. There can be no assurance that the Company will be able to generate
such revenues and operate profitably.
We
will require additional funds to achieve our current business strategy and our
inability to obtain additional financing could cause us to cease our business
operations in the future if suitable funding is not secured
Even with
the proceeds from offerings and other resources in 2008, we will need to raise
additional funds through public or private debt or sale of equity to fully
achieve our business strategy. Such financing may not be available when needed.
Even if such financing is available, it may be on terms that are materially
adverse to your interests with respect to dilution of book value, dividend
preferences, liquidation preferences, or other terms.
Our
ability to grow our company through acquisitions, business combinations and
joint ventures, to maintain and expand our development, production and
distribution of motion pictures, television programming and digital media and to
fund our operating expenses will depend upon our ability to obtain funds through
equity financing, debt financing (including credit facilities) or the sale or
syndication of some or all of our interests in certain projects or other assets.
Our business plan requires a substantial investment of capital. The production,
acquisition and distribution of motion pictures require a significant amount of
capital. A significant amount of time may elapse between our expenditure of
funds and the receipt of commercial revenues from our motion pictures, if any.
This time lapse requires us to fund a significant portion of our capital
requirements from private parties, institutions, and other sources. Although we
intend to reduce the risks of our production exposure through strict financial
guidelines and financial contributions from broadcasters, sub-distributors, tax
shelters, government and industry programs and studios, we cannot assure you
that we will be able to implement successfully these arrangements or that we
will not be subject to substantial financial risks relating to the production,
acquisition, completion and release of future motion pictures. If we increase
our production slate or our production budgets, we may be required to increase
overhead, make larger up-front payments to talent and consequently bear greater
financial risks. Any of the foregoing could have a material adverse effect on
our business, results of operations or financial condition.
If we are
unable to obtain financing in the future on reasonable terms, we could be forced
to delay, scale back or eliminate certain elements of our business model. In
addition, such inability to obtain financing in the future on reasonable terms
could have a material negative effect on our business, operating results, or
financial condition to such extent that could be forced to restructure, file for
bankruptcy, sell assets or cease operations, any of which could put our Company
and any investments into our Company at significant risk.
We
are subject to a working capital deficit, which means that our current assets at
December 31, 2008, were not sufficient to satisfy our current
liabilities
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risk
Factors - continued
Ability
to Achieve Profitable Operations -
continued
As of
December 31, 2008, we had a working capital deficit of $1,420,275, which means
that our current liabilities of $1,422,183 exceeded our current assets of $1,908
by that amount on December 31, 2008. Current assets are assets that are expected
to be converted to cash within one year and, therefore, may be used to pay
current liabilities as they become due. Our working capital deficit means that
our current assets on December 31, 2008, were not sufficient to satisfy all of
our current liabilities on that date. We will have to raise additional capital
or debt to fund the deficit.
If
we are unable to retain the services of our executive officers, Robert P. Atwell
and George Jackson, or if we are unable to successfully recruit qualified
managerial personnel and employees with experience in business and the motion
picture industry, we may not be able to continue our operations.
Our
success depends to a significant extent upon the continued service of our
executive officers, Robert P. Atwell, President and Chief Executive Officer, and
George Jackson, Secretary and Chief Financial Officer. Loss of the services of
any of our executive officers could have a material adverse effect on our
growth, revenues, and prospective business. We do maintain key-man insurance on
the lives of our executive officers.
In
addition, in order to successfully implement and manage our Camelot Film and
Media Group business plan, we will be dependent upon, among other things,
successfully recruiting highly skilled creative and production personnel,
including producers, executives, cinematographers, editors, costume designers,
set designers, sound technicians, lighting technicians, actors, sales and
marketing experts, and legal and accounting experts. With Camelot Studio Group,
we will need key executives, real estate, financial, studio operators, studio
staff and entitlement experts. For Camelot Production Services Group, we will
need experts in production, technology, post production, distribution,
accounting, legal, banking, event management, education, sales and marketing,
internet and merchandising. Although we expect to find qualified candidates to
fill these positions, competition is intense and they may be unwilling to work
for us under acceptable terms. This could delay production or reduce the quality
of our film projects, which would impair our ability to successfully implement
our business model.
Also,
many of these positions could require us to hire members of unions or guilds. As
a result, our ability to terminate unsatisfactory or non-performing workers
could be adversely affected by existing union or guild contracts and
regulations. This could cause delays in production of our film projects and
significantly increase costs.
There can
be no assurance that we will be able to find, attract and retain existing
employees or that we will be able to find, attract and retain qualified
personnel on acceptable terms.
Mr.
Atwell, our President, Chief Executive Officer and Chairman, owns a controlling
interest in our voting stock and as a result stockholders will have a limited
voice in our management
Mr.
Atwell, our President, Chief Executive Officer and Chairman, is the beneficial
owner of 34% of our issued and outstanding common shares and 83% of our Series A
Convertible Preferred Stock (“Series A”) and 84% of our Series B Convertible
Preferred Stock (“Series B”) and 84% of our Series C Convertible Preferred Stock
(“Series C”). Each share of Series A entitles the holder to 50 votes and each
share of Series B entitles the holder to 1,000 votes. In the aggregate, Mr.
Atwell is entitled to cast 6,904,855,819 votes or 76% of the votes in any vote
by our stockholders. Mr. Jackson, the Chief Financial Officer, corporate
secretary and director, is the beneficial owner of 4% of our issued and
outstanding common shares and 15% of each of our Series A Convertible Preferred
Stock and 15% of our Series B Convertible Preferred Stock and 15% of our Series
C Convertible Preferred Stock. In the aggregate, Mr. Jackson is entitled to cast
1,225,136,599 votes or 13% of the votes in any vote by our stockholders.
Together, they are entitled to cast 8,129,992,418 votes or 89% of the votes in
any vote by our stockholders. Thus, Mr. Atwell and Mr. Jackson will have the
ability to control substantially all matters submitted to our stockholders for
approval, including:
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election
of our board of directors;
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removal
of any of our directors;
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amendment
of our certificate of incorporation or bylaws; and
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adoption
of measures that could delay or prevent a change in control or impede a
merger, takeover or other business combination involving
us.
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As a
result of Atwell and Wilson’s ownership, and their respective positions as chief
executive officer and director, they are able to influence all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. In addition, sales of significant amounts of
shares held by our directors and executive officers, or the prospect of these
sales, could adversely affect the market price of our common stock. Management's
stock ownership may discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium over our stock
price.
It
is likely that additional shares of our stock will be issued in the normal
course of our business development, which will result in a dilutive effect on
our existing shareholders
We will
issue additional stock as required to raise additional working capital, meet
additional funding requirements, secure intellectual properties, undertake
company acquisitions, recruit and retain an effective management team,
compensate our officers and directors, engage industry consultants and for other
business development activities.
ITEM
1. DESCRIPTION OF BUSINESS -
continued
Risk
Factors - continued
Ability to Achieve Profitable
Operations - continued
If
we fail to adequately manage our growth, we may not be successful in growing our
business and becoming profitable
We expect
our business and number of employees to grow over the next year. We expect that
our growth will place significant stress on our operation, management, employee
base and ability to meet capital requirements sufficient to support our growth
over the next 12 months. Any failure to address the needs of our growing
business successfully could have a negative impact on our chance of
success.
If
we acquire or invest in other businesses, we will face certain risks inherent in
such transactions
We may
acquire, make investments in, or enter into strategic alliances or joint
ventures with, companies engaged in businesses that are similar or complementary
to ours. If we make such acquisitions or investments or enter into strategic
alliances, we will face certain risks inherent in such transactions. For
example, we could face difficulties in managing and integrating newly acquired
operations. Additionally, such transactions would divert management resources
and may result in the loss of artists or songwriters from our rosters. We cannot
assure you that if we make any future acquisitions, investments, strategic
alliances or joint ventures that they will be completed in a timely manner, that
they will be structured or financed in a way that will enhance our
creditworthiness or that they will meet our strategic objectives or otherwise be
successful. Failure to effectively manage any of these transactions could result
in material increases in costs or reductions in expected revenues, or
both.
“Penny
Stock” rules may make buying or selling our common stock difficult
Trading
in our securities is subject to the “penny stock” rules. The SEC has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
These rules require that any broker-dealer who recommends our securities to
persons other than prior customers and accredited investors, must, prior to the
sale, make a special written suitability determination for the purchaser and
receive the purchaser’s written agreement to execute the transaction. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated with trading in the penny stock
market. In addition, broker-dealers must disclose commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities they offer. The additional burdens imposed upon broker- dealers
by such requirements may discourage broker-dealers from effecting transactions
in our securities, which could severely limit the market price and liquidity of
our securities. Broker- dealers who sell penny stocks to certain types of
investors are required to comply with the Commission’s regulations concerning
the transfer of penny stocks. These regulations require broker-dealers
to:
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Make
a suitability determination prior to selling a penny stock to the
purchaser;
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Receive
the purchaser’s written consent to the transaction; and
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Provide
certain written disclosures to the
purchaser.
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Risks Associated with the
Motion Picture Production and Distribution Industry
Because
the movie industry is intensely competitive and we lack the name recognition and
resources of our competitors, we may never generate any revenues or become
profitable
The
motion picture industry is highly competitive. We believe that a motion
picture’s theatrical success is dependent upon general public acceptance,
marketing technology, advertising and the quality of the production. We intend
to produce motion picture productions that normally should compete with numerous
independent and foreign productions as well as productions produced and
distributed by a number of major domestic companies, many of which are units of
conglomerate corporations with assets and resources substantially greater than
ours. Some of the production and distribution companies that we will compete
with are The Weinstein Company, Jerry Bruckheimer Films, Miramax Films, Lions
Gate Entertainment Corp., Sony Pictures Entertainment, Inc., New Line Cinema, a
subsidiary of Time Warner, Universal Studios, 20th Century
Fox Film Corporation, a subsidiary of News Corp., Buena Vista Motion Pictures
Group, a collection of affiliated motion picture studios all subsidiaries of The
Walt Disney Company, Paramount Pictures Corporation, a subsidiary of Viacom, and
Troma Entertainment, Inc. Most of these competitors are significantly larger
than us, have a long-standing business.
Our
management believes that in recent years there has been an increase in
competition in virtually all facets of the motion picture industry. With
increased alternative distribution channels for many types of entertainment, the
motion picture business competes more intensely than previously with all other
types of entertainment activities as well as television. While increased use of
pay per view television, pay television channels, and home video products are
potentially beneficial, there is no guarantee that we will be able to
successfully penetrate these markets. Failure to penetrate these potential
distribution channels would have a material adverse impact on our results of
operations.
Since
our success depends on the commercial success of our motion pictures, which is
unpredictable and highly speculative, we may never generate any revenue or
become profitable
The
success of a single motion picture project is fraught with an unusually high
degree of uncertainty and risk. Similarly, the probability of successfully
completing a motion picture project is also laden with an unusually high degree
of uncertainty and risks. A studio or independent producer’s ability to finance
a project, execute a successful distribution strategy, obtain favorable press
and compete with an unknown quantity of competing releases are just some of the
factors that impact the commercial success or failure of a film project. Our
strategy involves producing a minimum of 12 motion pictures per year. While the
intent is to reduce production risk through this strategy, our plan has the
potential to compound risks germane to the industry.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risk
Factors -
continued
Ability
to Achieve Profitable Operations -
continued
Movie
producers are often involved in several projects at the same time and an active
film director is often presented with opportunities to direct many movies. In
addition, independent contractors needed to produce the film often have
commitments to more than one movie project. Because we may decide to replace key
members of our production team if they are unable to perform their duties within
our schedule, the marketing appeal of our film may be reduced.
If we do
not complete the film on schedule or within budget, our ability to generate
revenue may be diminished or delayed. Our success depends on our ability to
complete the film on schedule and within budget.
Each film we produce and distribute should appeal to a given segment of
society to achieve acceptance. Although our intent to target niche markets that
should require less than broad market acceptance to achieve commercial success,
there can be no assurance that this strategy will succeed.
Motion
picture production and distribution is highly speculative and inherently risky.
There can be no assurance of the economic success of any motion picture since
the revenues derived from the production and distribution of a motion picture
(which do not necessarily bear a direct correlation to the production or
distribution costs incurred) depend primarily upon its acceptance by the public,
which cannot be predicted. The commercial success of a motion picture also
depends upon the acceptance of competing films released into the marketplace at
or near the same time, the availability of alternative forms of entertainment
and leisure time activities, general economic conditions and other tangible and
intangible factors, all of which can change and cannot be predicted with
certainty. Further, the theatrical success of a motion picture is generally a
key factor in generating revenues from other distribution channels. There is a
substantial risk that some or all of our motion pictures will not be
commercially successful, resulting in costs not being recouped or anticipated
profits not being realized.
Theaters
are more likely to exhibit feature films with substantial studio marketing
budgets. Even if we are able to complete the films and obtain distribution, it
is unclear how much should be spent on marketing to promote each film by our
distributors.
All of
these factors cannot be predicted with certainty. In addition, motion picture
attendance is seasonal, with the greatest attendance typically occurring during
the summer and holidays. The release of a film during a period of relatively low
theater attendance is likely to affect the film’s box office receipts
adversely.
Relatively
few motion pictures return a profit to investors. There can be no assurance that
a motion picture will recoup its production costs. There is a very high degree
of risk that any motion picture we may produce will not return all or any
portion of our investment.
We intend to
distribute our films in foreign countries which may be unpredictable and may
have unstable and different governments and/or laws than the
U.S.
We plan
to license motion picture and television programming in foreign countries to
sub-distributors. If we are at all successful in this regard, a portion of our
revenues should be derived from foreign sources. Because of this, our business
is subject to certain risks inherent in international trade, many of which are
beyond our control. Such risks include, but are not limited to, changes in laws
and policies affecting trade, investment and taxes (including laws and policies
relating to the repatriation of funds and to withholding taxes), differing
degrees of protection for intellectual property, the instability of foreign
economies and governments and in some cases an adverse acceptance to a film may
occur, resulting in a demand to renegotiate the license agreement’s terms and
conditions. In addition, fluctuations in foreign exchange rates may affect our
results of operations.
Piracy
of the original motion pictures that we plan to produce may reduce our revenues
and potential earnings
According
to industry sources, piracy losses in the motion picture industry have increased
substantially, from an estimated $2.2 billion in 1997 to an estimated $6.1
billion in 2005. In certain regions such Asia, the former Soviet Union and South
America, motion picture piracy has been a major issue for some time. With the
proliferation of DVD format around the globe, along with other digital recording
and playback devices, losses from piracy have spread more rapidly in North
America and Europe. Piracy of original motion pictures we produce and distribute
may adversely impact the gross receipts received from the exploitation of these
films, which could have a material adverse effect on our business, results of
operations or financial condition.
Our
operating results will fluctuate
Like all
motion picture production companies, our revenues and results of operations
could be significantly dependent upon the timing of releases and the commercial
success of the motion pictures we distribute, none of which can be predicted
with certainty. Accordingly, our revenues and results of operations may
fluctuate significantly from period to period, and the results of any one period
may not be indicative of the results for any future periods.
In
accordance with generally accepted accounting principles and industry practice,
we intend to amortize film costs using the individual-film-forecast method under
which such costs are amortized for each film in the ratio that revenue earned in
the current period for such title bears to management's estimate of the total
revenues to be realized from all media and markets for such title. To comply
with this accounting principal, our management plans to regularly review, and
revise when necessary, our total revenue estimates on a title-by-title basis,
which may result in a change in the rate of amortization and/or a write-down of
the film asset to net realizable value. Results of operations in future years
should be dependent upon our amortization of film costs and may be significantly
affected by periodic adjustments in amortization rates. The likelihood of the
Company's reporting of losses is increased because the industry's accounting
method requires the immediate recognition of the entire loss in instances where
it is expected that a motion picture should not recover the Company's
investment.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risk
Factors - continued
Ability
to Achieve Profitable Operations -
continued
Similarly,
should any of our films be profitable in a given period, we should have to
recognize that profit over the entire revenue stream expected to be generated by
the individual film.
Our
film production budgets may increase and film production spending may exceed
such budgets
Our
future film budgets may increase due to factors including, but not limited to,
(1) escalation in compensation rates of people required to work on our projects,
(2) number of personnel required to work on our projects, (3) equipment needs,
(4) the enhancement of existing or the development of new proprietary technology
and (5) the addition of facilities to accommodate the growth of a studio. Due to
production exigencies, which are often difficult to predict, it is not uncommon
for film production spending to exceed film production budgets, and our projects
may not be completed within the budgeted amounts. In addition, when production
of each film is completed, we may incur significant carrying costs associated
with transitioning personnel on creative and development teams from one project
to another. These carrying costs increase overall production budgets and could
have a material adverse effect on our results of operations and financial
condition.
Our
anticipated successive releases of films could place a significant strain on our
limited resources
We
anticipate establishing parallel creative teams so that we can develop more than
one film at a time. These teams are expected to work on future projects, as we
move towards producing multiple films per year. Due to the anticipated strain on
our personnel from the effort required for the release of an upcoming film and
the time required for creative development of future films, it is possible that
we would be unable to release twelve new films in the first year and in
subsequent years. We may be required to expand our employee base, increase
capital expenditures and procure additional resources and facilities in order to
accomplish the scheduled releases of our films. This growth and expansion may
place a significant strain on our resources. We cannot provide any assurances
that any future film will be released as targeted or that this strain on
resources will not have a material adverse effect on our business, financial
condition or results of operations. As we move towards achieving multiple films
a year, there will likely be additional demands placed on the availability of
key people. A lack of availability of key people may adversely impact the
success and timing of our future films.
We may
implement a variety of new and upgraded operational and financial systems,
procedures and controls, including improvement and maintenance of our accounting
system, other internal management systems and backup systems. Our growth and
these diversification activities, along with the corresponding increase in the
number of our employees and our rapidly increasing costs, may result in
increased responsibility for our management team. We may need to improve our
operational, financial and management information systems, to hire, train,
motivate and manage our employees, and to provide adequate facilities and other
resources for them. We cannot provide any assurance we will be successful in
accomplishing all of these activities on a timely and cost-effective basis. Any
failure to accomplish one or more of these activities on a timely and
cost-effective basis would have a material adverse effect on our business,
financial condition and results of operations.
The
decisions regarding the timing of theatrical releases and related products, the
marketing and distribution strategy, and the extent of promotional support are
important factors in determining the success of our motion pictures and related
products. We may enter into agreements with third-parties to assist us in the
marketing and distribution of our films, and we may require the marketers and
distributors to consult with us with respect to all major marketing and
distribution decisions. Said agreements may or may not include: (1) the manner
in which distributors may distribute our films and related products; (2) the
number of theaters to which our films are distributed; (3) the specific timing
of release of our films and related products; or (4) the specific amount or
quality of marketing and promotional support of the films and related products
as well as the associated promotional and marketing budgets.
We
are smaller and less diversified than most of our competitors
Although
we are a small independent distributor and producer at this time, we expect to
constantly compete with major U.S. and international studios. Most of the major
U.S. studios are part of large diversified corporate groups with a variety of
other operations, including television networks and cable channels that can
provide both means of distributing their products and stable sources of earnings
that may allow them better to offset fluctuations in the financial performance
of their motion picture and television operations. In addition, the major
studios have more resources with which to compete for ideas, storylines and
scripts created by third parties as well as for actors, directors and other
personnel required for production. The resources of the major studios may also
give them an advantage in acquiring other businesses or assets, including film
libraries, that we might also be interested in acquiring. The foregoing could
have a material adverse effect on our business, results of operations and
financial condition.
The
motion picture industry is highly competitive and at times may create an
oversupply of motion pictures in the market
The
number of motion pictures released by our competitors, particularly the major
U.S. studios, may create an oversupply of product in the market, reduce our
share of box office receipts and make it more difficult for our films to succeed
commercially as we produce, market and distribute our films. Oversupply may
become most pronounced during peak release times, such as school holidays and
national holidays, when theater attendance is expected to be highest. For this
reason, and because of our more limited production and advertising budgets, we
plan to not release our films during peak release times, which may also reduce
our potential revenues for a particular release. Moreover, we cannot guarantee
that we can release all of our films when they are otherwise scheduled. In
addition to production or other delays that might cause us to alter our release
schedule, a change in the schedule of a major studio may force us to alter the
release date of a film because we cannot always compete with a major studio’s
larger promotion campaign. Any such change could adversely impact a film’s
financial performance. In addition, if we cannot change our schedule after such
a change by a major studio because we are too close to the release date, the
major studio’s release and its typically larger promotion budget may adversely
impact the financial performance of our film. The foregoing could have a
material adverse effect on our business, results of operations and financial
condition.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risk
Factors - continued
Ability
to Achieve Profitable Operations -
continued
The
limited supply of motion picture screens compounds this product oversupply
problem. Currently, a substantial majority of the motion picture screens in the
U.S. typically are committed at any one time to only ten to 15 films distributed
nationally by major studio distributors. In addition, as a result of changes in
the theatrical exhibition industry, including reorganizations and consolidations
and the fact that major studio releases occupy more screens, the number of
screens available to us when we want to release a picture may decrease. If the
number of motion picture screens decreases, box office receipts, and the
correlating future revenue streams, such as from home video and pay and free
television, of our motion pictures may also decrease, which could have a
material adverse effect on our business, results of operations or financial
condition.
If
we are alleged to have infringed on the intellectual property or other rights of
third parties it could subject us to significant liability for damages and
invalidation of our proprietary rights
Our
business is highly dependent upon intellectual property, a field that has
encountered increasing litigation in recent years. If third parties allege that
we have infringed on their intellectual property rights, privacy rights or
publicity rights or have defamed them, we could become a party to litigation.
These claims and any resulting lawsuits could subject us to significant
liability for damages and invalidation of our proprietary rights and/or restrict
our ability to publish and distribute the infringing or defaming content. There
can be no assurance that we would prevail in any such litigation. If we were to
lose a litigation relating to intellectual property, we could be forced to pay
monetary damages and to cease the sale of certain products or the use of certain
technology. Any of the foregoing may adversely affect our business.
Risks Related to Our Common
Stock and Its Market
If
the ownership of our common stock continues to be somewhat concentrated in
shares owned by our management, and mainly Mr. Atwell and Mr. Jackson, it may
prevent you and other stockholders from influencing significant corporate
decisions and may result in conflicts of interest that could cause our stock
price to decline
As of
December 31, 2008, Mr. Atwell, our President, Chief Executive Officer and
Chairman, and his affiliates, and Mr. Jackson, our Chief Financial Officer,
secretary and director, beneficially own or control approximately 89%
of the votes that may be cast in any stockholder vote. Accordingly, Mr. Atwell,
Mr. Jackson and their affiliates will have sole control over the outcome of
corporate actions requiring stockholder approval, including the election of
directors, any merger, consolidation or sale of all or substantially all of our
assets or any other significant corporate transactions. This stockholder control
may also delay or prevent a change of control of us, even if such a change of
control would benefit our other stockholders. The concentration of stock
ownership may adversely affect the trading price of our common stock due to
investors’ perception that conflicts of interest may exist or
arise.
We
have not, and currently do not anticipate, paying dividends on our common
stock
We have
never paid any dividend on our common stock and do not plan to pay dividends on
our common stock for the foreseeable future. We currently intend to retain
future earnings, if any, to finance operations, capital expenditures and to
expand our business.
There
is a limited market for our common stock which makes it difficult for investors
to engage in transactions in our securities
Our
common stock is quoted on the OTCBB under the symbol “CMLT”. If public trading
of our common stock does not increase, a liquid market will not develop for our
common stock. The potential effects of this include difficulties for the holders
of our common shares to sell our common stock at prices they find attractive. If
liquidity in the market for our common stock does not increase, investors in our
company may never realize a profit on their investment.
Our stock has been thinly traded,
which can lead to price volatility and difficulty liquidating any
investment in our
stock
The
trading volume of our stock has been low, which can cause the trading price of
our stock to change substantially in response to relatively small orders. In
addition, during the last two fiscal years and subsequent interim period, our
common stock has traded as low as $0.0001 and as high as $0.05. Both volume and
price could also be subject to wide fluctuations in response to various factors,
many of which are beyond our control, including actual or anticipated variations
in quarterly and annual operating results and general market perception. An
absence of an active trading market could adversely affect our shareholders’
ability to sell our common stock in short time periods, or possibly at all. In
addition, we believe that factors such as changes in the overall economy or the
condition of the financial markets could cause the price of our common stock to
fluctuate substantially. These fluctuations may also cause short sellers to
enter the market from time to time in the belief that we will have poor results
in the future. We cannot predict the actions of market participants and,
therefore, can offer no assurances that the market for our stock will be stable
or appreciate over time.
ITEM 1. DESCRIPTION OF
BUSINESS
- continued
Risks
Related to Our Common Stock and Its Market -
continued
A sale of a substantial number of
shares of our common stock may cause the price of our common stock to
decline
If our
shareholders sell substantial amounts of our common stock in the public market,
including shares issued upon the exercise of outstanding options or warrants,
the market price of our common stock could fall. These sales also may make it
more difficult for us to sell equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate.
Our
common stock is deemed to be “penny stock”, which may make it more difficult for
investors to sell their shares due to suitability requirements
Our
common stock is deemed to be “penny stock” as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). These requirements may reduce the potential market
for our common stock by reducing the number of potential investors. This may
make it more difficult for investors in our common stock to sell shares to third
parties or to otherwise dispose of them. This could cause our stock price to
decline. Penny stocks are stock:
|
§
|
With
a price of less than $5.00 per
share;
|
|
§
|
That
are not traded on a “recognized” national
exchange;
|
|
§
|
Whose
prices are not quoted on the NASDAQ automated quotation system (NASDAQ
listed stock must still have a price of not less than $5.00 per share);
or
|
|
§
|
In
issuers with net tangible assets less than $2.0 million (if the issuer has
been in continuous operation for at least three years) or $10.0
million (if in continuous operation for less than three years), or with
average revenues of less than $6.0 million for the last three
years.
|
Broker/dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks. Moreover, broker/dealers are
required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor. Many brokers have decided not to trade
“penny stocks” because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited. In the event that we remain subject to the “penny stock
rules” for any significant period, there may develop an adverse impact on the
market, if any, for our securities. Because our securities are subject to the
“penny stock rules,” investors will find it more difficult to dispose of our
securities.
The
conversion of the promissory notes based on our 2006/2007/2008 financing is
based on an average of our closing bid price of our intraday trading prices of
our common stock over a certain period of time prior to conversion and the
decrease of the intraday trading price will result in issuance of a significant
increase of shares resulting in dilution to our shareholders
The
conversion of the promissory notes in our 2006-2008 financing is based on the
applicable percentage of the average of the lowest three (3) trading prices for
the Common Stock during the twenty (20) trading day period prior to conversion.
The “Applicable Percentage” means 50%; provided, however, that the Applicable
Percentage shall be increased to (i) 55% in the event that a Registration
Statement is filed within thirty days of the closing and (ii) 60% in the event
that the Registration Statement becomes effective within one hundred and twenty
days. At present, the applicable percentage is 50%, as mutually agreed to
between the note holders and the company. The price of our common shares may
fluctuate and the lower intra-day trading price in the future, will result in a
conversion ratio resulting in issuance of a significant amount of our common
shares to the promissory note holders. This will result in our present
shareholders being diluted as the note holders convert.
Future
selling by stockholders may impact our stock value through the execution of
short sales which may decrease the value of our common stock
Short
sales are transactions in which a selling shareholder sells a security it does
not own. To complete the transaction, a selling shareholder must borrow the
security to make delivery to the buyer. The selling shareholder is then
obligated to replace the security borrowed by purchasing the security at the
market price at the time of replacement. The price at such time may be higher or
lower than the price at which the security was sold by the selling shareholder.
If the underlying security goes down in price between the time the selling
shareholder sells our security and buys it back, the selling shareholder will
realize a gain on the transaction. Conversely, if the underlying security goes
up in price during the period, the selling shareholder will realize a loss on
the transaction. The risk of such price increases is the principal risk of
engaging in short sales. The selling shareholders in this registration statement
could short the stock by borrowing and then selling our securities in the
market, and then converting the stock through either the Note or Warrants at a
discount to replace the security borrowed. Because the selling shareholders
control a large portion of our common stock, the selling shareholders could have
a large impact on the value of our stock if they were to engage in short selling
of our stock. Such short selling could impact the value of our stock in an
extreme and volatile manner to the detriment of other shareholders.
Shares eligible
for public sale in the future could decrease the price of our shares of common
stock and reduce our future ability to raise capital
Sales of
substantial amounts of shares of our common stock in the public market could
decrease the prevailing market price of our common stock. If this is the case,
investors in our shares of common stock may be forced to sell such shares at
prices below the price they paid for their shares, or in the case of the
Investors in the recent financing, prices below the price they converted their
notes and warrants into shares.
ITEM
1. DESCRIPTION OF BUSINESS
- continued
Risks
Related to Our Common Stock and Its Market -
continued
In
addition, a decreased market price may result in potential future investors
losing confidence in us and failing to provide needed funding. This will have a
negative effect on our ability to raise equity capital in the
future.
REPORTS
TO SECURITY HOLDERS
The
public may read and copy any materials filed with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. This information, once we
complete our filing, should be available at http://www.sec.gov. Links to such
information are expected to be available on our web site at
www.camelotfilms.com.
ITEM
2. DESCRIPTION OF PROPERTY
Our
corporate headquarters are located at 8001 Irvine Center Drive, Suite 400,
Irvine, CA 92618. The space is leased on an annual basis. The current lease
expires on December 31, 2009. We can be reached by calling (949) 754-3030,
faxing (949) 643-5504 or emailing [email protected].
We invite you to visit our website at www.camelotfilms.com
for information about our company, products and services.
ITEM
3. LEGAL PROCEEDINGS
As of the
date of this filing, we are involved in two legal proceedings. One matter
involves a settlement of office rents owed at our previous office location in
Aliso Viejo, California. We elected to move prior to the expiration of our
lease, and we are currently negotiating a settlement with them. The other matter
involves a dispute between us and Growthink, Inc., regarding the preparation and
delivery of a business plan. To date, we have paid Growthink approximately
$60,000 for development, preparation, completion and delivery of our master
business plan. They have requested additional payments be made totaling $10,000.
We have requested completion of certain delivery items prior to making any
further payment.
Management
is not aware of any other legal matters threatened or pending against the
Company that have not been previously disclosed in one or more of the Company’s
filings with the Securities and Exchange Commission.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August
19, 2008, the Board of Directors and the stockholders approved a 100-for-1
reverse stock split of all of our outstanding common and preferred stock. As a
result of the reverse stock split, effective August 29, 2008, the number of
outstanding common shares was reduced from 434,727,332 to 4,347,316, as of
August 29, 2008, and the number of our outstanding preferred stock was reduced
from 39,552,047 to 395,521.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Information
Our
Company's common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB)
under the symbol "CMLT" of the National Association of Securities Dealers, Inc.
(the "NASD”).
Any
market price for shares of common stock of the Company is likely to be very
volatile, and numerous factors beyond the control of the Company may have a
significant effect. In addition, the over-the-counter stock markets generally
have experienced, and continue to experience, extreme price and volume
fluctuations that have often been unrelated to the operating performance of
companies listed on such exchanges.
These
broad market fluctuations, as well as general economic and political conditions,
may adversely affect the market price of the Company's common stock in any
market that may develop.
Sales of
"restricted securities" under Rule 144 may also have an adverse effect on any
market that may develop. See the caption "Sales of Unregistered
Securities".
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Stock
Performance
Our
common stock is currently quoted on the OTCBB under the symbol “CMLT”. There is
a limited trading market for our common stock. The following table sets forth
the range of high and low bid quotations for each quarter within the last two
fiscal years. These quotations as reported by the OTCBB, Pink Sheets and
historical data as reported by the OTCBB reflect inter-dealer prices without
retail mark-up, mark-down, or commissions and may not necessarily represent
actual transactions.
|
Closing
Bid
|
YEAR
2008
|
High
Bid
|
Low
Bid
|
1st
Quarter Ended March 31
|
$0.01
|
$0.002
|
2nd
Quarter Ended June 30
|
$0.0016
|
$0.0006
|
3rd
Quarter Ended September 30
|
$0.05
|
$0.0003
|
4th
Quarter Ended December 31
|
$0.003
|
$0.0001
|
|
|
|
YEAR
2007
|
High
Bid
|
Low
Bid
|
1st
Quarter Ended March 31
|
$0.110
|
$0.051
|
2nd
Quarter Ended June 30
|
$0.100
|
$0.015
|
3rd
Quarter Ended September 30
|
$0.015
|
$0.002
|
4th
Quarter Ended December 31
|
$0.007
|
$0.003
|
|
|
|
As of
December 31, 2008 the bid share price of our Common Stock was $0.0001 on the
OTCBB. As of December 31, 2007 the bid share price of our Common Stock was $.004
on the OTCBB. OTCBB quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions and may not represent actual
transactions.
