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Securities registered under Section
12(b) of the Exchange Act:
None.
N/A
(Title of
Class)
(Name of exchange on Which
Registered)
Securities registered pursuant to
Section 12(g) of the Act:
Common Stock, $0.0001 Par
Value
Check whether the Issuer is not required
to file reports pursuant to Section 13 or 15(d) of the Exchange
Act. o
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 there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B is not contained in
the 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-KSB or any amendment to
this Form 10-KSB x
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No x
The aggregate market value of the voting
Common Stock held by non-affiliates of the registrant as of March 31, 2008 was
approximately $1,938,659 based on the $0.0001 per share closing price of the
Common Stock on the Over The Counter Bulletin Board composite transactions
tape. The number of shares of Common Stock outstanding as of that
date was approximately 19,386,585,664.
AMENDMENT
We
omitted Item 8A (Controls and Procedures) from our Form 10-KSB for December 31,2007. We are amending our Form 10-KSB to include Item
8A.
Certain statements made in this Annual
Report on Form 10-KSB are "forward looking statements" (within the meaning of
the Private Securities Litigation Reform Act of 1995) regarding the plans and
objectives of management for future operations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. Our plans and objectives are based,
in part, on assumptions involving judgments with respect to, among other things,
future economic, competitive and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our control. Although we believe that our
assumptions underlying the forward looking statements are reasonable, any of the
assumptions could prove inaccurate and, therefore, there can be no assurance
that the forward-looking statements included in this report will prove to be
accurate. In light of the significant uncertainties inherent in the forward
looking statements included herein particularly in view of the current state of
our operations, the inclusion of such information should not be regarded as a
statement by us or any other person that our objectives and plans will be
achieved. Factors that could cause actual results to differ
materially from those expressed or implied by such forward looking statements
include, but are not limited to, the factors set forth herein under the headings
"Business,""Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The primary business focus of Raven Moon
Entertainment, Inc. (the "Company" or "Raven Moon") is the development and
production of family G-Rated children's television programs and animated movies,
DVD's, CD music products, music publishing and talent
management.
The Company has completed 44 television
episodes and 44 DVD titles of the "Gina D Kids Club" all of which are available
for distribution. The production of "Gina D's Kids Club" has resulted
in a music library of over 350 original songs, and a cast of characters which
are suitable for licensing and merchandising opportunities. The
Company's future revenue stream is dependant on its worldwide television
exposure of both the "Gina D's Kids Club" and the Company's ability to sell
DVD's, music CD's and other merchandise from the programs in the
marketplace.
It was an assumption that as part of the
Company's business plan, the completion of a total of 44 episodes and saturated
visibility on worldwide television exposure could create multiple revenue
streams which includes worldwide licensing and merchandising opportunities for
DVD's, CD's, and toys that have been inspired by the show. Of course,
the programs will need to be accepted by the viewers, the licensees and the
retailers. Parents stated that they wanted better programming for
their children, and the Company remains committed to the goal of providing the
very best in family values children's entertainment.
In 2002, the Company created a wholly
owned subsidiary called JB Toys, LLC which controls the exclusive licensing and
merchandising rights to the following product lines for a period of ten years:
The "Cuddle Bug", "The Christmas Cuddle Bug", "The Cuddle Bug Cousins", "The
Birthday Cuddle Bugs", "The BoBo Blocks", and "Mr. Bicycle
Man". Raven Moon continues to receive 15% of gross profits received
by JB Toys, LLC for ten years. Because the Company recently signed a
television distribution contract with DLT Entertainment, LLC (a major company
located in New York, Los Angeles and London) for a new show called "BoBo Tales",
the contract for the BoBo Blocks was recently renewed for an additional ten
years with Tri-Color Entertainment, Inc. and JB Toys, LLC.
-3-
The "Gina D's Kids Club" began airing on
television once a week in September 2004, through the efforts of syndicator Role
Entertainment. In order to maximize the Company's airtime exposure to
five days, like programs such as "Sesame Street", "Arthur" and "Barney", we decided to
move the program to PBS public television stations. The Company has
signed a 27 month agreement with WPBT-PBS, Miami to be the presenting station through
American Public Television ("APT"), so that the programs could be broadcast on
public television stations beginning in June 2006. As part of that
agreement, the Company had to produce an additional 16 half-hour episodes at an
approximate cost of $4,000,000.
During November 2006, the Company
announced that Trinity Broadcasting had given "Gina D's Kids Club" a second time
slot that will air seven days a week. Once the Company has the
program in a position where it's airing regularly on a station or network which
is considered a destination for kids, management believes there are numerous
opportunities in a billion dollar licensing and merchandising market for
preschool kids. Raven Moon management has already explored these
opportunities and has met with prominent industry leaders who have
recommended the company adapt a strategy which will allow Raven Moon to build
upon the "Gina D's Kids Club" brand.
Raven Moon's GINA D programs and public
service announcements (PSA's) have increased its TV coverage 800% since the 1st
quarter of 2007 with eight (8) cable networks, PBS stations and 135 U.S. and
international markets, representing carriage in over 95% of the
world. The programs and PSA's can be seen on the:
AMG-TV
Network,
The World Harvest Television
Network (WHT),
The Trinity Broadcasting
Network (TBN),
The Smile of a Child
Network,
The Inspirational iLifetv
Television Network,
The Victory Television
Network (VTN),
The Christian Television
Network (CTN),
Public Broadcasting Stations
(PBS),
ABC, CBS,
NBC,
DirecTV stations throughout
the U.S.,
Israel on METV,
and
The Far East on
FETV.
"GINA D'S KIDS CLUB" program segments
have also been featured on the E-Entertainment Network's "The Soup" and on ABC's
Jimmy Kimmel Show. Program segments and PSA's have also been featured
on WNED-PBS's THINK BRIGHT Network covering, all PBS stations in New York State,
WPBT-PBS's worldwide uVu network, www.youtube.com and
www.godtube.com. For stations and times go to
www.ginadskidsclub.com.
In addition to "Gina D's Kids Club",
Raven Moon's licensee Gina D's Kids Club, Inc. has begun developing a movie
called "Gina D & The Transistor Sisters In Search of the Golden
Record."The Company has already produced a "Mr. Bicycle Man" and a
"Let's Get Fit" Public Service Announcement.
On March 8, 2008the Company announced
that due to its tremendous television broadcast growth over the past year, it
had licensed its television and DVD library and all related properties to GINA
D's KIDS CLUB, INC. In exchange for the license, the Company will
receive a significant 20% gross royalty of any revenues received by GINA D'S
KIDS CLUB, INC. in perpetuity with a $10 million guarantee to be paid in the
first three years of the agreement. If the $10 million minimum
payment is not made within the three year timeframe, all rights under the
license will revert back to the Company.
-4-
On March 11, 2008the Company announced
that that GINA D'S KIDS CLUB, INC. had signed a worldwide distribution deal with
Sullivan Entertainment in Toronto, Canada. Sullivan Entertainment is
best known for their classic hits including: "Anne of Green Gables", "Mozart's
Magic Flute" and "Road to Avonlea." Sullivan Entertainment has been
in business over thirty years and has worked with an impressive array of
talented actors including: Academy Award Winner Diane Wiest, Golden Globe Winner
Faye Dunaway, Emmy Award Winners Christopher
Lloyd, Colleen Dewhurst and Peter Coyote.
During March 2008, GINA D's KIDS CLUB,
Inc. had finished the production phase of a new 90-minute feature length made
for television movie and DVD called "Gina D'S Pre-School Musical The Movie"
which is narrated by Casey Kasem and was produced on the heels of Disney's
highly successful High School Musical.
On April 2, 2008the Company announced
that it in an effort to restructure the Company without undergoing a reverse
split, it has reduced the total number of common outstanding by approximately
nine (9) billion shares, or approximately 53% of the outstanding shares on that
date. The nine (9) billion shares were purchased in 2006 by the
Company's founders by exercising warrants at a cost of $200,000 and will be
retired to the treasury without any remuneration to the
founders. In addition the Company also announced that accrued
compensation of $3 million will also be forgiven by the founders. The
accrued compensation is for services performed prior to January 1,2008.
On April 3, 2008the Company announced
that its licensee MADE IN AMERICA ENTERTAINMENT, LLC (dba YOUNG AMERICA MUSIC
USA.COM) had signed "Radio Icon" Casey Kasem to record a new spoken word music
CD. The recording called "Young America narrated by Casey
Kasem and featuring Gina D" was written and produced by executive producers Joey
and Bernadette DiFrancesco with additional lyrics by Lorre Crimi and Frank Akrey
and is part of a twelve (12) song collection. The music from this 12
song CD collection will be sold beginning April 14, 2008 on
www.YoungAmericaMusicUSA.com.
Casey Kasem is best known for his
"American Top 40" countdown radio programs which have spanned the generations
from the 1970's and beyond with rerun programs currently airing on XM Satellite
Radio. Mr. Kasem, an actor and voice talent, was also the "voice of
NBC", the voice of "Shaggy" in the "Scooby-Doo" television series and movie,
many voices on Sesame Street, and voices on "The Transformers" cartoon series
and other movies and television appearances throughout his illustrious
career.
Competitive Business
Conditions
The main competition in our industry
comes from the major studios, such as Disney and Universal Studios that produce
a large percentage of children's programming plus producers of such shows as
"Barney,""Sesame Street," and the "Muppets." The next level of
competition is from other independent production companies. To be
competitive, we must produce high quality creative productions and must develop
the reputation and contacts to meet with the principal players in this
industry. As we obtain more distributors, we expect that they will
provide the support necessary to enable us to compete in this
marketplace.
Beginning 2008, the Company intends to
follow the changing industry trend set by iTUNES that topped WAL-MART, BEST BUY
and TARGET in music sales as reported in the Los Angeles Times on April 4,2008. The new sales operation will set-up downloads with
iTUNES, RHAPSODY, MY SPACE, AMAZON MP3 and other companies to create
revenues from music, DVD's and movie downloads from the Company's asset library
of 350 songs, 44 award winning DVD's and feature movies with no production,
manufacturing, or warehousing expenses.
