SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
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(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2004
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-14247
Century Park Pictures Corporation
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1458152
(State of incorporation) (IRS Employer ID Number)
4701 IDS Center, Minneapolis, MN 55402
(Address of principal executive offices)
(612) 333-5100
(Issuer's telephone number)
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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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 3, 2004: 74,456,441
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
CENTURY PARK PICTURES CORPORATION
Form 10-QSB for the Quarter ended June 30, 2004
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 12
Item 3 Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
PART I
ITEM 1 - FINANCIAL STATEMENTS
CENTURY PARK PICTURES CORPORATION
BALANCE SHEETS
June 30, 2004 and 2003
(UNAUDITED)
June 30, June 30,
2004 2003
----------- -----------
ASSETS
CURRENT ASSETS
Cash on hand and in bank $ -- $ --
----------- -----------
TOTAL CURRENT ASSETS -- --
----------- -----------
PROPERTY AND EQUIPMENT - AT COST
Furniture and fixtures -- 94,077
Less accumulated depreciation -- (94,077)
----------- -----------
NET PROPERTY AND EQUIPMENT -- --
----------- -----------
OTHER ASSETS
Rent deposits 926 926
----------- -----------
TOTAL ASSETS $ 926 $ 926
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ -- $ 100,000
Accounts payable - trade -- --
Accrued interest payable -- 73,714
Other accrued expenses -- 9,027
Advances from shareholder 33,970 20,917
Accrued compensation 354,500 354,500
----------- -----------
TOTAL CURRENT LIABILITIES 388,470 558,158
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - $0.001 par value
200,000,000 shares authorized. 72,456,441 and
63,670,141 shares issued and outstanding, respectively 72,456 63,670
Additional paid-in capital 6,804,569 6,713,597
Accumulated deficit (7,264,569) (7,334,499)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (387,544) (557,232)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 926 $ 926
=========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
CENTURY PARK PICTURES CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Nine and Three months ended June 30, 2004 and 2003
(UNAUDITED)
Nine months Nine months Three months Three months
ended ended ended ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
REVENUES $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
EXPENSES
General and administrative expenses 4,926 12,051 (7,472) 1,774
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (4,926) (12,051) 7,472 (1,774)
OTHER INCOME (EXPENSE)
Interest expense (2,104) (37,980) -- (12,022)
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR
INCOME TAXES AND EXTRAORDINARY ITEM (7,030) (50,031) 7,472 (13,796)
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (7,030) (50,031) 7,472 (13,796)
EXTRAORDINARY ITEM
Forgiveness and extinguishment of
notes payable and accrued interest 86,956 -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) 79,926 (50,031) 7,472 (13,796)
OTHER COMPREHENSIVE INCOME -- -- -- --
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME (LOSS) $ 79,926 $ (50,031) $ 7,472 $ (13,796)
=========== =========== =========== ===========
Netloss per weighted-average share of common
stock outstanding, calculated on Net Loss -
basic and fully diluted
From continuing operations $ (0.00) $ (0.00) $ (0.00) $ (0.00)
From extraordinary item 0.00 0.00 0.00 0.00
----------- ----------- ----------- -----------
$ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
Weighted-average number of shares
of common stock outstanding 70,280,665 11,068,696 72,456,441 13,432,806
=========== =========== =========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
CENTURY PARK PICTURES CORPORATION
STATEMENTS OF CASH FLOWS
Nine months ended June 30, 2004 and 2003
(UNAUDITED)
Nine months Nine months
ended ended
June 30, June 30,
2004 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ 79,926 $ (50,031)
Adjustments to reconcile net income to net cash
provided by operating activities
Forgiveness of notes payable and accrued interest (86,956) --
Consulting fees paid with common stock 7,870 --
Contribution of interest expense related to
suspended interest payable on notes payable 2,104 37,980
Increase (Decrease) in
Accounts payable and accrued expenses (9,027) --
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (6,083) (12,051)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Funds advanced by officer/shareholder 6,083 12,051
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,083 12,051
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- --
Cash and cash equivalents at beginning of period -- --
--------- ---------
Cash and cash equivalents at end of period $ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURES OF INTEREST AND INCOME TAXES PAID
Interest paid during the period $ -- $ --
========= =========
Income taxes paid (refunded) $ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of outstanding notes payable into common stock $ 50,000 $ 300,000
========= =========
Conversion of accrued interest payable into common stock $ 36,758 $ 237,834
========= =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Century Park Pictures Corporation (Company) was incorporated in 1983 in
accordance with the Laws of the State of Minnesota.