The
decline in the market price of our stock over the past two years is due in part
to several key factors that have occurred, including the following:
|
·
|
Management’s
decision to devote considerable time and financial resources to the
development of Camelot Studios at ATEP without being able to publicly
announce progress on that project due to contractual restraints;
and
|
|
·
|
The
conversion of notes held by the NIR note holders and the resulting
immediate sale of those shares into the marketplace, which resulted in
stock price declines; and
|
|
·
|
The
conversion of notes held by various note holders and the resulting sale of
those shares into the marketplace at extremely low market prices;
and
|
|
·
|
The
lack of any significant news on the Company or any sustained public
relations effort due in part to the inability to release news on the
studio project.
|
Holders
As of
December 31, 2008, there were 1,563,669,608 shares of Common Stock outstanding.
On December 31, 2008, there were 127 holders of record of our Common Stock.
However, we estimate there are approximately 1,027 total stockholders of our
Common Stock including those held in street name, known as “CEDE”. On December
31, 2007, there were 224,506,332 shares of Common stock outstanding and 112
holders of record of our Common Stock.
Dividends
We have
never declared or paid cash dividends on our Common Stock. We currently intend
to retain cash earnings, if any, to support expansion, and do not anticipate
paying any cash dividends for the foreseeable future. Should we ever produce
sufficient earnings as a result of gains in securities of Concept Affiliates we
develop, our Board of Directors, after taking into account our earnings, capital
requirements, financial condition and other factors, has the discretion to
distribute such securities to our shareholders as property
dividends.
Reverse
Stock Split
On August
19, 2008, the Board of Directors approved a 100-for-1 reverse stock split of all
of our outstanding common and preferred stock. As a result of the reverse stock
split, effective August 29, 2008, the number of outstanding common shares was
reduced from 434,727,332 to 4,347,316, as of August 29, 2008, and the number of
our outstanding preferred stock was reduced from 39,552,047 to 395,521. All
references to our common stock (other than issuances) in the balance of this
Report have been restated to reflect the reverse stock split.
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale of Unregistered
Securities
All
securities sold in the past three years have been reported in previous quarterly
filings on Form 10-Q and annual filings on Form 10-K. Here is a summary of all
shares issued during fiscal year 2008 effective dates:
Stockholder
|
Shares
Issued
|
Exemption
|
Consideration
|
Disposition/Price
|
|
|
|
|
|
Robert
P. Atwell
|
248,818,180
|
144
|
Loans;Services
|
Issued/Market
|
Hope
Capital, Inc.
|
207,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Watson
Investment Enterprises
|
200,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
The
Atwell Group
|
178,000,000
|
144
|
Loans;Services
|
Issued/Market
|
K&L
International Enterprises
|
153,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Camelot
Escrow
|
100,000,000
|
144
|
Escrow
|
Held
in Reserve
|
AJW
Offshore LLC
|
86,665,515
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Phillip
Parsons
|
83,272,727
|
S8
|
Services
|
Issued/Market
|
Tamara
Atwell
|
82,272,727
|
S8
|
Services
|
Issued/Market
|
George
Jackson
|
78,300,000
|
S8
|
Services
|
Issued/Market
|
The
Corporate Solution, Inc.
|
60,000,000
|
S8
|
Services
|
Issued/Market
|
Rodger
Spainhower
|
52,000,000
|
S8
|
Services
|
Issued/Market
|
Chris
Flannery
|
51,000,000
|
S8
|
Services
|
Issued/Market
|
Vince
Monaco
|
51,000,000
|
S8
|
Services
|
Issued/Market
|
Douglas
Warner
|
22,000,000
|
S8
|
Services
|
Issued/Market
|
Phil
Scott
|
20,000,000
|
S8
|
Services
|
Issued/Market
|
AJW
Qualified LLC
|
17,952,480
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
AJW
Partners LLC
|
10,101,849
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Scorpion
Bay LLC
|
9,221,000
|
144
|
Services
|
Issued/Market
|
AlphaTrade.com
|
8,750,000
|
144
|
Debt
Retirement
|
Issued/Market
|
La
Jolla Investment Partners
|
7,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Tania
Babeshoff
|
7,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
ATG,
Inc.
|
7,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Ongkaruck
Sripetch
|
7,000,000
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Patrick
Winn
|
6,022,727
|
S8
|
Services
|
Issued/Market
|
Susan
Sanchez
|
2,272,727
|
S8
|
Services
|
Issued/Market
|
Bastien
Living Trust
|
2,000,000
|
S8
|
Services
|
Issued/Market
|
Lewis
Consulting Group
|
2,000,000
|
S8
|
Services
|
Issued/Market
|
New
Millennium Capital LLC
|
1,393,356
|
144
|
Debt
Retirement
|
Issued/Market/Discount
(1)
|
Schubert
Flint
|
1,000,000
|
S8
|
Services
|
Issued/Market
|
Joseph
Petrucelli
|
1,000,000
|
S8
|
Services
|
Issued/Market
|
Jeffory
Smith
|
1,000,000
|
S8
|
Services
|
Issued/Market
|
Thomas
Stepp
|
500,000
|
S8
|
Services
|
Issued/Market
|
CEDE
|
4
|
42
|
Bal.
Adj.
|
Issued/Market
|
|
|
|
|
|
Total
|
1,764,543,292
|
|
|
|
Notes:
(1)
Issued at 50% Discount to Market per contract
Here is a
complete breakdown of all common shares issued in 2008 by effective
date:
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
2/22/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
2/22/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
2/22/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
2/22/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
2/25/2008
|
Common
|
144
|
1,000,000
|
Schubert
Flint
|
Consulting
|
Services
|
.005
|
CSG
|
|
|
|
|
|
|
|
|
|
3/03/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.003
|
Conversion
|
3/03/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.003
|
Conversion
|
3/03/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.003
|
Conversion
|
3/03/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.003
|
Conversion
|
3/06/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
3/06/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
3/06/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale
of Unregistered Securities - continued
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
3/06/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0024
|
Conversion
|
3/11/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0021
|
Conversion
|
3/11/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0021
|
Conversion
|
3/11/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0021
|
Conversion
|
3/11/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0021
|
Conversion
|
3/14/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0016
|
Conversion
|
3/14/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0016
|
Conversion
|
3/14/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0016
|
Conversion
|
3/14/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0016
|
Conversion
|
3/20/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0013
|
Conversion
|
3/20/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0013
|
Conversion
|
3/20/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0013
|
Conversion
|
3/20/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0013
|
Conversion
|
3/26/2008
|
Common
|
144
|
43,500
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/26/2008
|
Common
|
144
|
6,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/26/2008
|
Common
|
144
|
299,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/26/2008
|
Common
|
144
|
151,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/31/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/31/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/31/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
3/31/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
|
|
|
|
|
|
|
|
|
4/04/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/04/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/04/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/04/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/11/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/11/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/11/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/11/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/16/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/16/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/16/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/16/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/22/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/22/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/22/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/22/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0012
|
Conversion
|
4/25/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0013
|
Conversion
|
4/25/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
0013
|
Conversion
|
4/25/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
0013
|
Conversion
|
4/25/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
0013
|
Conversion
|
|
|
|
|
|
|
|
|
|
5/01/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/01/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/01/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/01/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/05/2008
|
Common
|
144
|
174,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/05/2008
|
Common
|
144
|
24,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/05/2008
|
Common
|
144
|
1,502,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/05/2008
|
Common
|
144
|
300,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/09/2008
|
Common
|
144
|
1,035,300
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/09/2008
|
Common
|
144
|
142,800
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/09/2008
|
Common
|
144
|
8,936,900
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
5/09/2008
|
Common
|
144
|
1,785,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
|
|
|
|
|
|
|
|
|
6/10/2008
|
Common
|
144
|
487,200
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
6/10/2008
|
Common
|
144
|
67,200
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
6/10/2008
|
Common
|
144
|
4,205,600
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
6/10/2008
|
Common
|
144
|
840,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
|
|
|
|
|
|
|
|
|
8/01/2008
|
Common
|
144
|
100,000,000
|
Camelot
|
Financial
|
Escrow
|
.001
|
Reserve
|
8/13/2008
|
Common
|
144
|
9,221,000
|
Scorpion
Bay LLC
|
Consulting
|
Services
|
.0005
|
CSG
|
8/13/2008
|
Common
|
S8
|
20,000,000
|
George
Jackson
|
Management
|
Services
|
.0005
|
CMLT
|
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale
of Unregistered Securities - continued
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
8/13/2008
|
Common
|
144
|
28,000,000
|
The
Atwell Group
|
Manage/Fiscal
|
Cash/Services
|
.0005
|
CMLT
|
8/13/2008
|
Common
|
S8
|
10,000,000
|
The
Corporate Solution
|
Consulting
|
Services
|
.0005
|
CMLT
|
8/29/2008
|
Common
|
144
|
10,849
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.01
|
Conversion
|
8/29/2008
|
Common
|
144
|
1,496
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.01
|
Conversion
|
8/29/2008
|
Common
|
144
|
93,650
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.01
|
Conversion
|
8/29/2008
|
Common
|
144
|
18,705
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.01
|
Conversion
|
|
|
|
|
|
|
|
|
|
9/03/2008
|
Common
|
144
|
10,849
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.009
|
Conversion
|
9/03/2008
|
Common
|
144
|
1,496
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.009
|
Conversion
|
9/03/2008
|
Common
|
144
|
93,650
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.009
|
Conversion
|
9/03/2008
|
Common
|
144
|
18,705
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.009
|
Conversion
|
9/05/2008
|
Common
|
S8
|
250,000
|
Patrick
Winn
|
Administrative
|
Services
|
.012
|
CMLT
|
9/08/2008
|
Common
|
144
|
4
|
CEDE
|
Share
Adjustment
|
Adj
|
.00
|
Bal
Adj
|
9/12/2008
|
Common
|
144
|
10,849
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.002
|
Conversion
|
9/12/2008
|
Common
|
144
|
1,496
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.002
|
Conversion
|
9/12/2008
|
Common
|
144
|
93,650
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.002
|
Conversion
|
9/12/2008
|
Common
|
144
|
18,705
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.002
|
Conversion
|
9/12/2008
|
Common
|
144
|
2,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.005
|
Conversion
|
9/16/2008
|
Common
|
144
|
10,849
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0025
|
Conversion
|
9/16/2008
|
Common
|
144
|
1,496
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0025
|
Conversion
|
9/16/2008
|
Common
|
144
|
93,650
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0025
|
Conversion
|
9/16/2008
|
Common
|
144
|
18,705
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0025
|
Conversion
|
9/16/2008
|
Common
|
144
|
2,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.003
|
CMLT
|
9/16/2008
|
Common
|
S8
|
300,000
|
George
Jackson
|
Management
|
Services
|
.003
|
CMLT
|
9/18/2008
|
Common
|
144
|
4,785
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0015
|
Conversion
|
9/18/2008
|
Common
|
144
|
660
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0015
|
Conversion
|
9/18/2008
|
Common
|
144
|
41,305
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0015
|
Conversion
|
9/18/2008
|
Common
|
144
|
8,250
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0015
|
Conversion
|
9/18/2008
|
Common
|
S8
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
S8
|
250,000
|
Patrick
Winn
|
Administrative
|
Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
S8
|
250,000
|
Patrick
Winn
|
Administrative
|
Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
144
|
1,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
144
|
1,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
144
|
1,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
144
|
1,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/18/2008
|
Common
|
144
|
1,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/22/2008
|
Common
|
144
|
6,064
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/22/2008
|
Common
|
144
|
836
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/22/2008
|
Common
|
144
|
52,345
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/22/2008
|
Common
|
144
|
10,455
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/24/2008
|
Common
|
144
|
10,849
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/24/2008
|
Common
|
144
|
1,496
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/24/2008
|
Common
|
144
|
93,650
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/24/2008
|
Common
|
144
|
18,705
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
144
|
15,909,090
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
144
|
15,909,090
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
Chris
Flannery
|
Legal
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
500,000
|
Thomas
Stepp
|
Legal
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
500,000
|
Patrick
Winn
|
Administrative
|
Cash
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
Joe
Petrucelli
|
Legal
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
Vince
Monaco
|
Consulting
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
S8
|
1,000,000
|
Phil
Parsons
|
Consulting
|
Services
|
.002
|
CMLT
|
9/26/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/26/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/26/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/26/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
9/27/2008
|
Common
|
S8
|
2,272,727
|
Phil
Parsons
|
Consulting
|
Services
|
.002
|
CMLT
|
9/27/2008
|
Common
|
S8
|
2,272,727
|
Patrick
Winn
|
Administrative
|
Services
|
.002
|
CMLT
|
9/27/2008
|
Common
|
S8
|
2,272,727
|
Susan
Sanchez
|
Administrative
|
Services
|
.002
|
CMLT
|
9/27/2008
|
Common
|
S8
|
2,272,727
|
Tamara
Atwell
|
Administrative
|
Services
|
.002
|
CMLT
|
9/27/2008
|
Common
|
S8
|
1,000,000
|
Jeffory
Smith
|
Consulting
|
Services
|
.002
|
CMLT
|
9/27/2008
|
Common
|
S8
|
2,000,000
|
Lewis
Consulting Gp
|
Consulting
|
Services
|
.002
|
CSG
|
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale
of Unregistered Securities - continued
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
9/27/2008
|
Common
|
S8
|
2,000,000
|
Bastien
Living Trust
|
Consulting
|
Services
|
.002
|
CSG
|
9/27/2008
|
Common
|
S8
|
2,000,000
|
Doug
Warner
|
Consulting
|
Services
|
.002
|
CMLT
|
|
|
|
|
|
|
|
|
|
10/01/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0011
|
Conversion
|
10/01/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0011
|
Conversion
|
10/01/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0011
|
Conversion
|
10/01/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0011
|
Conversion
|
10/01/2008
|
Common
|
144
|
7,000,000
|
La
Jolla Investment
|
Debt
Retirement
|
Cash/Services
|
.002
|
Conversion
|
10/01/2008
|
Common
|
144
|
7,000,000
|
Tania
Babeshoff
|
Debt
Retirement
|
Cash/Services
|
.002
|
Conversion
|
10/01/2008
|
Common
|
144
|
7,000,000
|
ATG,
Inc.
|
Debt
Retirement
|
Cash/Services
|
.002
|
Conversion
|
10/01/2008
|
Common
|
144
|
7,000,000
|
Ongkaruck
Sripetch
|
Debt
Retirement
|
Cash/Services
|
.002
|
Conversion
|
10/03/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
10/03/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
10/03/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
10/03/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.001
|
Conversion
|
10/07/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0007
|
Conversion
|
10/07/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0007
|
Conversion
|
10/07/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0007
|
Conversion
|
10/07/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0007
|
Conversion
|
10/08/2008
|
Common
|
144
|
35,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.0004
|
CMLT
|
10/13/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0003
|
Conversion
|
10/13/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0003
|
Conversion
|
10/13/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0003
|
Conversion
|
10/13/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0003
|
Conversion
|
10/14/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/14/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/14/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/14/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/14/2008
|
Common
|
S8
|
2,000,000
|
Rodger
Spainhower
|
Edgar
Fees
|
Services
|
.0004
|
CMLT
|
10/16/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/16/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/16/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/16/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/27/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/27/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/27/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/27/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
10/31/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
10/31/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
10/31/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
10/31/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
|
|
|
|
|
|
|
|
|
11/04/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/04/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/04/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/04/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/06/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/06/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/06/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/06/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/06/2008
|
Common
|
144
|
8,750,000
|
AlphaTrade.com
|
Debt
Retirement
|
Services
|
.0017
|
Conversion
|
11/10/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/10/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/10/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/10/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/10/2008
|
Common
|
S8
|
5,000,000
|
Phil
Parsons
|
Consulting
|
Services
|
.0016
|
CMLT
|
11/10/2008
|
Common
|
S8
|
2,500,000
|
Patrick
Winn
|
Administrative
|
Services
|
.0016
|
CMLT
|
11/10/2008
|
Common
|
S8
|
5,000,000
|
Tamara
Atwell
|
Administrative
|
Services
|
.0016
|
CMLT
|
11/11/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/11/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/11/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/11/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/13/2008
|
Common
|
144
|
69,513
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/13/2008
|
Common
|
144
|
9,588
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale
of Unregistered Securities - continued
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
11/13/2008
|
Common
|
144
|
600,049
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/13/2008
|
Common
|
144
|
119,850
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/13/2008
|
Common
|
144
|
18,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0008
|
Conversion
|
11/14/2008
|
Common
|
144
|
117,450
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/14/2008
|
Common
|
144
|
16,200
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/14/2008
|
Common
|
144
|
1,013,850
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/14/2008
|
Common
|
144
|
202,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/18/2008
|
Common
|
144
|
117,450
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/18/2008
|
Common
|
144
|
16,200
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/18/2008
|
Common
|
144
|
1,013,850
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/18/2008
|
Common
|
144
|
202,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/18/2008
|
Common
|
144
|
20,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0008
|
Conversion
|
11/19/2008
|
Common
|
144
|
117,450
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/19/2008
|
Common
|
144
|
16,200
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/19/2008
|
Common
|
144
|
1,013,850
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/19/2008
|
Common
|
144
|
202,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/19/2008
|
Common
|
144
|
22,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
11/19/2008
|
Common
|
S8
|
5,000,000
|
Phil
Scott
|
Valuation
|
Services
|
.0005
|
CMLT
|
11/20/2008
|
Common
|
144
|
117,450
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/20/2008
|
Common
|
144
|
16,200
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/20/2008
|
Common
|
144
|
1,013,850
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/20/2008
|
Common
|
144
|
202,500
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/21/2008
|
Common
|
144
|
261,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/21/2008
|
Common
|
144
|
36,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/21/2008
|
Common
|
144
|
2,253,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/21/2008
|
Common
|
144
|
450,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/21/2008
|
Common
|
S8
|
25,000,000
|
Tamara
Atwell
|
Administrative
|
Services
|
.0002
|
CMLT
|
11/21/2008
|
Common
|
S8
|
25,000,000
|
Phil
Parsons
|
Consulting
|
Services
|
.0002
|
CMLT
|
11/21/2008
|
Common
|
S8
|
25,000,000
|
George
Jackson
|
Management
|
Services
|
.0002
|
CMLT
|
11/21/2008
|
Common
|
144
|
25,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.0002
|
CMLT
|
11/24/2008
|
Common
|
144
|
261,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/24/2008
|
Common
|
144
|
36,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/24/2008
|
Common
|
144
|
2,253,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/24/2008
|
Common
|
144
|
450,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
11/25/2008
|
Common
|
144
|
34,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
11/25/2008
|
Common
|
144
|
34,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
11/26/2008
|
Common
|
144
|
380,364
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/26/2008
|
Common
|
144
|
52,464
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/26/2008
|
Common
|
144
|
3,283,372
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
11/26/2008
|
Common
|
144
|
655,800
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
|
|
|
|
|
|
|
|
|
12/01/2008
|
Common
|
144
|
725,667
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/01/2008
|
Common
|
144
|
100,092
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/01/2008
|
Common
|
144
|
6,264,091
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/01/2008
|
Common
|
144
|
1,251,150
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/02/2008
|
Common
|
144
|
40,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/02/2008
|
Common
|
S8
|
5,000,000
|
Phil
Scott
|
Valuation
|
Services
|
.0002
|
CMLT
|
12/03/2008
|
Common
|
144
|
25,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/08/2008
|
Common
|
144
|
725,667
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/08/2008
|
Common
|
144
|
100,092
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/08/2008
|
Common
|
144
|
6,264,091
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/08/2008
|
Common
|
144
|
1,251,150
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/08/2008
|
Common
|
144
|
50,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/08/2008
|
Common
|
144
|
50,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/16/2008
|
Common
|
144
|
60,000,000
|
Hope
Capital, Inc.
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/17/2008
|
Common
|
144
|
5,000,000
|
K
& L International
|
Debt
Retirement
|
Cash
|
.0002
|
Conversion
|
12/18/2008
|
Common
|
144
|
50,000,000
|
Watson
Investment
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/18/2008
|
Common
|
144
|
50,000,000
|
Watson
Investment
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/23/2008
|
Common
|
144
|
870,000
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/23/2008
|
Common
|
144
|
120,000
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/23/2008
|
Common
|
144
|
7,510,000
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/23/2008
|
Common
|
144
|
1,500,000
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00009
|
Conversion
|
12/29/2008
|
Common
|
144
|
100,000,000
|
Watson
Investment
|
Debt
Retirement
|
Cash
|
.0001
|
Conversion
|
12/30/2008
|
Common
|
144
|
2,151,075
|
AJW
Partners
|
Debt
Retirement
|
Cash
|
.00006
|
Conversion
|
ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS - continued
Sale
of Unregistered Securities - continued
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
12/30/2008
|
Common
|
144
|
296,700
|
New
Millennium
|
Debt
Retirement
|
Cash
|
.00006
|
Conversion
|
12/30/2008
|
Common
|
144
|
18,568,475
|
AJW
Offshore
|
Debt
Retirement
|
Cash
|
.00006
|
Conversion
|
12/30/2008
|
Common
|
144
|
3,708,750
|
AJW
Qualified Partners
|
Debt
Retirement
|
Cash
|
.00006
|
Conversion
|
12/31/2008
|
Common
|
S8
|
20,000,000
|
Doug
Warner
|
Consulting
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
Rodger
Spainhower
|
Edgar
Fees
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
Phil
Parsons
|
Consulting
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
Tamara
Atwell
|
Administrative
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
30,000,000
|
George
Jackson
|
Management
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
Robert
P. Atwell
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
The
Atwell Group
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
The
Atwell Group
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
144
|
50,000,000
|
The
Atwell Group
|
Manage/Fiscal
|
Cash/Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
The
Corporate Solution
|
Manage/Fiscal
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
5,000,000
|
Phil
Scott
|
Valuation
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
5,000,000
|
Phil
Scott
|
Valuation
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
Vince
Monaco
|
Consulting
|
Services
|
.0001
|
CMLT
|
12/31/2008
|
Common
|
S8
|
50,000,000
|
Chris
Flannery
|
Legal
|
Services
|
.0001
|
CMLT
|
|
|
|
|
|
|
|
|
|
Total
|
Common
|
|
1,764,543,292
|
|
|
|
|
|
Notes: “CMLT”
refers to transactions related to Camelot Entertainment Group operations. “CSG”
refers to transactions related to Camelot Studio Group operations. “Conversions”
refer to convertible note transactions retiring debt.
Preferred
Stock
Holders
As of
December 31, 2008, there were 21,695,521 shares of Preferred Stock outstanding.
On December 31, 2008, there were 19 holders of record of our Preferred
Stock.
2008
Preferred Stock Issuances
In fiscal
year 2008, we issued 31,450,000 shares of Preferred Stock, before and after the
reverse split of shares that was effective on August 29, 2008. We issued
11,100,000 shares of Series A Convertible Preferred Stock, 8,100,000 shares of
Series B Convertible Preferred Stock, and 12,250,000 shares of Series C
Convertible Preferred Stock.
Date
|
Title
|
Exemption
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
Note
|
8/13/08
|
Series
A
|
4.2
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.0005
|
CMLT
|
8/13/08
|
Series
A
|
4.2
|
3,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0005
|
CMLT
|
8/13/08
|
Series
B
|
4.2
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.0005
|
CMLT
|
8/13/08
|
Series
C
|
4.2
|
750,000
|
Scorpion
Bay LLC
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
3,000,000
|
The
Atwell Group
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
50,000
|
Sea
Castle LLC
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
100,000
|
Joseph
Petrucelli
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
250,000
|
Pacific
Surf Partners LP
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
775,000
|
OCTY,
Inc.
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
50,000
|
Tim
McCullium
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
100,000
|
George
Jackson
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
50,000
|
Jeff
Brown
|
CDG
|
Cash
|
.0005
|
CSG
|
8/13/08
|
Series
C
|
4.2
|
25,000
|
Irene
Aurand
|
CDG
|
Cash
|
.0005
|
CSG
|
9/26/08
|
Series
A
|
4.2
|
100,000
|
George
Jackson
|
Management
|
Services
|
.0022
|
CMLT
|
9/26/08
|
Series
A
|
4.2
|
1,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0022
|
CMLT
|
9/26/08
|
Series
B
|
4.2
|
100,000
|
George
Jackson
|
Management
|
Services
|
.0022
|
CMLT
|
9/26/08
|
Series
B
|
4.2
|
1,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0022
|
CMLT
|
9/26/08
|
Series
C
|
4.2
|
100,000
|
George
Jackson
|
Management
|
Services
|
.0022
|
CMLT
|
9/26/08
|
Series
C
|
4.2
|
1,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0022
|
CMLT
|
12/20/08
|
Series
A
|
4.2
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.0001
|
CMLT
|
12/20/08
|
Series
A
|
4.2
|
5,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0001
|
CMLT
|
12/20/08
|
Series
B
|
4.2
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.0001
|
CMLT
|
12/20/08
|
Series
B
|
4.2
|
5,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0001
|
CMLT
|
12/20/08
|
Series
C
|
4.2
|
1,000,000
|
George
Jackson
|
Management
|
Services
|
.0001
|
CMLT
|
12/20/08
|
Series
C
|
4.2
|
5,000,000
|
Robert
Atwell
|
Management
|
Cash/Services
|
.0001
|
CMLT
|
Notes: “CMLT” refers to transactions
related to Camelot Entertainment Group operations. “CSG” refers to transactions
related to Camelot Studio Group operations. “CDG” refers to transactions related
to Camelot Development Group transactions.
ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The
matters discussed in this report contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which
are subject to the "safe harbor" created by those sections. These
forward-looking statements include but are not limited to statements concerning
our business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; and statements concerning
assumptions made or exceptions as to any future events, conditions, performance
or other matters which are "forward-looking statements" as that term is defined
under the Federal Securities Laws. All statements, other than historical
financial information, may be deemed to be forward-looking statements. The words
"believes", "plans", "anticipates", "expects", and similar expressions herein
are intended to identify forward-looking statements. Forward-looking statements
are subject to risks, uncertainties, and other factors, which would cause actual
results to differ materially from those stated in such statements.
Forward-looking statements include, but are not limited to, those discussed in
"Risk Factors" and elsewhere in this report, and the risks discussed in the
Company's other SEC filings.
INTRODUCTION
Management’s
discussion and analysis of results of operations and financial condition
(“MD&A”) is provided as a supplement to the accompanying financial
statements and notes to help provide an understanding of Camelot Entertainment
Group Inc.’s (“Camelot” or the “Company”) financial condition, cash flows and
results of operations. MD&A is organized as follows:
|
o
|
Plan
of Operation. This section provides a brief description of
Camelot’s plan of operation for fiscal year
2009.
|
|
o
|
Overview. This section
provides a general description of our corporate structure and what the
management will focus on in 2009.
|
|
o
|
Cash requirements. This
section provides a discussion of how long Camelot can satisfy its cash
requirements and the need, if any, to raise additional funds in
2009.
|
|
o
|
Research and
Development. This section discusses the research and development
activities of Camelot.
|
|
o
|
Equipment. This section
looks at if there will be any major equipment purchases in
2009.
|
|
o
|
Change in Employees.
This section discusses if there will be any significant change in the
number of employees.
|
|
o
|
Results
of Operations. This section provides an analysis of Camelot’s results of
operations for the two years ending December 31,
2008.
|
|
o
|
Liquidity and Capital
Resources. This section provides an analysis of Camelot’s cash
flows for the two years ended December 31, 2008, as well as a
discussion of the Company’s outstanding debt and commitments that existed
as of December 31, 2008. Included in the analysis of outstanding debt
is a discussion of the amount of financial capacity available to fund the
Company’s future commitments, as well as a discussion of other financing
arrangements.
|
|
o
|
Sources of Revenue.
This section examines expected sources of
revenues.
|
|
o
|
Recent Financings. This
section discusses financing transactions of Camelot during
2008.
|
|
o
|
Off-Balance
Sheet Arrangements. This section discloses any off-balance sheet
arrangements that have or are reasonably likely to have a current or
future effect on Camelot’s financial
condition.
|
|
o
|
Critical
Accounting Estimates. This section identifies those accounting estimates
that are considered important to the Company’s results of operations and
financial condition, require significant judgment and require estimates on
the part of management in
application.
|
|
o
|
Critical
Accounting Policies. This section identifies those accounting policies
that are considered important to the Company’s results of operations and
financial condition, require significant judgment and require estimates on
the part of management in application. All of the Company’s significant
accounting policies, including those considered to be critical accounting
policies, are summarized in Note 1 to the accompanying financial
statements.
|
|
o
|
Caution
Concerning Forward-Looking Statements. This section provides a description
of the use of forward looking information appearing in this report,
including in MD&A and the financial statements. Such information is
based on management’s current expectations about future events, which are
inherently susceptible to uncertainty and changes in circumstances. Refer
“Risk Factors” in Part I of this report, for a discussion of the risk
factors applicable to the Company.
|
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation
Overview
Camelot
Entertainment Group is working to become a fully integrated, broad based
entertainment company whose planned future global operations expect to encompass
motion picture production and distribution, television programming, production
and syndication, home video acquisition and distribution, digital media
production and distribution, development and operation of studio facilities,
development of new technologies, and distribution of filmed entertainment
worldwide. We are planning to become a global leader in the creation,
production, distribution, licensing and marketing of all form of creative
content and their related businesses across all current and emerging media and
platforms. If we are successful in implementing our business model, we could
lead the industry in every aspect from feature film, television and home
entertainment production and distribution to DVD, digital distribution,
licensing and entertainment related digital media.
Our
Company is divided up into three major divisions, Camelot Film and Media Group,
Camelot Studio Group and Camelot Production Services Group.
During
fiscal year 2009, the Company’s focus will be on the ongoing development of
projects within our Camelot Film and Media Group division, while continuing to
pursue opportunities through our Camelot Studio Group division. The emergence of
Camelot Film and Media Group as it prepares to unveil its Camelot Production
Model (“CPM”) in 2009 points to significant activity for us this year. In order
to implement our plans to become a global media and entertainment company, it is
critical that we build a solid foundation to build upon, and that begins with
making sure that each division is carefully structured and that their respective
business models are implemented in accordance with those designs.
There are
five steps that comprise the backbone of our operating philosophy. Each step,
when implemented, secures the foundation for the next step. These five steps
are:
|
1.
|
Education;
which leads to
|
|
2.
|
Infrastructure;
which leads to
|
|
3.
|
Utilization;
which leads to
|
|
4.
|
Opportunity;
which leads to
|
The
current focus of our operations is our Camelot Film and Media Group division,
where we have acquired several literary properties as we gear up to hopefully
begin physical production this year on several projects in our production
pipeline. Veteran producer H. Kaye Dyal has been brought in to head up
production for us in our Camelot Features division, and he has brought in
several projects that are in various stages of development.
Fiscal
year 2009 should also see the emergence of our production and distribution
division, Camelot Film and Media Group, and the proprietary Camelot Films “CPM”.
Designed to have mainstream appeal and franchise potential, the CPM provides for
the development, production, marketing and distribution of motion pictures by
combining the efficiencies realized by studios of the early 1900’s with the
artistic focus and diversity of today’s independent productions. Using this
approach, we believe the risk-reward relationship facing the typical film
project can be dramatically shifted. For example, whereas a typical film pushes
artists and directors to rush development and production in hopes of conserving
cash, the CPM extends the pre-production cycle substantially to reduce costs
while simultaneously increasing quality. Similarly, whereas many independent
films are limited by the types of post production technology used, due in part
to budget constraints, we intend to invest directly in top of the line
technology, spreading the costs over a targeted minimum number of original
motion pictures each year. One benchmark of the CPM is to develop the ability to
consistently produce films with the look, feel and artistic content of
multi-million dollar pictures, for a fraction of the cost.
Within
our Camelot Film and Media Group division, Camelot Films plans to focus on high
quality, suspense, action, thriller, comedy and dramatic commercial content.
Camelot Features will continue to develop its limited catalogue of literary
properties and preparations to begin pre-production on some of its projects as
packaging is completed. Camelot Television Group plan to continue to explore
potential pilots and television series to produce. Camelot Urban Entertainment
is expected to complete its first feature length documentary during 2009 and
continue the development process on several feature film properties currently
being developed. Camelot Film and Media Group plans to accelerate the activity
in its Latin entertainment division once it completes its search for an
executive to lead that division. We also plan to increase activity in our family
division, Ferris Wheel Films. We hope to renew our consulting agreement with
Capital Arts Entertainment, which is part of a contemplated acquisition plan
that could result in the Capital Arts Management team joining forces with the
Company and heading up Camelot Film and Media Group. Experts in efficient budget
production, the management of Capital Arts has over 250 film credits in
production and distribution, and they have an excellent industry reputation.