Creative Talent
We have been able to obtain the talent
necessary to develop and produce this programming, including actors, set
designers and builders, television production crews, scriptwriters, and
musicians, from sub-contractors available in the metropolitan Orlando, Florida
area, many of whom presently develop and produce materials and productions for
Disney and Universal Studios.
-5-
Joey and Bernadette DiFrancesco, the
Company's principal creative talent, have spent a substantial time developing
these properties and products during the last three
fiscal years. They are in charge of the production of the product on
an ongoing basis.
"GINA D'S KIDS CLUB" programs and DVD's
have won a:
2005 Telly
Award,
2005 Kids First!
Award,
Communicator Award,
and
Crystal Award for Excellence
in Creativity, Special Effects and Animation.
The show has also been approved by Kids
First!, the Coalition for Quality Children's Media and in 2007 the entire series
of television DVD's have been awarded the DOVE
FOUNDATION FAMILY SEAL OF APPROVAL.
Finally, the "SAFETY, HEALTH AND
FITNESS" television DVD has just been awarded the 2007 Greatest Products Award
from iParenting Media (which is Disney owned).
Intellectual
Property
We have determined to focus our primary
efforts on audio and video production for television and Family Values Videos
and more specifically on the present development of the "Gina D's Kids Club"
children's videos. On April 11, 2001, we acquired from Joseph and
Bernadette DiFrancesco a one (1) year option for the rights to the program "Gina
D's Kids Club," the cartoon characters "TV Ted", "Baby and the Transistor
Sisters" and other characters from the show including: "Simon,""Fishy,""Kitty,""Hammy,""Miss Muffin," and the music publishing rights to songs
written by Mr. and Mrs. DiFrancesco, in exchange for one (1)
split-adjusted
share of our common stock at par
value.
Because the Company failed to have
produced the required number of programs and videos by April 1, 2002, the Option
was extended for an additional year in exchange for one (1) split-adjusted share
of common stock to J&B DiFrancesco. On March 4, 2004 and March 5,2004, the Company's Board of Directors renegotiated a new ten-year agreement
with Joey & Bernadette DiFrancesco, the copyright and trademark owners, to
be effective beginning January 1, 2004 and ending December 31,2014. In the agreement, the Company must pay J&B DiFrancesco, in
addition to their salaries as officers of the company, a creative license fee of
$750,000 plus 10% of gross revenues each year for ten years. The
Company shall own these rights provided that the Company does not file for
bankruptcy or is taken over by an unfriendly party.
Marketing and
Distribution
During November 2007 the Company
announced that its "Sing Along With Gina D" music CD had been accepted by media
giant ITUNES for distribution and a three (3) year agreement
signed. Under the Agreement, ITUNES may promote, market and
distribute the Company's music and any music video for three (3) years, subject
to typical terms and conditions. ITUNES, owned by Apple Computer, is
considered by many as the premier music distribution medium and has distributed
over 2.5 billion songs making it the most popular online music
store. The Company believes this association could result in
substantial revenues over a period of time as sales are generated through
ITUNES.
On March 11, 2008the Company announced
that that its licensee GINA D'S KIDS CLUB, INC. who recently obtained all of the
worldwide licensing rights to market, promote and sell the GINA D'S KIDS CLUB,
television asset library of 44 half-hour episodes, had signed a worldwide
distribution deal with Sullivan Entertainment in Toronto,
Canada.
-6-
Customers
The Company is not dependant on a few
major customers because every television station in the country is involved in
filling its production day and is constantly seeking quality program material to
enable it to meet that demand.
Personnel
We currently have two full-time
employees and no part-time employees. We have no plan to hire any
additional employees in the immediate future. We expect to meet our
additional personnel needs through the hiring of independent
contractors. The Company relies heavily on the use of outside
consulting services. The source of independent contractors is readily
available in Central Florida from many different sources including the talent
pool of professionals who have worked with companies such as Disney/MGM,
Universal Studios and Nickelodeon.
Government
Regulation
There is no need for any governmental
approval of products or services of this type. The Federal
Communications Commission Rules of Broadcast mandate that broadcasters must
broadcast educational programs for children or lose their broadcast
license. The programs that Raven Moon Entertainment, Inc. produces
are educationally sound, original with fresh characters, have new music along
with interesting and appealing promotional tie-in concepts for children and
their parents and will thus comply fully with those Rules of
Broadcast. Accordingly, the Company believes that any governmental
regulation on the business will have a positive effect on the Company's business
activities.
Company History
Ybor City Shuttle Service, Inc. was
formed on January 7, 1998, pursuant to the Articles of Incorporation filed with
the Office of Secretary of State of the State of Florida on January 8, 1998. On
December 31, 1998, Articles of Merger for the merger of Ybor City Shuttle
Service, Inc., Raven Moon Entertainment, Inc. and International Resorts and
Entertainment Group, Inc. were filed with the State of Florida merging those
three corporations. The name of the surviving entity, Ybor City
Shuttle Services, Inc., was changed to Raven Moon International, Inc. as a part
of the merger. The original business of Ybor City Shuttle Service,
Inc. was intended to be the operation of a shuttle bus service initially
operating in Tampa, Florida, and intended to be expanded throughout the Tampa
Bay area and ultimately to other cities. Management of the Company
has subsequently determined not to pursue that line of
business. During 1998 the company was involved in the vacation resort
business formerly operated by International Resorts and Entertainment Group,
Inc. On June 1, 1998, that business was sold to North American
Resorts, Inc. because this company determined it to be
unprofitable.
Our principal executive offices are
located at 2005 Tree Fork Lane, Suite 101 Longwood, Florida32750. Our telephone number at that address is (407)
304-4764.
Risk Factors
A purchase of our common stock is
speculative and involves a high degree of risk. You should carefully consider
the risks described below together with all of the other information included or
incorporated by reference in this report before making an investment
decision. The risks and uncertainties described below are not the
only ones we face. If any of the following risks actually occur, our
business, financial condition or operating results could be
harmed. In such case, the trading price of our common stock could
decline and you could lose all or part of your investment.
We have experienced operating losses in
prior years.
For the year ended December 31, 2007,
our gross revenues increased to $1,035,424 from $6,637 in the 2006 year
resulting in a net loss of $7,504,905 for the 2007 operating year as compared
with a net loss of $12,346,259 for the 2006 operating year.
We have limited marketing and sales
capabilities.
-------------------------------------------------
-7-
Our future success depends, to a great
extent, on our ability to successfully market our products to television
syndications and TV stations. We currently have
limited sales and marketing capabilities. We cannot assure you that
any marketing and sales efforts undertaken by us will be successful or will
result in any significant sales.
Our industry is intensely competitive,
which may adversely affect our operations and financial
results.
All our markets are intensely
competitive and numerous companies offer products that compete with our
products. We anticipate that this competition will continue to
increase. Many of our competitors have substantially greater capital
resources, sales and marketing resources and experience. We cannot
assure you that we will be able to effectively compete with our competitors in
effecting our business expansion plans.
We depend on the continued services of
our President.
Our future success depends, in large
part, on the continuing efforts of our president, Joey DiFrancesco, our
principal creative officer, who also developed our strategic plan and who is
responsible for executing that plan. The loss of Mr. DiFrancesco
would adversely affect our business. At this time we do not have any
"key man" insurance on Mr. DiFrancesco. If we lose the services of
Mr. DiFrancesco, our business, operations and financial condition would be
materially adversely affected.
Our stock price is volatile and could be
further affected by events not within our control.
The trading price of our common stock
has been volatile and will continue to be subject to:
a. volatility in the trading
markets generally;
b. significant fluctuations
in our quarterly operating results; and
c. announcements regarding
our business or the business of our competitors.
Statements or changes in opinions,
ratings or earnings estimates made by brokerage firms or industry analysts
relating to the markets in which we operate or expect to operate could also have
an adverse effect on the market price of our common stock. In
addition, the stock market as a whole has from time to time experienced extreme
price and volume fluctuations which have particularly affected the market price
for the securities of many small cap companies and which often have been
unrelated to the operating performance of these companies.
The liquidity of our stock is severely
reduced because we are classified as a "penny stock."
The Securities and Exchange Commission
(SEC) has adopted regulations which generally define a "penny stock" to be any
non-Nasdaq equity security that has a market price (as therein defined) of less
than $5.00 per share or with an exercise price of less than $5.00 per
share. Our securities are subject to the existing rules on penny
stocks and, accordingly, the market liquidity for our securities could be
severely adversely affected. For any transaction involving a penny
stock, unless exempt, the rules require substantial additional disclosure
obligations and sales practice obligations on broker-dealers where the sale is
to persons other than established customers and accredited investors (generally,
those persons with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions
covered by these rules, the broker dealer must make a special suitability
determination for the purchase of the common stock and have received the
purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of a
risk disclosure document mandated by the SEC relating to the penny stock
market. The broker dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our common stock
and accordingly the market for our common stock.
-8-
The Commission generally defines a penny
stock to be any equity security that has a market price less than $5.00 per
share, as well as the shares of companies that are considered blind pools or
blank check companies, subject to certain exceptions. Rule 3a51-1
provides that any equity security is considered to be a penny stock unless that
security is: registered and traded on a national securities exchange meeting
specified criteria set by the Commission; authorized for quotation on one of the
trading systems (not including the OTC Bulletin Board) of The NASDAQ Stock
Market; issued by a registered investment company; excluded from the definition
on the basis of price (at least $5.00 per share) or the issuer's net tangible
assets; or exempted from the definition by the Commission. If the
Company's shares are deemed to be a penny stock, trading in the shares will be
subject to additional sales practice requirements on broker-dealers who sell
penny stocks to persons other than established customers and accredited
investors, generally persons with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse. In
addition, several states restrict or prohibit trading in penny stocks and shares
of blank check and blind pool companies.