In prior periods, the Company developed, produced and marketed various
entertainment properties, including without limitation, the intellectual
product(s) of entities engaged in the motion picture, television, and theatrical
state productions, such as creative writers, producers and directors, for the
motion picture, pay/cable and commercial television markets.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended September 30, 1999.
NOTE B - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
adopted a year-end of September 30.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-KSB for the year ended
September 30, 2003. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending September 30, 2004.
For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial statements
and makes all operating decisions and allocates resources based on the best
benefit to the Company as a whole.
6
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - GOING CONCERN UNCERTAINTY
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended September 30, 1999.
The Company has no operating activities, no cash on hand, no profit and operates
a business plan with inherent risk. Because of these factors, our auditors have
issued an audit opinion for the Company which includes a statement describing
our going concern status. This means, in our auditor's opinion, substantial
doubt about our ability to continue as a going concern exists at the date of
their opinion.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If no additional operating capital is received during the next twelve months,
the Company will be forced to rely on existing cash in the bank and upon
additional funds loaned by management and/or significant stockholders to
preserve the integrity of the corporate entity at this time. In the event, the
Company is unable to acquire advances from management and/or significant
stockholders, the Company's ongoing operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. CASH AND CASH EQUIVALENTS
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of furniture and fixtures and is recorded
at historical cost. These costs were depreciated over the estimated useful
lives of the individual assets using the straight-line method.
Gains and losses from disposition of property and equipment are recognized
as incurred and are included in operations.
7
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
3. INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes. At June 30, 2004 and 2003, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
As of June 30, 2004 and 2003, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. Due to the
provisions of Internal Revenue Code Section 338, the Company may have
limited net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of any
future change in control involving 50 percentage points or more of the
issued and outstanding securities of the Company.
4. INCOME (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common shareholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements. Fully diluted earnings (loss) per share
is computed similar to basic income (loss) per share except that the
denominator is increased to include the number of common stock equivalents
(primarily outstanding options and warrants). Common stock equivalents
represent the dilutive effect of the assumed exercise of the outstanding
stock options and warrants, using the treasury stock method, at either the
beginning of the respective period presented or the date of issuance,
whichever is later, and only if the common stock equivalents are considered
dilutive based upon the Company's net income (loss) position at the
calculation date.
The Company had no common stock equivalents outstanding at June 30, 2004 or
2003, respectively.
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if any.
(Remainder of this page left blank intentionally)
8
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE F - NOTES PAYABLE
On July 31, 2002, the Company's Board of Directors and the respective
noteholders approved the extension of the ultimate maturity date of the notes
through December 3, 2003. In conjunction with the extension, the noteholders
agreed to discontinue the accrual of interest subsequent to July 31, 2002.
The effect of the discontinuance of interest accruals subsequent to July 31,
2002 will be charged to operations as a component of interest expense with an
offset to contributed additional paid-in capital to recognize the economic
effect of the suspended and forgiven interest on these notes in the respective
future period.
On June 25, 2003, noteholders aggregating $300,000 in outstanding principal and
$231,900 in accrued interest payable exercised their respective conversion
rights and received an aggregate 53,106,900 shares of restricted, common stock
upon conversion.
On December 3, 2003, the final ultimate maturity date, one remaining noteholder
exercised his conversion rights and converted approximately $50,000 in principal
and $36,758 in accrued interest payable into 8,675,800 shares of restricted,
unregistered common stock.
On December 3, 2003, upon the failure to convert or post a claim for repayment,
the Company's Board of Directors, with the approval of legal counsel, voided the
remaining outstanding unconverted notes payable of approximately $50,000 and the
associated accrued interest of approximately $36,956 and recognized a one-time
gain on the technical forgiveness of these debts.
For the respective nine month periods ending June 30, 2004 and 2003, the Company
has recognized approximately $2,107 and $36,625 in additional paid-in capital
due to the suspended interest on these notes.
NOTE G - RELATED PARTY TRANSACTIONS
Through June 30, 2004, the Company's Chief Executive Officer has advanced the
Company an aggregate of approximately $33,970 to support operations, settle
outstanding trade accounts payable and provide working capital. The advance is
repayable upon demand and is non-interest bearing and is unsecured.
As of June 30, 2004 and 2003, respectively, the Company owed the Company's Chief
Executive Officer approximately $354,500 for cumulative accrued salary in prior
years.