More details concerning this potential acquisition are expected to be released
later this fiscal year. Camelot Gaming and our Digital Media division should
begin to see activity in 2009. We continue to develop our distribution division,
with three potential acquisitions being discussed. If completed, these
acquisitions would strengthen our ability to distribute product both
domestically and internationally. Initially delayed by economic uncertainty,
further details on these potential acquisitions should be available during the
2nd quarter of 2009. We continued our consulting relationship with Chris Davis
International in 2008 on international sales and we are currently exploring
expansion of that relationship during 2009.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan of Operation -
continued
Overview - continued
Due to
our prior focus and the commitment of resources on the Camelot Studios at ATEP
project, we made the decision to slow down the progress of our other divisions
and concentrate on completing the development and entitlement process of the
ATEP project. When that stopped, we refocused our attention on
Camelot Film and Media Group and will be increasing activity in Camelot
Production Services Group during 2009. Notwithstanding the foregoing, our
priority in 2009 will be as follows: first, Camelot Film and Media Group;
second, Camelot Studio Group; and third, Camelot Production Services
Group.
In
addition, we are in the process of revamping our web site, www.camelotfilms.com.
Our new web site is expected to allow us to provide more detail on our
activities with regular updates. Our site plans to also be fully interactive and
hopefully will provide those accessing our site with the latest technical
innovations and industry wise links. Our site is expected to provide digital
downloading capability, previews, film clips, distance learning, IPTV channels,
blogs, user email, retail outlets, screenplay and film submissions, uploading
capability and consumer interactive sections, including a consumer film review
section where the public can submit their own personalized film, television and
digital media reviews in addition to reviews of the commercial products featured
in the film, television and digital media productions.
Cash
Requirements
With
current financial arrangements, we should be able to satisfy our operational
cash requirements for fiscal year 2009. Our current operational cash
requirements do not include any debt retirement, just basic operational
expenses. In order to meet our 2009 obligations, we renewed our agreement with
The Atwell Group to provide us with funds to meet our operational cash
requirements in 2009. In addition to the renewing our agreement with The Atwell
Group, we are also exploring other financing options for Camelot Film and Media
Group in 2009. Additional 2009, working capital, if necessary, would be provided
through agreements between Camelot and our officers and directors, and possibly
through additional new agreements with The Atwell Group as discussed
herein.
We had
entered into an agreement with Camelot Studio Investors, LLC, whereby we were
selling them up to thirty per cent (30%) of our interest in the Camelot Studios
at ATEP development for a total purchase price of $3,000,000 on an as needed
basis. In the event the full purchase price had been received, we would have
used part of the proceeds to retire and/or pay down the debt known as the “NIR
Financing”, which is described herein. We would have also used the proceeds to
retire other debt, including debt to officers and other accounts payable, and to
provide an operating reserve for the Company, which would have satisfied our
operational cash requirements for fiscal year 2009 and beyond. However, those
funds never materialized beyond an initial $200,000 and that agreement was
terminated. We are currently working on replacing that agreement and expect to
have something in place by the second quarter of 2009.
Research
and Development
Our
research and development activities are expected to be performed under our
Camelot Production Services Group division, which includes Camelot Technology
Group, which plans to research new technologies for our industry.
Our
Camelot Film and Media Group division is in the process of developing several
literary properties that could become productions for us beginning in 2009. The
development process of feature films is a lengthy process and many of the
projects developed never are produced.
Equipment
Purchases
We are
not expecting to purchase any major pieces of equipment during 2009. The
exception to this could be the purchase of equipment and other physical assets
by Camelot Films in the event one or more of its film slates is funded during
2009.
Changes
in Employees
We are
not expecting a significant increase in the number of employees during 2009. If
any additions are made, they would probably occur during the third and or fourth
quarter of 2009, and would depend upon the status of Camelot Film and Media
Group project and slate financing.
Recent
Developments
Writers
Guild of America Collective Bargaining Agreement
On
November 5, 2007, the Writers Guild of America (East and West) (the
“Guild”) commenced a strike against film and television studios subsequent to
the expiration of the Guild’s collective bargaining agreement on
October 31, 2007. The Company’s Camelot Film and Media Group division and
certain of their suppliers retain the services of writers who are members of the
Guild. In February 2008, the Guild reached an agreement with the film and
television studios, thereby ending the strike. The strike caused delays in the
development of some feature films and hampered the development of new television
projects. Camelot did not experience any short-term or long-term reduction in
operating results that were attributable to these delays, and it does not
anticipate that the strike will have a significant long-term
impact.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan of Operation -
continued
SAG and AFTRA Suspend
Bargaining Agreement - continued
The
Screen Actors Guild (“SAG”) and the American Federation of Television and Radio
Artists (“AFTRA”), the two major actors unions that represent actors in film,
television, stage and radio, will now negotiate studio contracts separately.
AFTRA voted on March 29, 2008 to suspend the guild's 27-year joint bargaining
agreement with the Screen Actors Guild, leaving the two unions to negotiate
separately on new contracts with the major studios.
This
action could undermine SAG's contract negotiations with the studios in its new
contract as AFTRA pursues its own agenda on behalf of its members, who work
mostly in television. The move ends a longstanding partnership between the two
unions, known as Phase One, under which they had jointly bargained film and
prime-time TV contracts for nearly three decades. AFTRA plans to negotiate a new
prime-time TV contract directly with the studios and independently from
SAG.
This move
by AFTRA introduces a new element of uncertainty in the television and movie
industry by raising the possibility of an actors walkout this summer, just as
some shows are returning to the air after a three-month absence and the movie
industry is trying to get back on its feet following the writers strike.
Hollywood's talent guilds, which represent writers, directors and actors, have
pushed to center stage in this year's contract negotiations the issue of how
their members are paid in the digital era. Now that directors and writers have
reached new three-year contracts with the studios, the industry had hoped the
actors could peacefully negotiate a new deal before their contract expires June
30, 2008. That did not happen, and as of April 2009 contract negotiations were
still ongoing.
Results
of Operations
We have a
limited history of operations as a film, television and digital media company.
We believe that due to the complex nature and long term cycle of our business
operations, period-to-period comparisons of our operating results are not
necessarily meaningful and should not be relied on as an indication of future
performance. However, it is still important that you review the audited
financial statements, the unaudited interim financial statements and the related
notes in addition to thoroughly reading our current plan of
operations.
Our
current cash requirements are provided principally through our financing
agreement with The Atwell Group, Inc. (“TAG”), a company owned by our Chairman.
We renewed an agreement with TAG (which assumed the original agreement from
Eagle Consulting Group on March 28, 2003), to provide operational funding for
the Company during the fourth quarter of 2008. In exchange for twenty percent
(20%)of the Company’s outstanding common stock on a non-dilutive, continuing
basis until the Company could secure additional financing from another source,
TAG has agreed to provide funding for the Company’s annual audit, quarterly
filings, accounts payable and other ongoing expenses including office, phones,
business development, legal and accounting fees.
Our
recent cash requirements were to be provided principally through our agreement
with Camelot Studio Investors, LLC, whereby we were selling them up to thirty
per cent (30%) of our interest in the Camelot Studios at ATEP development for a
total purchase price of $3,000,000. In the event the full purchase price had
been received, we would have used part of the proceeds to retire and/or pay down
the debt known as the “NIR Financing”, which is described herein. We were to
also use the proceeds to retire other debt, including debt to officers and other
accounts payable, and to provide an operating reserve for the Company, which
would have satisfied our operational cash requirements for fiscal year 2009.
Other than an initial $200,000, no other cash funds were ever received by the
company as a result of that agreement, which is no longer in
effect.
Our
historical cash requirements were provided principally through our financing
agreement with Eagle Consulting Group, Inc. (“Eagle”), a company owned by our
Chairman. We entered into an agreement with Eagle on March 28, 2003, to provide
operational funding for the Company. In exchange for twenty percent (20%)of the
Company’s outstanding common stock on a non-dilutive, continuing basis until the
Company could secure additional financing from another source, Eagle agreed to
provide funding for the Company’s annual audit, quarterly filings, accounts
payable and other ongoing expenses including office, phones, business
development, legal and accounting fees. During 2007, Eagle advanced Camelot
$235,125. During 2006, Eagle advanced the Company a total, including
interest, of $401,982, which covered most of our operating expenses for 2006.
The Eagle agreement was completed as of December 31, 2007.
In
addition, during 2007 and 2006 we entered into various financing transactions
with Scorpion Bay, LLC, managed by Timothy Wilson, one of our directors, and The
Atwell Group, Inc., owned by our Chairman, Robert Atwell. The agreements are
discussed in more detail elsewhere in this report.
Like all
motion picture, television and digital media production and distribution
companies, our expected future revenues and results of planned operations could
be significantly dependent upon many factors, including the ability of Camelot
to finance its projects, the progress made by Camelot in implementing its
business model, and if Camelot is in a position to do so, the timing of releases
and the commercial success of the motion pictures we plan to distribute in the
future, none of which can be predicted with any certainty. Accordingly, our
planned revenues and results of operations, if any, may fluctuate significantly
from period to period, and the results of any one period may not be indicative
of the results for any future periods. Similarly, the efficiencies we aim to
realize through our model may not materialize. Failure of the efficiencies to
materialize, along with other risks germane to the picture production, or if we
are unable to finance our films, may cause us to produce fewer films than our
plan calls for.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation - continued
Liquidity
and Capital Resources
We have a
limited history of operations as a film, television and digital media production
and distribution company. We believe that, due to the complex nature of our
business model and the ensuing long term sales cycles, period-to-period
comparisons of our operating results are not necessarily meaningful and should
not be relied on as an indication of future performance. Our current
liquidity and capital resources are provided principally through our current
agreements with The Atwell Group, Inc., which are discussed below under Recent
Financing. During 2008, we also received funds through the NIR Financing,
described as well in Recent Financing. We have received financing commitments
from three different groups thus far in 2009, and are in the process of
completing those transactions. Due to the ongoing economic uncertainty, we have
elected to withhold any further information on those agreements until they have
been completed.
Recent
Financing
Camelot
Studio Investors
In
January 2008, we agreed to sell up to 30% of our interest in Camelot Development
Group, LLC (“CDG”) to Camelot Studio Investors LLC (“CSI”) for up to $3,000,000
on an as needed basis. CDG, which is part of our Camelot Studio Group division,
is 50% joint venture partner with Janez Investments Tustin XI (“JIT”) in Camelot
Development Tustin, LLC (“CDT”). CDT was working with the South Orange County
Community College District (“SOCCCD”) to become the master developer for the
Advanced Technology and Education Park (“ATEP”) campus in Tustin, California,
which was to include Camelot Studios at ATEP. The ATEP project was terminated
during the third quarter of 2008. We only received a total of $200,000 in cash
and an additional $300,000 in debt conversion
CSI
received 1,000 shares of our $0.001 par value Series C Convertible Preferred
Stock for each one half of one per cent (.05%) of CDG purchased by CSI. The
managing member of CSI is Scorpion Bay, LLC (“Scorpion”), which is managed by
Timothy Wilson, one of our former at-large directors. The proceeds from the
sale, had it been completed, would have been utilized to retire debt, pay
operating expenses and provide a contingency reserve for Camelot Studio Group
and the Camelot Studios at ATEP project.
NIR
Financing
2006 NIR Convertible Notes
Payable
On
December 27, 2006, we entered into a Securities Purchase Agreement with AJW
Capital Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New
Millennium Capital Partners II, LLC. Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (i) $1,000,000 in Callable
Secured Convertible Notes (the “Notes”) and (ii) warrants to purchase 100,000
shares of our common stock (the “Warrants”). This transaction is referred to as
the “NIR Financing”.
Pursuant
to the Securities Purchase Agreement, the Investors will purchase the Notes and
Warrants in two tranches as set forth below:
|
1.
|
At
closing on December 27, 2006 (“Closing”), the Investors purchased Notes
aggregating $600,000 and Warrants to purchase 100,000 shares of CMEG
common stock;
|
|
2.
|
Upon
effectiveness of the Registration Statement, on June 5, 2007 the Investors
purchased Notes aggregating
$400,000.
|
The Notes
carry an interest rate of 10% per annum (as amended) and a maturity date of
December 27, 2009. The notes are convertible into CMEG common shares at the
applicable percentage of the average of the lowest three (3) trading prices for
CMEG shares of common stock during the twenty (20) trading day period prior to
conversion. The “Applicable Percentage” means 50%; provided, however, that the
Applicable Percentage shall be increased to (i) 55% in the event that a
Registration Statement is filed within thirty (30) days of the
closing.
At our
option, we may prepay the Notes in the event that no event of default exists,
there are a sufficient number of shares available for conversion of the Notes
and the market price is at or below $.25 per share. In addition, in the event
that the average daily price of the common stock, as reported by the reporting
service, for each day of the month ending on any determination date is below
$.25, we may prepay a portion of the outstanding principal amount of the Notes
equal to 101% of the principal amount hereof divided by thirty-six (36) plus one
month's interest. Exercise of this option will stay all conversions for the
following month. The full principal amount of the Notes is due upon default
under the terms of Notes. In addition, we have granted the Investors a security
interest in substantially all of our assets and intellectual property as well as
registration rights.
We
simultaneously issued to the Investors seven year warrants to purchase 100,000
shares of our common stock at an exercise price of $15.00.
In
connection with the recent financing and pursuant to a Structuring Agreement, we
also issued to Lionheart Associates, LLC d/b/a Fairhills Capital (“Lionheart”)
warrants representing the right to purchase up to 5,826 shares of our common
stock under the same terms as the Warrants issued to the Investors.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation - continued
2008 NIR Convertible Notes
Payable
On August
14, 2008, Camelot issued a callable secured convertible note payable for
$160,000 to New Millennium Capital Partners II, LLC. Camelot received the
proceeds in August and September 2008. The note payable provided for annual
interest at 10%, was secured by the assets of the Company (less contractual
exclusions), and matures on May 10, 2011. The principle and accrued interest of
the note is convertible into Camelot’s common stock at a variable conversion
price which is 50% of the average market price of the common stock of the lowest
three trading days prior to the date of conversion. The proceeds were used for
working capital purposes and advances from related parties. In addition, the
investors shall receive 20,000,000 cashless warrants at an exercise price of
$0.01 which expire in seven years.
On
September 22, 2008, Camelot issued a callable secured convertible note payable
for $15,000 to New Millennium Capital Partners II, LLC. The proceeds were used
to pay for public relations consulting services. The note payable provided for
annual interest at 10%, was secured by the assets of the Company (less
contractual exclusions), and matures on September 21, 2011. The principle and
accrued interest of the note is convertible into Camelot’s common stock at a
variable conversion price which is 50% of the average market price of the common
stock of the lowest three trading days prior to the date of
conversion.
Additional
Information
The
Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the Warrants and receive shares of our common stock such that
the number of shares of our common stock held by them and their affiliates after
such conversion or exercise does not exceed 4.99% of the then issued and
outstanding shares of CMEG’s common stock.
As a
result of our SB-2 Registration, a total of 132,285 shares of common stock
were registered. They were all converted at various prices during 2007. With the
changes in Rule 144 that became effective on February 15, 2008, additional
shares will now be converted under Rule 144 B (1). As of December 31, 2008, the
principal balance of the Notes was $1,205,719.
In the
event of full conversion of the aggregate principal amount of the Notes of
$1,205,719 as of December 31, 2008, we would have to issue a total of
21,264,640,000 shares of common stock. This amount is calculated as
follows:
The
aggregate principal amount of the Notes is $1,205,719. The estimated conversion
price of the Notes is $0.00005 based on the following: $0.0001 was the average
of the lowest three (3) trading prices for our shares of common stock during the
twenty (20) trading days prior to December 31, 2008, less a 50% discount. Thus,
at a discounted price-per-share of $0.00005, 24,114,380,000 shares of the
Company's common stock would be issuable upon conversion of $1,205,719 into
common shares of the Company ("Conversion Shares"). However, due to contractual
limitations, the most that could be converted in any singular conversion as of
December 31, 2008 is approximately 78,027,113 shares, or 4.99% of the
1,563,669,608 outstanding shares. In addition, there are contractual limitations
that could be imposed by Camelot that would result in the inability of the note
holders to convert during any given 30 day period.
As of
December 31, 2008, our stock was trading at $.0001, the lowest quoted trade
available on the OTCBB. As a result, the trading price of stock will not go any
lower, thereby establishing a floor for the effective conversion price at
$.00005. In the event the conversion price discount was increased, there could
me more shares issued over time. The following table shows the effect on the
number of shares issuable upon full conversion, in the event the common stock
price declines by 25%, 50% and 75% from its the most recent trading
price.
|
|
Price
Decreases By
|
|
12/31/2008
|
25%
|
50%
|
75%
|
Average
Common Stock Price (as defined above)
|
$0.0001
|
$0.0001
|
$0.0001
|
$0.0001
|
Conversion
Price (50% Discount)
|
$0.00005
|
$0.00005
|
$0.00005
|
$0.00005
|
100%
Conversion Shares:
|
24,114,380,000
|
24,114,380,000
|
24,114,380,000
|
24,114,380,000
|
Principal
Balance of Notes:
|
$1,205,719
|
|
|
|
There is
no limit to the number of shares that we may be required to issue upon
conversion of the Notes as it is dependent upon our share price, which varies
from day to day. This could cause significant downward pressure on the price of
our common stock.
Scorpion
Bay Loans
On June
15, 2007, we entered into a loan agreement with Scorpion Bay, LLC (“Scorpion”),
whereby Scorpion loaned Camelot $300,000 in three tranches of $100,000 each on
June 15, July 15 and August 15 2007. Interest on the loan was in the form of
30,000 shares of our $0.001 par value common stock (“Shares”). The loan was due
and payable on November 15, 2007. The loan was secured with a blanket note and
second deed of trust on real property owned by Robert and Tamara Atwell. Robert
Atwell is the Chairman, President and CEO of Camelot (“Atwell”). In the event
the loan was not paid by the due date, the note could be extended by Scorpion at
a cost of 7,500 Shares for each 30 day extension. On or about October 25, 2007,
Scorpion agreed to release and/or transfer the security interest provided by
Atwell in reference to the $300,000 loan to the Company by Scorpion on June 15,
2007 and the amount due to Scorpion was transferred to real property owned by
Atwell. As a result, Camelot will not incur any additional interest charges
and/or fees connected with the loan. Scorpion received a total of 130,000 Shares
(including 50,000 shares issued to Dolphin Communities) in connection with the
loan and events related thereto.
On
November 21, 2006, we entered into a loan agreement with Scorpion, whereby
Scorpion loaned Camelot $250,000. Interest was paid in the form of 5000 Shares.
As additional consideration, Scorpion received a total of 15,000 Shares. The
loan was due and payable on March 22, 2007. The loan was secured with a blanket
note and second deed of trust on real property owned by Robert and Tamara
Atwell. In the event the loan was not paid by the due date, the note could be
extended by Scorpion at a cost of 15,000 Shares for the first 30 day extension,
20,000 Shares for the second 30 day extension, 25,000 Shares for the third 30
day extension and so forth. The note was paid in full on June 5, 2007. As a
result, Scorpion received a total of 80,000 Shares in connection with the loan
and events related thereto.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation - continued
Additional
Scorpion Bay Loan
On
November 23, 2007, Scorpion entered into a loan agreement with Love Bug
Management Corp. (“Love Bug”), an entity owned by Atwell, whereby Scorpion
loaned Love Bug $100,000. The proceeds were used for Atwell and Camelot
expenses. As a result of this loan, Atwell paid approximately $36,000 in direct
Camelot expenses. The loan was secured with a blanket note and second deed of
trust on real property owned by Robert and Tamara Atwell. Scorpion received
47,000 Shares in connection with the loan and events related
thereto.
Scorpion
Bay Services in Connection with Camelot Development Tustin, LLC
On September 25, 2007, Camelot issued
Scorpion 28,000 shares for services in connection with Camelot Development
Tustin, LLC and the development of Camelot Studios at ATEP in conjunction with
Camelot Studio Group.
On October 25, 2007, Camelot issued
Scorpion 41,000 shares for services in connection with Camelot Development
Tustin, LLC and the development of Camelot Studios at ATEP in conjunction with
Camelot Studio Group.
The
Atwell Group
Throughout
2008, The Atwell Group, Inc. has paid for expenses on behalf of Camelot as
needed. With the occurrence of other financial resources becoming available, the
amount of resources committed by The Atwell Group had diminished when compared
to prior years. Due to the lack of funding being realized by the CSI investment
agreement and other transactions, we have renewed our agreement with The Atwell
Group to provide funding as needed during 2009. The Atwell Group, Inc. is owned
by our Chairman, Robert Atwell.
Private
Placements and Registrations
We are
also in the process of preparing a private placement memorandum and an S-1
registration statement for the purpose of funding Camelot Films® initial slate
of pictures. If the anticipated funding is successful, it is our goal to have
between ten and 12 motion pictures in various stages of development or
production within 12 to 24 months. In the event we are unable to complete the
funding, we could have to delay our slate until such time as the necessary
funding is acquired.
Like all
entertainment companies, our revenues and results of operations could be
significantly dependent upon the timing of releases and the commercial success
of the various projects we develop, none of which can be predicted with
certainty. Accordingly, our revenues and results of operations may fluctuate
significantly from period to period, and the results of any one period may not
be indicative of the results for any future periods. Similarly, the efficiencies
we aim to realize through our model may not materialize. Failure of the
efficiencies to materialize, along with other risks germane to the picture
production, may cause us to produce fewer projects than our plan calls
for.
Sources
of Revenue
Our
expected sources of revenue during 2009 and beyond are expected initially to be
derived from our Camelot Film and Media Group and our Camelot Production
Services Group.
Camelot
Film and Media Group
We expect
to begin generating minimal revenues, albeit slowly initially, during 2009 from
our Camelot Film and Media Group division, specifically being generated from two
divisions within Camelot Film and Media Group, Camelot Films® and Camelot
Features. It will take three to five years to realize significant revenues from
these divisions as they become fully operational.
We are
currently updating our business plan, the core of which is our film, television
and digital media business model. Upon completion of the business plan, we
expect to finalize a private placement and subsequent S-1 Registration which
could provide the funding necessary to launch our first slate of films under the
Camelot Films banner. In addition, we will continue to develop and package
projects within our Camelot Features division, including those projects listed
earlier in this report. Our urban division, Camelot Urban Entertainment, plans
on completing its first feature length documentary later this year with an
expected release date of early 2010. Initial pre-sales could generate limited
revenues prior to its formal release, although until the feature is completed we
will not know how the market will react.
Once our
films are funded and begin the production process, our distribution division
intends to engage international and domestic channels of distribution using a
variety of methods. If successful, these distribution outlets could generate
early limited revenues prior to the actual delivery of the films. The type of
film, subject matter and scale of the project will determine in most cases the
priority in which the following distribution methods are addressed:
|
·
|
Licensing
of videocassettes and digital video discs
(DVDs)
|
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation - continued
Camelot
Film and Media Group - continued
|
·
|
Pay-per-view
cable and satellite licensing
|
|
·
|
Pay
television and internet licensing
|
|
·
|
Broadcast
television, cable and satellite
licensing
|
|
·
|
Hotels,
airlines and other non-theatrical
exhibitions
|
|
·
|
Theatrical
exhibition
|
|
|
|
|
·
|
Mobile
and other forms of Digital Media
|
|
|
|
|
·
|
Syndicated
television licensing
|
|
|
|
|
·
|
internet
Protocol TV (IPTV)
|
Our
strategy of developing in-house distribution and marketing expertise, while
intended to increase the proportion of a given original motion picture’s revenue
we can retain, may actually have the effect of reducing the speed with which we
can obtain cash from any motion pictures we complete. This is due in part to the
way that many independent productions distribute their motion
pictures.
We
believe that many independent productions plan to engage sales agents to
distribute their motion pictures. These sales agents often license the
distribution rights to distributors on behalf of the production company, or
another party that owns the rights to the motion picture negative. In exchange
for these services, the agent normally receives a percentage of any licensing
fees generated by licensing the film to a distributor.
The
distributor’s licensing a film’s rights often has a fee set as a percentage of
gross revenue from the film. While a preset rate is used, the amount of this fee
is generally unknown at the time that the distribution agreement is entered
into, as there is no way to know with any degree of certainty how much revenue,
if any, will be generated by the film. However, in some cases the distributor
might pay a certain minimum amount to the production company, or rights owner,
upon delivery of a completed motion picture. This is sometimes referred to as a
minimum guarantee or simply as an advance. Such guarantees, when available,
reduce the perceived risks of parties financing original motion picture
productions. As a result, these advances can make it easier for producers to
obtain financing for a project.
Our
strategy does not involve working through sales agents, although if we are
unable to successfully market our films directly to distributors, we may have no
alternative but to pursue such channels. Under our strategy of marketing
directly to buyers and other distributors, we would still have the ability to
pursue and negotiate minimum guarantees and advances. However, in general we
believe that this would likely negatively impact the potential return we seek to
realize on our original motion picture productions. The result of this strategy
may be that the speed with which we convert film projects into cash inflows
could also be negatively impacted.
Expected
Significant Changes in the Number of Employees
According
to the Bureau of Labor Statistics, in 2008, the United States had about 367,900
wage and salary jobs in the motion picture production and distribution industry.
The majority of these jobs were in motion picture production and services,
including casting, acting, directing, editing, film processing, motion picture
and videotape reproduction, and equipment and wardrobe rental. Most motion
picture and distribution establishments employ fewer than 10
workers.
Many
additional individuals work in the motion picture production and distribution
industry on a freelance, contract, or part-time basis, but accurate statistics
on their numbers are not available. Many people in the film industry are
self-employed. They sell their services to anyone who needs them, often working
on productions for many different companies during the year. Competition for
these jobs is intense, and many people are unable to earn a living solely from
freelance work.
While
these factors appear to reinforce our belief that there is a large pool of
available resources to engage in the production of our original motion pictures,
there can be no guarantee that the resources will accept our terms or business
strategy. According to our planned business model, those that do are expected to
be engaged primarily as independent contractors. However, our plans also call
for substantially increasing the number of individuals we hire as salaried and
hourly employees.
None of
our executive officers or directors currently has a contracted compensation
package. The Board of Directors has established parameters for the anticipated
employment contracts, which are expected to be finalized during the second
quarter of 2009. However, our executive officers do receive
compensation. We also plan to hire a minimum of four additional personnel
engaged in marketing and distribution, operations and general and administrative
capacities. These planned changes in personnel alone are significant. However,
should we be required to engage a higher number of production professionals as
employees, instead of our current plans to engage many production personnel as
independent contractors, the increase in employees would be even more
significant.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Plan
of Operation - continued
General
Our
operations consist primarily of developing literary properties which can be
produced, distributed and marketed as original motion pictures, television
programming and digital media through our Camelot Film and Media Group. In
addition, we are continuing to pursue projects through our Camelot Studio Group
division and on a limited basis, projects within our Camelot Production Services
Group division. These have inherent long-term sales cycles. As a result, we
believe that period-to-period comparisons of our operating results are not
necessarily meaningful and should not be relied on as an indication of future
performance. However, it is still important that you read the discussion in
connection with the audited financial statements, the unaudited interim
financial and the related notes included elsewhere in this annual
report.
YEAR
ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED DECEMBER 31, 2007
REVENUE
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenues
|
|
$
|
58,568
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
We did
not generate any revenue for the year ended December 31, 2008. While we are
currently focused on developing literary properties which can be produced,
distributed and marketed as original motion pictures, television programming and
digital media through our Camelot Film and Media Group, our focus had been on
our studio group’s development of our first studio facility project formerly
known as “Camelot Studios at ATEP” in Tustin, California and on several projects
under our production services division. All of our divisions, including those
that have limited operations and those that are being developed, have not as yet
generated any revenue. We do not expect to generate any significant revenue from
any studio projects for two to three years. Revenue from film and media group
operations should begin to materialize within the next 24 months, depending upon
availability of financing and other logistical factors, including script
development and staffing.
COST OF SERVICES
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Services
|
|
$
|
95,700
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
Our cost
of services historically was comprised principally of consulting services
provided by contract individuals on behalf of our customer’s business model we
were structuring at that time. We provided no services that generated revenue
for the year ended December 31, 2008, and had no costs of services. To the
degree that we generate consulting revenue in future periods, consulting
services provided by officers during such periods are to be matched to revenue
associated with such services and recorded as costs of services. In future
periods, we expect to rely heavily on the ability to use exchanges of our equity
to key production and other personnel and contractors as a means of reducing the
cash required to complete original motion picture projects. Such reliance could
likely result in a lack of predictability and a great deal of volatility with
regard to our cost of sales and, therefore, our gross margin
percentage.
SALES
AND MARKETING EXPENSES
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
& Marketing Expenses
|
|
$
|
53,959
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
Since
inception, sales and marketing expenses have consisted of advertising,
promotional materials and public relations expenses. There were no Sales &
Marketing expenses for 2008 or 2007. In future periods, we expect that nearly
all of our sales and marketing expenses should be related to the distribution
and promotion of original motion pictures, television programming and digital
media we intend to produce. Similarly, we anticipate that nearly all such
expenses should require settlement in cash.
ITEM 6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
RESEARCH AND
DEVELOPMENT
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
& Development Expenses
|
|
$
|
252,550
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
Since
inception, research and development expenses have consisted primarily of costs
related to the acquisition, testing, design, development and enhancement of
certain technologies we held rights to and which we intended to use in the
future to meet our internal needs or the needs of ventures we might have
invested these technologies with. While the total dollar amount of research and
development expenses was zero during 2008 and there were none in
2007.
GENERAL AND ADMINISTRATIVE
|
|
Cumulative
During
Development
|
|
|
Year
Ended December 31,
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
General
& Administrative Expenses
|
|
$
|
13,418,567
|
|
|
$
|
1,406,916
|
|
|
$
|
1,864,178
|
|
(25%)
|
The
Company has incurred $13,418,567 of general and administrative expenses since
its inception. General and Administrative expenses were $1,864,178 for the year
ended, December 31, 2007, compared to $1,406,916 for the year ended, December
31, 2008.
The
general and general administrative expenses for 2008 were comprised of $602,300
of officer salaries and $319,385 of professional services and $71,133 of
professional fees (accounting, legal and other fees). Additionally,$123,520 for
marketing costs, $13,349 telephone costs, $143,188 rent, $10,196 for
insurance (D&O, workers comp and business liability), office staff payroll
$26,250, write off of screenplay costs previously capitalized of $79,700 and
$2,195 other administrative costs. These expenses were related to the pursuit of
the Company’s plan of developing Camelot Studios at ATEP and the development,
production and distribution of film, television and digital media
product.
The
general and general administrative expenses for 2007 were comprised of $450,000
of officer’s salaries and $713,032 of professional services and $290,519 of
professional fees (accounting, legal and other fees). Additionally, $84,994 in
expenses related to travel and industry trade shows, including the Cannes Film
Festival, was incurred during the second quarter of 2007. Other costs, $18,549
for marketing, seminars and trades, $18,667 telephone costs, $87,374 rent,
$48,647 for insurance (D&O, workers comp and business liability), office
staff payroll $91,227, bad debt $17,500 and $43,669 for other administrative
costs. These expenses were related to the pursuit of the Company’s plan of
developing Camelot Studios at ATEP and the development, production and
distribution of film, television and digital media product.
IMPAIRMENT OF LONG-LIVED ASSETS AND
IMPAIRMENT OF INVESTMENTS IN OTHER COMPANIES
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
Impairment
of Assets
|
|
$
|
2,402,338
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of Investments in Other Companies
|
|
$
|
710,868
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(0%)
|
|
Our
impairment policy requires management to review assets and investments for
impairment on an ongoing basis. In the case of investments in other companies,
this analysis, combined with our other accounting policies, is expected to have
a material impact on our results of operations in future periods. Our
accounting policies generally may require us to record services performed in
exchange for stock in early stage companies at a nominal value, since the stock
issued generally has no readily determinable value. However, when we used our
stock to effect investments in other companies, the bid price for our stock on
the date of issuance is used to value the transaction initially. Subsequently,
an impairment of this value may be required to reduce the carrying amount on our
books to reflect an impairment in value.
Our
financial results since inception are indicative of the extent to which
impairment of investments and assets can impact our operating results. Since
inception, impairment of investments in other companies accounts for $710,868,
or approximately 4% of our $16,705,021 net loss, whereas impairment of
long-lived assets has accounted for $2,402,338, or approximately 20% of our net
loss since inception. Together, these two expense categories account for 26% of
our net loss from inception and through the year ended December 31,
2005.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
IMPAIRMENT OF LONG-LIVED
ASSETS AND IMPAIRMENT OF INVESTMENTS IN OTHER COMPANIES - continued
An
impairment loss is recorded in the period in which we determine that the
carrying amount is not recoverable. This requires the Company to make long-term
forecasts of its future revenues and costs related to the assets subject to
review. These forecasts may require assumptions about demand for the Company's
products and services, future market conditions and technological developments
in order to support fair value and avoid impairment. Significant and
unanticipated changes to these assumptions could require a provision for
impairment in a future period.