We presently lease office and warehouse
space located at 2005 Tree Fork Lane, Longwood, Florida, for a monthly rental of
$2,000. The lease is on a month-to-month basis. We believe
these facilities will be adequate for our purposes because our primary business
is conducted in rented professional
recording studios and facilities of subcontractors used in the television,
motion picture, and recording business.
On April 7, 2006, we received a demand
from John G. Pierce, as Trustee, for a payment of $137,752.62 as a satisfaction
of the principle amount plus interest on certain promissory notes, issued by the
Company. The Company has settled this dispute and recorded a $90,000
settlement liability at December 31, 2006 that was satisfied in part
by the issuance of the Company's common stock during 2007. At
December 31, 2007 the remaining liability was $6,148.
During August 2007, the Company entered
into a securities agreement with an investor holding two (2) billion shares of
the Company's common stock. The agreement provides for minimum
payments to be realized by the investor either through the sale of
stock or as stock repurchases by the
Company. At this date, the agreement is in default and the parties
are renegotiating its terms. However, there can be no assurance that
the renegotiation will be successful and if not successful, litigation against
the Company is likely. The Company has elected to record as a liability the
$465,000 balance of the agreement due to the investor at December 31,2007.
On March 1, 2005, the stockholders voted
to amend Raven Moon's Certificate of Incorporation to increase the authorized
common shares from 400 million to 20 billion shares. The additional
shares were made available to conduct a variety of corporate transactions, such
as public offerings, private placements, employee and consultant compensation
plans.
On July 1, 2005, the stockholders voted
to amend Raven Moon's Certificate of Incorporation to increasing the authorized
number of the shares of Common Stock to 100 million after affecting a 1 for
1,000 share reverse stock split.
As a result of the 1 for 1000 reverse
split, the existing total authorized shares did not cover the contractual
obligations of the Company. Therefore, on August 8, 2005, the
stockholders voted to amend Raven Moon's Certificate of Incorporation to
increase the number of authorized shares of Common Stock of the Company to 5
billion shares.
On October 25, 2005, the stockholders
voted to amend Raven Moon's Certificate of Incorporation, increasing the number
of authorized shares of Common Stock of the Company to 20 billion
shares. The Company needed the additional shares of Common Stock to
accommodate the conversions of outstanding preferred shares and the exercise of
warrants.
On May 5, 2006, the stockholders voted
to amend Raven Moon's Certificate of Incorporation, increasing the number of
authorized shares of Common Stock of the Company to 30 billion
shares. Once again, the Company needed the additional shares of
Common Stock to accommodate the conversions of outstanding preferred shares and
the exercise of warrants.
Item
5. Market For Registrant's Common Equity
And Related Stockholder Matters
Our common stock began trading on the
NASDAQ over-the-counter bulletin board under the symbol "RMOO" on December 1,2000. The symbol was changed to "RVMO" in 2005, to "RMNE" and "RMEI"
during 2006 and to "RVME" and "RVEN" in 2007.
Historical Market Price Data for Common
Stock of Raven Moon Entertainment, Inc.
The following table sets forth the range
of high and low bid prices for the common stock for the period beginning January1, 2006 and ending December 31, 2007, as reported by NASDAQ. These
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission, and may not necessarily represent actual
transactions.
Common
Stock
High ($)
Low ($)
1st Quarter
2006
$
0.0008
$
0.0001
2nd Quarter
2006
$
0.0003
$
0.0001
3rd Quarter
2006
$
0.0004
$
0.0001
4th Quarter
2006
$
0.0007
$
0.0001
1st Quarter
2007
$
0.3500
$
0.0001
2nd Quarter
2007
$
0.0003
$
0.0001
3rd Quarter
2007
$
0.0700
$
0.0001
4th Quarter
2007
$
0.0500
$
0.0001
Number of Shareholders and Total
Outstanding Shares
As of December 31, 2007, approximately
2,662,000 shares of our common stock were outstanding and, as far as we can
determine, were held by approximately 449 holders of record.
Dividends
We have not paid any cash dividends
since our inception and do not anticipate paying cash dividends in the
foreseeable future. We did pay a dividend of one share of restricted
common stock for each outstanding share of common stock on September 1,2003.
Our common stock is traded in the
over-the-counter market, and the shares are subject to the provisions of Section
15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, commonly referred
to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that term is used in Rule 3a51-1 of the
Exchange Act.
As of December 31, 2007, the Company had
579,730 shares of preferred stock outstanding. Holders of Preferred
Stock are entitled to one vote for each share of Common Stock into which the
number of shares of Preferred Stock held of record would be convertible on the
record date. Holders of Preferred Stock are entitled to vote on all
matters submitted to a vote of stockholders and may not cumulate their votes for
the election of directors. The shares of Preferred Stock are not
entitled to any dividend or distribution in preference to the Common
Stock.
-10-
Preferred Stock may be converted at any
time by the holder of the shares of Preferred Stock, but conversion shall occur
automatically at the discretion of the Company at any time after a registration
statement to register the shares of the Common Stock underlying both the shares
of Preferred Stock has been declared effective by the United States Securities
and Exchange Commission. Each share of Preferred Stock shall be
entitled to convert into $10.00 in value of the Company's Common
Stock. The value of the Common Stock for this purpose shall be
determined based on the average of the closing trade price for the Company's
common stock for each of the ten (10) consecutive trading days immediately prior
to the date the holder or Company, as the case may be, gives notice of
conversion of the shares of Preferred Stock, less a discount of twenty percent
(20%).
All shares of Preferred Stock issued and
outstanding are fully paid and nonassessable, with no personal liability
attaching to the ownership thereof.
Item 6. Management's
Discussion and Analysis of Financial Condition and Results
Operations
Cautionary statement identifying
important factors that could cause our actual results to differ from those
projected in forward-looking statements.
Pursuant to the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, readers of this report
are advised that this document contains both statements of historical facts and
forward-looking statements. Forward-looking statements are subject to
certain risks and uncertainties, which could cause actual results to differ
materially from those indicated by the forward-looking
statements. Examples of forward looking statements include, but are
not limited to (i) projections of revenues, income or loss, earnings per share,
capital expenditures, dividends, capital structure and other financial items,
(ii) statements of our plans and objectives with respect to business
transactions and enhancement of shareholder value, (iii) statements of future
economic performance, and (iv) statements of assumptions underlying other
statements and statements about our business prospects.
Revenues are generated from the sale of
rights, licenses, and toys inspired by the children entertainment productions of
Raven Moon Entertainment as well as branding and marketing activities performed
on behalf of the Company's clients.
Total revenues for the period ending
December 31, 2007 and December 31, 2006 were $1,035,424 and $6,637,
respectively. The significant increase was due to the Company being
able to generate service revenue from its branding and marketing activities from
related parties. These activities amounted to $1,020,850 for the year
ended December 31, 2007.
The sales of plush toys increase 156% to
$14,574 for the year ended December 31, 2007 as compared to $5,675 for the year
ended December 31, 2006. The Company anticipates that this sales
increase will continue as the market for the Company's products continue to
mature.
Cost of Goods Sold
------------------
Cost of goods sold increased to $7,286
in 2007 from $3,538 in 2006 and consists primarily of the prior cost of
manufacturing the "Cuddle Bug" toys from JB Toys, a wholly owned subsidiary of
Raven Moon Entertainment as well as the current costs of manufacturing CD's and
DVD's. Cost of goods sold for the Company has been consistent at
approximately 50% of sales.
Consulting fees and production expenses
accounted for the majority of the expenses incurred by the
Company. The Company only has two full-time employees and relies
heavily on outside consultants and production facilities to operate on a daily
basis.
Production costs have decreased 41% over
the two year period as the animation projects have been completed. As
is consistent with prior years, the significant portion of production activities
were financed through the issuance of S8 stock, which has allowed the Company to
conserve its limited cash resources for other operating
activities.
The Company is currently developing more
animation features and expects production activities to increase significantly
over the 2008 and 2009 years.
Net Loss
--------
During the period ended December 31,2007, the Company recorded a net loss of $7,504,905 as compared to a loss
$12,346,259 for period ending December 31, 2006, a decrease of
40%. The decrease is primarily attributable to the decrease in
production activities as animation projects have been
completed.
Income Taxes
------------
As a result of the loss made during the
period ended December 31, 2007 no provision was made for income taxes for the
period.
These circumstances raise substantial
doubt about the Company's ability to continue as a going concern. The
Company's ability to continue as a going concern is dependent upon our ability
to sell our stock at discounted prices to existing shareholders to generate
cash, and upon the acceptance by many of our vendors and independent contractors
to continue to provide services to us in exchange for shares of our
stock. Adequate funds may not be available when needed or may not be
available on terms favorable to the Company. If the Company is unable
to secure sufficient funding, the Company may be unable to develop or enhance
its products and services, take advantage of business opportunities, respond to
competitive pressures or grow the Company's business in the manner that the
Company's management believes is possible. This could have a negative
effect on the Company's business, financial condition and results of
operations. Without such support, the Company may not be able to meet
its working capital requirements and accordingly the Company and its
subsidiaries may need to reorganize and seek protection from its
creditors.
We have audited the accompanying
consolidated balance sheets of Raven Moon Entertainment, Inc. and subsidiaries
(Raven Moon) as of December 31, 2007 and 2006, and the related consolidated
statements of operations, deficit in stockholders' equity, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Raven Moon's management. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance
with auditing standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting. 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 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, such consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of Raven Moon as of December 31, 2007 and 2006, and the
results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 3 to the consolidated financial
statements, the Company has suffered losses from operations and has a net
capital deficiency that raises substantial doubt about its ability to continue
as a going concern. Management plans in regard to these matters are
described in Note 3. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Raven Moon Entertainment, Inc. and its
wholly owned subsidiaries are primarily engaged in the production and
development of family values television programs that convey good morals and
positive attitudes to children. The market for these products is
worldwide, although the Company devotes most of its efforts within the
continental United States.