NOTE H - INCOME TAXES
The components of income tax (benefit) expense for the six months ended June 30,
2004 and 2003, respectively, are as follows:
Nine months Nine months
ended ended
June 30, June 30,
2004 2003
------------ ------------
Federal:
Current $ -- $ --
Deferred -- --
------------ ------------
-- --
------------ ------------
State:
Current -- --
Deferred -- --
------------ ------------
-- --
------------ ------------
Total $ -- $ --
============ ============
9
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE H - INCOME TAXES - CONTINUED
As of June 30, 2004, the Company has a Federal net operating loss carryforward
of approximately $3,100,000 and a State net operating loss carryforward of
approximately $790,000 to offset future taxable income. Subject to current
regulations, these carryforwards expire through 2015.
The Company's income tax expense for each of the nine months ended June 30, 2004
and 2003, respectively, differed from the statutory federal rate of 34 percent
as follows:
Nine months Nine months
ended ended
June 30, June 30,
2004 2003
-------- --------
Statutory rate applied to earnings (loss) before income taxes $27,200 $(15,800)
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Other, including reserve for deferred tax asset (27,200) 15,800
-------- --------
Income tax expense $ -- $ --
======== ========
Temporary differences, consisting primarily of statutory differences between the
financial statement carrying amounts and tax bases of assets and liabilities
give rise to deferred tax assets and liabilities as of the respective years
ended September 30, 2003 and 2002.
Year ended September 30, 2003
---------------------------------------------
Federal State Total
----------- ----------- -----------
Deferred tax assets:
Other (current) $ 96,000 $ 35,000 $ 131,000
Net operating loss carryforwards (non-current) 932,000 77,000 1,009,000
----------- ----------- -----------
1,028,000 112,000 1,140,000
Valuation allowance (1,028,000) (112,000) (1,140,000)
----------- ----------- -----------
Net Deferred tax asset $ -- $ -- $ --
=========== =========== ===========
Deferred tax liabilities $ -- $ -- $ --
=========== =========== ===========
Year ended September 30, 2002
---------------------------------------------
Federal State Total
----------- ----------- -----------
Deferred tax assets:
Other (current) $ 96,000 $ 35,000 $ 131,000
Net operating loss carryforwards (non-current) 932,000 77,000 1,009,000
----------- ----------- -----------
1,028,000 112,000 1,140,000
Valuation allowance (1,028,000) (112,000) (1,140,000)
----------- ----------- -----------
Net Deferred tax asset $ -- $ -- $ --
=========== =========== ===========
Deferred tax liabilities $ -- $ -- $ --
=========== =========== ===========
During the years ended September 30, 2003 and 2002, respectively, the valuation
allowance increased (decreased) by approximately $-0- and $-0-. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carryforwards are expected
to be available to reduce taxable income.
10
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE I - COMMON STOCK TRANSACTIONS
On June 25, 2003, the Company issued an aggregate 53,783,500 shares of
restricted, unregistered common stock in redemption of various outstanding notes
payable in the face amount of approximately $300,000 and accrued interest
payable of approximately $237,835, pursuant to the conversion terms of the
respective notes. The valuation of this transaction was equal to the "fair
value" of the Company's common stock on the conversion date.
On December 3, 2003, the Company issued 8,675,800 shares of restricted,
unregistered common stock in redemption of two (2) notes payable in the face
amount of approximately $50,000 and accrued interest payable of approximately
$36,758, pursuant to the conversion terms of the respective notes. The valuation
of this transaction was equal to the "fair value" of the Company's common stock
on the conversion date. The Company relied upon Section 4(2) of The Securities
Act of 1933, as amended, for an exemption from registration of these shares and
no underwriter was used in this transaction.
On December 3, 2003, the Company issued 787,100 shares of restricted,
unregistered common stock as compensation for fees associated with the
conversion of the outstanding notes payable and accrued interest payable. This
transaction was valued at approximately $7,871, which was equal to the "fair
value" of the Company's common stock on the conversion date. The Company relied
upon Section 4(2) of The Securities Act of 1933, as amended, for an exemption
from registration of these shares and no underwriter was used in this
transaction.
NOTE J - COMMITMENTS AND CONTINGENCIES
The Company leases office space under a noncancellable operating lease that
expired on August 31, 2002. The space has been sub-leased to a separate company
owned by the Company's CEO. The Company incurred no expense related to this
lease during either of the years ended September 30, 2003 and 2002,
respectively, or subsequent thereto.
11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2) RESULTS OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES
Century Park Pictures Corporation (Company) was incorporated in 1983 in
accordance with the Laws of the State of Minnesota.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended September 30, 1999.