INCOME
TAXES
There is
no current or deferred tax expense for the period from January 1, 2008 to
December 31, 2008 due to net losses from operations by the Company. As of
December 31, 2008 we had federal net operating loss carryforwards of over
$8,800,000, compared to operating loss carryforwards of over $7,700,000 as of
December 31, 2007. The operating loss carryforwards expire beginning in 2013 and
may be subject to significant limitations attributable to change in control
rules.
NET
LOSS
|
|
Cumulative
During Development
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
Stage
|
|
|
2008
|
|
|
2007
|
|
|
%
Change
|
|
Net
(loss)
|
|
$
|
(16,705,021
|
)
|
|
$
|
(428,575
|
)
|
|
$
|
(2,103,235
|
)
|
|
|
80%
|
|
Net
(loss) per share
|
|
|
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
1,231,640
|
|
|
|
|
|
The net
loss for 2008 was less than 2007 due to termination of the ATEP project during
the year. General and Administrative expenses were more in 2007 due
to professional service fees charged for money raised for the company during the
year.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company has had minimal revenues, has
experienced an accumulated deficit of $16,705,021 and has a stockholders’
deficit. These conditions, the loss of financial support from affiliates, and
the failure to secure a successful source of additional financial resources
raise substantial doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustments to reflect the
possible future effects on the classification of liabilities that may result
from the outcome of this uncertainty.
We have
incurred net losses from operations in each fiscal year since our inception. The
changes in components of our net loss are important. Impairment of assets
accounted for 0% of our net loss in 2003, 2004, 2005 and 2006, whereas
impairment of assets accounted for 40% of our net loss in 2002. We anticipate
that impairments should no longer play a major role in our operating results for
2007 as well as in future periods. Although none of our impairment losses have
consumed cash flow since inception, our ability to convert the assets, resources
and technology we acquired into gains, and ultimately positive cash flow, had
largely determined the viability or lack thereof of our business model.
Similarly, to the degree that we had to issue more shares to acquire assets and
resources that were later impaired and not readily recovered, such events were
dilutive to our existing shareholders. Going forward, impairments should
hopefully no longer be an issue.
Off-Balance Sheet
Arrangements
We do not
have any off-balance sheet arrangements, financings, or other relationships with
entities or other persons, also known as “special purpose entities”
(SPEs).
Critical
Accounting Estimates
The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires our management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. As such, in accordance with the use of
accounting principles generally accepted in the United States of America, our
actual realized results may differ from management’s initial estimates as
reported. A summary of our significant accounting policies are detailed in the
notes to the financial statements which are an integral component of this
filing.
Management
evaluates the probability of the utilization of the deferred income tax asset
related to the net operating loss carryforward. The Company has estimated a
$7,600,000 deferred income tax asset related to net operating loss carryforward
and other book/tax differences at December 31, 2008. Management determined that
because the Company has yet to generate taxable income and that the generation
of taxable income in the short term is uncertain, it was appropriate to provide
a valuation allowance for the total deferred income tax asset, resulting in a
net deferred income tax asset of $0.
ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - continued
Critical
Accounting Policies
The
Company has defined a critical accounting policy as one that is both important
to the portrayal of the Company's financial condition and results of operations;
and requires the management of the Company to make difficult, subjective or
complex judgments. Estimates and assumptions about future events and their
effects cannot be perceived with certainty. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments. These estimates may change as new events occur, as more
experience is acquired, as additional information is obtained and as the
Company's operating environment changes.
We have
identified the policies below as critical to our business operations and the
understanding of our results of operations. The impact and any associated risks
related to these policies on our business operations is discussed throughout
Management's Discussion and Analysis of Financial Condition and Results of
Operations, where such policies affect our reported and expected financial
results. In the ordinary course of business, we have made a number of estimates
and assumptions relating to the reporting of results of operations and financial
condition in the preparation of our financial statements in conformity with
accounting principles generally accepted in the United States of America. Actual
results could differ significantly from those estimates under different
assumptions and conditions. We believe that the following discussion addresses
our most critical accounting policies, which are those that are most important
to the portrayal of our financial condition and results of operations and
require our most difficult, subjective, and complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.
Acquired
Technology and Intangible Assets
Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), establishes accounting and reporting standards for
recording, valuing and impairing goodwill and other intangible assets. The
adoption of SFAS 142 did not have an impact on the Company's financial condition
or results of operations for fiscal year 2004. However, as the Company's
business model is heavily dependent on acquiring intangible assets, this
pronouncement is expected to have a material impact on the Company's financial
condition and results of operations in future periods, should the Company
survive as an ongoing concern.
Going
Concern Uncertainties
The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles accepted in the United States, which
contemplate continuation of Camelot as a going concern. However, Camelot has
experienced recurring operating losses and negative cash flows from
operations. This is due in part to Camelot’s historical focus on
developing Camelot Studios at ATEP, which has necessitated considerable monetary
and time commitments from Camelot in lieu of Camelot pursuing revenue generating
opportunities either through its Camelot Film and Media Group or Camelot
Production Services Group divisions. Camelot’s Board of Directors made the
decision to have Camelot focus on the studio project due to the long term
importance of the studio and the impact successful completion of that project
would have on Camelot Studio Group and Camelot overall. As a result, Camelot has
had to delay several revenue generating projects which it will implement once
the basic entitlement phase has been concluded for Camelot Studios at ATEP. With
the ATEP project now over, the company is pursuing those revenue generating
projects.
Camelot’s
continued existence is dependent upon its ability to increase operating revenues
and/or obtain additional equity financing. As part of our ongoing efforts to
obtain additional financing, we have renewed our agreement with The Atwell Group
to provide funding for our basic operational requirements. Previously, in
January 2008 Camelot agreed to sell up to 30% of its interest in Camelot
Development Group, LLC (“CDG”) to Camelot Studio Investors (“CSI”) for up to
$3,000,000 on an as needed basis. Proceeds from the sale were to be used to
retire debt, provide operating expenses for Camelot and establish a reserve for
contingency expenditures related to the Camelot Studios at ATEP project and
Camelot Studio Group. Those funds, with the exception of $200,000, never
materialized and that agreement has been terminated.
On
December 27, 2006, we entered into a Securities Purchase Agreement with AJW
Capital Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New
Millennium Capital Partners II, LLC. Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (i) $1,000,000 in Callable
Secured Convertible Notes (the “Notes”) and (ii) warrants to purchase 100,000
shares of our common stock (the “Warrants”). This transaction is referred to
also as the “NIR Funding”. Additional agreements with NIR were entered into on
July 31, 2008 and September 22, 2008, whereby NIR provided an additional
$160,000 and $15,000 respectively.
We
entered into an agreement with Eagle Consulting Group, Inc. (“Eagle”) on March
28, 2003, to provide operational funding for the Company, which expires on March
28, 2008. In exchange for twenty percent (20%)of the Company’s outstanding
common stock on a non-dilutive, continuing basis until the Company can secure
additional financing from another source, Eagle provided funding for the
Company’s annual audit, quarterly filings, accounts payable and other ongoing
expenses including office, phones, business development, legal and accounting
fees. On June 5, 2007, the Company completed its funding transaction with NIR
and its note holders, whereby the note holders have invested monies into the
Company, thereby ending the agreement with Eagle.
In
addition, during 2006 and 2007 we also reached agreement with Scorpion Bay, LLC
(“Scorpion”), to provide short term loans to Camelot on an as needed basis. To
date, all of these loans have been repaid. Further, The Atwell Group has
provided advances for certain Camelot expenses when necessary. It appears likely
that such funding and financial arrangements with The Atwell Group and our
officers and directors should continue to be enough to meet all of the Company's
cash requirements in 2009. However, the Company must find additional sources of
financing in order to remain a going concern in the future. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
ITEM 6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Significant
Accounting Practices
Beginning
January 1, 2004, we adopted new accounting rules which were effective January 1,
2001, which require, among other changes, that exploitation costs, including
advertising and marketing costs, be expensed as incurred. Theatrical print costs
are amortized over the periods of theatrical release of the respective
territories. Under accounting rules in effect for periods prior to January 1,
2001, such costs were capitalized as a part of film costs and amortized over the
life of the film using the individual-film-forecast method. The current practice
dramatically increases the likelihood of reporting losses upon a film’s
theatrical release, but should provide for increased returns when a film is
released in the ancillary markets of home video and television, when we incur a
much lower proportion of advertising costs. Additional provisions under the new
accounting rules include changes in revenue recognition and accounting for
development costs and overhead, and reduced amortization periods for film
costs.
Accounting for Motion Picture Costs
In
accordance with accounting principles generally accepted in the United States
and industry practice, we amortize the costs of production, including
capitalized interest and overhead, as well as participations and talent
residuals, for feature films using the individual-film-forecast method under
which such costs are amortized for each film in the ratio that revenue earned in
the current period for such title bears to management’s estimate of the total
revenues to be realized from all media and markets for such title. All
exploitation costs, including advertising and marketing costs, are expensed as
incurred. Theatrical print costs are amortized over the periods of theatrical
release of the respective territories.
We plan
to regularly review, and revise when necessary, our total revenue estimates on a
title-by-title basis, which may result in a change in the rate of amortization
and/or a write-down of the film asset to estimated fair value. These revisions
can result in significant quarter-to-quarter and year-to-year fluctuations in
film write-downs and amortization. A typical film recognizes a substantial
portion of its ultimate revenues within the first two years of release. By then,
a film has been exploited in the domestic and international theatrical markets
and the domestic and international home video markets, as well as the domestic
and international pay television and pay-per-view markets. A similar portion of
the film’s capitalized costs should be expected to be amortized accordingly,
assuming the film or television program is profitable.
The
commercial potential of individual motion pictures varies dramatically, and is
not directly correlated with production or acquisition costs. Therefore, it is
difficult to predict or project a trend of our income or loss. However, the
likelihood that we report losses, particularly in the year of a motion picture’s
release, is increased by the industry’s method of accounting which requires the
immediate recognition of the entire loss (through increased amortization) in
instances where it is estimated the ultimate revenues of a motion picture could
not recover our capitalized costs. On the other hand, the profit of a profitable
motion picture must be deferred and recognized over the entire revenue stream
generated by that motion picture. This method of accounting may also result in
significant fluctuations in reported income or loss, particularly on a quarterly
basis, depending on our release schedule, the timing of advertising campaigns
and the relative performance of individual motion pictures.
Impairment of Long-Lived
Assets
We adhere
to the provisions of Statement of Financial Accounting Standards ("SFAS") No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"). The Company reviews the carrying value of its long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable through undiscounted net cash flows. Impairment is calculated based
on fair value of the asset, generally using net discounted cash flows. Any
long-lived assets to be disposed of are reported at the lower of the carrying
amount or fair value less estimated costs to sell.
Equity Investments
We are
accounting for any potential investment in other related entities in the future
in accordance with Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for
Investments in Common Stock.” In accordance with APB Opinion No. 18,
management plans to continually review its equity investments to determine if
any impairment has occurred. If, in management’s judgment, an investment has
sustained an other-than-temporary decline in its value, the investment is
written down to its fair value by a charge to earnings. Such determination is
dependent on the specific facts and circumstances, including the financial
condition of the investee, subscriber demand and growth, demand for advertising
time and space, the intent and ability to retain the investment, and general
economic conditions in the areas in which the investee operates.
Derivative
Instruments
In June
1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended by Statement of Financial Accounting Standards No. 137,
“Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of Financial Accounting Standards Board No. 133,” and by
Statement of Financial Accounting Standards No. 138, “Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an Amendment of
Financial Accounting Standards Board Statement No. 133,” which is effective for
all quarters of fiscal years beginning after June 15, 2000. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. We adopted Statement of Financial Accounting Standards No.
133 beginning January 1, 2004. The adoption of Statement of Financial Accounting
Standards No. 133 did materially impact our results of operations with our
convertible notes payable entered into in December 2006.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Accounting
for Films
In June
2000, the Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position 00-2 “Accounting by
Producers or Distributors of Films” (“SoP 00-2”). SoP 00-2 establishes new
accounting standards for producers or distributors of films, including changes
in revenue recognition, capitalization and amortization of costs of acquiring
films and accounting for exploitation costs, including advertising and marketing
expenses. We elected adoption of SoP 00-2 effective as of April 1,
2004.
The
principal changes as a result of applying SoP 00-2 are as follows:
Advertising
and marketing costs, which were previously capitalized to investment in films on
the balance sheet and amortized using the individual film forecast method, are
now expensed the first time the advertising takes place.
We
capitalize costs of production, including financing costs, to investment in
motion pictures. These costs are amortized to direct operating expenses in
accordance with SoP 00-2. These costs are stated at the lower of unamortized
motion picture costs or fair value (net present value). These costs for an
individual motion picture or television program are amortized in the proportion
that current period actual revenues bear to management’s estimates of the total
revenue expected to be received from such motion picture over a period not to
exceed ten years from the date of delivery.
Management
plans to regularly review, and revise when necessary, its total revenue
estimates, which may result in a change in the rate of amortization and/or
write-down of all or a portion of the unamortized costs of the motion picture to
its fair value. No assurance can be given that unfavorable changes to revenue
estimates will not occur, which may result in significant write-downs affecting
our results of operations and financial condition.
Revenue Recognition
Revenue
from the sale or licensing of motion pictures is recognized upon meeting all
recognition requirements of SoP 00-2. Revenue from the theatrical release of
motion pictures is recognized at the time of exhibition based on the company’s
participation in box office receipts. Revenue from the sale of DVDs in the
retail market, net of an allowance for estimated returns, is recognized on the
latter of shipment to the customer or “street date” (when it is available for
sale by the customer). Under revenue sharing arrangements, rental revenue is
recognized when we are entitled to receipts and such receipts are
determinable.
Revenues
from television licensing are recognized when the motion picture is available to
the licensee for telecast. For television licenses that include separate
availability “windows” during the license period, revenue is allocated over the
“windows.” Revenue from sales of international territories are recognized when
the feature film is available to the distributor for exploitation and no
conditions for delivery exist, which under most sales contracts requires that
full payment has been received from the distributor.
For
contracts that provide for rights to exploit a program on multiple media (i.e.
theatrical, video, television) with a fee for a single motion picture where the
contract specifies the permissible timing of release to various media, the fee
is allocated to the various media based on management’s assessment of the
relative fair value of the rights to exploit each media and is recognized as the
program is released to each media. For multiple-title contracts with a fee, the
fee is allocated on a title-by-title basis, based on management’s assessment of
the relative fair value of each title. Cash payments received are recorded as
deferred revenue until all the conditions of revenue recognition have been
met.
Income Taxes
The
Company recognizes future income tax assets and liabilities for the expected
future income tax consequences of transactions that have been included in the
financial statements or income tax returns. Future income taxes are provided for
using the liability method. Under the liability method, future income taxes are
recognized for all significant temporary differences between the tax and
financial statement bases of assets and liabilities.
Capital
Structure
The
Company has adopted Statement of Financial Accounting Standards No. 129,
"Disclosure of Information about Capital Structure" ("SFAS 129"), which requires
companies to disclose all relevant information regarding their capital
structure.
On
December 31, 2008, there were 1,563,977,942 shares outstanding of our $0.001 par
value Common Stock. Each share of Common Stock is entitled to one
vote.
On
December 31, 2008, there were 7,347,510 shares outstanding of our $0.001
par value Series A Convertible Preferred Stock. The Series A Preferred converts
to four shares of common stock for every one share of Series A Preferred Stock.
Each share of Series A Preferred Stock is entitled to 50 votes. Series A
Preferred ranks superior to our common stock and our Series C Preferred Stock
and ranks junior to our Series B Preferred Stock.
ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued
Capital
Structure - continued
On
December 31, 2008, there were 7,196,510 shares outstanding of our $0.001 par
value Series B Convertible Preferred Stock. The Series B Preferred converts to
10 shares of common stock for every one share of Series B Preferred Stock. Each
share of Series B Preferred Stock is entitled to 1,000 votes. Series B Preferred
ranks superior to all other classes of stock.
On
December 31, 2008, there were 7,151,500 shares outstanding of our $0.001
par value Series C Convertible Preferred Stock. The Series C Preferred converts
to one shares of common stock for every one share of Series C Preferred Stock.
Each share of Series C Preferred Stock is entitled to one vote. Series C
Preferred ranks superior to our common stock and ranks junior to our Series A
and Series B Preferred Stock.
On
October 25, 2007, the Company entered into a Share Issuance Agreement (“SIA”)
with Zuckerman, Kocmur and Scorpion (“JJT”). According to the terms and
conditions of the SIA, as additional consideration for Janez becoming a joint
venture partner with CDG, and in consideration for additional business
development and consulting efforts provided by JJT, JJT received 800,000 shares
of our common stock. 200,000 shares were issued to Zuckerman, 200,000 shares
were issued to Kocmur, these shares were valued at the market price at the date
of issue $0.60 and recorded as professional services in the amount of $240,000.
The 400,000 shares were issued to Scorpion in Preferred Series A and B stock
were recorded at the market price at the date of issue and recorded as
professional services in the amount of $307,276. In addition,
Zuckerman, Wilson and Joseph Petrucelli were nominated to serve on our Board of
Directors. The parties also agreed on a common stock structure which provides
JTT and Robert P. Atwell, our Chairman (“Atwell”) with anti-dilution protection.
Further, the SIA directs the Company to seek stockholder approval to increase
the authorized shares of the common stock to 400,000,000 and increase the Board
of Directors from five to seven members. The SIA has been terminated and is no
longer in effect.
ITEM 7. FINANCIAL STATEMENTS
We are
filing the following reports, financial statements and notes to financial
statements with this Annual Report. These reports may be found following Part
III of this Annual Report.
ITEM 8. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLCOSURES
Since
January 28, 2008, McKennon, Wilson & Morgan, LLP has served as the company’s
Certifying Accountant.
On
January 28, 2008, the Company engaged McKennon, Wilson & Morgan, LLP as its
Certifying Accountant for 2007 year end. The Company has no consulting
arrangements or other services that are performed by McKennon, Wilson &
Morgan, LLP.
On
January 28, 2008, the Company dismissed Malone & Bailey, CPA’s as its
Certifying Accountant for 2007 year-end audit. The Company had no disagreements
or other issues with Malone & Bailey. The audit committee felt it was better
to have the auditor located in the same region as the Company. Malone &
Bailey is located in Houston, Texas. McKennon, Wilson & Morgan, LLP is
located in Irvine, California. During 2007, quarterly reviews were
performed by Malone & Bailey, CPA’s. The Company had no consulting
arrangements or other services that are performed by Malone-Bailey, CPA’s or by
Epstein, Weber & Conover and/or Moss/Adams, CPA’s.
ITEM
8A. CONTROL AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’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 for timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes 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
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Evaluation
of Disclosure Controls and Procedures
The
Company, under the supervision and with the participation of its management,
including the Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Company’s “disclosure controls
and procedures” (as such term is defined in Rule 13a-15(e) under the
Exchange Act) as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective to
ensure that information required to be disclosed in reports filed or submitted
by the Company under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and that
information required to be disclosed by the Company is accumulated and
communicated to the Company’s management to allow timely decisions regarding the
required disclosure.
ITEM 8A. CONTROL AND PROCEDURES -
continued
Management’s
Report on Internal Control over Financial Reporting
Our
management, including the Certifying Officer, is responsible for establishing
and maintaining adequate internal control over financial reporting, as defined
in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of our financial statements for external purposes in accordance
with generally accepted accounting principles. Our internal control over
financial reporting includes those policies and procedures that: (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that our receipt and expenditures are being
made only in accordance with authorizations of management and our Board of
Directors; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.
All
internal control systems, no matter how well designed, have inherent
limitations. A system of internal control may become inadequate over time
because of changes in conditions or deterioration in the degree of compliance
with the policies or procedures. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
Our
management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008 using the criteria set forth by the Commission
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on this assessment, our management concluded that, as of
December 31, 2008, our internal control over financial reporting disclosure
controls and procedures were not effective to ensure that the information
required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s
rules and forms, and is accumulated and communicated to our management,
including the Certifying Officer, as appropriate to allow timely decisions
regarding required disclosure, due to the material weaknesses described
below.
In light
of the material weaknesses described below, our management, including the
Certifying Officer, performed additional analysis and other post-closing
procedures to ensure our financial statements were prepared in accordance with
generally accepted accounting principles. Accordingly, we believe that the
financial statements included in this report fairly present, in all material
respects, our financial condition, results of operations and cash flows for the
periods presented.
A
material weakness is a control deficiency (within the meaning of the Public
Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 2) or
combination of control deficiencies, which result in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. The management has identified the
following four material weaknesses which have caused the management to conclude
that our disclosure controls and procedures were not effective at the reasonable
assurance level:
1. We do
not have sufficient segregation of duties within accounting functions due to the
limited personnel, which is a basic internal control. This will change with the
addition of more staff members.
2.
Procedures are not in place to properly cut-off accounts payable and accrue
un-invoiced liabilities.
3. The
accounting department lacks adequate skills to account for stock based
compensation for employees and non-employees related to stock issued for
liabilities or services, and derivative accounting for convertible debt with a
conversion rate with no floor (causing derivative accounting).
Our
management, including the Certifying Officer, has discussed this matter with our
current independent registered public accounting firm. To remediate the material
weaknesses in our disclosure controls and procedures identified above, in
addition to working with our independent auditors, we have continued to refine
our internal procedures to address these weaknesses. These procedures include
using an external consultant to assist in the identification and calculation of
difficult accounting transactions which generally are associated with debt and
equity.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting during the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
Code of
Ethics
We have
adopted a Code of Business Conduct that applies to all our directors, officers
(including our principal executive officer and principal financial officer) and
employees. The Code of Business Conduct can be found on our website at www.camelotfilms.com.
We plan to also post on this section of our website any amendment to the Code of
Business Conduct, as well as any waivers that are required to be disclosed in
accordance with Securities and Exchange Commission or market
regulations.
PART
III
ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
The
following table sets forth the names and ages of the current directors and
executive officers of the Company as of December 31, 2008, the principal offices
and positions with the Company held by each person and the date such person
became a director or executive officer of the Company. Each serves until the
next annual meeting of stockholders.
Name
|
|
Age
|
|
Position
|
|
Date
of Appointment
|
|
|
|
|
|
|
|
Robert
P. Atwell
|
|
55
|
|
President,
Chief Executive Officer, Chairman
|
|
March
19, 2003
|
|
|
|
|
|
|
|
George
Jackson
|
|
48
|
|
Secretary,
Chief Financial Officer, Director
|
|
April
1, 2005
|
|
|
|
|
|
|
|
Robert P.
Atwell, 55, has been Chairman,
President and Chief Executive Officer of the Company since March 19, 2003. Mr.
Atwell is also the President of The Atwell Group, Inc., which encompasses
several companies that Mr. Atwell has been affiliated with since 1978, including
The Corporate Solution, Inc. (1978), Eagle Consulting Group, Inc. (1996), The
Atwell Group, LLC (2004) and Camelot Films, Inc. (1978). Mr. Atwell is also the
majority stockholder of two pink sheet companies, Sky440, Inc. and Emaji, Inc.
Mr. Atwell recently took over control of those two companies to implement a
restructuring of their operations and to install new management teams. Mr.
Atwell’s private companies specialize in taking small companies public, securing
and implementing assignments for a variety of agencies and corporations
including general business consulting, corporate restructuring, mergers and
acquisitions, corporate investigations and securities administration. Mr. Atwell
has been involved in all aspects of motion picture industry, including business
affairs, development, production, distribution, finance, sales and
marketing. Mr. Atwell began his career in the entertainment business
in 1971, working initially in television and independent film before
establishing Camelot Films in 1978.
ITEM 9. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT. - continued
George
Jackson, 48, was appointed Chief Financial Officer and joined the Board of
Directors on April 1, 2005. Mr. Jackson has been a Certified Public Accountant
since 1984. He worked with the public accounting firm of KPMG. While at KPMG he
worked as a consultant and auditor on many film companies including: Carolco
Films, New World Pictures and others. He was the co-founder, CEO & CFO of
several fitness centers from 1985 to 1999. He was responsible for managing
companies with over $20 million in revenue, 540 employees in the United States
and Asia, raising over $10 million in capital and managing the accounting
departments and preparing financial statements for shareholders in the U.S. and
Asia. He sold all his fitness center assets to Bally Total Fitness in early
2000, netting a return to shareholders of over 45% on an annual basis. From 2000
to present he has developed more fitness centers in Asia and been a director to
several fitness companies. Mr. Jackson graduated from the University of Southern
California with a B.S. in Accounting in 1982.
Board
Committees
The Board
of Directors of the Company has a standing Audit Committee, Corporate Governance
and Nominating Committee and Compensation Committee.
Audit
Committee
The
principal functions of the Audit Committee are to review and monitor the
Company’s financial reporting and the internal and external audits. The
committee’s functions include, among other things: (i) to select and
replace the Company’s independent registered public accounting firm;
(ii) to review and approve in advance the scope and the fees of our annual
audit and the scope and fees of non-audit services of the independent registered
public accounting firm; (iii) to receive and consider a report from the
independent registered public accounting firm concerning their conduct of the
audit, including any comments or recommendations they might want to make in that
connection, and (iv) to review compliance with and the adequacy of our
major accounting and financial reporting policies and controls. The Audit
Committee met four times during the fiscal year ended December 31, 2008. It
currently consists of Messrs. Atwell (Chairman) and Jackson. The Board has
determined that Messrs. Atwell and Jackson are not “independent” as defined in
the listing standards of the NASDAQ Stock Market.
Corporate
Governance and Nominating Committee
Messrs.
Atwell (Chairman) and Atwell constitute the Corporate Governance and Nominating
Committee. The Board has determined that the members of the committee are not
“independent” as
defined in the listing standards of the NASDAQ Stock Market. The primary
functions of the Corporate Governance and Nominating Committee are to identify,
evaluate and recommend nominees to serve as Directors and review corporate
governance principles and practices and respond to regulatory initiatives and
requirements. The Corporate Governance and Nominating Committee met four times
in the fiscal year ended December 31, 2008.
Compensation
Committee
Messrs.
Atwell (Chairman) and Jackson are the members. The primary functions of the
Compensation Committee are to review and approve the compensation of the Chief
Executive Officer and the other executive officers of the Company, to recommend
the compensation of the directors, to review and approve the terms of any
employment contracts with executive officers and to produce an annual report for
inclusion in the Company’s proxy statement. The Compensation Committee also
administers and interprets the Company’s equity compensation and employee
benefit plans and grants all awards under the employee’s stock incentive
plan.
Significant
Employees
We rely
on our Board of Directors, Executive Officers, and all of our employees to
further the development of our business.
Family
Relationships
There are
no family relationships.
Involvement
in Certain Legal Procedures
None.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's directors
and executive officers, and persons who beneficially own more than ten percent
of a registered class of our equity securities (referred to as "reporting
persons"), to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities. Reporting persons are required by Commission regulations to
furnish us with copies of all Section 16(a) forms they file. To the Company's
knowledge, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than ten percent beneficial owners during such
period were satisfied.
ITEM
10. EXECUTIVE COMPENSATION
None of our executive officers or
directors currently has a contracted compensation package. The Board of Directors has established
parameters for the anticipated employment contracts, which are expected to be
finalized during the second quarter of 2009. Our President and CEO
earned $420,000 as a base salary in 2008. Our CFO earned $150,000 as a base
salary in 2008. As of December 31, 2008 the CEO and CFO had not
received these amounts and they are recorded as related party accounts payable
on the balance sheet. In addition to the base salary, additional consideration
is due and will be determined by the Board of Directors in 2009. The additional
consideration will be added to the compensation packages for 2009, which are
expected to increase.
ITEM 10. EXECUTIVE
COMPENSATION - continued
The
following table summarizes all compensation paid to our President and Chief
Financial Officer for services rendered in all capacities to the Company during
each of the fiscal years ended December 31, 2008 and 2007.
Name
and Principal Position
|
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
|
Non-Qualified
Deferred Compensation Earnings
($)
|
|
|
All
Other Compensation
($)
|
|
Totals
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
P. Atwell,
(1)
President,
Chief
|
|
|
2008
|
|
$
|
420,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
420,000
|
Executive
Officer
|
|
|
2007
|
|
$
|
250,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Jackson, (2)
Secretary,
Chief
|
|
|
2008
|
|
$
|
150,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
150,000
|
Financial
Officer
|
|
|
2007
|
|
$
|
100,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Ellis, (3)
Chief
Operating
|
|
|
2008
|
|
$
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
0
|
Officer
|
|
|
2007
|
|
$
|
70,000
|
|
|
0
|
|
|
70,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
$
|
140,000
|
Stock
Option Plan
Our Board
of Directors adopted the 2007 Stock Plan on October 1, 2007 (“Plan”). Under the
Plan, stock options may be granted to eligible participants in the form of
Incentive Stock Options (ISOs) under the Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or options which do not qualify as ISOs
(non-Qualify Stock Options or "NQSOs"). In addition, the Plan permits several
types of grants, including outright grants of common stock (“Awards”), direct
purchase rights (“Purchase Rights”) and other stock rights as determined by the
board. The aggregate number of shares which may be issued under the Plan is
Twenty Million (20,000,000), subject to certain allowed
adjustments.
Under the
Plan, outstanding options must be exercised within 10 years from the date of
grant and no later than three months after termination of employment or service
as a director, except that any optionee who is unable to continue employment or
service as a director due to total and permanent disability may exercise such
options within one year of termination and the options of an optionee who is
employed or disabled and who dies must be exercised within one year after the
date of death.
The
Plan should require that the exercise prices of options granted must be at least
equal to the fair market value of a share of common stock on the date of grant,
provided that for incentive options if an employee owns more than 10% of the
Company's outstanding common stock then the exercise price of an incentive
option must be at least 110% of the fair market value of a share of the
Company's common stock on the date of grant, and the maximum term of such option
may be no longer than five years. The aggregate fair market value of common
stock, determined at the time the option is granted, for which incentive stock
options become exercisable by an employee during any calendar year, is to be
limited to an amount to be determined by our Board of Directors.
The Plan
is to be administered by the Company's Board of Directors, or a committee
thereof, which determines the terms of options granted, including the exercise
price, the number of shares of common stock subject to the option, and the terms
and conditions of exercise. No option granted under the Plan is transferable by
the optionee other than by will or the laws of descent and distribution, and
each option is exercisable during the lifetime of the optionee only by such
optionee.
Director
Compensation
Directors
who are not employees of the Company or any of its subsidiaries and who do not
have a compensatory agreement providing for service as a director of the Company
or any of its subsidiaries are eligible to receive the following
compensation:
|
|
|
|
Annual
retainer for each Director, paid quarterly in advance
|
|
$
|
5,000
|
|
Additional
annual retainer for Chairs of the Compensation Committee and Nominating
and Governance Committee
|
|
$
|
1,000
|
|
Additional
annual retainer for Chair of the Audit Committee
|
|
$
|
1,000
|
|
The
Company pays each director’s reasonable travel, lodging, meals and other
expenses connected with their Board service. As of April 15, 2009, the Company’s
Board of Directors did not have any members that were not employees and or
officers of the Company.
The
Non-Employee Directors’ Deferred Compensation Plan provides that eligible
directors may elect to defer 50% to 100% of their retainer fees. Each deferral
election must be made prior to the year such retainer payment is due and will
last for the entire year. Deferral elections may be terminated for the next
year. Deferred amounts may be used to acquire our common stock at fair market
value on the date each retainer payment would be otherwise paid to an eligible
director, to acquire stock units equivalent to the fair market value of our
common stock on the date each retainer payment would be otherwise paid or may be
paid in cash following termination of service as a director with interest
accruing at the prime rate on such deferred fees.
ITEM 10. EXECUTIVE
COMPENSATION - continued
Directors
who are employees and non-employee directors who are not eligible for the
foregoing non-employee director compensation receive no separate compensation
for director service.
2008
Non-Employee Director Compensation
The
following table provides information regarding compensation earned by, awarded
or paid to non-employee directors who served during the year ended
December 31, 2008.
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or
Paid in
Cash
($)
|
|
Value of Option
Awards
($)
|
Non-equity
Incentive
Plan
Compensation
|
All
Other
Compensation
|
Total
|
None
|
|
$
|
0
|
|
0
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
0
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
|
Certain Relationships and Related
Transactions
None of
our Board members are related. There were no Company related transactions
between the Board members in 2008.