Note 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The
accompanying consolidated financial statements include the accounts of Raven
Moon Entertainment, Inc. and its wholly owned subsidiaries JB Toys LLC, Raven
Animation, Inc., Flaw-Less Designs LLC, Made In America Entertainment and Raven
Moon Sales, Inc. (the "Company"). JB Toys LLC will cease to exist on
December 5, 2012. Inter-company transactions and balances have been
eliminated in
consolidation.
REVENUE RECOGNITION - Revenues from
distribution of plush toys and CD's are recognized upon receipt of payment or
delivery of product, which does not vary significantly from the time the
products are shipped.
Revenue from the distribution of videos
is recognized as earned under the criteria established by SOP
00-2. The Company's revenue cycle is generally one to three years,
with the expectation that substantially all revenue will be recognized in the
first two years of individual videos. In accordance with SOP 00-2,
the Company considers revenue earned when all of the following have
occurred:
1. The Company has a valid
sale or licensing agreement in place;
2. The video is complete and
in accordance with the agreement with the customer;
3. The video has been
delivered or is deliverable;
4. The license period has
begun; and
5. The revenue is fixed or
determinable and collection is reasonably assured.
PRODUCTION COSTS - Production costs
includes costs to develop and produce video entertainment
products. These costs were paid primarily to companies and
individuals hired to perform a specific task. The Company outsources
these activities in order to reduce
overhead costs. Production costs are amortized by the ratio of
current year's revenue bear to management's estimated ultimate
revenue. Because the Company cannot demonstrate through
its experience the ultimate revenue from
the video entertainment products, it has elected to expense all production
costs.
STOCK FOR COMPENSATION - The Company
accounts for the issuance of common or preferred stock for goods and services at
the fair market value of the goods or services provided or the fair market value
of the common or preferred stock issued, whichever is
more reliably determined.
UNCLASSIFIED BALANCE SHEET - In
accordance with the provisions of SOP 00-2, the Company has elected to present
an unclassified balance sheet.
INVENTORY - Inventory consists of plush
toys, DVDs and CDs. The plush toys,DVDs and CDs are stated at the
lower of cost or market determined using the first-in-first method
(FIFO).
-19-
INTELLECTUAL PROPERTY - Intellectual
property is recorded at the lower of cost or net realizable
value. The Company performs an impairment test of intellectual
property quarterly. SFAS 142 requires the Company to compare the fair value of the
intellectual property to its carrying amount to determine if there is potential
impairment. If the carrying amount of the intellectual property
exceeds its fair value, an impairment loss is recognized. Fair values
for intellectual properties are determined based on discounted cash flows,
market multiples or appraised values as appropriate. Because the
Company cannot demonstrate through its experience the ultimate revenue from
intellectual property it has elected to expense all costs associated with
intellectual property.
MANAGEMENT ESTIMATES - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Actual results could differ
from those estimates.
STOCK-BASED COMPENSATION - The Company
accounts for stock options issued to employees under Statement of Financial
Accounting Standards 123, wherein such options are valued based upon the
Black-Scholes option pricing model.
CASH EQUIVALENTS - The Company considers
all highly liquid investments with original maturities of three months or less
to be cash equivalents.
NET (LOSS) PER SHARE - Primary
earnings-per-share computations are based on the weighted average number of
shares outstanding during the period. The weighted average number of
shares outstanding was 579,527 and one (1) for the years ended December 31, 2007
and 2006, respectively.
INCOME TAXES - The Company has incurred
approximately $56,000,000 of net operating losses which may be carried forward
and used to reduce taxable income in future years. Deferred tax
assets created by the net operating losses are offset by an equal valuation
allowance.
RECLASSIFICATIONS - Certain amounts
reported in previous years have been reclassified to the 2007 financial
statement presentation.
CREDIT RISKS - Financial instruments,
which potentially subject the Company to concentrations of credit risk, consist
of cash and cash equivalents. The Company maintains its cash in bank
deposit accounts, which, at times, may exceed federally insured
limits. It has not experienced any losses in such
accounts. The Company believes that it is not exposed to any
significant credit risk on cash and cash equivalents.
STOCK SPLITS - The Company has adopted
the following stock splits. All applicable share and per share data
in these consolidated financial statements have been restated to give effect to
these stock splits.
a. Adopted a 5 to 1 forward stock split
effective January 30, 2006.
b. Adopted a 75 to 1 reverse stock split
effective February 17, 2006.
c. Adopted a 20 to 1 reverse stock split
effective July 17, 2006.
e. Adopted a 2000 to 1 reverse stock
split effective December 15, 2006.
f. Adopted a 4000 to 1 reverse stock
split effective March 8, 2007.
g. Adopted a 4000 to 1 reverse stock
split effective July 9, 2007.
h. Adopted a 4000 to 1 reverse stock
split effective October 9, 2007.
i. Adopted a 8000 to 1 reverse stock
split effective January 3, 2008.
Prior period share numbers may, after
being restated for the above reverse stock splits, result in a figure that is
less than one (1).
-20-
RECENT ACCOUNTING
PRONOUNCEMENTS
In February 2006, FASB issued SFAS No.
155, "Accounting for Certain Hybrid Financial Instruments." SFAS No.
155 amends SFAS No 133, "Accounting for Derivative Instruments and Hedging
Activities", and SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." SFAS No. 155,
permits fair value remeasurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation,
clarifies which interest only strips and principal only strips are not subject
to the requirements of SFAS No. 133, establishes a requirement to evaluate
interest in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation, clarifies that concentrations of
credit risk in the form of subordination are not embedded derivatives, and
amends SFAS No. 140 to eliminate the prohibition on the qualifying special
purpose entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments
acquired or issued after the beginning of the Company's first fiscal year that
begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the financial
statement.
In March 2006 FASB issued SFAS No. 156,
"Accounting for Servicing of Financial Assets." This Statement amends
SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," with respect to the accounting for separately
recognized servicing assets and servicing liabilities. This Statement requires
an entity to recognize a servicing asset or servicing liability each time it
undertakes an obligation to service a financial asset by entering into a
servicing contract and requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value, if
practicable. This Statement is effective as of the beginning of the
Company's first fiscal year that begins after September 15,2006. Management believes that this statement will not have a
significant impact on the financial statement.
In September 2006, FASB issued SFAS No.
157, "Fair Value Measurements." This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not
require any new fair value measurements. This Statement is effective
for financial statements issued for fiscal years beginning after November 15,2007, and interim periods within those fiscal years. Management is currently
evaluating the effect of this pronouncement on financial
statements.
In February 2007, FASB issued FASB
Statement No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities." FAS 159 is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted subject to specific
requirements outlined in the new Statement. FAS 159 allows entities
to choose, at specified election dates, to measure eligible financial assets and
liabilities at fair value that are not otherwise required to be measured at fair
value. If a company elects the fair value option for an eligible
item, changes in that item's fair value in subsequent reporting periods must be
recognized in current earnings. FAS 159 also establishes presentation
and disclosure requirements designed to draw comparison between entities that
elect different measurement attributes for similar assets and
liabilities. Management is currently evaluating the effect of this
pronouncement on financial statements.
Note 3 - BUSINESS AND
OPERATIONS
The Company is currently working to
establish the following lines of business:
Home Video and Television
Productions
Internet Retail
Sales
Music CDs
Plush Toys
These financial statements are prepared
on a going concern basis that assumes that the Company will be able to realize
assets and discharge liabilities in the normal course of
business. Accordingly, it does not give effect to adjustments, if
any, that would be necessary should the Company be unable to continue as a going
concern and therefore be required to realize assets and liquidate its
liabilities, contingent obligations and commitments in other than the normal
course of business and the amounts which may be different from those shown in
these financial statements. The ability to continue as a going
concern is dependent on its ability to: Obtain additional debt and equity
financing and generate profitable operations in the future.
-21-
The Company has initiated several
actions to generate working capital and improve operating performances,
including equity and debt financing and cost reduction
measures. There can be no assurance that the Company will be able to
successfully implement its plan, or if successfully implemented the Company will
achieve its goals. Furthermore, if the Company is unable to raise
additional funds it may be required to reduce its workforce, reduce compensation
levels, reduce dependency on outside consultants, modify its growth and
operating plans, and even be forced to terminate operations
completely.
Notes payable to third parties bear
interest at 10% annually. These are demand notes, and are
unsecured.
Loans from shareholders are non-interest
bearing, but the shareholders received additional shares of preferred stock and
common stock in 2000 and are also entitled to gross revenue royalty fees of the
gross revenue of the Company for ten years. The royalties range from
..0125% to .5% of gross revenues. No royalties were earned in 2007 and
2006.
There are two types of Class B
units:
1. The cash investments for Class
B members of LLC are non-interest bearing loans. The members are
entitled to receive all distributions from gross profits of the LLC until the
members have received an amount equal to their initial cash
investment. Once the Class B members, who invested cash have been
repaid, the Class B members are entitled to annually receive 85% of all gross
profits of the LLC derived from the sale of products. The Company has received
$275,000 of cash investments from Class B members and has repaid $77,500 as of
December 31, 2007.
2. The members who exchange
services or rights to intellectual property for Class B units are not entitled
to receive any distributions from gross profits of the LLC until the members who
invested cash have received an amount equal to their initial
investment. Once the Class B members, who invested cash have been
repaid, the Class B members are entitled to receive 85% of all gross profits of
the LLC derived from the sale of product on an annual basis. As of
December 31, 2007, the Company has exchanged 100 units to WEE-OOO, LTD, a
related party, for a ten year extension of the option agreement for the rights
to Gina D's, 50 units to Mike Gibilisco for the rights to the BoBo Blocks, 200
units to Bernadette DiFrancesco, a related party, for the rights to the
Cuddle 7.50 units to members of the Board of Directors for services
provided in 2002, 2003 and 2004, and 15 units to Joseph and Bernadette
DiFrancesco for a 10 year license for Mr. Bicycle Man.