General and administrative expenses for the nine months ended June 30, 2004 and
2003 were approximately $4,926 and $12,050, respectively. Interest expense on
the outstanding notes payable was approximately $2,104 and $36,625 for each of
the respective nine month periods. During the quarter ended June 30, 2004,
management reviewed and settled an outstanding accrual for legal fees which had
been estimated and accrued in prior periods. As of June 30, 2004, the only
liabilities of the Company are accrued officers compensation from prior years
and amounts due for funds paid on the Company's behalf to support the corporate
entity and maintain the Company's required filings under the Securities Exchange
Act of 1934, as amended.
On July 31, 2002, the Company's Board of Directors and the respective
noteholders approved the extension of the ultimate maturity date of various
notes payable to December 3, 2003. In conjunction with the extension, the
individual noteholders agreed to discontinue the accrual of interest subsequent
to July 31, 2002. The effect of the discontinuance of interest accruals
subsequent to July 31, 2002 will be charged to operations as a component of
interest expense with an offset to contributed additional paid-in capital to
recognize the economic effect of the suspended and forgiven interest on these
notes in the respective future period.
On June 25, 2003, noteholders aggregating $300,000 in outstanding principal and
$231,900 in accrued interest payable exercised their respective conversion
rights and received an aggregate 53,106,900 shares of restricted, common stock
upon conversion.
On December 3, 2003, the final ultimate maturity date, one remaining noteholder
exercised his conversion rights and converted approximately $50,000 in principal
and $36,758 in accrued interest payable into 8,675,800 shares of restricted,
unregistered common stock.
On December 3, 2003, upon the failure to convert or post a claim for repayment,
the Company's Board of Directors, upon the advise of legal counsel, voided the
12
remaining outstanding unconverted notes payable aggregating approximately
$50,000 and the associated accrued interest of approximately $36,956 and
recognized a one-time gain on the technical forgiveness of these debts.
On December 3, 2003, the Company issued 787,100 shares of restricted,
unregistered common stock as compensation for fees associated with the
conversion of the outstanding notes payable and accrued interest payable. This
transaction was valued at approximately $7,871, which was equal to the "fair
value" of the Company's common stock on the conversion date. The Company relied
upon Section 4(2) of The Securities Act of 1933, as amended, for an exemption
from registration of these shares and no underwriter was used in this
transaction.
Net income (loss) for the six months ended June 30, 2004 and 2003, respectively,
was approximately $79,926 and $(46,500). Earnings per share for the respective
quarters ended June 30, 2004 and 2003 was $0.00 and $0.00 on the
weighted-average post-reverse split shares issued and outstanding.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under the Securities Exchange Act of 1934 (Exchange Act).
At June 30, 2004 and September 30, 2003, respectively, the Company had working
capital of approximately $(388,470) and $(558,000).
Management intends to continue to restrict expenditures with respect to the
future development of entertainment properties and to market its completed
properties. The Company has two completed properties. The costs of development
have been written off. Accordingly, the Company will incur little, if any, costs
of marketing. Management believes these actions may contribute to the Company's
liquidity. The Company has no material commitments for capital expenditures as
of June 30, 2004 and anticipates no significant capital expenditures for future
periods.
The Company intends to continue to seek out potential acquisitions. Since the
Company has no available bank lines of credit, there are no assurances that the
Company will be able to successfully identify any potential acquisitions or
that, if identified, it will obtain financing under terms acceptable to the
Company. Management presently considers an acquisition or a merger of the
Company a viable alternative.
The Company has no operating activities, no cash on hand, no profit and operates
a business plan with inherent risk. Because of these factors, our auditors have
issued an audit opinion for the Company which includes a statement describing
our going concern status. This means, in our auditor's opinion, substantial
doubt about our ability to continue as a going concern exists at the date of
their opinion.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If no additional operating capital is received during the next twelve months,
the Company will be forced to rely on existing cash in the bank and upon
additional funds loaned by management and/or significant stockholders to
preserve the integrity of the corporate entity at this time. In the event, the
Company is unable to acquire advances from management and/or significant
stockholders, the Company's ongoing operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
13
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
ITEM 3. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President, Chief Executive and Financial Officer. Based upon that evaluation,
the Company's President, Chief Executive and Financial Officer concluded that
the Company's disclosure controls and procedures are effective. There have been
no significant changes in the Company's internal controls or in other factors,
which could significantly affect internal controls subsequent to the date the
Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive and Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
REPORTS ON FORM 8-K
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PARK PICTURES CORPORATION
Dated: August 3, 2004 /s/ Thomas K. Scallen
-------------- ------------------------------------
Thomas K. Scallen
Chairman, Chief Executive Officer,
Chief Financial Officer and Director
15