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following tables set forth, as of December 31, 2008, certain information
regarding the ownership of Camelot’s capital stock by Camelot's Board of
Director’s, executive officers and each person who is known to Camelot to be a
beneficial owner of more than 5% of Camelot’s Common Stock. Unless otherwise
indicated below, to Camelot’s knowledge, the persons listed below have sole
voting and investing power with respect to his or her shares of Common Stock,
except to the extent authority is shared by spouses under applicable community
property laws.
The
number of shares of common stock owned are those "beneficially owned" as
determined under the rules of the Securities and Exchange Commission, including
any shares of common stock as to which a person has sole or shared voting or
investment power and any shares of common stock which the person has the right
to acquire within 60 days through the exercise of any option, warrant or right.
All shares are held beneficially and of record and each record shareholder has
sole voting and investment power.
No
officer, director or security holder listed herein owns any common stock
warrants, options or rights not listed herein.
All
shares are held beneficially and of record and each record shareholder has sole
voting and investment power. The address at which each Executive Officer and
Director can be reached is the Company's headquarters.
As of
December 31, 2008, there were 1,563,977,942 shares of Common Stock held by 127
stockholders of record. Of these shares, 308,334 shares of Common Stock are
being held by Camelot in reserve for funding and other contractual obligations.
As a result, there are 1,563,669,608 shares of Common Stock considered to be
issued and outstanding.
Name
of Beneficial
Owner
|
Shares
Beneficially
Owned
|
Percent
|
|
|
|
Robert
P. Atwell, Inc. (1)
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
531,766,319
|
34%
|
|
|
|
George
Jackson (2)
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
58,535,599
|
4%
|
|
|
|
TOTAL
5% Stockholders as a Group
|
590,301,918
|
38%
|
|
|
|
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS - continued
(1)
Includes all shares owned and or under the control of the Beneficial
Owner. Robert P. Atwell is the owner of The Atwell Group, Inc. and other
entities that have holdings in Camelot. Mr. Atwell is an officer and a
director of Camelot.
|
|
|
(2)
Includes all shares owned and or under the control of the Beneficial
Owner. Mr. Jackson is an officer and director of Camelot.
|
|
|
Securities
Ownership of Management
Common
Stock
The
following table sets forth as of December 31, 2008, certain information, based
on information obtained from the persons named below, with respect to the
securities ownership of the common stock by Management. Management owns 38%, or
590,301,918 shares, of the Company’s common stock.
Name
of Beneficial Owner
|
Shares
Beneficially Owned
|
Percent
(3)
|
|
|
|
Robert
P. Atwell (1)
Chairman,
President, CEO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
531,766,319
|
34%
|
|
|
|
George
Jackson (2)
Secretary,
CFO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
58,535,599
|
4%
|
Totals:
|
590,301,918
|
38%
|
|
|
|
Note
(1): Includes direct and indirect affiliate ownership.
|
|
|
Note
(2): Includes direct and indirect affiliate ownership.
|
|
|
Note
(3): Based on 1,563,669,608 shares issued as of 12/31/08.
|
|
|
The
number of shares of common stock owned are those "beneficially owned" as
determined under the rules of the Securities and Exchange Commission, including
any shares of common stock as to which a person has sole or shared voting or
investment power and any shares of common stock which the person has the right
to acquire within 60 days through the exercise of any option, warrant or
right.
All
shares are held beneficially and of record and each record stockholder has sole
voting and investment power. The address at which each Executive Officer and
Director can be reached is the Company's headquarters.
Preferred
Stock
The
following table sets forth as of December 31, 2008, certain information, based
on information obtained from the persons named below, with respect to the
securities ownership of preferred stock by Management. Management owns 99%, or
21,536,819 shares, of the Company’s 21,695,521 total shares of preferred
stock.
As of
December 31, 2008, we had three classes of preferred stock, Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock.
On
December 31, 2008, there were 7,196,510 shares outstanding of our $0.001 par
value Series B Convertible Preferred Stock. The Series B Preferred converts to
10 shares of common stock for every one share of Series B Preferred Stock. Each
share of Series B Preferred Stock is entitled to 1,000 votes. Series B Preferred
ranks superior to all other classes of stock.
On
December 31, 2008, there were 7,347,511 shares outstanding of our $0.001
par value Series A Convertible Preferred Stock. The Series A Preferred converts
to 4 shares of common stock for every one share of Series A Preferred Stock.
Each share of Series A Preferred Stock is entitled to 50 votes. Series A
Preferred ranks superior to our common stock and ranks junior to our Series B
Preferred Stock.
On
December 31, 2008, there were 7,151,500 shares outstanding of our $0.001
par value Series C Convertible Preferred Stock. The Series C Preferred converts
to 1 share of common stock for every one share of Series C Preferred Stock. Each
share of Series C Preferred Stock is entitled to 1 vote. Series C Preferred
ranks superior to our common stock and ranks junior to our Series A and Series B
Preferred Stock.
ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS - continued
Name
of Beneficial Owner
|
Series
A Preferred
Shares
Beneficially Owned
|
Percent
(3)
|
|
|
|
Robert
P. Atwell (1)
Chairman,
President, CEO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
6,125,010
|
83%
|
|
|
|
George
Jackson (2)
Secretary,
CFO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
1,110,000
|
15%
|
Totals:
|
7,235,010
|
98%
|
Note
(1): Includes shares held directly and indirectly. Converts to 24,500,040
common shares. Equals 306,250,500 votes.
|
|
|
Note
(2): Includes shares held directly and indirectly. Converts to 4,440,000
common shares. Equals
55,500,000
votes.
(3)
Based on 7,347,511 total Series A Shares
|
|
|
Name
of Beneficial Owner
|
Series
B Preferred
Shares
Beneficially Owned
|
Percent
(3)
|
|
|
|
Robert
P. Atwell (1)
Chairman,
President, CEO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
6,060,809
|
84%
|
|
|
|
George
Jackson (2)
Secretary,
CFO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
1,110,000
|
15%
|
Totals:
|
7,170,809
|
99%
|
|
|
|
Note
(1): Includes shares held directly and indirectly. Converts to 60,608,090
common shares. Equals 6,060,809,000 votes.
|
|
|
Note
(2): Includes shares held directly and indirectly. Converts to 11,100,000
common shares. Equals 1,110,000,000 votes.
Note
(3): Based on 7,196,510 total Series B Shares
|
|
|
Name of Beneficial Owner
|
Series C Preferred
Shares Beneficially Owned
|
Percent (3)
|
|
|
|
Robert
P. Atwell (1)
Chairman,
President, CEO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
6,030,000
|
84%
|
|
|
|
George
Jackson (2)
Secretary,
CFO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
1,101,000
|
15%
|
Totals:
|
7,131,000
|
99%
|
|
|
|
Note
(1): Includes shares held directly and indirectly. Converts to 6,030,000
common shares. Equals 6,030,000 votes.
|
|
|
Note
(2): Includes shares held directly and indirectly. Converts to 1,101,000
common shares. Equals 1,101,000 votes.
|
|
|
Note
(3): Based on 7,151,500 total Series C Shares. |
|
|
ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS - continued
Voting Rights by Class
Summary as of December 31, 2008
Common
|
|
Shares
|
|
|
Common Equivalent
|
|
|
Votes
|
|
|
Percentage
|
|
Management
|
|
|
590,301,918 |
|
|
|
590,301,918 |
|
|
|
590,301,918 |
|
|
|
38 |
% |
Others
|
|
|
973,367,690 |
|
|
|
973,367,690 |
|
|
|
973,367,690 |
|
|
|
62 |
% |
Total
|
|
|
1,563,669,608 |
|
|
|
1,563,669,608 |
|
|
|
1,563,669,608 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A
|
|
Shares
|
|
|
Common Equivalent
|
|
|
|
|
|
Percentage |
|
Management
|
|
|
7,235,010 |
|
|
|
28,940,040 |
|
|
|
361,750,500 |
|
|
|
98 |
% |
Others
|
|
|
112,501 |
|
|
|
450,004 |
|
|
|
5,625,050 |
|
|
|
2 |
% |
Total
|
|
|
7,347,511 |
|
|
|
29,390,044 |
|
|
|
367,375,550 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B
|
|
Shares
|
|
|
Common Equivalent
|
|
|
|
|
|
Percentage
|
|
Management
|
|
|
7,170,809 |
|
|
|
71,708,090 |
|
|
|
7,170,809,000 |
|
|
|
99 |
% |
Others
|
|
|
25,701 |
|
|
|
257,010 |
|
|
|
25,701,000 |
|
|
|
1 |
% |
Total
|
|
|
7,196,510 |
|
|
|
71,965,100 |
|
|
|
7,196,510,000 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C
|
|
Shares
|
|
|
Common Equivalent
|
|
|
|
|
|
Percentage
|
|
Management
|
|
|
7,131,000 |
|
|
|
7,131,000 |
|
|
|
7,131,000 |
|
|
|
99 |
% |
Others
|
|
|
20,500 |
|
|
|
20,500 |
|
|
|
20,500 |
|
|
|
1 |
% |
Total
|
|
|
7,151,500 |
|
|
|
7,151,500 |
|
|
|
7,151,500 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Shares
|
|
|
Common Equivalent
|
|
|
|
|
|
Percentage
|
|
Management
|
|
|
611,838,737 |
|
|
|
698,081,048 |
|
|
|
8,129,992,418 |
|
|
|
89 |
% |
Others
|
|
|
973,526,392 |
|
|
|
974,095,204 |
|
|
|
1,004,714,240 |
|
|
|
11 |
% |
Total
|
|
|
1,585,365,129 |
|
|
|
1,672,176,252 |
|
|
|
9,134,706,658 |
|
|
|
100 |
% |
Voting
Rights of Management and Beneficial Owners of 5% or More of the Common Stock as
of December 31, 2008
The
following table shows the total voting rights of management and beneficial
owners of 5% or more of common stock on items that are presented to stockholders
at annual and special meetings of the stockholders which require stockholder
approval.
Name
of Beneficial Owner (1)
|
Total
Votes
|
Percent
|
|
|
|
Robert
P. Atwell
Chairman,
President, CEO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
6,904,855,819
|
76%
|
|
|
|
George
Jackson
Secretary,
CFO
130
Vantis, Suite 140
Aliso
Viejo, CA 92656
|
1,225,136,599
|
13%
|
|
|
|
All
Other Common Stockholders
|
1,004,714,240
|
11%
|
|
|
|
Totals:
|
9,134,706,658
|
100%
|
|
|
|
Note
(1): Includes direct and indirect affiliate ownership.
|
|
|
Involvement
in Certain Legal Proceedings
None of
our management is involved in any type of legal proceedings.
ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
The
following transactions are for year ended December 31, 2008. All transactions
are incorporated by reference and can be found through our previous
filings:
Except as
indicated below, and for the periods indicated, there were no material
transactions, or series of similar transactions, since the beginning of the
Company’s last fiscal year, January 1, 2008, or any currently proposed
transactions, or series of similar transactions, to which we were or are a
party, in which the amount involved exceeds $100,000, and in which any director
or executive officer, or any security holder who is known by us to own of record
or beneficially more than 5% of any class of our common stock, or any member of
the immediate family of any of the foregoing persons, has an
interest.
Camelot
Studio Group
Camelot
Studio Group (“CSG”), one of our major divisions, had been in the process of
developing its first major studio facility, known as Camelot Studios at ATEP, as
part of the Advanced Technology and Education Park (“ATEP”) in Tustin,
California. That project was terminated in August 2008. As part of that process,
CSG formed Camelot Development Group, LLC (“CDG”) which is a 50% joint venture
partner with Janez Investments XI Tustin, LLC (“JIT”) in Camelot Development
Tustin, LLC (“CDT”). CDT was negotiating with the South Orange County Community
College District (“SOCCCD”) to be the master developer for the ATEP project,
including Camelot Studios at ATEP. To date, the Company has invested
approximately $2,600,000 in the Camelot Studios at ATEP project since the
Company began the process of locating CSG’s first studio facility at the Tustin
site in September 2005.
During
the first quarter of 2008, CDG agreed to enter into an agreement with Camelot
Studio Investors, LLC (“CSI”), whereby CSI would purchase 30% of CDG for
$3,000,000. As part of that transaction, Pacific Surf Partners, LP (“PSP”) would
receive 20% of CDG.
Timothy
Wilson (“Wilson”), a former director and stockholder of the Company, is the
managing member of Scorpion Bay, LLC (“Scorpion”), which owns 50% of JIT. Wilson
is also the managing member of CSI and PSP.
Jeff
Zuckerman (“Zuckerman”), a former director and stockholder of the Company, is
Senior Vice-President of Janez Group (“Janez”), which is a 50% owner of
JIT.
John
Kocmur (“Kocmur”), a stockholder, is President of Janez.
Share
Issuance Agreement
On
October 25, 2007, the Company entered into a Share Issuance Agreement (“SIA”)
with Zuckerman, Kocmur and Scorpion (“JJT”). According to the terms and
conditions of the SIA, as additional consideration for Janez becoming a joint
venture partner with CDG, and in consideration for additional business
development and consulting efforts provided by JJT, JJT received 80,000,000
shares of our common stock. 20,000,000 shares were issued to Zuckerman,
20,000,000 shares were issued to Kocmur and 40,000,000 shares were issued to
Scorpion. In addition, Zuckerman, Wilson and Joseph Petrucelli were nominated to
serve on our Board of Directors. The parties also agreed on a common stock
structure which provides JTT and Robert P. Atwell, our Chairman (“Atwell”) with
anti-dilution protection. Further, the SIA directs the Company to seek
stockholder approval to increase the authorized shares of the common stock to
400,000,000 and increase the Board of Directors from five to seven members. The
SIS has been terminated and is no longer in effect.
Eagle
Consulting Group
We
entered into an agreement with Eagle Consulting Group, Inc. (“Eagle”) on March
28, 2003, to provide operational funding for the Company, which expired on March
28, 2008. Atwell is the Chairman of Eagle. Eagle is now part of The Atwell
Group, owned by Atwell. This agreement has been renewed with The Atwell Group.
In exchange for twenty percent (20%) of the Company’s outstanding common stock
on a non-dilutive, continuing basis until the Company can secure additional
required financing from another source, Eagle had agreed to provide funding for
the Company’s annual audit, quarterly filings, accounts payable and other
ongoing expenses including office, phones, business development, legal and
accounting fees. In addition, Eagle received an option to receive 2,000,000
cashless options to purchase common shares at $0.03 per share. For each one
dollar ($1) increase in the price of the Company’s stock, Eagle shall be
entitled to receive an additional two million options throughout the term of the
agreement. In addition, the Company shall have the first right of refusal to
purchase the options from Eagle for the current market value once Eagle notifies
the Company that it intends to exercise the options. In the event the Company
elects not to exercise this first right of refusal, and subject to applicable
laws, Eagle shall be entitled to exercise the sale of shares or options
immediately thereafter. As of December 31, 2008, Eagle has not exercised its
right to receive the options and therefore no options have been
granted.
On June
5, 2007, the Company completed its funding transaction with NIR and its note
holders, whereby the note holders have invested monies into the Company, thereby
effectively ending the agreement with Eagle. The total stock to be issued in
connection with the NIR funding has yet to be determined as the note holders
have not yet completed their conversions. Upon completion of the NIR
conversions, the total amount of additional stock due Eagle under the terms of
the agreement shall be determined and issued to Eagle with an effective date of
June 5, 2007, the date the funding agreement with NIR was
completed.
For 2007,
Eagle advanced to the Company a total, including interest, of $170,747, which
covered part of our operating expenses for 2007, including general and
administrative costs, costs for screenplays and prepaid exhibitor’s space. We
have not issued Eagle any shares of common stock for repayment of expenses
advanced on behalf of the Company.
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - continued
Eagle
Consulting Group - continued
For 2006,
Eagle advanced to the Company a total, including interest, of $429,182, which
covered all of our operating expenses for 2006, including general and
administrative costs, costs for screenplays and prepaid exhibitor’s space. We
issued Eagle 2,427,101 shares of common stock for repayment of expenses advanced
on behalf of the Company. The stock issued was valued at the weighted average
price per share. Eagle received an additional 1,270,722 shares of common stock
for continuing to finance our operations under the agreement described
above.
The
Atwell Group
We
previously leased office space provided by The Atwell Group, Inc., a
privately-held company owned by Mr. Atwell, our President, Chief Executive
Officer and Chairman. The space was leased on an annual basis for $72,000 per
year. The current lease expires on December 31, 2009. However, both The Atwell
Group and we decided to terminate the lease early and move the company to its
current location in Irvine. Settlement discussions are currently ongoing. In
addition, The Atwell Group, The Corporate Solution and Love Bug Management
Corp., all of which are owned by Mr. Atwell, paid expenses on behalf of Camelot
during 2008 and 2007. Further, Mr. Atwell and his wife, Tamara Atwell, were
guarantors on various financial transactions involving Camelot during 2008 and
2007.
Scorpion
Bay
Scorpion
Bay LLC, Pacific Surf Partners, Camelot Studio Investors LLC (“Scorpion”), which
are managed or co-managed by Timothy Wilson, a former director, were involved in
various business and financial transactions involving Camelot during 2008 and
2007. These transactions have been discussed throughout this
report.
ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K LIST OF EXHIBITS ATTACHED OR INCORPORATED
BY REFERENCE PURSUANT TO ITEM 601 OF REGULATION S-B.
Where so
indicated by footnote, exhibits, which were previously filed, are incorporated
by reference. For exhibits incorporated by reference, the location of the
exhibit in the previous filing is indicated in parentheses.
|
|
|
|
|
Exhibit No.
|
|
Title
of Document
|
|
Location
|
3.1.1
|
|
Certificate
of Incorporation
|
|
Incorporated
by reference as Exhibit 2.1 to Form 10-K filed April 17,
2001
|
|
|
|
3.1.2
|
|
Amended
Certificate of Incorporation
|
|
Incorporated
by reference to Form 8-K filed June 29, 2004
|
|
|
|
3.2
|
|
By-laws
|
|
Incorporated
by reference as Exhibit 2.1 to Form 10-K filed April 17,
2001
|
|
|
|
4.1
|
|
Entry
Into a Material Definitive Agreement with New Millennium Capital Partners
II LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference to Form 8-K filed on January 4, 2007
|
|
|
|
|
|
4.2
|
|
Form
of Stock Purchase Warrant issued to New Millennium Capital Partners II,
LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference as Exhibit 4.3 to Form 8-K filed on January 4,
2007
|
|
|
|
4.3
|
|
Registration
Rights Agreement dated December 27, 2006 by and among New Millennium
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.4 to Form 8-K filed on January 4,
2007
|
|
|
|
4.4
|
|
Security
Agreement dated December 27, 2006 by and among the Company and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.5 to Form 8-K filed on January 4,
2007
|
|
|
|
4.5
|
|
Intellectual
Property Security Agreement dated December 27, 2006 by and among the
Company and New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.6 to Form 8-K filed on January 4,
2007
|
|
|
|
4.6
|
|
Structuring
Agreement with Lionheart
|
|
Incorporated
by reference as Exhibit 4.7 to Form 8-K filed on January 4,
2007
|
|
|
|
4.7
|
|
Change
in Registrant’s Certifying Accountant
|
|
Incorporated
by reference to Form 8-K filed on January 31, 2007
|
|
|
|
ITEM13.
|
EXHIBITS AND
REPORTS ON FORM 8-K LIST OF EXHIBITS ATTACHED OR INCORPORATED BY REFERENCE
PURSUANT TO ITEM 601 OF REGULATION S-B. -continued
|
4.8
|
|
Change
in Registrant’s Certifying Accountant
|
|
Incorporated
by reference to Form 8-K/A-1 filed on January 31, 2007
|
|
|
|
4.9
|
|
Entry
Into a Material Definitive Agreement with New Millennium Capital Partners
II LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference to Amendment No. 1 to Form 8-K filed on January 31,
2007
|
|
|
|
4.10
|
|
Securities
Purchase Agreement dated December 27, 2006, by and among the Company and
New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.1 to Form 8-K filed on February 1,
2007
|
|
|
|
4.11
|
|
Form
of Callable Convertible Secured Note by and among New Millennium Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.2 to Form 8-K filed on February 1,
2007
|
|
|
|
4.12
|
|
Entry
Into a Material Definitive Agreement
|
|
Incorporated
by reference to Amendment No. 2 to Form 8-K filed on February 2,
2007
|
|
|
|
4.13
|
|
Stock
Purchase Warrant issued to Lionheart Associates LLC d/b/a Fairhills
Capital
|
|
Incorporated
by reference as Exhibit 4.8 to Form 8-K filed on February 2,
2007
|
|
|
|
|
|
4.14
|
|
SB-2
Registration
|
|
Incorporated
by reference to SB-2 Registration Statement Form SB-2 filed on February 2,
2007
|
|
|
|
|
|
4.15
|
|
SB-2
Registration
|
|
Incorporated
by reference to SB-2 Registration Statement Form SB-2/A filed on May 11,
2007
|
|
|
|
|
|
4.16
|
|
SB-2
Registration
|
|
Incorporated
by reference to SB-2 Registration Statement Form SB-2/2A filed on May 31,
2007
|
|
|
|
|
|
4.17
|
|
Departure
of Directors
|
|
Incorporated
by reference to Form 8-K filed on July 31, 2007
|
|
|
|
|
|
4.18
|
|
Departure
of Directors
|
|
Incorporated
by reference to Form 8-K filed on August 31, 2007
|
|
|
|
|
|
4.19
|
|
S-8
Registration
|
|
Incorporated
by reference to Form S-8 filed on October 19, 2007
|
|
|
|
|
|
4.20
|
|
2007
Stock Option Plan
|
|
Incorporated
by reference as Exhibit 4.1 to Form S-8 filed on October 19,
2007
|
4.20
|
|
2007
Stock Option Plan
|
|
Incorporated
by reference as Exhibit 4.1 to Form S-8 filed on October 19,
2007
|
|
|
|
|
|
4.21
|
|
Changes
in Registrant’s Certifying Accountant
|
|
Incorporated
by reference to Form 8-K filed on February 1, 2008
|
|
|
|
|
|
4.22
|
|
Changes
in Registrant’s Certifying Accountant
|
|
Incorporated
by reference to Form 8-K/A filed on February 7, 2008
|
|
|
|
|
|
4.23
|
|
Appointment
of Directors
|
|
Incorporated
by reference to form 8-K filed on February 19, 2008
|
|
|
|
|
|
4.24
|
|
Departure
of Directors
|
|
Incorporated
by reference to form 8-K filed on May 19, 2008
|
|
|
|
|
|
4.25
|
|
Departure
of Directors
|
|
Incorporated
by reference to form 8-K filed on May 30, 2008
|
4.26
|
|
Reverse
Stock Split
|
|
Incorporated
by reference to form 14-C filed on August 14, 2008
|
|
|
|
|
|
4.27
|
|
Entry
Into a Material Definitive Agreement with New Millennium Capital Partners
II LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference to Form 8-K filed on August 21, 2008
|
|
|
|
|
|
4.28
|
|
Securities
Purchase Agreement dated July 31, 2008, by and among the Company and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.1 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
ITEM13.
|
EXHIBITS AND
REPORTS ON FORM 8-K LIST OF EXHIBITS ATTACHED OR INCORPORATED BY REFERENCE
PURSUANT TO ITEM 601 OF REGULATION S-B. -continued
|
4.29
|
|
Form
of Callable Convertible Secured Note dated July 31, 2008, by and among New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.2 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.30
|
|
Form
of Stock Purchase Warrant issued to New Millennium Capital Partners II,
LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference as Exhibit 4.3 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.31
|
|
Registration
Rights Agreement dated July 31, 2008 by and among New Millennium Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.4 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.32
|
|
Security
Agreement dated July 31, 2008 by and among the Company and New Millennium
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.5 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.33
|
|
Intellectual
Property Security Agreement dated July 31, 2008 by and among the Company
and New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.6 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.34
|
|
Subsidiary
Security Agreement dated July 31, 2008 by and among the Company and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.7 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.35
|
|
Amendment
to Previous Notes by and among the Company and New Millennium Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.8 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.36
|
|
Form
of Callable Convertible Secured Note dated August 15, 2008 by and among
New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.9 to Form 8-K filed on August 21,
2008
|
|
|
|
|
|
4.37
|
|
Change
of Trading Symbol to CMLT
|
|
Incorporated
by reference to Form 8-K filed on August 29, 2008
|
|
|
|
|
|
4.38
|
|
Increase
in Authorized to 850,000,000
|
|
Incorporated
by reference to Form 14-C filed on December 19, 2008
|
|
|
|
|
|
4.39
|
|
Increase
in Authorized to 3,000,000,000
|
|
Incorporated
by reference to Form 14-C filed on December 19, 2008
|
|
|
|
|
|
4.40
|
|
Change
of Address to Irvine
|
|
Incorporated
by reference to Form 8-K filed on February 4, 2009
|
|
|
|
|
|
4.41
|
|
Increase
in Authorized to 6,000,000,000
|
|
Incorporated
by reference to Form 14-C filed on March 26, 2009
|
|
|
|
|
|
4.42
|
|
Increase
in Authorized to 10,000,000,000
|
|
Incorporated
by reference to Form 14-C filed on March 27, 2009
|
|
|
|
|
|
4.43
|
|
Annual
Stockholders Meeting May 13, 2009
|
|
Incorporated
by reference to Form 14-A filed on April 3, 2009
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
ITEM13.
|
EXHIBITS AND
REPORTS ON FORM 8-K LIST OF EXHIBITS ATTACHED OR INCORPORATED BY REFERENCE
PURSUANT TO ITEM 601 OF REGULATION S-B. -continued
|
32.1
|
|
Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
32.2
|
|
Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
|
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Our
current auditors for December 31, 2008 and December 31, 2007 are McKennon,
Wilson & Morgan, LLP. During the first three quarters of 2007,
Malone & Bailey PLC were our auditors. Our auditors for December 31, 2006
were Malone & Bailey, CPA’s. During the first three quarters of 2006,
Epstein, Weber & Conover, PLC were our auditors. That firm was acquired by
Moss/Adams, CPA’s at the end of 2006.
Epstein,
Weber & Conover, PLC had been the Company’s independent auditor since March
of 2004. James C. Marshall C.P.A., P.C., was the Company's independent auditor
for the three quarters ended September 30, 2003.
The
Principal Accountants performed the services listed below and were paid the fees
listed below:
Audit
Fees
McKennon,
Wilson & Morgan, LLP charged $20,000 for the year ended December 31, 2008
audit
McKennon,
Wilson & Morgan, LLP charged $18,000 for quarterly review fees during
2008.
McKennon,
Wilson & Morgan, LLP charged $25,000 for the year ended December 31, 2007
audit.
Malone-Bailey
charged $1,000 for documents related to the year ended December 31, 2007
audit.
Malone-Bailey
charged $24,037 for review of the quarterly statements during fiscal year
2007.
Malone-Bailey
charged $5,175 for review of the SB-2 and SB-2A during fiscal year
2007.
Malone-Bailey
charged $1,500 for review of the S-8 during fiscal year 2007.
Malone-Bailey
charged $22,000 for the year ended December 31, 2006 audit.
CAMELOT
ENTERTAINMENT GROUP, INC.
Financial
Statements as of
December
31, 2008
And
Independent Auditors’ Report
INDEX
TO FINANCIAL STATEMENTS
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
|
|
BALANCE
SHEETS AS OF DECEMBER 31, 2008 and 2007
|
F-3
|
|
|
STATEMENTS
OF OPERATIONS FOR 2008, 2007 AND FOR INCEPTION TO DECEMBER 31,
2008
|
F-4
|
|
|
STATEMENTS
OF STOCKHOLDERS' DEFICIT FOR INCEPTION TO DECEMBER 31,
2008
|
F-5
- F-10
|
|
|
STATEMENTS
OF CASH FLOWS FOR 2008, 2007 AND FOR INCEPTION TO DECEMBER 31,
2008
|
F-11
|
|
|
NOTES
TO FINANCIAL STATEMENTS
|
F-12
TO F-36
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
We have
audited the accompanying balance sheets of Camelot Entertainment Group, Inc. as
of December 31, 2008 and 2007 and the related statements of operations,
stockholders’ deficit, and cash flows for the years then ended. The financial
statements for the period April 21, 1999 (inception) through December 31, 2006,
were audited by other auditors whose reports expressed unqualified opinions on
those statements. 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 audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide 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 Camelot Entertainment Group, Inc.
as of December 31, 2008 and 2007, and the related statements of operations,
stockholders’ deficit, and cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that Camelot
Entertainment Group, Inc. will continue as a going concern. As discussed in Note
2 to the financial statements, Camelot Entertainment Group, Inc. suffered losses
from operations and has a working capital deficiency, which raises substantial
doubt about its ability to continue as a going concern. Management’s plans
regarding those matters also are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ McKennon Wilson & Morgan
LLP
McKennon
Wilson & Morgan LLP
Irvine,
California
April 15,
2009
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2008
|
|
|
2007
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash
|
|
|
$ |
175 |
|
|
$ |
122 |
|
Prepaid
Expenses
|
|
|
|
1,733 |
|
|
|
6,424 |
|
Total
Current Assets
|
|
|
|
1,908 |
|
|
|
6,546 |
|
|
|
|
|
|
|
|
|
|
|
School
District Deposit
|
|
|
|
- |
|
|
|
50,000 |
|
Deferred
Financing Costs
|
|
|
|
- |
|
|
|
54,984 |
|
Scripts
Costs
|
|
|
|
- |
|
|
|
79,700 |
|
Total
Other Assets
|
|
|
|
- |
|
|
|
184,684 |
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
$ |
1,908 |
|
|
$ |
191,230 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
Payable and Accured Liabilities
|
|
|
$ |
206,847 |
|
|
$ |
176,999 |
|
Accrued
Wages to Related Parties
|
|
|
|
722,000 |
|
|
|
350,000 |
|
Secured
Convertible Notes Payable, net of discount of $394,506 and $0,
respectively
|
|
|
92,070 |
|
|
|
- |
|
Derivative
Liability - Conversion Feature
|
|
|
|
147,838 |
|
|
|
- |
|
Note
Payable to Shareholder
|
|
|
|
215,598 |
|
|
|
300,000 |
|
Shareholder
Advances
|
|
|
|
22,830 |
|
|
|
134,757 |
|
Other
Current Liabilities
|
|
|
|
15,000 |
|
|
|
- |
|
Total
Current Liabilities
|
|
|
|
1,422,183 |
|
|
|
961,756 |
|
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative
Liability - Series A, B and C Convertible Preferred Stock Conversion
Feature
|
|
|
|
65,630 |
|
|
|
726,223 |
|
Secured
Convertible Notes Payable, net of current portion and discount of $407,246
and $647,762, respectively
|
|
|
311,897 |
|
|
|
295,970 |
|
Derivative
Liability - Conversion Feature
|
|
|
|
218,500 |
|
|
|
542,661 |
|
Derivative
Liability - Warrant
|
|
|
|
3,992 |
|
|
|
50,759 |
|
Total
Long Term Liabilities
|
|
|
|
600,019 |
|
|
|
1,615,613 |
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
2,022,202 |
|
|
|
2,577,369 |
|
|
|
|
|
|
|
|
|
|
|
Series
A, B, C Convertible Preferred Stock
|
|
|
|
50,905 |
|
|
|
28,152 |
|
Par
value $.001 per share, 50,000,000 shares authorized: 7,347,510, 7,196,510
and 7,151,500
|
|
|
|
|
|
shares
issued and outstanding as of December 31, 2008
|
|
|
|
|
|
|
|
|
|
35,000,000
shares authorized: 195,011, 86,510 and 0
|
|
|
|
|
|
|
|
|
|
shares
issued and outstanding as of December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit:
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
|
1,563,670 |
|
|
|
2,245 |
|
Par
Value $.001 Per Share; Authorized 2,950,000,000 Shares;
1,563,977,942 Shares
|
|
|
|
|
|
|
|
|
Issued
and 1,563,669,608 Outstanding as of December 31, 2008
|
|
|
|
|
|
|
|
|
|
Authorized
300,000,000 shares; 2,553,397 issued and
|
|
|
|
|
|
|
|
|
|
2,245,063
shares outstanding as of December 31, 2007
|
|
|
|
|
|
|
|
|
|
Additional
Paid-in Capital
|
|
|
|
13,070,152 |
|
|
|
13,859,910 |
|
Deficit
Accumulated During the Development Stage
|
|
|
|
(16,705,021 |
) |
|
|
(16,276,446 |
) |
Total
Stockholders' Deficit
|
|
|
|
(2,071,199 |
) |
|
|
(2,414,291 |
) |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Deficit
|
|
|
$ |
1,908 |
|
|
$ |
191,230 |
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integal part of theses financial
statements.
|
|
|
|
|
|
Camelot
Entertainment Group, Inc. |
|
(A
Development Stage Company) |
Statements
of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
Inception
on
|
|
|
|
|
|
|
|
|
|
April
21, 1999
|
|
|
|
For
Year Ended,
|
|
|
For
Year Ended,
|
|
|
through
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
-
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
58,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
|
|
- |
|
|
|
- |
|
|
|
58,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of Services
|
|
|
- |
|
|
|
- |
|
|
|
95,700 |
|
Sales
and Marketing
|
|
|
- |
|
|
|
- |
|
|
|
53,959 |
|
Research
and Development
|
|
|
- |
|
|
|
- |
|
|
|
252,550 |
|
General
and Administrative
|
|
|
1,406,916 |
|
|
|
1,864,178 |
|
|
|
13,418,567 |
|
Impairment
of Assets
|
|
|
- |
|
|
|
- |
|
|
|
2,402,338 |
|
Impairment
of Investments in Other Companies
|
|
|
- |
|
|
|
- |
|
|
|
710,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Expenses
|
|
|
1,406,916 |
|
|
|
1,864,178 |
|
|
|
16,933,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
OPERATING LOSS
|
|
|
(1,406,916 |
) |
|
|
(1,864,178 |
) |
|
|
(16,875,414 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
(625,711 |
) |
|
|
(717,537 |
) |
|
|
(2,175,467 |
) |
Gain
on Derivative Liabilities
|
|
|
1,404,052 |
|
|
|
478,480 |
|
|
|
1,890,360 |
|
Other
Income - CSI Investors
|
|
|
200,000 |
|
|
|
- |
|
|
|
200,000 |
|
Gain
on Extinguishment of Debt
|
|
|
- |
|
|
|
- |
|
|
|
255,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expenses)
|
|
|
978,341 |
|
|
|
(239,057 |
) |
|
|
170,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$ |
(428,575 |
) |
|
$ |
(2,103,235 |
) |
|
$ |
(16,705,021 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Dilutive Loss Per Common Share
|
|
$ |
(0.00 |
) |
|
$ |
(1.71 |
) |
|
|
|
|
Weighted
Average Number of Shares Outstanding
|
|
|
88,613,681 |
|
|
|
1,231,640 |
|
|
|
|
|
The
accompanying notes are an integal part of theses financial
statements.