The Class B members have no voting
rights. The cash advances from Class B members who contributed cash have been
recorded as a liability because all advances must be repaid prior to any
distributions to the parent company.
MG Studio debt - On August 1, 2007, the
Company entered into an agreement with Gina D., Inc. ("GDI") regarding the
assumption of the Company's debt to MG Studios.
GDI will assume, without recourse, the
$3,200,000 debt owed to MG Studios by Raven Moon Entertainment. In
consideration of this debt assumption, Raven Moon will pay GDI a ten percent
(10%) royalty payment of all future gross revenues derived from Raven Moon's
exploitation of Gina D's programs, music and products. This agreement
is valid for ten years, and shall expire on July 31,2017.
Note 5 - RELATED PARTY
TRANSACTIONS
The Company is affiliated through
ownership of shares of the Company's common stock by the following
companies:
J. & B. DiFrancesco,
Inc.
WEE-OOO,
LTD.
Beyond the Kingdom,
Inc.
T.V. Toys,
Inc.
2221
Music
Clubhouse Videos,
Inc.
-22-
The Company has incurred aggregate
consulting, production, marketing and management fees with officers, directors
and other related parties for the years ended December 31, 2007 and
2006:
2007
2006
$11,996,540
$4,766,387
The Company had significant increases in
revenues from branding and marketing services provided to related
parties. These revenues amounted to $1,020,850 for the year ended
December 31, 2007.
The Company paid Gina Mouery, who is the
hostess for the "Gina D's Kids Club Show" and the daughter of Joseph
DiFrancesco, President and Chief Executive Officer of the Company, $24,000 each
year as an advance on future royalties for the years ended December 31, 2007
and 2006, respectively. The advance on future royalties - related
party was charged to production expense because the Company cannot demonstrate
through its experience the ultimate revenue from the video entertainment
products.
The Company agreed to pay or reimburse
Ms. Mouery $752 a month for a leased car. The Company paid
approximately $9,000 for the years ended December 31, 2007 and 2006,
respectively. This reimbursement is included in the general and
administrative expenses.
On May 1, 2004, Gina Mouery entered into
a ten-month consulting agreement with JB Toys, LLC and Raven Animation,
Inc. Ms. Mouery is to assist the Company as a Co-executive Producer
and Promotional Celebrity Talent for promotion and production of the Company's
products and services. Ms. Mouery has been paid $1,000,000 of
registered shares of common stock in ten equal installments priced at a 50%
discount from the closing bid price. On February 4, 2005, the Board
of Directors amended the agreement with Gina Mouery. The Board
granted a three-month extension and paid Gina Mouery $80,000 for the three-month
period. The payments were made with registered shares of common stock at a 33% discount
from the closing bid price.
During the years ended December 31, 2007
and 2006, Gina Mouery was not granted stock options.
During the year ended December 31, 2007,
Gina Mouery was granted 38 split-adjusted shares of common stock for talent
fees. The fair value of these shares of common stock was
$3,699,445. During the year ended December 31, 2006, Gina Mouery was
granted one (1) split-adjusted share of common stock for talent
fees. The fair value of this share of common stock was
$2,908,713. The fair value of the common stock was charged to
production expense because the Company cannot demonstrate through its experience
the ultimate revenue from the video entertainment products.
During 2007 Gina Mouery converted
warrants into 600,000 shares of common stock (which were subsequently split
adjusted to one (1) share). Also during 2007, Gina Mourey converted
preferred shares into 4,840,374,029 common stock shares (which were subsequently
split-adjusted to 186,326 shares of common stock).
On April 11, 2001, the Company entered
into an agreement with Joseph and Bernadette DiFrancesco in exchange for a one
year exclusive option to the program, certain cartoon characters and music
publishing rights related to songs written and used in "Gina D's Kids Club Show"
("Gina D's") which were created by Joseph and Bernadette DiFrancesco, in
exchange for 80 shares of common stock. The Company was not able to
meet its requirements under the option agreement, and the option expired April11, 2002.
On May 17, 2002, the Company made an
addendum to the expired Option Agreement, in exchange for $100,000 note payable
to Joseph and Bernadette DiFrancesco and a non-refundable grant of 53 shares of
common stock, valued at $390,000, and provided that the terms, conditions and
payment due in the Agreement dated April 11, 2001, are met and fulfilled by
April 11, 2003, and the option agreement granted to the Company on April 11,2001 shall be in force for a period of twenty (20) years. Because the
Company cannot demonstrate through its experience the ultimate revenue from the
video entertainment products it has elected to charge option rights to
intellectual properties $490,000 during 2002.
-23-
On March 4, 2004, the Board of Directors
approved extending the option agreement which expires April 11, 2004, with
Joseph and Bernadette DiFrancesco, for rights to "Gina D's." The
extension is for a ten-year period without restrictions or requirements, except
for bankruptcy, insolvency or takeover of the Company by a person or entity not
approved by the CEO. As part of extending the option agreement on
April 10, 2004, Joseph and Bernadette DiFrancesco received 100 units of JB Toys,
LLC. These units were issued to WEE-OOO, LTD, a limited partnership
owned by Joseph and Bernadette DiFrancesco. Also, Joseph and Bernadette
DiFrancesco received 667 restricted shares of Raven Moon Entertainment, Inc.
common stock. Joseph and Bernadette DiFrancesco shall also receive a
fee of $750,000 per year for ten years beginning in January 2004, or 10% of all
gross revenues from worldwide licensing and merchandising revenues received by
Raven Moon Entertainment, Inc. or JB Toys, LLC, whichever is
greater. The shares of stock were valued at $195,000, and charged to
intellectual property expense.
On June 1, 2004, the agreement with
Joseph and Bernadette DiFrancesco for the rights to "Gina D's" was further
amended. If the Company grants a license to any third party for "Gina
D's", the Company will pay Joseph and Bernadette DiFrancesco 50% of any revenues
derived from the license.
On June 1, 2004, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Joseph and Bernadette DiFrancesco
$100,000 and 15 units of Class B memberships of JB Toys for the rights to Mr.
Bicycle Man. (See Note 4.) The $100,000
was charged to option rights to intellectual property for the year ended
December 31, 2004, because the Company cannot demonstrate through its experience
the ultimate revenue from the video entertainment products. In
addition, Joseph and Bernadette DiFrancesco are to receive 15% of the revenues
of JB Toys, LLC for a ten-year period. Also, if JB Toys grants a
license to any third party for Mr. Bicycle Man, the Company will pay Joseph and
Bernadette DiFrancesco 50% of any revenues derived from the
license.
On June 1, 2004, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Joseph and Bernadette DiFrancesco
$250,000 and one (1) split-adjusted share common restricted stock of the Company
for the rights to "The Search for the Amazon Queen." The fair value
of the common stock was $195,000, which was charged to option rights to
intellectual property for the year ended December 31, 2004, because the Company
cannot demonstrate through its experience the ultimate revenue from the video
entertainment products. In addition, Joseph and Bernadette
DiFrancesco are to receive $100,000 per year beginning year two through year ten
plus 25% of gross revenue derived by JB Toys for "The Search for the Amazon
Queen". Also, if JB Toys grants a license to any third party for "The Search for
the Amazon Queen,"the Company will pay Joseph and Bernadette DiFrancesco 50% of
any revenues derived from the license.
Joseph and Bernadette DiFrancesco were
granted 48 split-adjusted shares of common stock during the year ended December31, 2007. The fair value of these shares was
$5,138,211. Joseph and Bernadette DiFrancesco were granted one (1)
split-adjusted share of common stock during the year ended December 31,2006. The fair value of this share was $514,492.The fair value was
charged to consulting fees because the Company cannot demonstrate through its
experience the ultimate revenue from the video entertainment
products.
Joseph and Bernadette DiFrancesco were
granted 75,000 shares of convertible preferred stock during the year ended
December 31, 2006. The $750,000 share value was used to offset
accrued fees for past services. During that year, Joseph and
Bernadette DiFrancesco also purchased an additional 7,000 shares of convertible
preferred stock for the fair value of $70,000.
Joseph and Bernadette DiFrancesco were
granted 75,000 and 320,000 shares of convertible preferred stock during the
years ended December 31, 2005 and 2004, respectively. The stock was
granted to TV Toys, Inc. The fair value of these shares was $750,000
and $3,200,000 and the fair value was charged to consulting fees because the
Company cannot demonstrate through its experience the ultimate revenue from the
video entertainment products.
During the year ended December 31, 2007,
TV Toys exercised warrants and purchased 1,000,000 shares of common stock (which
were subsequently split-adjusted to 125 shares). During the years
ended December 31, 2006 and 2005, TV Toys, Inc. converted 20,388 and 43,250,
respectively, shares of convertible preferred stock and received one (1)
split-adjusted share of restricted common stock.
During the year ended December 31, 2006,
Beyond The Kingdom converted 32,000 shares of convertible preferred stock and
received 200,000 shares of split-adjusted restricted common
stock.
-24-
During the year ended December 31, 2005,
Joseph and Bernadette DiFrancesco were granted warrants for one (1)
split-adjusted share of common stock. The fair value of these
warrants was $1,147,300 and was charged to production expense. The
Company did not issue any warrants to Joseph and Bernadette DiFrancesco during
2007 or 2006.
On April 14, 2005, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Bernadette DiFrancesco $100,000 per
year for ten years and 3.75 units of Class B memberships of JB Toys, LLC for the
rights to the "Dino Bugs." In addition Bernadette DiFrancesco is to
receive 10% of all gross revenue derived by JB Toys, LLC for the "Dino
Bugs."
On May 1, 2004, David Mouery (the
son-in-law of Joseph DiFrancesco, Chairman of the Board) entered into a
twelve-month consulting agreement with JB Toys, LLC and Raven Animation,
Inc. Mr. Mouery is to assist the Company as entertainment attorney
for legal matters and contracts for the Company's products and
services. Mr. Mouery was paid $120,000 of registered shares in twelve
equal installments of common stock priced at a 50% discount from the closing bid
price during 2004 and 2005 as compensation for those
services.
On August 9, 2005, the Company entered
into an agreement with David Mouery to provide legal services for three
years. He is to be paid a retainer of $10,000 per
month. If payment is made in S-8 stock it will be at a 25% discount
of the bid price on the day the stock is issued.
During the year ended December 31, 2005,
David Mouery was granted 8,889 options valued at $15,000. The Company
did not grant any options to Mr. Mouery during 2006.
During the year ended December 31, 2007,
David Mouery was granted 7,813 split-adjusted shares of common stock with a fair
value of $701,478. During the year ended December 31, 2006, David
Mouery was granted one (1) split-adjusted share of common stock with a fair
value of $223,880. The fair value of the common stock was charged
to
consulting expense because the Company
cannot demonstrate through its experience the ultimate revenue from the video
entertainment products.
The outside Board of Directors were
granted 15 split-adjusted and one (1) split-adjusted share of common stock
during the years ended December 31, 2007 and 2006, respectively. The
fair value of these shares was $1,618,488 and $155,715 for the years ended
December 31, 2007 and 2006, respectively. Also, the Board of
Directors were paid $129,800 for directors' fees for the year ended December 31,2006. The fair value of the common stock granted and director fees
paid were charged to consulting fees for the year ended December 31, 2007 and
2006.
During the years ended December 31, 2007
and 2006, loans from officers, directors and related parties are summarized as
follows:
2007
2006
Balance at beginning
of year
$
20,000
$
20,000
Increase in
loans
-
-
Payments on
loans
20,000
-
Balance at end of
period
$
-
$
20,000
-25-
Following is a schedule that summarizes
the activity in accruals and payments related to Joseph and Bernadette
DiFrancesco, the officers of the Company, for the year ended December 31, 2007
and 2006:
2007
2006
Beginning
balance
$
1,858,406
$
1,718,823
Accrued for
administrative
salary
-
881,462
Accrued production
fee
750,000
750,000
Payments to
Officers
-
(739,379
)
Exercise of preferred
stock
-
(750,000
)
Conversion to
equity
-
( 2,500
)
Ending
balance
$
2,608,405
$
1,858,406
Note 6 - COMMITMENTS AND
CONTINGENCIES
The Company has entered into an
employment contract with the officers, Joseph and Bernadette
DiFrancesco. On October 19, 2004 the Board of Directors extended
Joseph and Bernadette DiFrancesco's contract an additional seven years after the
current contract expires in exchange for a signing bonus of non-diluting
preferred shares. The preferred shares shall be convertible to common
stock at a 20% discount to market based upon the previous 10 day average and
will carry non-diluting rights equivalent to 40% of the common shares issued and
outstanding as long as the shares are held by Joseph and Bernadette DiFrancesco
or their assigns. Under the terms of the agreement, the Company is
obligated to make the following annual payments through November 15,2012:
2008
$1,269,306
2009
$1,523,167
2010
$1,827,800
2011
$2,193,360
2012
$2,632,032
In addition, the officers are to receive
a "Founders" royalty of 10% for any entertainment revenue received by the
Company for any entertainment project developed and or produced by the Company
during the term of this agreement. This royalty will be paid between
November 16th and December 31st in perpetuity.
The Company has entered into various
month-to-month verbal agreements with unrelated third parties to provide
production, marketing and administrative services. Payments are made
based on invoices rendered for specific services provided.
Note 7 - STOCK OPTION
PLAN
The Company established a stock option
plan for its executives, consultants, key employees, directors and its
affiliates (the "2001 Stock Option Plan"). The 2001 Stock Option Plan
allows for incentive stock options to be granted to future participants at a
price not less than 100% of the market value per share on the date of the
grant. No options have beengranted to employees under this
plan.
-26-
Non-statutory options are granted at
prices and terms determined by the board of directors. The following
is a summary of options, granted, exercised, and
outstanding:
The exercise price and the market value
for common stock options granted in 2005 is as follows:
Options
granted
Exercise
Price
Fair Market
Value
2005
572
$
18.00
$ 33.00
40,000
$ .38
$ 3.00
The weighted average fair value of
options granted during 2005 is $18.00. The weighted-average remaining
life of options granted is 6.92 at December 31, 2005.
The fair value of these options was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted average assumptions for 2005: Risk free
interest rate of 3.0%, a dividend yield of zero and a volatility factor of
..50.
NOTE 8 - PRIVATE PLACEMENT
OFFERING
The Company has plans to raise
$5,000,000 in a private placement offering to be used for working
capital. The Company is offering units that consist of one share
convertible Series B Preferred Stock and a warrant to purchase one-tenth of a
share of common stock at a price of $10.00 per unit. The minimum
purchase is $10,000. The conversion right may be exercised at any
time by the holder of the shares, but shall occur automatically at the Company's
discretion at any time after a registration statement to register the shares of
common stock underlying both the preferred share and the
warrant. Each preferred share shall convert to $10.00 in value of
common stock. The value of the common stock will be based upon the
average closing price of the Company's common stock for each of the ten
consecutive trading days prior to the date of conversion, less a 20%
discount.
The preferred shares have a preference
over common stock in any liquidation of the Company. The preferred
shares are not entitled to any dividend or distribution in preference to common
stock. The warrant, which will permit the holder to purchase
one-tenth of a share of common stock at $.10 expired May 31,2005. Also, the warrants will be subject to redemption at the
Company's option for $.05 per warrant provided the closing the
notice. As of December 31, 2007, the Company has sold $5,797,300 of
the private placement offerings.
Note 9 - SUBSEQUENT
EVENTS
1. On November 27, 2007 the
Board of Directors approved a one for 8,000 reverse stock split with an
effective date of January 3, 2008.
-27-
2. The following is a
schedule of common stock issued since December 31, 2007:
Issued to David Mouery for
services
19,000,000
Issued to Gina Mouery for
services
408,666,667
Issued for
expenses
606,813,821
Issued for debt
repayment
375,000
Issued for exempt shares to
Joseph DiFrancesco
8,973,878,055
Issued for exempt shares
to third parties
9,374,889,352
Issued for converted
shares
300,000
3. During August 2007, the
Company entered into a securities agreement with an investor holding two (2)
billion shares of the Company's common stock. The agreement provides
for minimum payments to be realized by the investor either through the sale of
stock or as stock repurchases by the Company. At this date, the
agreement is in default and the parties are renegotiating its
terms. However, there can be no assurance that the renegotiation will
be successful and if not successful, litigation against the Company is likely.
The Company has elected to record as a liability the $465,000 balance of the
agreement due to the investor at December 31, 2007.
4. On March 8, 2008 the
Company announced that it had licensed its television and DVD library and all
related properties to Gina D's Kids Club, Inc. In exchange for the
license, the Company will receive a significant 20% gross royalty of any
revenues received by GINA D'S KIDS CLUB, INC. in perpetuity with a $10 milion
guarantee to be paid in the first three years of the agreement. If
the $10 million minimum payment is not made within the three year timeframe, all
rights under the license will revert back to the Company.
5. On April 2, 2008 the
Company announced today that it in an effort to restructure the company without
undergoing a reverse split, it has reduced the total number of common
outstanding shares by approximately 53%. The nine billion shares were
purchased in 2006 by the Company's founders by exercising warrants at a cost of
$200,000 and will be retired to the treasury without any remuneration to the
founders. In addition, the Company also announced that accrued
compensation of $3 million will also be forgiven by the founders. The
accrued compensation is for services performed prior to January 1,2008.
6. On March 11, 2008 the
Company announced that that its licensee GINA D'S KIDS CLUB, INC. who recently
obtained all of the worldwide licensing rights to market, promote and sell the
GINA D'S KIDS CLUB, television asset library of 44 half-hour episodes, has
signed a worldwide distribution deal with Sullivan Entertainment in Toronto, Canada.
Under the
supervision and with the participation of our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures, as defined
in Rules 13a-15(e) promulgated under the Exchange Act, as of December 31, 2007
(the "Evaluation Date"). Based on this evaluation, our principal executive
officer and principal financial officer concluded as of the Evaluation Date that
our disclosure controls and procedures were not effective such that the
information relating to the Company, including our consolidated subsidiaries,
required to be disclosed in our SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
and (ii) is accumulated and communicated to management, including our principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. Our disclosure
procedures and controls were defective because we failed to report our
evaluation of them within the time periods specified in SEC rules and forms. By
filing this amendment, Management has taken steps to insure that future filings
contain Management’s report on internal controls over financial
reporting.
Management's
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate control over
financial reporting (as defined in Rules 13a-15(f) promulgated under the
Exchange Act. The term internal control over financial reporting is
defined as a process designed by, or under the supervision of, the issuer's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the issuer's board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
Our
management, including our chief executive officer and chief financial officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all error and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their
costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been
detected.
Our
management, with the participation of the chief executive officer and chief
financial officer, assessed the effectiveness of our internal control over
financial reporting as of December 31, 2007. In making this assessment,
our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated
Framework. Our management has concluded that, as of December 31, 2007,
our internal control over financial reporting is effective.
This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this annual report.
Changes
in Internal Control over Financial Reporting
Our
management has also evaluated our internal control over financial reporting, and
there have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
our last evaluation.
The directors of the Company are elected
annually by the shareholders for a term of one year, or until their successors
are elected and qualified. The Officers are appointed by the Board of
Directors at the annual meeting of directors immediately following each annual
meeting of shareholders of the Company and serve at the pleasure of the Board of
Directors.
Background of Directors and Executive
Officers
Joey DiFrancesco has served as a
director and the President of the Company since November 1999. Mr.