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2004
|
|
|
338,564
|
|
|
|
339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,498,057
|
|
|
|
(6,059,442
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(561,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
|
|
1,000
|
|
|
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
2,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
Shares
issued for financing
|
|
|
67,913
|
|
|
|
68
|
|
|
|
-
|
|
|
|
|
|
|
|
203,671
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
203,739
|
|
Subscriptions
receivable for financing agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(116,069
|
)
|
|
|
-
|
|
|
|
(116,069
|
)
|
Share
issued for services
|
|
|
240,090
|
|
|
|
240
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,109,267
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,109,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
issued for financing
|
|
|
76,046
|
|
|
|
76
|
|
|
|
-
|
|
|
|
-
|
|
|
|
228,989
|
|
|
|
-
|
|
|
|
(316,003
|
)
|
|
|
-
|
|
|
|
(86,938
|
)
|
Advances
offset sub a/r
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
174,000
|
|
|
|
-
|
|
|
|
174,000
|
|
Shares
issued for debt
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for amt due
|
|
|
15,899
|
|
|
|
16
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,574
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,590
|
|
Value
of option exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
351,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
351,000
|
|
Net
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,265,278
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,265,278
|
)
|
Balance
as of December 31, 2004
|
|
|
749,512
|
|
|
|
750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,482,547
|
|
|
|
(7,324,720
|
)
|
|
|
(258,072
|
)
|
|
|
-
|
|
|
|
(99,493
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting
services
|
|
|
40,000
|
|
|
|
40
|
|
|
|
-
|
|
|
|
-
|
|
|
|
219,960
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for officers
salaries
|
|
|
22,760
|
|
|
|
22
|
|
|
|
-
|
|
|
|
-
|
|
|
|
189,822
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
189,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle
for expenses paid
|
|
|
18,487
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,908
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting
services
|
|
|
2,335
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,998
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for officers
salaries
|
|
|
35,383
|
|
|
|
35
|
|
|
|
-
|
|
|
|
-
|
|
|
|
174,965
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle
for expenses paid
|
|
|
14,527
|
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119,657
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle 20%
of shares issued
|
|
|
17,623
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
122,738
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
122,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for Shareholder
loans 2005
|
|
|
35,869
|
|
|
|
36
|
|
|
|
-
|
|
|
|
-
|
|
|
|
259,905
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
259,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A Preferred Stock issued
|
|
|
-
|
|
|
|
-
|
|
|
|
51,000
|
|
|
|
51
|
|
|
|
560,949
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
561,000
|
|
Class
B Preferred Stock issued
|
|
|
|
|
|
|
|
|
|
|
51,000
|
|
|
|
51
|
|
|
|
2,804,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,805,000
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,500,139
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,500,139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at Dec 31, 2005
|
|
|
936,496
|
|
|
|
936
|
|
|
|
102,000
|
|
|
|
102
|
|
|
|
12,026,397
|
|
|
|
(11,824,859
|
)
|
|
|
(258,072
|
)
|
|
|
-
|
|
|
|
(55,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss at December 31, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,348,352
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,348,352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for officers
salaries
|
|
|
51,915
|
|
|
|
52
|
|
|
|
-
|
|
|
|
-
|
|
|
|
469,948
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
470,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Consultants
|
|
|
20,098
|
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
181,068
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
181,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle for expenses paid
|
|
|
12,013
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114,309
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle Shareholder
loans
|
|
|
12,708
|
|
|
|
13
|
|
|
|
-
|
|
|
|
-
|
|
|
|
118,169
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
118,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Eagle per
agreement 20%
|
|
|
18,327
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,426
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Scorpion
Bay LLC
|
|
|
15,000
|
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135,135
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135,150
|
|
Imputed
interest on related notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,238
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at Dec 31, 2006
|
|
|
1,066,557
|
|
|
|
1,067
|
|
|
|
102,000
|
|
|
|
102
|
|
|
|
13,234,690
|
|
|
|
(14,173,211
|
)
|
|
|
(258,072
|
)
|
|
|
-
|
|
|
|
(1,195,425
|
)
|
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - continued
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Nucore
|
|
|
50,000
|
|
|
|
50
|
|
|
|
-
|
|
|
|
-
|
|
|
|
499,950
|
|
|
|
-
|
|
|
|
(500,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for interest on Note Payable
|
|
|
70,000
|
|
|
|
70
|
|
|
|
-
|
|
|
|
-
|
|
|
|
338,930
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
339,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for expenses paid
|
|
|
4,020
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,074
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
16,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
|
|
12,500
|
|
|
|
13
|
|
|
|
-
|
|
|
|
|
|
|
|
49,987
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for conversion of notes payable
|
|
|
12,508
|
|
|
|
13
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,411
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
liability relieved by conversions on N/P
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,399
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed
interest on Shareholders loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,246
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
2,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for service - Bastien & Associates
|
|
|
2,084
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,081
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
2,083
|
|
|
|
|
27,289
|
|
|
|
27
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,349
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,376
|
|
NIR
Fairhill Capital
|
|
|
90,000
|
|
|
|
90
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,665
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,755
|
|
Shares
issued for interest on Notes payable - Scorpion
Bay LLC
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,090
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,100
|
|
Shares
issued to Scorpion
Bay LLC
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,490
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,500
|
|
Shares
issued for interest on notes payable - Scorpion
Bay LLC |
|
|
28,000
|
|
|
|
28
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,772
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services - Patrick Winn
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,790
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,800
|
|
Shares
issued for services - Susan Sanchez
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,790
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,800
|
|
Cancelled
Subscription Receivable 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(258,072
|
)
|
|
|
-
|
|
|
|
258,072
|
|
|
|
-
|
|
|
|
|
|
Shares
issued to Scorpion Bay, LLC
|
|
|
91,000
|
|
|
|
91
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,046
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,137
|
|
Shares
issued for Services - Patrick Winn
|
|
|
27,680
|
|
|
|
28
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,106
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,134
|
|
Shares
issued for Services - Susan Sanchez
|
|
|
34,460
|
|
|
|
34
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,338
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,372
|
|
Preferred
Stock - Series A
|
|
|
|
|
|
|
|
|
|
|
144,010
|
|
|
|
144
|
|
|
|
189,950
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
190,094
|
|
Shares
issued to Dolpin Communities
|
|
|
50,000
|
|
|
|
50
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,722
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,772
|
|
Preferred
Stock - Series B
|
|
|
-
|
|
|
|
|
|
|
|
35,510
|
|
|
|
36
|
|
|
|
117,146
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
117,182
|
|
Shares
issued to NIR
|
|
|
30,200
|
|
|
|
30
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,505
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,535
|
|
Shares
issued for legal services - Chris Flannery
|
|
|
25,000
|
|
|
|
25
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,975
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares
issued to John Kozmur - investment
|
|
|
200,000
|
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Shares
issued to Jeff Zuckerman - investment
|
|
|
200,000
|
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - continued
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Joseph Petrucelli - legal services
|
|
|
25,000
|
|
|
|
25
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,975
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares
issued to Chris Davis - services
|
|
|
2,384
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,190
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,192
|
|
Shares
issued to Micheal Ellis - services
|
|
|
47,924
|
|
|
|
48
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,952
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70,000
|
|
Shares
issued to Lewis Consulting - services
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
|
|
|
|
4,990
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares
issued to Craig Prater - services
|
|
|
1,458
|
|
|
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
728
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
729
|
|
Shares
issued to Scorpin Bay, LLC
|
|
|
147,000
|
|
|
|
147
|
|
|
|
-
|
|
|
|
|
|
|
|
52,781
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,928
|
|
Cancelled
Subscription Receivable to Nucore
|
|
|
(50,000
|
)
|
|
|
(50
|
)
|
|
|
-
|
|
|
|
|
|
|
|
(499,950
|
)
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
Derivative
Liability - Preferred Stock A & B
|
|
|
|
|
|
|
|
|
|
|
(281,520
|
)
|
|
|
(282
|
)
|
|
|
(306,785
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(307,067
|
)
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,103,235
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,103,235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2007
|
|
|
2,245,063
|
|
|
|
2,245
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,859,910
|
|
|
|
(16,276,446
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,414,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to Schubert Flint for services
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,990
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares
issued to NIR
|
|
|
55,000
|
|
|
|
55
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,440
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,495
|
|
Preferred
shares issued to Scorpion Bay
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,829
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
conversion 2nd qtr
|
|
|
315,000
|
|
|
|
315
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,331
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to Corporate
Solution, Inc. 8/13/2008
|
|
|
100,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
Shares issued to investors
escrow 8/1/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
Shares issued to Scorpion Bay,
LLC 8/13/2008
|
|
|
92,210
|
|
|
|
92
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,519
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,611
|
|
Shares issued to George
Jackson 8/13/2008
|
|
|
200,000
|
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Atwell Group,
Inc. 8/13/2008
|
|
|
280,000
|
|
|
|
280
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,720
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,000
|
|
Shares issued to Jeff
Brown 8/27/2008
|
|
|
10,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
290
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300
|
|
Shares issued to investors escrow
adjustment 8/27/2008
|
|
|
(10,000
|
)
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10
|
)
|
at
stock split
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to CEDE
9/8/2008
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to NIR 8/29/2008
|
|
|
124,700
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
624
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
749
|
|
Shares issued to NIR 9/3/2008
|
|
|
124,700
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,247
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,372
|
|
Shares issued to NIR 9/12/2008
|
|
|
124,700
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
811
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
936
|
|
Shares issued to NIR 9/17/2008
|
|
|
124,700
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
717
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
842
|
|
Shares issued to NIR 9/18/2008
|
|
|
55,000
|
|
|
|
55
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
160
|
|
Shares issued to NIR 9/22/2008
|
|
|
69,700
|
|
|
|
70
|
|
|
|
-
|
|
|
|
-
|
|
|
|
174
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
244
|
|
Shares issued to NIR 9/24/2008
|
|
|
124,700
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
839
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
964
|
|
Shares issued to NIR 9/26/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
218
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to K&L
Enterprises 9/12/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,000
|
|
Camelot
Entertainment Group, Inc.
|
|
(A Development
Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - continued
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to Patrick
Winn 9/5/2008
|
|
|
250,000
|
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
Shares issued to Robert
Atwell 9/18/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,000
|
|
Shares issued to George
Jackson 9/18/2008
|
|
|
300,000
|
|
|
|
300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
900
|
|
Shares issued to George
Jackson 9/19/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
Shares issued to Patrick
Winn 9/19/2008
|
|
|
250,000
|
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
Shares issued to Patrick
Winn 9/19/2008
|
|
|
250,000
|
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
Shares issued to Robert
Atwell 9/19/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to George
Jackson 9/26/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,400
|
|
Shares issued to Robert
Atwell 9/26/2008
|
|
|
31,818,180
|
|
|
|
31,818
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,182
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70,000
|
|
Shares issued to Chris
Flannery 9/26/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200
|
|
Shares issued to Thomas
Stepp 9/26/2008
|
|
|
500,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,100
|
|
Shares issued to Patrick
Winn 9/26/2008
|
|
|
500,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,100
|
|
Shares issued to Joe
Petrucelli 9/26/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200
|
|
Shares issued to Vince
Monaco 9/26/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200
|
|
Shares issued to Phillip
Parsons 9/26/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200
|
|
Shares issued to Douglas
Warner 9/27/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,400
|
|
Shares issued to Bastien Living
Trust 9/27/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,400
|
|
Shares issued to Lewis Consulting
Group 9/27/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,400
|
|
Shares issued to Jeffory
Smith 9/27/2008
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200
|
|
Shares issued to Tamara
Atwell 9/27/2008
|
|
|
2,272,727
|
|
|
|
2,273
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,727
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares issued to Susan
Sanchez 9/27/2008
|
|
|
2,272,727
|
|
|
|
2,273
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,727
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares issued to Patrick
Winn 9/27/2008
|
|
|
2,272,727
|
|
|
|
2,273
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,727
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares issued to Phillip
Parsons 9/27/2008
|
|
|
2,272,727
|
|
|
|
2,273
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,727
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
Shares issued to CEDE
9/30/2008
|
|
|
50,043
|
|
|
|
51
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to Hope Capital,
Inc 11/14/2008
|
|
|
18,000,000
|
|
|
|
18,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,400
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,600
|
|
Shares issued to Hope Capital,
Inc 11/18/2008
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,000
|
|
Shares issued to K&L
international, Inc 11/19/2008
|
|
|
22,000,000
|
|
|
|
22,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,600
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,400
|
|
Shares issued to K&L
international, inc 11/25/2008
|
|
|
34,000,000
|
|
|
|
34,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,400
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,600
|
|
Shares issued to Hope Capital,
Inc/ 11/25/2008
|
|
|
34,000,000
|
|
|
|
34,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,400
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,600
|
|
K&L
international, inc 12/2/2008
|
|
|
40,000,000
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,000
|
|
Hope Capital, Inc/ 12/3/2008
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Hope Capital, Inc/ 12/8/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
K&L
international, inc 12/8/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Hope Capital, Inc/ 12/17/2008
|
|
|
60,000,000
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(48,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,000
|
|
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - continued
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K&L
international, inc 12/17/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
Watson Investment Enterprises,
Inc. 12/18/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Watson Investment Enterprises,
Inc. 12/18/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Watson Investment Enterprises,
Inc. 12/29/2008
|
|
|
100,000,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(80,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Shares issued to La Jolla
Investment 10/1/2008
|
|
|
7,000,000
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,000
|
|
Shares issued to Tania
Babeshoff 10/1/2008
|
|
|
7,000,000
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,000
|
|
Shares issued to ATG, Inc
10/2/2008
|
|
|
7,000,000
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,800
|
|
Shares issued to Ongkaruck
Sripetch 10/2/2008
|
|
|
7,000,000
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,500
|
|
Shares issued to Robert
Atwell 10/8/2008
|
|
|
35,000,000
|
|
|
|
35,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,000
|
|
Shares issued to Rodger
Spainhower 10/14/2008
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,200
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
800
|
|
Shares issued to Alpha
Trade 11/7/2008
|
|
|
8,750,000
|
|
|
|
8,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,111
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,861
|
|
Shares issued to Philip
Parsons 11/10/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,000
|
|
Shares issued to Patrick
Winn 11/10/2008
|
|
|
2,500,000
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,500
|
|
Shares issued to Tamara
Atwell 11/10/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,000
|
|
Shares issued to Phil
Scott 11/19/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,500
|
|
Shares issued to Tamara
Atwell 11/21/2008
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Philip
Parsons 11/21/2008
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to George
Jackson 11/21/2008
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Robert
Atwell 11/21/2008
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Phil
Scott 12/2/2008
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
Shares issued to Doug
Warner 12/31/2008
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,000
|
|
Shares issued to Rodger
Spainhower 12/31/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Philip
Parsons 12/31/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Tamara
Atwell 12/31/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to George
Jackson 12/31/2008
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,000
|
|
Shares issued to Robert
Atwell 12/31/2008
|
|
|
350,000,000
|
|
|
|
350,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(280,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70,000
|
|
Shares issued to Phil
Scott 12/31/2008
|
|
|
10,000,000
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
Shares issued to Vince
Monaco 12/31/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Shares issued to Chris
Flannery 12/31/2008
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - continued
|
|
For
the Period from January1, 2004 to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to Shares to
NIR 10/1/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
623
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,422
|
|
Shares issued to
NIR 10/3/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
463
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,262
|
|
Shares issued to
NIR 10/8/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
783
|
|
Shares issued to
NIR 10/13/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(656
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
143
|
|
Shares issued to NIR 10/14/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(975
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(176
|
)
|
Shares issued to
NIR 10/16/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(975
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(176
|
)
|
Shares issued to
NIR 10/27/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(975
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(176
|
)
|
Shares issued to NIR 10/31/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(991
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(192
|
)
|
Shares issued to NIR 11/5/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(991
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(192
|
)
|
Shares issued to NIR 11/7/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(991
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(192
|
)
|
Shares issued to NIR 11/10/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(991
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(192
|
)
|
Shares issued to
NIR 11/11/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(987
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(188
|
)
|
Shares issued to NIR 11/14/2008
|
|
|
799,000
|
|
|
|
799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(991
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(192
|
)
|
Shares issued to NIR 11/14/2008
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,675
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(325
|
)
|
Shares issued to NIR 11/18/2008
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,675
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(325
|
)
|
Shares issued to NIR 11/19/2008
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,675
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(325
|
)
|
Shares issued to NIR 11/20/2008
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,648
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(298
|
)
|
Shares issued to NIR 11/21/2008
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,660
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(660
|
)
|
Shares issued to NIR 11/25/2008
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,660
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(660
|
)
|
Shares issued to NIR 11/26/2008
|
|
|
4,372,000
|
|
|
|
4,372
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,421
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,049
|
)
|
Shares issued to NIR 12/1/2008
|
|
|
8,341,000
|
|
|
|
8,341
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,177
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,836
|
)
|
Shares issued to NIR 12/8/2008
|
|
|
8,341,000
|
|
|
|
8,341
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,344
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,003
|
)
|
Shares issued to NIR 12/23/2008
|
|
|
10,000,000
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,402
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,402
|
)
|
Shares issued to NIR 12/30/2008
|
|
|
24,725,000
|
|
|
|
24,723
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(33,177
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(428,575
|
)
|
|
|
|
|
|
|
|
|
|
|
(428,575
|
)
|
Balance
at December 31, 2008
|
|
|
1,563,669,608
|
|
|
|
1,563,670
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,070,152
|
|
|
|
(16,705,021
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,071,199
|
)
|
The accompanying notes are an integal part of theses financial
statements.
Camelot
Entertainment Group, Inc.
|
|
(A
Development Stage Company)
|
|
Statements
of Cash Flows
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
Inception
on
|
|
|
|
|
|
|
|
|
|
April
21, 1999
|
|
|
|
For
Year Ended,
|
|
|
For
Year Ended,
|
|
|
through
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
loss:
|
|
$ |
(428,575 |
) |
|
$ |
(2,103,235 |
) |
|
$ |
(16,705,021 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred financing costs and discounts on notes payable
|
|
|
344,987 |
|
|
|
294,447 |
|
|
|
641,211 |
|
Imputed
interest on related party advances
|
|
|
17,000 |
|
|
|
2,246 |
|
|
|
38,484 |
|
Gain
on change of derivative liabilities
|
|
|
(1,404,052 |
) |
|
|
(478,480 |
) |
|
|
(1,245,251 |
) |
Common
stock issued for interest expense
|
|
|
138,450 |
|
|
|
430,309 |
|
|
|
703,909 |
|
Common
stock issued per dilution agreement
|
|
|
- |
|
|
|
- |
|
|
|
368,508 |
|
Value
of options expensed
|
|
|
- |
|
|
|
- |
|
|
|
351,000 |
|
Gain
on extinguishment of debt
|
|
|
- |
|
|
|
- |
|
|
|
(255,500 |
) |
Depreciation
|
|
|
- |
|
|
|
- |
|
|
|
3,997 |
|
Amortization
of deferred compensation
|
|
|
- |
|
|
|
- |
|
|
|
1,538,927 |
|
Common
stock issued for services
|
|
|
363,138 |
|
|
|
657,494 |
|
|
|
3,554,567 |
|
Common
Stock issued for related party services
|
|
|
- |
|
|
|
- |
|
|
|
22,000 |
|
Common
Stock issued for technology
|
|
|
- |
|
|
|
- |
|
|
|
19,167 |
|
Impairment
of investments in other companies
|
|
|
- |
|
|
|
- |
|
|
|
710,868 |
|
Impairment
of assets
|
|
|
129,700 |
|
|
|
17,500 |
|
|
|
2,758,060 |
|
Prepaid
services expensed
|
|
|
- |
|
|
|
- |
|
|
|
530,000 |
|
Expenses
paid through notes payable proceeds
|
|
|
- |
|
|
|
- |
|
|
|
66,439 |
|
Loss
on disposal of property and equipment
|
|
|
- |
|
|
|
- |
|
|
|
5,854 |
|
Preferred
stock issued to shareholder
|
|
|
- |
|
|
|
- |
|
|
|
3,366,000 |
|
Change
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in prepaids and other current assets
|
|
|
4,691 |
|
|
|
- |
|
|
|
(2,167 |
) |
Increase
(decrease) in accounts payable and accrued liabilities
|
|
|
173,993 |
|
|
|
36,374 |
|
|
|
558,183 |
|
Increase
(decrease) in due to officers
|
|
|
633,300 |
|
|
|
350,000 |
|
|
|
983,300 |
|
Cash
used in operating activities
|
|
|
(27,368 |
) |
|
|
(793,345 |
) |
|
|
(1,987,465 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
- |
|
|
|
- |
|
|
|
(6,689 |
) |
Purchase
of scripts and deposits
|
|
|
- |
|
|
|
(43,900 |
) |
|
|
(129,700 |
) |
Cash
used in investing activities
|
|
|
- |
|
|
|
(43,900 |
) |
|
|
(136,389 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
capital
|
|
|
- |
|
|
|
- |
|
|
|
25,500 |
|
Proceeds
from related party note payable
|
|
|
- |
|
|
|
300,000 |
|
|
|
1,316,613 |
|
Payments
on related party note payable
|
|
|
(20,652 |
) |
|
|
- |
|
|
|
(145,652 |
) |
Proceeds
from note payable
|
|
|
150,000 |
|
|
|
400,000 |
|
|
|
1,317,998 |
|
Payments
on notes payable
|
|
|
- |
|
|
|
(250,000 |
) |
|
|
(254,477 |
) |
Deferred
financing costs
|
|
|
- |
|
|
|
(13,000 |
) |
|
|
(88,000 |
) |
Advances
from shareholder
|
|
|
40,737 |
|
|
|
235,125 |
|
|
|
275,862 |
|
Payments
on shareholder advances
|
|
|
(142,664 |
) |
|
|
(270,291 |
) |
|
|
(412,955 |
) |
Cash
provided by financing activities
|
|
|
27,421 |
|
|
|
401,834 |
|
|
|
2,034,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash
|
|
|
53 |
|
|
|
(435,411 |
) |
|
|
(88,965 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at beginning of year
|
|
|
122 |
|
|
|
435,533 |
|
|
|
1,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at the end of the year
|
|
$ |
175 |
|
|
$ |
122 |
|
|
$ |
(87,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
Cash
paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for related party liabilities
|
|
$ |
- |
|
|
$ |
16,078 |
|
|
$ |
248,581 |
|
Creation
of additional debt discount
|
|
$ |
- |
|
|
$ |
320,315 |
|
|
$ |
920,315 |
|
Stock
issued for debt conversion
|
|
$ |
101,560 |
|
|
$ |
56,448 |
|
|
$ |
158,008 |
|
Derivative
liability relieved by conversion
|
|
$ |
19,722 |
|
|
$ |
48,399 |
|
|
$ |
68,121 |
|
Accrued
interest converted into convertible notes payable
|
|
$ |
144,143 |
|
|
$ |
- |
|
|
$ |
144,143 |
|
Accrued
salaries relieved with issuance of common stock
|
|
$ |
261,300 |
|
|
$ |
- |
|
|
$ |
261,300 |
|
Stock
issued per finance agreement
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
500,000 |
|
The accompanying notes are an integal
part of theses financial statements.
1.
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Camelot
Entertainment Group, Inc. (the “Company” or “Camelot”), a Delaware corporation,
is a film, television, digital media and entertainment company. Camelot
Entertainment Group has limited operations and thus is classified as a
development stage company. Due to the unexpected termination of its agreement to
develop Camelot Studios at Advanced Technology and Education Park (“ATEP”) in
August, 2008, management has been in the process of restructuring its
organization in order to focus on its core business objectives, which include
the development, production and distribution of feature film, television, home
video and digital media production. As a result, during the third and fourth
quarters of 2008, the Company’s operations were severely limited as it went
through the restructuring process. It did not generate any revenues
during 2008, and due to its limited operations and the long-term revenue cycle
of the film business in general, it does not expect to generate any significant
revenues in 2009. The Company’s ability to develop sustained operations and to
generate revenues is to a great extent dependent upon successful completion of
its planned funding activities during 2009 and beyond. Failure to complete its
funding objectives as discussed herein could have a material adverse effect on
Camelot’s ability to sustain its limited operations.
Management
believes that the direction the Company is now taking will allow it to fully
implement its business plan and as a result make progress toward sustaining
operations in 2009. Camelot’s business model classifies its planned operations
into the following three major divisions:
|
·
|
Camelot
Film and Media Group, consisting principally of feature film, television,
home video, and digital media production and
distribution;
|
|
·
|
Camelot
Studio Group, consisting principally of site acquisition, design,
development and operation of Camelot Studio locations domestically and
internationally;
|
|
·
|
Camelot
Production Services Group, consisting principally of consulting,
education, finance, production support and technology
services.
|
At
December 31, 2008, the Company had reduced its corporate staff to a total
of three full time and part time employees and approximately four
consultants which provides services to the Company on an as needed basis. The
Company also retains independent contractors on a project by project basis to
reduce its overhead. While Camelot’s main activity during the past three years
had been centered within the Camelot Studio Group division during the third and
fourth quarter of 2008, the Company refocused its development activities within
the Camelot Film and Media Group division. While Camelot continued to pursue
potential studio sites within its Camelot Studio Group division, it had very
limited operations in its Camelot Production Services Group division during
2008. The Company reduced the size of its physical office space, moving its
headquarters to Irvine, California during the first quarter of
2009.
Since
March 31, 2003, Camelot’s activities have consisted of developing and
implementing its business plan, securing operating capital, building a
management team, acquiring and developing literary properties for its Camelot
Film Group division, structuring its Camelot Studio Group division and embarking
on its first studio project “Camelot Studios at ATEP”, obtaining and processing
intellectual property rights, and entering into various ventures, consulting
agreements and alliances with affiliates and third-party
providers. Camelot has substantially relied on funding provided by
its Chairman, Robert P. Atwell, and his affiliated companies, including The
Atwell Group, Inc. and Eagle Consulting Group, Inc. and Scorpion Bay,
LLC; funding provided by the “NIR SB-2 Transactions”, including the affiliated
note holders; and funding provided by other directors, consultants and
stockholders.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
1. BASIS OF PRESENTATION
AND SIGNIFICANT ACCOUNTING POLICIES - continued
The
Company’s activities prior to becoming Camelot in 2003, going back to inception,
consisted of raising capital, recruiting a management team and entering into
ventures and alliances with affiliates. The Company, prior to Camelot,
substantially relied on issuing stock to officers, directors, professional
service providers and other parties in exchange for services and
technology.
Basis of
Presentation
Camelot
is considered to be a development stage enterprise as defined in Statement of
Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by
Development Stage Enterprises.” Consequently, Camelot has presented these
financial statements in accordance with that Statement, including losses
incurred from April 21, 1999 (Inception) to December 31, 2008. The Company has
not presented the statement of stockholders’ deficit for the year ended December
31, 2008, as the significant transactions relate to the issuance of common stock
issued for services and conversions of debt which are described elsewhere in the
document.
Cash and Cash
Equivalents - Camelot considers all investment instruments purchased with
maturities of three months or less to be cash equivalents
Script Costs -
Camelot capitalizes costs it incurs to buy or develop scripts that will later be
used in the production of films according to the guidelines in Statement of
Position (“SOP”) SOP 00-2. During 2008, Camelot expensed all script costs
previously capitalized of $79,700 as the scripts were not in production and had
been outstanding in excess of three years.
Income Taxes -
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Due to historical net losses, a
valuation allowance has been established to offset the deferred tax
assets.
In July
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes— an interpretation of FASB Statement No. 109 ("FIN 48")”. FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes. FIN 48 describes a recognition threshold and measurement
attribute for the recognition and measurement of tax positions taken or expected
to be taken in a tax return and also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The cumulative effect of adopting FIN 48 is required to be
reported as an adjustment to the opening balance of retained earnings (or other
appropriate components of equity) for that fiscal year, presented separately.
The adoption of FIN 48 did not have a material impact to the Company’s financial
statements.
Financial Instruments
- Financial instruments consist primarily of obligations under accounts
payable and accrued expenses, related party notes payable, convertible notes
payable and derivative liabilities. The carrying amounts of accounts payable and
accrued expenses approximate fair value because of the short maturity of those
instruments. The carrying value of related party notes payable, convertible
notes payable and derivative liabilities approximate fair value
because they contain market value interest rates and have specified repayment
terms. Camelot has applied certain assumptions in estimating these fair values.
The use of different assumptions or methodologies may have a material effect on
the estimates of fair values.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
1. BASIS OF PRESENTATION AND
SIGNIFICANT ACCOUNTING POLICIES - continued
Stock-Based Compensation -
Prior to December 31, 2005, Camelot accounted for stock based compensation under
SFAS No. 123 “Accounting for Stock-Based Compensation” as permitted under
this standard; compensation cost was recognized using the intrinsic value method
described in Accounting Principles Board Opinion No. 25, “Accounting for Stock
Issued to Employees”. Effective December 15, 2005, Camelot adopted SFAS No. 123
(Revised 2004), “Share-Based Payment”, and applied the provisions of the
Securities and Exchange Commission Staff Accounting Bulletin No. 107 using the
modified-prospective transition method. Camelot had not issued any options to
employees in the prior periods thus; there was no impact of adopting the new
standard.
Impairment of Long-lived
Assets - Impairment of long-lived assets is assessed by the Company
whenever there is an indication that the carrying amount of the asset may not be
recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted cash flows generated by those assets to the assets’ net
carrying value. The amount of impairment loss, if any, is measured as the
difference between the net book value of the assets and the estimated fair value
of the related assets.
Modifications to Convertible
Debt - The Company accounts for modifications of ECFs in accordance with
EITF 06-6 “Debtors Accounting for a Modification (or exchange) of Convertible
Debt Instruments”. EITF 06-6 requires the modification of a
convertible debt instrument that changes the fair value of an ECF be recorded as
a debt discount and amortized to interest expense over the remaining life of the
debt. If modification is considered a substantial (i.e. greater than
10% of the carrying value of the debt), an extinguishment of the debt is deemed
to have occurred, resulting in the recognition of an extinguishment gain or
loss.
Equity Instruments Issued
with Registration Rights Agreement - The Company accounts for
registration rights agreement penalties as contingent liabilities, applying the
accounting guidance of FASB No. 5. This accounting is consistent with views
established by the Emerging Issues Task Force (“EITF”) in its consensus set
forth in FASB Staff Positions FSP EITF 00-19-2 “Accounting for Registration
Payment Arrangements”, which was issued December 21, 2006. Accordingly, the
Company recognizes the damages when it becomes probable that they will be
incurred and amounts are reasonably estimable. As of December 31, 2008, the
Company does not believe damages related to these rights are probable, and thus,
an accrual has not been recorded.
Earnings (Loss) per
Share - Basic earnings (loss) per share are based on the weighted average
number of shares of common stock outstanding during the
period. Diluted earnings (loss) per share also includes the effect of
stock options, other common stock equivalents outstanding during the during the
period, and assumes the conversion of the Company’s Series A, B and C preferred
stock and conversion of convertible notes payable for the period of time such
stock and notes were outstanding, if such preferred stock and convertible notes
are dilutive. For the year ended, December 31, 2008, dilutive
securities on a fully converted basis would cause the Company to be in excess of
their authorized shares of 2,950,000,000. Thus, the dilutive earnings per share
for year ended December 31, 2008 is limited to the amount of common stock
authorized by the Company’s stockholders.
The
following table sets forth the computation of the numerator and of basic and
diluted loss per share for the year ended December, 2008 and 2007. There were no
adjustments to the denominator. The following items were anti-dilutive and thus
excluded from the calculation.
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
|
Used
in calculating basic loss per share
|
|
|
88,613,681
|
|
|
|
6,294,927
|
|
Effect
of dilutive convertible preferred stock convertible notes and
warrants
|
|
|
2,861,386,319
|
|
|
|
1,647,151
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding used in
|
|
|
|
|
|
|
|
|
Calculating
diluted loss per share
|
|
|
2,950,000,000
|
|
|
|
7,942,078
|
|
As of
December 31, 2008, the Company has only 2,950,000,000 shares authorized, thus
the effects of convertible preferred stock and notes into common stock are
limited to the amount authorized by the Company’s stockholders.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
1. BASIS OF PRESENTATION AND
SIGNIFICANT ACCOUNTING POLICIES - continued
Recent Accounting
Pronouncements
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
141(R), “Business Combinations” (“SFAS 141(R)”), which replaces FAS 141. SFAS
141(R) establishes principles and requirements for how an acquirer in a business
combination recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any controlling interest;
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase; and determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. FAS 141(R) is to be applied prospectively
to business combinations.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS
160”), which addresses the accounting and reporting framework for minority
interests by a parent company. SFAS 160 also addresses disclosure requirements
to distinguish between interests of the parent and interests of the
noncontrolling owners of a subsidiary. SFAS 160 will become effective beginning
with our first quarter of 2009. The Company does not expect SFAS No. 160 will
have a material impact on its financial statements.
In March
2008, the FASB, affirmed the consensus of FASB Staff Position (FSP) APB No. 14-1
(APB 14-1), “Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement),” which applies to all
convertible debt instruments that have a net settlement feature; which
means that such convertible debt instruments, by their terms, may be settled
either wholly or partially in cash upon conversion. FSP APB 14-1 requires
issuers of convertible debt instruments that may be settled wholly or partially
in cash upon conversion to separately account for the liability and equity
components in a manner reflective of the issuer’s nonconvertible debt borrowing
rate. Previous guidance provided for accounting for this type of convertible
debt instrument entirely as debt. FSP APB 14-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008 and interim
periods within those fiscal years. . The Company is currently evaluating the
impact of this standard on our financial statements.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the “GAAP
hierarchy"). SFAS No. 162 will become effective 60 days following the Security
and Exchange Commission’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles.” The Company does not expect the
adoption of SFAS No. 162 to have a significant impact on our financial
statements.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
2. GOING
CONCERN
The
accompanying financial statements have been prepared assuming that Camelot will
continue as a going concern. During the year ended, December 31, 2008, Camelot
had no revenue producing operations; a negative working capital of $1,420,275
and an accumulated deficit from Inception of $16,705,021. These conditions raise
substantial doubt about Camelot’s ability to continue as a going concern. The
financial statements do not include any adjustments to reflect the possible
future effects on the classification of liabilities that may result from the
outcome of this uncertainty.
Management’s
plans with respect to the current situation consist of restructuring its debt,
seeking additional financial resources from its existing investors, note
holders, debt holders, officers, directors (past and present) and it’s CEO
Robert Atwell. In addition, the Company is planning a major capital
raising effort during the second quarter of 2009. However, especially due to the
current worldwide economic conditions, there can be no assurances that our
efforts will be successful. If current conditions persist, the Company may have
to delay its planned major capital raising efforts. During the year ended
December 31, 2008, the Company sold 2% of its interest in CDG for $200,000 and
this money was used fund Camelot Entertainment Group’s operating expenses and
used to reduce related-party payables. During the year ended December 31, 2008,
the Company issued $160,000 in secured notes payable to fund
operations. See Note 4 for additional information.
3. INVESTMENT
On
November 5, 2007, Camelot Development Group, LLC (“CDG”), which on that date was
owned 100% by Camelot, entered into an Operating Agreement known as Camelot
Development Tustin (“CDT”) with Janez Investments XI Tustin, LLC (“Janez”), for
the purpose of master developing the ATEP in Tustin, California and the
subsequent acquisition of real property through a ground lease with the South
Orange County Community College District (“SOCCCD”) in order to develop and
build Camelot’s first major studio complex which is planned to be located at
ATEP campus (“Project”). Under the terms of the Operating Agreement, Camelot has
been credited with an initial investment of $1,500,000 into the Project,
representing previous expenditures made by Camelot. Janez is obligated under the
terms of the CDT Agreement contribute cash to CDT in the sum of $1,500,000 as
and when necessary to pay for predevelopment costs or acquisition expenses as
set forth in the Business Plan for the Project. In addition, Camelot
will be responsible for one half of future expenditures once Janez $1,500,000
contribution has been extinguished. As of December 31, 2008, Camelot
has terminated its involvement in the CDT project following a request by Janez
to restructure the Operating Agreement. This request has resulted in the CDT
project being mutually terminated by Camelot and the SOCCCD.
The
Company accounted for the investment under the equity method of
accounting. The Company did not record an initial investment in CDG
as the intangible asset transferred could not be stepped up in basis because it
did not have an ascertainable value nor can it be guaranteed that the asset will
be ultimately recovered. In addition, the Company and Janez will be paid for
their services from CDG. Total development costs by CDG during the
year ended December 31, 2008, were $304,277 of which $146,053 was attributable
to the Company. Due to the zero basis in the investment, the Company did not
record any of the losses in the accompanying statement of operations in 2008. As
of December 31, 2008, the project has been terminated. In connection with the
termination, the Company expensed the $50,000 deposit that had been previously
paid.
In
January 2008, the Company agreed to sell up to 30% of its interest in CDG to
Camelot Studio Investors, LLC (“CSI”) for up to $3,000,000 on an as needed
basis. In addition, CSI receives 1,000 shares of our $0.001 par
value Series C Convertible Preferred Stock for each one half of one percent
(.05%) of CDG purchased by CSI. Under this agreement 11,500 Series C
Preferred Stock shares were issued. The managing member of CSI is
Scorpion Bay, LLC, which is managed by Timothy Wilson, one of our previous
directors, who resigned in May 2008. The proceeds from the sale were to be
utilized to retire debt and to fund operations. During the year ended December
31, 2008, the Company sold 2% of its interest for $200,000 in cash and another
3% for additional debt converted into shares. At December 31, 2008, the Company
investment in CDG is not relevant since the CDT project has been terminated. The
Company’s investment in CDG will only become relevant in the future as
additional studio projects are brought on-line by CDG.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
4. CONVERTIBLE
NOTES PAYABLE
2006 and 2007 Convertible
Notes Payable
On
December 27, 2006, Camelot issued a callable secured convertible note payable
for $1,000,000 to various holders. Camelot received the proceeds in two
tranches: $600,000 gross proceeds were received in December 2006 and $400,000 in
gross proceeds was received in June 2007 when the required registration
statement was deemed effective. The note payable provided for annual interest at
8%, was secured by all of the assets of the Company, and matures
on December 27, 2009. The principal and accrued interest of the note is
convertible into Camelot’s common stock at a variable conversion price, which is
50% of the average market price of the common stock of the lowest three trading
days prior to the date of conversion. In addition, these notes have registration
rights agreements, which call for liquidated damages in the event an effective
registration statement is not filed within a timely basis. In addition, the
holders of these notes and the placement agent were issued seven-year warrants
to purchase 105,826 common shares at an exercise price of $15.00 per share. The
warrants were issued in connection with the first tranche received.
Camelot
evaluated the notes and warrants under SFAS 133 “Accounting for Derivative
Instruments and Hedging Activities” and EITF 00-19 “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock” and determined that the notes contained compound embedded derivative
liabilities. The warrants were also determined to be liabilities under SFAS 133
and EITF 00-19. Camelot determined that the compound embedded conversion
features required bi-furcation from the note instrument and required an estimate
of its fair market value. The fair market value of the compound embedded
derivative was estimated using a lattice model incorporating weighted average
probability cash flow. The fair market value of the warrants was estimated using
the Black Scholes model.
On August
14, 2008, in connection with a subsequent funding discussed below, the Company
modified the interest rate to 10% and the discount on conversion to 50%.The
Company determined that this modification was considered “significant” and thus
qualified the note for extinguishments under EITF 06-6. Thus, the Company
accounted for the extinguishment of the convertible notes, warrants and embedded
conversion feature in accordance with APB 26. In accordance with these
provisions, the Company recorded a non-cash loss on the extinguishment based on
the difference between the fair value of the new instruments issued and the
difference between the carry value and stated value of the convertible debt and
fair value of the derivative liabilities immediately prior to extinguishment. In
connection with the modification, the Company
recorded an extinguishment loss of $211,212 which is recorded in the gain on
derivative liability on the accompanying statement of operations
2008 Convertible Notes
Payable
On August
14, 2008, Camelot issued a callable secured convertible note payable for
$160,000 to various holders. Camelot received the proceeds in August
and September 2008. The note payable provided
for annual interest at 10%, was secured by all of the assets of the Company, and
matures on May 10, 2011. The principal and accrued interest of the note is
convertible into Camelot’s common stock at a variable conversion price which is
50% of the average market price of the common stock of the lowest three trading
days prior to the date of conversion. At no time can their aggregate holdings
exceed 4.99%. The proceeds were used for working capital purposes and advances
from related parties. In addition, the investors shall receive 20,000,000
cashless warrants at an exercise price of $0.01 which expire in seven
years.
Camelot
evaluated the notes and warrants under SFAS 133 “Accounting for Derivative
Instruments and Hedging Activities” and EITF 00-19 “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock” and determined that the notes contained compound embedded derivative
liabilities.
The
warrants were also determined to be liabilities under SFAS 133 and EITF 00-19.
Camelot determined that the compound embedded conversion features required
bifurcation from the note instrument and required an estimate of its fair market
value. The fair market value of the compound embedded derivative was estimated
using a lattice model incorporating weighted average probability cash flow. The
fair market value of the warrants was estimated using the Black Scholes
model.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
4. CONVERTIBLE NOTES
PAYABLE - continued
2008 Accrued Interest
Converted into Convertible Notes Payable
During
2008, Camelot converted accrued interest of $144,143 into callable secured
convertible notes payable. The notes payable provided for annual
interest at __%, was secured by all of the assets of the Company, and matures
three years from the date of issuance of January 31, 2011 and December 30, 2011.
The principal of the note is convertible into Camelot’s common stock at a
variable conversion price which is 50% of the average market price of the common
stock of the lowest three trading days prior to the date of conversion. At no
time can their aggregate holdings exceed 4.99%.
Camelot
evaluated the notes and warrants under SFAS 133 “Accounting for Derivative
Instruments and Hedging Activities” and EITF 00-19 “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock” and determined that the notes contained compound embedded derivative
liabilities.
Conversions and Valuation of
Derivative Liabilities Issued with 2006, 2007 and 2008 Convertible
Notes
As of
December 31, 2008, Camelot estimated the fair value of the derivatives
liabilities to be a total of $336,338 resulting in gain on derivative liability
presented in the statement of operations for the year ended December 31, 2008 of
$646,689. As of December 31, 2007, Camelot estimated the fair value
of the derivatives liabilities to be a total of $593,420 resulting in gain on
derivative liability presented in the statement of operations for the year ended
December 31, 2007 of $925,788. In addition, Camelot amortized
$201,551 and $294,447 of the discount on the convertible note payable to
interest expense during the years ended December 31, 2008 and 2007,
respectively. As of December 31, 2008 and 2007, the principal balances of the
notes were $1,205,719 and $943,732, respectively.
At
December 31, 2008 and 2007, the fair market value of the compound embedded
derivative was estimated using a lattice model incorporating weighted average
probability cash flow. The valuation was calculated using a lattice model with
the following assumptions at December 31, 2008, the stock price would increase
in the short term at the cost of equity with a 250% volatility, there was a 95%
probability the Company would not be in default of its registration
requirements, assuming an event of default occurring 50% of the time increasing
..10% per month, reset events projected to occur 5% of the time at an exercise
price of $0.004, the holder would automatically convert at a stock price of
$0.20 if the registration was effective and the Company was not in default, the
Company would trigger redemption of the note when available at a stock price of
$0.10 or higher, alternative financing would be initially available to redeem
the note and start to increase monthly by 10% of the notes to a maximum of 75%
and the trading volume would increase at 1% per month. The valuation was
calculated using a lattice model with the following assumptions at December 31,
2007, the stock price would increase in the short term at the cost of equity
with a 150% volatility, there was a 95% probability the Company would not be in
default of its registration requirements, assuming an event of default occurring
5% of the time increasing .10% per month.
At
December 31, 2008, the fair market value of the warrants was estimated using
Black Scholes with the major assumptions of (1) calculated volatility of 250%;
(2) expected term of five years; (3) risk free rate of 9% and (4) expected
dividends of zero. At December 31, 2007, the fair market value of the
warrants was estimated using Black Scholes with the major assumptions of (1)
calculated volatility of 200%; (2) expected term of six years; (3) risk free
rate of 3.45% and (4) expected dividends of zero.
During
the years ended December 31, 2008 and 2007, the holders of convertible notes
converted $39,310 and $56,448 resulting in the issuance of 79,483,200
and 137,707 shares of common stock, respectively. Upon conversion, the
Company reclassed approximately $19,722 and $48,399 of the compound derivative
to additional paid-in capital, respectively.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
4. CONVERTIBLE
NOTES PAYABLE - continued
In the
event of full conversion of the aggregate principal amount of the notes of
$1,205,719 as of December 31, 2008, we would have to issue a total of
24,114,380,000 shares of common stock, which exceeds our authorized shares of
5,950,000,000. However, due to contractual limitations, the most that could be
converted in any singular conversion is approximately 280,000,000 shares, or
4.99% of the outstanding. In addition, there are contractual limitations that
could be imposed by Camelot that would result in the inability of the note
holders to convert during any given 30-day period. There is no limit to the
number of shares that Camelot may be required to issue upon conversion of the
notes, as it is dependent upon Camelot’s share price, which varies from day to
day. This could cause significant downward pressure on the price of Camelot’s
common stock.
Future
minimum principal payments due under convertible notes payable for the year
ended December 31 are as follows: 2009 - $486,576; 2010 - $400,000; 2011 -
$319,143.
Transfer
of Notes Payable
On August
28, 2008, the Company’s CEO entered into an agreement with a third party to
assume $25,000 of amounts due to him from the Company. Under the terms of the
agreement, the note accrues interest at 15%, is due in one year, and is
convertible at 50% of the average market price of the common stock of the lowest
three trading days prior to the date of conversion. Due to the significant
changes to the term of the loan the Company treated the modification as an
extinguishment. There was no impact on the
financial statements. On September 30, 2008, the third party converted $10,000
of the note into 2,000,000 shares of common stock. In connection of the
issuance, the Company recorded fair value of amounts in excess of
note relieved of $12,000.
See Note
8 for additional amounts assigned by the CEO to third parties in which were
immediately converted to shares of common stock.
Scorpion
Bay, LLC
On June
15, 2007, we entered into a loan agreement with Scorpion Bay, LLC (“Scorpion”),
whereby Scorpion loaned Camelot $300,000 in three tranches of $100,000 each on
June 15, July 15 and August 15, 2007. Interest on the loan was payable in 30,000
shares of Camelot’s common stock. The shares were issuable in 10,000 share
increments at each tranche. Camelot valued the common stock with an average
price per share of $1.60 totaling $47,600 based upon the fair market value of
the shares at each tranche. The loan was due and payable on November 15, 2007.
The loan was secured with a blanket note and second deed of trust on real
property owned by Robert and Tamara Atwell (“Atwell”). In the event the loan was
not paid by the due date, the note could be extended for a period of 30 days at
Scorpion’s option for 7,500 shares of common stock. On or about October 25,
2007, Scorpion transferred the note to the real property held by Atwell. In
turn, Atwell assumed the $300,000 note with the Company. (see Note 6) In
connection with this transfer, Scorpion and a related entity of theirs received
a total of 130,000 shares of common stock. The Company valued the common
shares at $39,000, or $0.30 per share, based upon the market price at the
time.
On
November 21, 2006, Camelot entered into a loan agreement with Scorpion, whereby
Scorpion loaned Camelot $250,000 due on March 22, 2007. Interest was payable in
the form of 5,000 common shares. Scorpion received a total of 15,000 shares upon
issuance of the loan with a fair market value of $135,150 which was recorded as
interest expense during the year ended December 31, 2006. The loan was secured
with a blanket note and second deed of trust on real property owned by Robert
and Tamara Atwell. In the event the loan was not paid by the due date, the note
could be extended by Scorpion at a cost of 15,000 common shares for the first 30
day extension, 20,000 common shares for the second 30 day extension, 25,000
common shares for the third 30 day extension and so forth. The note was paid in
full on June 5, 2007. Due to the extensions, Scorpion received a total of 60,000
shares during the year ended December 31, 2007, with an average price per share
of $4.90, in the amount of $294,000 and recorded as interest
expense.
On
November 23, 2007, Scorpion entered into a loan agreement with Love Bug
Management Corp. (“Love Bug”), an entity owned by Atwell, whereby Scorpion
loaned Love Bug $100,000. The proceeds were used for Atwell and Camelot
expenses. As a result of this loan, Atwell paid approximately $36,000 in direct
Camelot expenses, which have been included in the amounts payable to Atwell at
December 31, 2007. The loan was secured with a blanket note and second deed of
trust on real property owned by Robert and Tamara Atwell and was not guaranteed
by Camelot. Scorpion received 47,000 shares of the Company’s common stock in
connection with the loan and events related thereto. The Company valued the
shares at $19,928 based on $0.40, market price on the date of
issue.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
At
December 31, 2008, Camelot determined that the federal and state net operating
loss carryforwards were not significant due to potentially significant
limitations as defined in Section 382 of the Internal Revenue code. Thus, at
December 31, 2008, the Company has reversed the deferred tax assets and
valuation allowance as a result of the expected limitation. The deferred tax
assets at December 31, 2007 consisted of net operating loss carry forwards of
$1,367,634. During the years ended December 31, 2008 and 2007, the valuation
allowance decreased by$1,367,634 and increased by
$745,671.
6. RELATED
PARTY TRANSACTIONS
Accrued
Salaries
At
December 31, 2008 and 2007, the Company has accrued $722,000 and $350,000 in
compensation to its current officers, respectively. The amount due to
officers includes: Robert Atwell, $511,000 and $250,000; and to George Jackson,
$211,000 and $100,000, respectively.
Advances
from Affiliates
During
the year ended, December 31, 2008, the Company received $40,737 in advances from
either the CEO or affiliated company controlled by the CEO, compared to $235,125
in advances for year ended December 31, 2007. During the year ended
December 31, 2008, the Company paid $142,664 of these amounts, leaving a balance
due of $22,830 at December 31, 2008. During the year ended December
31, 2007, the Company paid $270,290 of these amounts, issued 4,019 with a market
value of $16,078, leaving a balance due of $134,757 at December 31, 2008.
Imputed interest recorded during the years ended December 31, 2008 and 2007,
related to the advances by the affiliate were $1,763 and $2,246,
respectively.
Robert Atwell
In
October 2007, the $300,000 note payable due to the Scorpion Bay, LLC was
transferred to property owned by Robert Atwell in which secured the note
payable. The note is due on demand and incurs interest at 6%. During the year
ended, December 31, 2008, the Company accrued $17,000 in interest expense. See
Note 5 and 8 for assignment of portions of this note to various third parties.
As of December 31, 2008 and 2007, amounts outstanding under the note were
$215,598 and $300,000, respectively.
Scorpion Bay,
LLC
Timothy
Wilson (“Wilson”), one of our previous directors (resigned in May 2008) and a
stockholder of the Company, is the managing member of Scorpion Bay, LLC
(“Scorpion”), which owns 50% of JIT. Wilson is also the managing member of CSI
and PSP. See Note 3, 7 and 9 for transactions.
Issuances
of Preferred and Common Stock
See Note
7 and 9 for description of preferred and common stock issued to related
parties.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
6. RELATED
PARTY TRANSACTIONS - continued
Other
2007 Related Party Transactions
The
following transactions are for year ended December 31, 2007. All transactions
are incorporated by reference and can be found through our previous
filings:
Camelot
Studio Group
Camelot
Studio Group (“CSG”), one of our major divisions, is in the process of
developing its first major studio facility, currently known as Camelot Studios
at ATEP, as part of the Advanced Technology and Education Park (“ATEP”) in
Tustin, California. As part of that process, CSG formed Camelot Development
Group, LLC (“CDG”) which is a 50% joint venture partner with Janez Investments
XI Tustin, LLC (“JIT”) in Camelot Development Tustin, LLC (“CDT”). CDT was
negotiating with the South Orange County Community College District (“SOCCCD”)
to be the master developer for the ATEP project, including Camelot Studios at
ATEP. To date, the Company has invested approximately $2,600,000 in the Camelot
Studios at ATEP project since the Company began the process of locating CSG’s
first studio facility at the Tustin site in September 2005. As of December 31,
2008, Camelot has terminated its involvement in the CDT project following a
request by Janez to restructure the Operating Agreement. This request has
resulted in the CDT project being mutually terminated by Camelot and the
SOCCCD. See Note 3 for additional information.
Timothy
Wilson (“Wilson”), a former directors and a former major stockholder of the
Company, is the managing member of Scorpion Bay, LLC (“Scorpion”), which owns
50% of JIT. Wilson is also the managing member of CSI and PSP. Jeff Zuckerman
(“Zuckerman”), former directors and a former significant stockholder of the
Company, is Senior Vice-President of Janez Group (“Janez”), which is a 50% owner
of JIT. John Kocmur (“Kocmur”), was previously a 5% or more
beneficial owner of our common stock, is President of Janez.
Share
Issuance Agreement
On
October 25, 2007, the Company entered into a Share Issuance Agreement (“SIA”)
with Zuckerman, Kocmur and Scorpion (“JJT”). According to the terms and
conditions of the SIA, as additional consideration for Janez becoming a joint
venture partner with CDG, and in consideration for additional business
development and consulting efforts provided by JJT, JJT received 800,000 shares
of our common stock. 200,000 shares were issued to Zuckerman, 200,000 shares
were issued to Kocmur and 400,000 shares were issued to Scorpion. In addition,
Zuckerman, Wilson and Joseph Petrucelli were nominated to serve on our Board of
Directors. The parties also agreed on a common stock structure which provides
JTT and Robert P. Atwell, our Chairman (“Atwell”) with anti-dilution protection.
Further, the SIA directs the Company to seek stockholder approval to increase
the authorized shares of the common stock to 400,000,000 and increase the Board
of Directors from five to seven members. Upon the cancellation of the ATEP
project, the agreement was cancelled.
Eagle
Consulting Group
We
entered into an agreement with Eagle Consulting Group, Inc. (“Eagle”) on March
28, 2003, to provide operational funding for the Company, which expires on March
28, 2008. Atwell is the Chairman of Eagle. Eagle is now part of The Atwell
Group, owned by Atwell. In exchange for twenty percent (20%)of the Company’s
outstanding common stock on a non-dilutive, continuing basis until the Company
can secure additional financing from another source, Eagle has agreed to provide
funding for the Company’s annual audit, quarterly filings, accounts payable and
other ongoing expenses including office, phones, business development, legal and
accounting fees. In addition, Eagle received an option to receive 20,000
cashless options to purchase common shares at $0.03 per share. For each one
dollar ($1) increase in the price of the Company’s stock, Eagle shall be
entitled to receive an additional two million options throughout the term of the
agreement. In addition, the Company shall have the first right of refusal to
purchase the options from Eagle for the current market value once Eagle notifies
the Company that it intends to exercise the options. In the event the Company
elects not to exercise this first right of refusal, and subject to applicable
laws, Eagle shall be entitled to exercise the sale of shares or options
immediately thereafter. As of December 31, 2008 and 2007, Eagle has not
exercised its right to receive the options and therefore no options have been
granted.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
6. RELATED PARTY
TRANSACTIONS - continued
On June
5, 2007, the Company completed its funding transaction with NIR and its note
holders, whereby the note holders have invested monies into the Company, thereby
ending the agreement with Eagle. The total stock to be issued in connection with
the NIR funding has yet to be determined as the note holders have not yet
completed their conversions. Upon completion of the NIR conversions, the total
amount of additional stock due Eagle under the terms of the agreement shall be
determined and issued to Eagle with an effective date of June 5, 2007, the date
the funding agreement with NIR was completed.
For 2007,
Eagle has advanced to the Company a total, including interest, of $170,747,
which covered part of our operating expenses for 2007, including general and
administrative costs, costs for screenplays and prepaid exhibitor’s space. We
have not issued Eagle any shares of common stock for repayment of expenses
advanced on behalf of the Company. These advanced are recorded under the
advances payable to related party.
The
Atwell Group
We
utilize office space provided by The Atwell Group, Inc., a privately-held
company owned by Mr. Atwell, our President, Chief Executive Officer and
Chairman. The space is leased on an annual basis for $72,000 per year. The
current lease expires on December 31, 2009. In addition, The Atwell Group, The
Corporate Solution and Love Bug Management Corp., all of which are owned by Mr.
Atwell, paid expenses on behalf of Camelot during 2007. Further, Mr. Atwell and
his wife, Tamara Atwell, were guarantors on various financial transactions
involving Camelot during 2007. These advanced are recorded under the advances
payable to related party.
Scorpion
Bay
Scorpion
Bay LLC, Pacific Surf Partners, Camelot Studio Investors LLC (“Scorpion”), which
are managed or co-managed by Timothy Wilson, one of our directors, were involved
in various business and financial transactions involving Camelot during 2007.
These transactions have been discussed throughout this report.
7. PREFERRED
STOCK
As of
December 31, 2008, there were 7,347,510 shares outstanding of our $0.001 par
value Series A Convertible Preferred Stock (“Series A Preferred”). The Series A
Preferred converts to four shares of common stock for every one share of Series
A Preferred stock. Each share of Series A Preferred stock is entitled to 50
votes. Series A Preferred ranks superior to our common stock and ranks junior to
our Series B Preferred Stock.
As of
December 31, 2008, there were 7,196,510 shares outstanding of our $0.001 par
value Series B Convertible Preferred Stock (“Series B Preferred”). The Series B
Preferred converts to 10 shares of common stock for every one share of Series B
Preferred stock. Each share of Series B Preferred stock is entitled to 1,000
votes. Series B Preferred ranks superior to all other classes of
stock.
On
January 8, 2008, Camelot established a Series C Convertible Preferred Stock
(“Series C Preferred”) of which 10,000,000 shares were authorized. The Series C
Convertible Preferred converts to one share of common stock for every one share
of Series C Convertible Preferred stock. Each share of Series C Preferred stock
is entitled to one vote. The Company’s Series A and B are superior to the Series
C Preferred.
2008 Issuances of Preferred
Stock
On
January 1, 2008, 12,500 shares of Series A Preferred stock were issued to
Scorpion Bay, LLC for services rendered in connection with the studio project.
The shares were valued at $25,000 based on the estimated
fair value of the Series A Preferred stock on the date of issuance and expensed.
The fair value is based upon the closing market price of the Company’s common
stock on the date of issuance assuming no future performance commitments exist.
All per-share data discussed below represent the fair market value on the date
of agreement.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
7. PREFERRED
STOCK - continued
On August
13, 2008, the Company issued Scorpion Bay, LLC 7,500 shares of Series C
Preferred shares at $0.05 per share in reference to the development of
ATEP.
On August
13, 2008, the Company issued Tim McCullium 500 shares of Series C Preferred
shares at $0.05 per share in reference to the development of Camelot Studios at
the Advanced Education and Technology Park (“ATEP”) in Tustin,
California.
On August
13, 2008, the Company issued George Jackson 1,000 shares of Series C Preferred
shares at $0.05 per share in reference to the development of Camelot Studios at
ATEP.
On August
13, 2008, the Company issued The Atwell Group 30,000 shares of Series C
Preferred shares at $0.05 per share in reference to the development of Camelot
Studios at ATEP.
On August
13, 2008, the Company issued Sea Castle, LLC 500 shares of Series C Preferred
shares at $0.05 per share in reference to the development of Camelot Studios at
ATEP.
On August
13, 2008, the Company issued Joseph Petrucelli 1,000 shares of Series C
Preferred shares at $0.05 per share in reference to the development of Camelot
Studios at ATEP.
On August
13, 2008, the Company issued Pacific Surf Partners, LP 2,500 shares of Series C
Preferred shares at $0.05 per share in reference to the development of Camelot
Studios at ATEP.
On August
13, 2008, the Company issued Octy, Inc. 7,750 shares of Series C Preferred
shares at $0.05 per share in reference to the development of Camelot Studios at
ATEP.
On August
13, 2008, the Company issued Jeff Brown 500 shares of Series C Preferred shares
at $0.05 per share in reference to the development of Camelot Studios at
ATEP.
On August
13, 2008, the Company issued Irene Aurand 250 shares of Series C Preferred
shares at $0.05 per share in reference to the development of Camelot Studios at
ATEP.
On August
13, 2008, the Company issued George Jackson 10,000 shares of Series B Preferred
stock at $0.50 per share for services and other consideration rendered to the
Company.
On August
13, 2008, the Company issued George Jackson 10,000 shares of Series A Preferred
stock at $0.20 per share for services and other consideration rendered to the
Company.
On August
13, 2008, the Company issued Robert Atwell 30,000 shares of Series A Preferred
stock at $0.20 per share for services and other consideration rendered to the
Company.
On
September 26, 2008, the Company issued George Jackson 100,000 shares of Series B
Preferred stock at $0.08 per share for services and other consideration rendered
to the Company.
On
September 26, 2008, the Company issued Robert Atwell 1,000,000 shares of Series
B Preferred stock at $0.08 per share for services and other consideration
rendered to the Company.
On
September 26, 2008, the Company issued George Jackson 100,000 shares of Series C
Preferred stock at $0.002 per share for services and other consideration
rendered to the Company.
On
September 26, 2008, the Company issued Robert Atwell 1,000,000 shares of Series
C Preferred stock at $0.002 per share for services and other consideration
rendered to the Company.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
7. PREFERRED
STOCK - continued
On
December 23, 2008, the Company issued George Jackson 1,000,000 shares of Series
A Preferred stock at $0.0008 per share for services and other consideration
rendered to the Company.
On
December 23, 2008, the Company issued Robert Atwell 5,000,000 shares of Series A
Preferred stock at $0.0008 per share for services and other consideration
rendered to the Company.
On
December 23, 2008, the Company issued George Jackson 1,000,000 shares of Series
B Preferred stock at $0.002 per share for services and other consideration
rendered to the Company.
On
December 23, 2008, the Company issued Robert Atwell 5,000,000 shares of Series B
Preferred stock at $0.002 per share for services and other consideration
rendered to the Company.
On
December 23, 2008, the Company issued George Jackson 1,000,000 shares of Series
C Preferred stock at $0.0002 per share for services and other consideration
rendered to the Company.
On
December 23, 2008, the Company issued Robert Atwell 5,000,000 shares of Series C
Preferred stock at $0.0002 per share for services and other consideration
rendered to the Company.
2007 Issuances of Preferred
Stock
In 2007,
we issued 192,020 shares of Preferred Stock. We issued 156,511 shares of Series
A Convertible Preferred Stock and 35,510 shares of Series B Convertible
Preferred Stock.