DiFrancesco has been a producer and director of children's television programs
for more than 20 years. Prior to that, he was employed in the music
publishing and record production business in New York City with Laurie Records,
RCA,Columbia/Sony and MCA. From
1994 to November 1997, Mr. DiFrancesco served as the president and a director of
St. Anthony's Entertainment, Inc., an entertainment company he
founded. From January 1997 to January 1999, Mr. DiFrancesco served as
president and a director of International Resorts and Entertainment, Inc., a
Florida corporation in the vacation club
business. This company was merged into Raven Moon in December
1998. Mr. DiFrancesco has been self-employed in the fields of
television, audio and video programming for more than the past ten
years. From November 1999 to date, Mr. DiFrancesco has served as
President of Raven Moon Entertainment, Inc., a Florida corporation in the entertainment
industry. Mr. DiFrancesco also serves as director of this
company.
Bernadette DiFrancesco has served as
Vice President and a director of the Company since November of
1999. Mrs. DiFrancesco has been self-employed for more than 20 years
during which time she and Mr. DiFrancesco have produced television programs,
developed the "Praise-R-cise" alternative to aerobic dancing, and produced 26
half hour episodes of "Curly's Kids" with former Harlem Globetrotter star Curly
Neil, among other ventures. She has been actively involved in
development of all of our present intellectual properties above. From
January 1994 to January 1997, Mrs. DiFrancesco served as vice president of St.
Anthony's Entertainment, Inc., a Florida corporation in the entertainment
business. From January 1997 to January 1999, Mrs. DiFrancesco served
as vice president of International Resorts and Entertainment, Inc., a vacation
club company that merged into Raven Moon Entertainment, Inc. in December
1998.
Larry Oakley a featured speaker at
numerous international investment conferences, created www.WallStreetCorner.com
in 1998 with his wife Rosanne as the new editorial venue for his Conservative
Speculator newsletter. Investors in 65 countries now regularly read
Conservative Speculator, his editorial columns, & the Special Situation
profiles. From 1984 to 1998 Mr. Oakley served as CEO of Guidera
Communication Corp., a broker relations firm. He is a member of Raven
Moon's Board of Advisors and his knowledge in accounting qualifies him according
to Sarbanes-Oxley as a candidate for the position of Chairman of the Finance
Committee. Mr. Oakley holds a degree in Mechanical Engineering from
George Washington University and management and accounting degree
from College of the City of New York.
-30-
Janice K. Battenberg, Ed.D. is an
Educational Psychologist and Business and Educational Consultant. Dr.
Battenberg has a full range of experiences within the public and private
corporate and educational industries. A few of her activities
include: Executive Director of a not-for-profit private school (Academy Plus),
fifteen years as manager of the Learning Support Center for St. Vincent Hospital and Stress
Center, private practice, past university instructor, creator of touch sensitive
and audible computer software for preschool through adults, and recipient of the
Sagamore of the Wabash (Indiana's highest honor awarded by Indiana
Governors). From 1968 to 1981, Dr. Battenberg held several teaching,
administrative and consulting positions within the Indiana Public School System. From 1982 to
present, Dr. Battenberg served in several senior management positions with a
number of entities active in the field of education, learning and
development. She has been on the Board of Advisors of Raven Moon
Entertainment, Inc. for the past four years and has published a report on how
the "Gina D's Kids Club" television programs meet FCC
requirements. At the request of the Executive Producers she also has
been instrumental this past year in reviewing and evaluating all new scripts
prior to production so that they meet educational requirements and guidelines
mandated by the FCC for children's programming. She has also broken
ground with educators in China to have the "Gina D's Kids Club" videos
and DVD's distributed to schools and other outlets. Dr. Battenberg holds
Bachelor degree in Psychology and Master Degree in Education from Butler
University and doctorate in Special Education and Educational Psychology from
Ball State University.
Meetings and Committees of the
Board
The Board of Directors met monthly
during the 2007 and 2006 fiscal years, and took action by written consent
numerous times. The Board of Directors has an audit committee
consisting of Ms. Battenberg and Messr. Oakley (Chairman).
Compensation of
Directors
Ms. Battenberg and Messr. Oakley
receive, each, $2,500 per month for their services as directors. Our
policy is to reimburse non-employee directors for expenses actually incurred in
connection with attending meetings of our board of
directors. Directors and executive officers are also eligible for
stock and option grants under our stock option plans as determined by our board
of directors.
Pursuant to Section 16(a) of the
Securities Exchange Act of 1934, our directors and officers, and persons who own
more than ten percent of the Company's Common Stock, are required 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 of the
Company. Officers, directors and greater than ten-percent
shareholders are required by regulation to furnish us with copies of all Section
16(a) reports they file. To our knowledge, based solely on a review
of the copies of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year ended
December 31, 2006, except as set forth below, directors, officers and greater
than ten percent beneficial owners complied with all applicable Section 16(a)
filing requirements.
Each of the directors filed their Form
4's during the years 2007 and 2006; however, these forms were not timely
filed.
None of the directors timely filed Form
5 for the years 2007 or 2006.
The following table sets forth the
annual compensation of persons serving as executive officers of the
Company.
Name
and
Other
Compensation
Principal
Position
Salary
Paid
Joseph DiFrancesco,
64
President
2003
$
382,579
$
58,692
2004
459,095
2005
550,914
2006
1,411,095
2007
0
Bernadette DiFrancesco,
62
Vice
President
2003
127,526
58,691
2004
153,032
2005
183,638
2006
220,365
2007
0
The Company leases two automobiles for
use by Joey and Bernadette DiFrancesco. Each lease was recently
renewed for a three-year term. One lease is for $832 per month, and
the other is for $952 per month.
Option Grants
Individual
Grants
% of
Total
Number
of
Oprions
Shares
Granted
to
Underlying
Employees
in
Exercise
Expiration
Name
Options*
Fiscal
Year
Price
Date
Joey
DiFrancesco
400,000
20
%
12.5(cent)
Nov 2012
Bernadette
DiFrancesco
400,000
20
%
12.5(cent)
Nov 2012
Stephen
Chrystie
400,000
0
12.5(cent)
Nov 2012
Anthony
Arcari
400,000
0
12.5(cent)
Nov 2012
Norman
Weinstock
400,000
0
12.5(cent)
Nov 2012
*Split -
adjusted
-32-
Options
Exercised
Number
of
Shares
Value
of
Underlying
Unexercised
Unexercised
In-The-Money
Shares
Options
at
Options
at
Acquired
Fiscal Year
End
Fiscal Year
End
on
Value
Exercisable/
Exercisable/
Name
Exercise
Realized
Unexerciseable
Unexerciseable
Joey
DiFrancesco
0
0
1
0
Bernadette
DiFrancesco
0
0
1
0
Stephen
Chrystie
0
0
1
0
Anthony
Arcari
0
0
1
0
Norman
Weinstock
0
0
1
0
*Split -
adjusted
Employment
Agreements
The Company has entered into an
employment contract with Joseph and Bernadette DiFrancesco. At the
October 19, 2004 Board of Directors meeting, the Board approved extending Joseph
and Bernadette DiFrancesco's contract for an additional seven years after the
current contract expires in exchange for a signing bonus of non-diluting
preferred shares. The preferred shares shall be convertible to common
stock at a 20% discount to market based upon the previous 10 day average and
will carry non-diluting rights equivalent to 40% of the common shares issued and
outstanding as long as the shares are held by Joseph and Bernadette DiFrancesco
or their assigns. Under the terms of the agreement, the Company is
obligated to make annual payments through November 15, 2012 as
follows:
2008
$1,269,306
2009
$1,523,167
2010
$1,827,800
2011
$2,193,360
2012
$2,632,032
In addition, Joseph and Bernadette
DiFrancesco are to receive a Founders royalty of 10% for any entertainment
revenue received by the Company for any entertainment project developed and or
produced by the Company during the term of this agreement. This
royalty will be paid between November 16th and December 31st in
perpetuity.
Item
11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth
information known to the company with respect to beneficial ownership of our
common stock as of February 8, 2007. The table lists: (i) each
stockholder known by us to be the beneficial owner of more than five percent
(5%) of our common stock, (ii) each director, (iii) each executive officer, and
(iv) all of our directors and executive officer(s) as agroup. Except
as noted, each of the persons named in the table has sole voting and investment
power with respect to common stock beneficially owned by such
person.
(1) The Company has been advised by
counsel that Mr. Danon may be asserting non-ownership of the shares to rescind
the issuance to him and be paid a sum of money in excess of $350,000 but the
Company is in the progress of resolving and clarifying the matter though no suit
or resolution has been reached.
The Company is affiliated through
ownership of shares of the Company's common stock by the following
companies:
J. & B. DiFrancesco,
Inc.
WEE-OOO,
LTD.
Beyond the Kingdom,
Inc.
T.V. Toys,
Inc.
2221
Music
Clubhouse Videos,
Inc.
-34-
The Company has incurred aggregate
consulting, production, marketing and management fees with officers, directors
and other related parties for the years ended December 31, 2007 and
2006:
2007
2006
$11,996,540
$4,766,387
The Company had significant increases in
revenues from branding and marketing services provided to related
parties. These revenues amounted to $1,020,850 for the year ended
December 31, 2007.
The Company paid Gina Mouery, who is the
hostess for the "Gina D's Kids Club Show" and the daughter of Joseph
DiFrancesco, President and Chief Executive Officer of the Company, $24,000 each
year as an advance on future royalties for the years ended December 31, 2007 and
2006, respectively. The advance on future royalties - related party
was charged to production expense because the Company cannot demonstrate through
its experience the ultimate revenue from the video entertainment
products.
The Company agreed to pay or reimburse
Ms. Mouery $752 a month for a leased car. The Company paid
approximately $9,000 for the years ended December 31, 2007 and 2006,
respectively. This reimbursement is included in the general and
administrative expenses.