Date
|
Title
|
Amount
|
Name
|
Type
|
Consideration
|
Price
|
12/31/07
|
Series
A
|
100,000
|
Scorpion
Bay
|
Services
|
Consulting
|
$1.32
|
12/31/07
|
Series
A
|
44,011
|
The
Atwell Group
|
Services
|
Administrative
|
$1.32
|
12/31/07
|
Series
B
|
27,500
|
Scorpion
Bay
|
Services
|
Consulting
|
$3.30
|
12/31/07
|
Series
B
|
9,810
|
The
Atwell Group
|
Services
|
Administrative
|
$3.30
|
Derivative
Valuation
At the
time of issuance of the Series A, B and C Preferred stock, the Company did not
have enough authorized shares on a fully diluted basis due to the conversion
feature of the convertible notes, which caused the Series A, B and C Preferred
stock to be tainted, and more akin to debt. In addition, management determined
that the Series A, B and C Preferred contained compound embedded derivative
liabilities under SFAS 133 and EITF 00-19, because of the classification of
these securities as liabilities. The Company determined that the compound
embedded conversion features required bifurcation from the remaining Series A, B
and C Preferred and required an estimate of its fair market value. The fair
market value of the compound embedded derivative was estimated using a lattice
model incorporating weighted average probability cash flow.
For
issuances during the year ended 2008, the fair market value of the compound
embedded derivative associated with the Series A, B and C Preferred stock was
estimated to be $196,982 and resulted in the Series A, B and C Preferred stock
being discounted to its par value. Due to the excess fair value of the compound
embedded derivative over the proceeds of ($100,749) the Company recorded an
immediate charge to derivative gain (loss).
For
issuances during the year ended 2007, the fair market value of the compound
embedded derivative associated with the Series A, B and C Preferred stock was
estimated to be $485,098 and resulted in the Series A, B and C Preferred stock
being discounted to its par value. Due to the excess fair value of the compound
embedded derivative over the proceeds of ($220,143) the Company recorded an
immediate charge to derivative gain (loss).
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
7. PREFERRED STOCK - continued
As of
December 31, 2008, the Company estimated the fair value of the preferred stock
derivative liabilities to be a total of $65,630resulting in a loss on derivative
liability presented in the statement of operations of $757,363. At December
31, 2008, the fair market value of the conversion feature derivative related to
the Series A, B and C Preferred stock was estimated using a lattice model
incorporating weighted average probability cash flow. The valuation was
calculated using a lattice model with the following weighted average
assumptions: the stock price would increase in the short term at the cost of
equity with a 250% volatility and there was a 100% probability the Company would
not be in default of its registration requirements as there were
none.
As of
December 31, 2007, the Company estimated the fair value of the preferred stock
derivative liabilities to be a total of $726,223 resulting in a loss on
derivative liability presented in the statement of operations of $241,125. At
December 31, 2008, the fair market value of the conversion feature derivative
related to the Series A, B and C Preferred stock was estimated using a lattice
model incorporating weighted average probability cash flow. The valuation was
calculated using a lattice model with the following weighted average
assumptions: the stock price would increase in the short term at the cost of
equity with a 150% volatility and there was a 100% probability the Company would
not be in default of its registration requirements as there were
none.
8.
COMMITMENTS
The
Atwell Group has an office usage agreement with the Company to provide office
space. During the year ended December 31, 2008, the Company paid $72,000 under
this agreement which is included in rent expense. This agreement was
for a period of two years with monthly payments ranging from $6,000 to $6,108.
Minimum annual payments under this contract as of December 31, 2008, for the
year ended December 31, 2009 are $73,296. In January 2009,
the company moved to a smaller office. The company has accrued rent
expense for $83,000 for obligations due under the lease
agreement. The agreement for the smaller office is for a period of
thirteen (13) months with monthly payments of $1,700 per
month. Minimum annual payments under this contract for 2009 are
$20,400.
Employment
Contracts and Guarantees
In
December 2008, the Board of Directors authorized the Company to enter into
employment contracts with Robert P. Atwell, Chairman, President and CEO, and
George Jackson, Secretary and Chief Financial Officer. These contracts are
expected to be finalized during the second quarter of 2009. The board authorized
certain components of those contracts contingent upon the Company raising in
excess of $1,000,000 in gross proceeds from an offering. The components are as
follows:
For the
employment contract with Robert P. Atwell, the Company will enter into a formal
employment agreement with Atwell no later than December 31, 2009. Further, that
the employment agreement shall provide all of the basic terms and conditions
contained in other similar employment agreements entered into by chairmen,
presidents and/or chief executive officers of publicly traded motion picture
production and distribution companies, including, but limited to, base salary,
bonuses, stock and warrant and/or option issuances, expense provisions, health,
dental and eye care insurance, E & O insurance, D & O insurance, key man
insurance, life insurance, auto insurance, travel allowance, auto allowance,
memberships and subscriptions, continuing education, professional legal and
accounting services and other customary inclusions. In addition, the employment
agreement shall provide assumption by the Company of any and all tax liabilities
of Atwell, if any, incurred on or after March 19, 2003, including, but not
limited to, personal and corporate tax liabilities to be identified as an
exhibit to the Employment Agreement. And, the employment agreement shall provide
assumption by the Company of any and all tax liabilities of Atwell and/or Eagle
Consulting Group, Inc., if any, incurred on or after January 1, 2000, including,
but not limited to, personal and corporate tax liabilities to be identified as
an exhibit to the Employment Agreement; with this assumption being provided as a
result of Atwell and Eagle’s original funding of the Company and its predecessor
and first subsidiary, Camelot Films, Inc. prior to March 19, 2003. Also, the
employment agreement shall contain clauses protecting Atwell in the event of a
change in control, including, but not limited to, an acquisition and/or merger
involving the Company, in part by including contract termination language which
will provide Atwell with compensation for a period of no less than ten (10)
years following any termination, whether for cause or not and that the base
salary shall be set at no less than the current salary allocated for Atwell as
shown in the Company’s 10-K annual report for 2008.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
8. COMMITMENTS - continued
For the
employment agreement with George Jackson, the Company will enter into a formal
employment agreement with Jackson no later than December 31, 2009 and that the
employment agreement shall provide all of the basic terms and conditions
contained in other similar employment agreements entered into by chief executive
financial officers of publicly traded motion picture production and distribution
companies, including, but limited to, base salary, bonuses, stock and warrant
and/or option issuances, expense provisions, health, dental and eye care
insurance, E & O insurance, D & O insurance, key man insurance, life
insurance, auto insurance, travel allowance, auto allowance, memberships and
subscriptions, continuing education, professional legal and accounting services
and other customary inclusions. Further, that the employment agreement shall
provide assumption by the Company of any and all tax liabilities of Jackson, if
any, incurred on or after April 1, 2005, including, but not limited to, personal
tax liabilities to be identified as an exhibit to the Employment Agreement.
Also, the Employment Agreement shall contain clauses protecting Jackson in the
event of a change in control, including, but not limited to, an acquisition
and/or merger involving the Company, in part by including contract termination
language which will provide Jackson with compensation for a period of no less
than ten (10) years following any termination, whether for cause or not and that
the base salary shall be set at no less than the current salary allocated for
Jackson as shown in the Company’s 10K annual report for 2008.
9.
STOCKHOLDERS’ DEFICIT
Authorized
Shares
On May 6,
2008, the Company’s board of directors increased the authorized shares of common
stock to 500,000,000.
On
December 4, 2008, the Company’s board of directors increased the authorized
shares of common stock to 850,000,000.
On
December 23, 2008, the Company’s board of directors increased the authorized
shares of common stock to 3,000,000,000.
Reverse
Stock Split
On August
19, 2008, the Board of Directors approved a 100-for-1 reverse stock split of all
of our outstanding common and preferred stock. As a result of the reverse stock
split, effective August 29, 2008, the number of outstanding common shares was
reduced from 434,727,332 to 4,347,316, as of August 29, 2008, and the
number of our outstanding preferred stock was reduced from 39,552,047 to
395,521. All references to our common stock in the balance of this report have
been restated to reflect the reverse stock split.
Determination
of Fair Value
The fair
value of the Company’s common stock issuances are based upon the closing market
price of the Company’s common stock on the date of issuance assuming no future
performance commitments exist. All shares discussed below are valued using these
assumptions.
Common
Stock Held in Treasury
On August
1, 2008, the Company set aside 1,000,000 shares for future funding and other
corporate transactions in order to meet current and contemplated terms and
conditions of consulting and funding agreements to be held in reserve. As of
December 31, 2008, 990,000 are still held in reserve.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common Stock Issued for Related
Party Services
On August
13, 2008, the Company issued George Jackson, our CFO, 200,000 Shares at $0.05
per share for services rendered to the Company.
On August
13, 2008, the Company issued The Atwell Group 280,000 Shares at $0.05 per Share
for services and other consideration provided by Robert Atwell, our
CEO.
On August
13, 2008, the Company issued The Corporate Solution, Inc. 100,000 Shares at
$0.03 per Share for services and other consideration provided to the Company.
The Corporate Solution is owned by Robert Atwell, our CEO.
On
September 18, 2008, the Company issued Robert Atwell 2,000,000 shares at $0.003
per share for services rendered to the Company and other
consideration.
On
September 18, 2008, the Company issued George Jackson 300,000 shares at $0.003
per share for services rendered to the Company and other
consideration.
On
September 19, 2008, the Company issued Robert Atwell 5,000,000 shares at $0.002
per share for services rendered to the Company and other
consideration.
On
September 19, 2008, the Company issued George Jackson 1,000,000 shares at $0.002
per share for services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued George Jackson 2,000,000 shares at
$0.0022 per share for services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued Robert Atwell a total of 31,818,180
shares at $0.0022 per share for services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued Tamara Atwell 2,272,727 shares at $0.0022
per share for administrative services rendered to the Company and other
consideration.
On
October 9, 2008, the Company authorized the issuance of 35,000,000 Shares at
$0.0004 per share to Robert Atwell for services rendered to the Company and
other consideration.
On
November 10, 2008, the Company authorized the issuance of 5,000,000 Shares at
$0.0018 per share to Tamara Atwell for administrative services rendered to the
Company and other consideration.
On
November 21, 2008, the Company authorized the issuance of 25,000,000 Shares at
$0.0004 per share to Tamara Atwell for administrative services rendered to the
Company and other consideration.
On
November 21, 2008, the Company authorized the issuance of 25,000,000 Shares at
$0.0004 per share to George Jackson for services rendered to the Company and
other consideration.
On
November 21, 2008, the Company authorized the issuance of 25,000,000 Shares at
$0.0004 per share to Robert Atwell for services rendered to the Company and
other consideration.
On
December 31, 2008, the Company authorized the issuance of 30,000,000 Shares at
$0.0002 per share to George Jackson for services rendered to the Company and
other consideration.
On
December 31, 2008, the Company authorized the issuance of 350,000,000 Shares at
$0.0002 per share to Robert Atwell for services rendered to the Company and
other consideration.
On
December 31, 2008, the Company authorized the issuance of 50,000,000 shares at
$0.0002 per share to Tamara Atwell for administrative services rendered to the
Company and other consideration.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common
Stock Issued for Wrap-Around Agreements
At
various times during the year ended December 31, 2008, the Company’s CEO
assigned portions of the amounts due to him to third parties (“Wrap-Around
Agreement”). Under the terms of the Wrap-Around Agreement the notes incurred
interest at 15% per annum and generally had a maturity date of one year from the
transaction. In addition, at the holders option, at any time after the issuance
of the note, to convert all or any lesser portion of the Outstanding Principal
Amount and accrued but unpaid Interest into common voting stock at the price of
50 % discount of the average three deep bid on the day of
conversion. Generally, the notes were converted on the date of
purchase or shortly there after. In connection with these transactions the
Company recorded the excess value of the common stock issued over the note
relieved as interest expense. The fair value of the common stock was determined
based upon the closing market price of the Company’s common stock on the date of
conversion. The following is a summary of Wrap-Around Agreement
conversions:
On
September 12, 2008, the Company issued K & L Enterprises 2,000,000 shares at
$0.012 per share in satisfaction of notes of $10,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between K &L and the
Company dated August 28, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $24,000 over the note relieved of $14,000
as interest expense.
On
November 14, 2008, the Company issued Hope Capital 18,000,000 shares at $0.0003
per share in satisfaction of notes of $6,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope Capital and the Company
dated October 1, 2008. In connection with this conversion, the Company recorded
the excess of fair value of $12,600 over the note relieved of $6,600 as interest
expense.
On
November 18, 2008, the Company issued Hope Capital 20,000,000 shares at $0.0003
per share in satisfaction of notes of $7,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope Capital and the Company
dated November 13, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $16,000 over the note relieved of $9,000 as
interest expense.
On
November 19, 2008, the Company issued K & L International Enterprises
22,000,000 shares at $0.00007 per share in satisfaction of notes of $1,500 in
accordance with the terms and conditions of the Wrap-Around Agreement between K
& L International Enterprises and the Company dated August 28, 2008. In
connection with this conversion, the Company recorded the excess of fair value
of $15,400 over the note relieved of $13,900 as interest expense.
On
November 25, 2008, the Company issued K & L International Enterprises
34,000,000 shares at $0.0004 per share in satisfaction of notes of $1,500 in
accordance with the terms and conditions of the Wrap-Around Agreement between K
& L International Enterprises and the Company dated August 28, 2008. In
connection with this conversion, the Company recorded the excess of fair value
of $13,600 over the note relieved of $12,100 as interest expense.
On
November 25, 2008, the Company issued Hope Capital 34,000,000 shares at
$0.000073 per share in satisfaction of notes of $2,500 in accordance with the
terms and conditions of the Wrap-Around Agreement between Hope Capital and the
Company dated November 19, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $13,600 over the note relieved of $11,100
as interest expense.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common
Stock Issued for Wrap-Around Agreements
On
December 2, 2008, the Company issued K & L Enterprises 40,000,000 shares at
$0.0001 per share in satisfaction of notes of $2,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between K & L
International Enterprises and the Company dated August 28, 2008. In connection
with this conversion, the Company recorded the excess of fair value of
$16,000over the note relieved of $12,000 as interest expense.
On
December 3, 2008, the Company issued Hope Capital 25,000,000 shares at $0.00008
per share in satisfaction of notes of $2,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope Capital and the Company
dated November 19, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $10,000 over the note relieved of $3,000 as
interest expense.
On
December 8, 2008, the Company issued K & L Enterprises 50,000,000 shares at
$0.00015 per share in satisfaction of notes of $7,500 in accordance with the
terms and conditions of the Wrap-Around Agreement between K & L
International Enterprises and the Company dated August 28, 2008. In connection
with this conversion, the Company recorded the excess of fair value of $20,000
over the note relieved of $12,500 as interest expense.
On
December 8, 2008, the Company issued Hope Capital 50,000,000 shares at $0.000125
per share in satisfaction of notes of $6,250 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope Capital and the Company
dated November 19, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $20,000 over the note relieved of $13,750
as interest expense.
On
December 17, 2008, the Company issued Hope Capital 60,000,000 shares at
$0.000116 per share in satisfaction of notes of $7,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Hope Capital and the
Company dated November 19, 2008. In connection with this conversion, the Company
recorded the excess of fair value of $12,000 over the note relieved of $5,000 as
interest expense.
On
December 17, 2008, the Company issued K & L International Enterprises
5,000,000 shares at $0.0001 per share in satisfaction of notes of $500 in
accordance with the terms and conditions of the Wrap-Around Agreement between K
& L International Enterprises and the Company dated August 28, 2008. In
connection with this conversion, the Company recorded the excess of fair value
of $1,000 over the note relieved of $500 as interest expense.
On
December 18, 2008, the Company issued Watson Investment Enterprises 50,000,000
shares at $0.00005 per share in satisfaction of notes of $2,500 in accordance
with the terms and conditions of the Wrap-Around Agreement between Watson
Investment Enterprises and the Company dated August 28, 2008. In connection with
this conversion, the Company recorded the excess of fair value of $10,000 over
the note relieved of $7,500 as interest expense.
On
December 18, 2008, the Company issued Watson Investment Enterprises 50,000,000
shares at $0.00005 per share in satisfaction of notes of $2,500 in accordance
with the terms and conditions of the Wrap-Around Agreement between Watson
Investment Enterprises and the Company dated August 28, 2008. In connection with
this conversion, the Company recorded the excess of fair value of $10,000 over
the note relieved of $7,500 as interest expense.
On
December 29, 2008, the Company issued Watson Investment Enterprises 100,000,000
shares at $0.00005 per share in satisfaction of notes of $5,000 in accordance
with the terms and conditions of the Wrap-Around Agreement. In connection with
this conversion, the Company recorded the excess of fair value of $20,000 over
the note relieved of $15,000 as interest expense.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common Stock Issued
for Wrap-Around Agreements
On
October 1, 2008, the Company issued Tania Babeshoff 7,000,000 shares at $0.002
per share in connection with a Wrap-Around Agreement. However, no proceeds were
received by the Company or Robert Atwell. The Company expensed the fair value of
the common stock issued immediately.
On
October 2, 2008, the Company issued ATG, Inc. 7,000,000 shares at $0.004 per
share in connection with a Wrap-Around Agreement. However, no proceeds were
received by the Company or Robert Atwell. The Company expensed the fair value of
the common stock issued immediately.
On
October 2, 2008, the Company issued Ongkaruck Sripetch 7,000,000 shares at
$0.004 per share in connection with a Wrap-Around Agreement. However, no
proceeds were received by the Company or Robert Atwell. The Company expensed the
fair value of the common stock issued immediately.
.
On
November 7, 2008, the Company issued AlphaTrade.com 8,750,000 shares at $0.002
per share in connection with a Wrap-Around Agreement. However, no proceeds were
received by the Company or Robert Atwell. The Company expensed the fair value of
the common stock issued immediately.
Common
Stock Issued for Services
On
February 24, 2008, the Company issued 10,000 shares of common shares public
relations firm for professional services rendered in connection with the Tustin
Studio project. The shares were valued at $0.05 per share, totaling
$5,000. The shares were valued based on the closing market price of the
Company’s common stock on the date of issuance and expensed immediately as there
were no future performance requirements.
On August
13, 2008, the Company issued Scorpion Bay, LLC 92210 shares at $0.05 per share
in accordance with various agreements between the Company and Scorpion Bay in
reference to the development of Camelot Studios at ATEP.
On August
27, 2008, the Company issued Jeff Brown 10,000 shares of its $0.001 par value
common stock at $0.03 per share for services and other consideration in
reference to the development of Camelot Studios at ATEP.
On
September 5, 2008, the Company issued Patrick Winn 250,000 Shares at $0.012 per
share for administrative services rendered to the Company.
On
September 19, 2008, the Company issued Patrick Winn 250,000 Shares at $0.002 per
share for administrative services rendered to the Company and other
consideration.
On
September 19, 2008, the Company issued Patrick Winn an additional 250,000 shares
at $0.002 per share for administrative services rendered to the Company and
other consideration.
On
September 26, 2008, the Company issued Chris Flannery 1,000,000 shares at
$0.0022 per share for legal services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued Thomas Stepp 500,000 shares at $0.0022
per share for legal services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued Patrick Winn 500,000 shares at $0.0022
per share for administrative services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued Joe Petrucelli 1,000,000 shares at
$0.0022 per share for legal services rendered to the Company and other
consideration.
On
September 26, 2008, the Company issued Vince Monaco 1,000,000 shares at $0.0022
per share for marketing and printing services rendered to the Company and other
consideration.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common Stock Issued
for Wrap-Around Agreements
On
September 26, 2008, the Company issued Phillip Parsons 1,000,000 shares at
$0.0022 per share for craft services, transportation and security services
rendered to the Company and other consideration.
On
September 27, 2008, the Company issued Douglas Warner 2,000,000 shares at
$0.0022 per share for business development and management services rendered to
the Company and other consideration.
On
September 27, 2008, the Company issued Gary Bastien 2,000,000 shares at $0.0022
per share for architectural services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued John Lewis 2,000,000 shares at $0.0022
per share for public policy services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued Jeffory Smith 1,000,000 shares at $0.0022
per share for business development services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued Susan Sanchez 2,272,727 Shares at $0.0022
per share for administrative services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued Patrick Winn 2,272,727 Shares at $0.0022
per share for administrative services rendered to the Company and other
consideration.
On
September 27, 2008, the Company issued Phillip Parsons 2,272,727 Shares at
$0.0022 per share for craft service, transportation and security services
rendered to the Company and other consideration.
On
October 14, 2008, the Company authorized the issuance of 2,000,000 shares at
$0.0004 per share to Rodger Spainhower for Edgar services rendered to the
Company and other consideration.
On
November 10, 2008, the Company authorized the issuance of 5,000,000 shares at
$0.0018 per share to Phillip Parsons for craft service, transportation and
security services rendered to the Company and other consideration.
On
November 10, 2008, the Company authorized the issuance of 2,500,000 shares at
$0.0018 per share to Patrick Winn for administrative services rendered to the
Company and other consideration.
On
November 19, 2008, the Company authorized the issuance of 5,000,000 shares at
$0.0007 per share to Phil Scott for accounting services rendered to the Company
and other consideration.
On
November 21, 2008, the Company authorized the issuance of 25,000,000 shares at
$0.0004 per share to Phillip Parsons for craft service, transportation and
security services rendered to the Company and other consideration.
On
December 2, 2008, the Company authorized the issuance of 5,000,000 shares at
$0.0004 per share to Phil Scott for accounting services rendered to the Company
and other consideration.
On
December 31, 2008, the Company issued Douglas Warner 20,000,000 shares at
$0.0002 per share for business development and management services rendered to
the Company and other consideration.
On
December 31, 2008, the Company authorized the issuance of 50,000,000 shares at
$0.0002 per share to Phillip Parsons for craft service, transportation and
security services rendered to the Company and other consideration.
On
December 31, 2008, the Company authorized the issuance of 10,000,000 Shares at
$0.0002 per share to Phil Scott for accounting services rendered to the Company
and other consideration.
On
December 31, 2008, the Company authorized the issuance of 50,000,000 Shares at
$0.0002 per share to Rodger Spainhower for Edgar services rendered to the
Company and other consideration.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
9. STOCKHOLDERS’ DEFICIT -
continued
Common Stock Issued
for Wrap-Around Agreements
On
December 31, 2008, the Company issued Vince Monaco 50,000,000 Shares at $0.0002
per share for marketing and printing services rendered to the Company and other
consideration.
On
December 31, 2008, the Company issued Chris Flannery 50,000,000 Shares at
$0.0002 per share for legal services rendered to the Company and other
consideration.
2007
Shares Issuances
During
fiscal year 2007, the Company issued 1,866,839 total shares of common stock, all
of which were issued to third parties at or above the market price. Of these
shares, 380,000 shares, or 20.35%, were issued in connection with a proposed
$3,000,000 financing transaction with Nucore World Industries in Pasadena,
California. That transaction did not close, and 330,000 of those shares were
returned to the treasury and 50,000 of those shares have had an administrative
stop placed on them pending return of the certificate and cancellation thereof.
356,000 shares, or 19.06%, were issued to Scorpion Bay, LLC, for interest and
services rendered to the Company, including services on behalf of Camelot Studio
Group. Scorpion Bay is managed by Tim Wilson, one of our directors. In addition,
308,333 shares, or 16.51%, were issued to the Company to be held for financing
activities during 2007, including reserving shares for note conversions in
connection with the NIR financing agreements. 2,000,000 shares, or 10.71%, were
issued to Jeff Zuckerman, one of our directors and a member of Janez Development
Group, a member of Camelot Development Tustin; and 2,000,000 shares, or 10.71%,
were issued to John Kozmur, also a member of Janez Development Group. Both
Zuckerman and Kozmur were issued shares in connection with Camelot Studio Group
activities. The four note holders who provided financing to us during 2007
through the SB2 registration (known as the “NIR” funding transaction) were
issued an aggregate total of 132,708, or 7.1% of the total issued. Here is a
summary of the total shares issued by stockholder:
Stockholder
|
Shares
Issued
|
Consideration
|
Disposition/Price
|
|
|
|
|
Nucore
World Industries
|
380,000
|
Funding
|
Cancelled;
Stopped
|
Scorpion
Bay, LLC
|
356,000
|
Interest;
Services
|
Issued/Market
|
Camelot
Ent. Gp.
|
308,333
|
Funding
|
Held
in Reserve
|
Jeff
Zuckerman
|
200,000
|
Services
|
Issued/Market
|
John
Kozmur
|
200,000
|
Services
|
Issued/Market
|
AJW
Offshore
|
85,053
|
Funding
|
Issued/Market
|
Dolphin
Communities
|
50,000
|
Loans;
Services
|
Issued/Market
|
Michael
Ellis
|
47,924
|
Services
|
Issued/Market
|
Susan
Sanchez
|
44,460
|
Services
|
Issued/Market
|
Patrick
Winn
|
37,680
|
Services
|
Issued/Market
|
AJW
Qualified Partners
|
34,559
|
Funding
|
Issued/Market
|
Bastien
and Associates
|
29,373
|
Services
|
Issued/Market
|
Chris
Flannery
|
25,000
|
Services
|
Issued/Market
|
Petrucelli
& Associates
|
25,000
|
Services
|
Issued/Market
|
Douglas
Warner
|
12,500
|
Services
|
Issued/Market
|
AJW
Partners
|
11,501
|
Funding
|
Issued/Market
|
Lewis
Consulting Group
|
10,000
|
Services
|
Issued/Market
|
The
Atwell Group
|
4,120
|
Loans;
Services
|
Issued/Market
|
Chris
Davis Int’l
|
2,384
|
Services
|
Issued/Market
|
New
Millennium Capital
|
1,587
|
Funding
|
Issued/Market
|
Craig
Prater
|
1,458
|
Services
|
Issued/Market
|
|
1,866,839 |
|
|
Total |
|
|
|
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
Authorized
Shares
On March
26, 2009, the Company’s board of directors authorized an increase in the
authorized shares of stock to 6,000,000,000.
On March
29, 2009, the Company’s board of directors increased the authorized shares of
stock to 10,000,000,000.
Escrow
Shares
On March
2, 2009, the Company issued 900,000,000 shares of common stock to the Company to
be held in escrow for future issuances.
Related Party Issuances for
Services
On March
25, 2009, the Company issued Robert P. Atwell 5,000,000 shares of its Series A
Preferred Stock for management services rendered to the Company and other
consideration.
On March
25, 2009, the Company issued George Jackson 600,000 shares of its Series A
Preferred Stock for management services rendered to the Company and other
consideration.
Wrap-Around
Agreements
On
January 6, 2009, the Company issued Watson Investment Enterprises 300,000,000
shares at $0.00005 per share in satisfaction of notes of $15,000 in accordance
with the terms and conditions of the Wrap-Around Agreement between Watson
Investment Enterprises and the Company.
On
January 6, 2009, the Company issued Hope Capital 100,000,000 shares at $0.000055
per share in satisfaction of notes of $5,500 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope and the
Company.
On
January 15, 2009, the Company issued Watson Investment Enterprises 110,000,000
shares at $0.000045 per share in satisfaction of notes of $5,000 in accordance
with the terms and conditions of the Wrap-Around Agreement between Watson
Investment Enterprises and the Company.
On
January 28, 2009, the Company issued TJ Management Group, LLC 454,545,454 shares
at $0.000055 per share in satisfaction of notes of $25,000 in accordance with
the terms and conditions of the Wrap-Around Agreement between TJ Management
Group, LLC and the Company.
On
February 11, 2009, the Company issued Acicia Investors, LLC 100,000,000 shares
at $0.00005 per share in satisfaction of notes of $5,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Acacia Investors, LLC
and the Company.
On
February 23, 2009, the Company issued TJ Management Group, LLC 454,545,454
shares at $0.000055 per share in satisfaction of notes of $25,000 in accordance
with the terms and conditions of the Wrap-Around Agreement between TJ Management
Group, LLC and the Company.
On
February 23, 2009, the Company issued Hope Capital 255,000,000 shares at
$0.00007 per share in satisfaction of notes of $18,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Hope and the
Company.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
10. SUBSEQUENT EVENTS -
continued
On
February 24, 2009, the Company issued Primary Finance LLC 100,000,000 shares at
$0.00005 per share in satisfaction of notes of $5,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Hope and the
Company.
On
February 26, 2009, the Company issued Watson Investment Enterprises 110,000,000
shares at $0.000045 per share in satisfaction of notes of $5,000 in accordance
with the terms and conditions of the Wrap-Around Agreement between Watson
Investment Enterprises and the Company.
On
February 26, 2009, the Company issued TJ Management Group, LLC 454,545,454
shares at $0.000055 per share in satisfaction of notes of $25,000 in accordance
with the terms and conditions of the Wrap-Around Agreement between TJ Management
Group, LLC and the Company.
On
February 26, 2009, the Company issued Hope Capital 300,000,000 shares at
$0.00005 per share in satisfaction of notes of $15,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Hope and the
Company.
On March
11, 2009, the Company issued Primary Finance LLC 100,000,000 shares at $0.00005
per share in satisfaction of notes of $5,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope and the
Company.
On March
16, 2009, the Company issued TJ Management Group, LLC 454,545,454 shares at
$0.000055 per share in satisfaction of notes of $25,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between TJ Management Group,
LLC and the Company.
On March
19, 2009, the Company issued Watson Investment Enterprises 200,000,000 shares at
$0.00005 per share in satisfaction of notes of $10,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Watson Investment
Enterprises and the Company.
On March
23, 2009, the Company issued Hope Capital 300,000,000 shares at $0.00005 per
share in satisfaction of notes of $15,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope and the
Company.
On March
23, 2009, the Company issued TJ Management Group, LLC 454,545,454 shares at
$0.000055 per share in satisfaction of notes of $25,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between TJ Management Group,
LLC and the Company.
On March
24, 2009, the Company issued Watson Investment Enterprises 250,000,000 shares at
$0.00005 per share in satisfaction of notes of $12,500 in accordance with the
terms and conditions of the Wrap-Around Agreement between Watson Investment
Enterprises and the Company.
On March
27, 2009, the Company issued Hope Capital 300,000,000 shares at $0.00005 per
share in satisfaction of notes of $15,000 in accordance with the terms and
conditions of the Wrap-Around Agreement between Hope and the
Company.
On March
27, 2009, the Company issued Watson Investment Enterprises 200,000,000 shares at
$0.00005 per share in satisfaction of notes of $10,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between Watson Investment
Enterprises and the Company.
On March
31, 2009, the Company issued Watson Investment Enterprises 150,000,000 shares at
$0.00005 per share in satisfaction of notes of $7,500 in accordance with the
terms and conditions of the Wrap-Around Agreement between Watson Investment
Enterprises and the Company.
On April
1, 2009, the Company issued TJ Management Group, LLC 454,545,454 shares at
$0.000055 per share in satisfaction of notes of $25,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between TJ Management Group,
LLC and the Company.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
10. SUBSEQUENT EVENTS - continued
On April
6, 2009, the Company issued New Media Advisors, Inc. 50,000,000 shares at
$0.0001 per share in satisfaction of notes of $5,000 in accordance with the
terms and conditions of the Wrap-Around Agreement between New Media Advisors and
the Company.
NIR
Conversions
On
January 6, 2009, the Company issued 24,725,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
January 9, 2009, the Company issued 24,725,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
January 15, 2009, the Company issued 24,725,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
January 23, 2009, the Company issued 5,020,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
February 3, 2009, the Company issued 10,000,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
February 13, 2009, the Company issued 10,000,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
February 23, 2009, the Company issued 10,000,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On
February 27, 2009, the Company issued 10,000,000 shares of its $0.001 par value
common stock to the note holders in connection the callable secured convertible
notes described in “Notes Payable”, Section 4 herein.
On March
2, 2009, the Company issued 10,000,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
On March
5, 2009, the Company issued 10,000,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
On March
9, 2009, the Company issued 10,000,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
Camelot
Entertainment Group, Inc.
(A
Development Stage Company)
Notes
to Financial Statements
10. SUBSEQUENT EVENTS - continued
On March
20, 2009, the Company issued 239,765,300 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
On March
31, 2009, the Company issued 9,640,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
On April
1, 2009, the Company issued 3,000,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
On April
6, 2009, the Company issued 381,834,000 shares of its $0.001 par value common
stock to the note holders in connection the callable secured convertible notes
described in “Notes Payable”, Section 4 herein.
Shares Issued for
Services
On January 23, 2009, the Company authorized the issuance of
25,000,000 Shares at $0.0002 per share to Phillip Parsons for craft services,
transportation and security services rendered to the Company and other
consideration.
On March
27, 2009, the Company authorized the issuance of 50,000,000 Shares at $0.0001
per share to Phil Scott for accounting services rendered to the Company and
other consideration.
On April
6, 2009, the Company authorized the issuance of 50,000,000 Shares at $0.0001 per
share to Phil Scott for accounting services rendered to the Company and other
consideration.
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report on Form 10-K, dated April 15, 2009,
to be signed on its behalf by the undersigned, thereunto duly
authorized.
CAMELOT
ENTERTAINMENT GROUP, INC.
(Registrant)
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/s/Robert P. Atwell
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/s/
George Jackson
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Robert
P. Atwell
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George
Jackson
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Chief
Executive Officer
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Chief
Financial Officer
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S-1