On May 1, 2004, Gina Mouery entered into
a ten-month consulting agreement with JB Toys, LLC and Raven Animation,
Inc. Ms. Mouery is to assist the Company as a Co-executive Producer
and Promotional Celebrity Talent for promotion and production of the
Company's products and services. Ms. Mouery has been paid $1,000,000
of registered shares of common stock in ten equal installments priced at a 50%
discount from the closing bid price. On February 4, 2005, the Board
of Directors amended the agreement with Gina Mouery. The Board
granted a three-month extension and paid Gina Mouery $80,000 for the three-month
period. The payments were made with registered shares of common stock
at a 33% discount from the closing bid price.
During the years ended December 31, 2007
and 2006, Gina Mouery was not granted stock options.
During the year ended December 31, 2007,
Gina Mouery was granted 38 split-adjusted shares of common stock for talent
fees. The fair value of these shares of common stock was
$3,699,445. During the year ended December 31, 2006, Gina Mouery was
granted one (1) split-adjusted share of common stock for talent
fees. The fair value of this share of common stock was
$2,908,713. The fair value of the common stock was charged to
production expense because the Company cannot demonstrate through its experience
the ultimate revenue from the video entertainment products.
During 2007 Gina Mouery converted
warrants into 600,000 shares of common stock (which were subsequently split
adjusted to one (1) share). Also during 2007, Gina Mourey converted
preferred shares into 4,840,374,029 common stock shares (which were subsequently
split-adjusted to 186,326 shares of common stock).
On April 11, 2001, the Company entered
into an agreement with Joseph and Bernadette DiFrancesco in exchange for a one
year exclusive option to the program, certain cartoon characters and music
publishing rights related to songs written and used in "Gina D's Kids
Club Show" ("Gina D's") which were created by Joseph and Bernadette DiFrancesco,
in exchange for 80 shares of common stock. The Company was not able
to meet its requirements under the option agreement, and the option
expired April 11, 2002.
On May 17, 2002, the Company made an
addendum to the expired Option Agreement, in exchange for $100,000 note payable
to Joseph and Bernadette DiFrancesco and a non-refundable grant of 53 shares of
common stock, valued at $390,000, and provided that the terms, conditions and
payment due in the Agreement dated April 11, 2001, are met and fulfilled by
April 11, 2003, and the option agreement granted to the Company on April 11,2001 shall be in force for a period of twenty (20) years. Because the
Company cannot demonstrate through its experience the ultimate revenue from the
video entertainment products it has elected to charge option rights to
intellectual properties $490,000 during 2002.
On March 4, 2004, the Board of Directors
approved extending the option agreement which expires April 11, 2004, with
Joseph and Bernadette DiFrancesco, for rights to "Gina D's." The
extension is for a ten-year period without restrictions or requirements, except
for bankruptcy, insolvency or takeover of the Company by a person or entity not
approved by the CEO. As part of extending the option agreement on
April 10, 2004, Joseph and Bernadette DiFrancesco received 100 units of JB Toys,
LLC. These units were issued to WEE-OOO, LTD, a limited partnership
owned by Joseph and Bernadette DiFrancesco. Also, Joseph and Bernadette
DiFrancesco received 667 restricted shares of Raven Moon Entertainment, Inc.
common stock. Joseph and Bernadette DiFrancesco shall also receive a
fee of $750,000 per year for ten years beginning in January 2004, or 10% of all
gross revenues from worldwide licensing and merchandising revenues received by
Raven Moon Entertainment, Inc. or JB Toys, LLC, whichever is
greater. The shares of stock were valued at $195,000, and charged to
intellectual property expense.
-35-
On June 1, 2004, the agreement with
Joseph and Bernadette DiFrancesco for the rights to "Gina D's" was further
amended. If the Company grants a license to any third party for "Gina
D's", the Company will pay Joseph and Bernadette DiFrancesco 50% of any revenues
derived from the license.
On June 1, 2004, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Joseph and Bernadette DiFrancesco
$100,000 and 15 units of Class B memberships of JB Toys for the rights to Mr.
Bicycle Man. (See Note 4.) The $100,000 was charged to option rights
to intellectual property for the year ended December 31, 2004, because the
Company cannot demonstrate through its experience the ultimate revenue from the
video entertainment products. In addition, Joseph and Bernadette
DiFrancesco are to receive 15% of the revenues of JB Toys, LLC for a ten-year
period. Also, if JB Toys grants a license to any third party for Mr.
Bicycle Man, the Company will pay Joseph and Bernadette DiFrancesco 50% of any
revenues derived from the license.
On June 1, 2004, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Joseph and Bernadette DiFrancesco
$250,000 and one (1) split-adjusted share common restricted stock of the Company
for the rights to "The Search for the Amazon Queen." The fair value
of the common stock was $195,000, which was charged to option rights to
intellectual property for the year ended December 31, 2004, because the Company
cannot demonstrate through its experience the ultimate revenue from the video
entertainment products. In addition, Joseph and Bernadette
DiFrancesco are to receive $100,000 per year beginning year two through year ten
plus 25% of gross revenue derived by JB Toys for "The Search for the Amazon
Queen". Also, if JB Toys grants a license to any third party for "The Search for
the Amazon Queen,"the Company will pay Joseph and Bernadette DiFrancesco 50% of
any revenues derived from the license.
Joseph and Bernadette DiFrancesco were
granted 48 split-adjusted shares of common stock during the year ended December31, 2007. The fair value of these shares was
$5,138,211. Joseph and Bernadette DiFrancesco were granted one (1)
split-adjusted share of common stock during the year ended December 31,2006. The fair value of this share was $514,492.The fair value was
charged to consulting fees because the Company cannot demonstrate through its
experience the ultimate revenue from the video entertainment
products.
Joseph and Bernadette DiFrancesco were
granted 75,000 shares of convertible preferred stock during the year ended
December 31, 2006. The $750,000 share value was used to offset
accrued fees for past services. During that year, Joseph and
Bernadette DiFrancesco also purchased an additional 7,000 shares of convertible
preferred stock for the fair value of $70,000.
Joseph and Bernadette DiFrancesco were
granted 75,000 and 320,000 shares of convertible preferred stock during the
years ended December 31, 2005 and 2004, respectively. The stock was
granted to TV Toys, Inc. The fair value of these shares was $750,000
and $3,200,000 and the fair value was charged to consulting fees because the
Company cannot demonstrate through its experience the ultimate revenue from the
video entertainment products.
During the year ended December 31, 2007,
TV Toys exercised warrants and purchased 1,000,000 shares of common stock (which
were subsequently split-adjusted to 125 shares). During the years
ended December 31, 2006 and 2005, TV Toys, Inc. converted 20,388 and 43,250,
respectively, shares of convertible preferred stock and received one (1)
split-adjusted share of restricted common stock.
During the year ended December 31, 2006,
Beyond The Kingdom converted 32,000 shares of convertible preferred stock and
received 200,000 shares of split-adjusted restricted common
stock.
During the year ended December 31, 2005,
Joseph and Bernadette DiFrancesco were granted warrants for one (1)
split-adjusted share of common stock. The fair value of these
warrants was $1,147,300 and was charged to production expense. The
Company did not issue any warrants to Joseph and Bernadette DiFrancesco during
2007 or 2006.
On April 14, 2005, the Company, through
its subsidiary JB Toys, LLC, agreed to pay Bernadette DiFrancesco $100,000 per
year for ten years and 3.75 units of Class B memberships of JB Toys, LLC for the
rights to the "Dino Bugs." In addition Bernadette DiFrancesco is to
receive 10% of all gross revenue derived by JB Toys, LLC for the "Dino
Bugs."
On May 1, 2004, David Mouery (the
son-in-law of Joseph DiFrancesco, Chairman of the Board) entered into a
twelve-month consulting agreement with JB Toys, LLC and Raven Animation,
Inc. Mr. Mouery is to assist the Company as entertainment attorney
for legal matters and contracts for the Company's products and
services. Mr. Mouery was paid $120,000 of registered shares in twelve
equal installments of common stock priced at a 50% discount from the closing bid
price during 2004 and 2005 as compensation for those
services.
-36-
On August 9, 2005, the Company entered
into an agreement with David Mouery to provide legal services for three
years. He is to be paid a retainer of $10,000 per
month. If payment is made in S-8 stock it will be at a 25% discount
of the bid price on the day the stock is issued.
During the year ended December 31, 2005,
David Mouery was granted 8,889 options valued at $15,000. The Company
did not grant any options to Mr. Mouery during 2006.
During the year ended December 31, 2007,
David Mouery was granted 7,813 split-adjusted shares of common stock with a fair
value of $701,478. During the year ended December 31, 2006, David
Mouery was granted one (1) split-adjusted share of common stock with a fair
value of $223,880. The fair value of the common stock was charged to
consulting expense because the Company cannot demonstrate through its experience
the ultimate revenue from the video entertainment products.
The outside Board of Directors were
granted 15 split-adjusted and one (1) split-adjusted share of common stock
during the years ended December 31, 2007 and 2006, respectively. The
fair value of these shares was $1,618,488 and $155,715 for the years ended
December 31, 2007 and 2006, respectively. Also, the Board of
Directors were paid $129,800 for directors fees for the year ended December
31,2006. The fair value of the common stock granted and director fees
paid were charged to consulting fees for the year ended December 31, 2007 and
2006.
During the years ended December 31, 2007
and 2006, loans from officers, directors and related parties are summarized as
follows:
2007
2006
Balance at beginning
of year
$
20,000
$
20,000
Increase in
loans
-
-
Payments on
loans
20,000
-
Balance at end of
period
$
-
$
20,000
Following is a schedule that summarizes
the activity in accruals and payments related to Joseph and Bernadette
DiFrancesco, the officers of the Company, for the year ended December 31, 2007
and 2006:
Audit fees billed to the Company by
Richard L. Brown & Company, P.A. ("Brown & Company") for auditing the
Company's annual financial statements for each of the fiscal years ended
December 31, 2007 and 2006 were $27,600, and for reviewing the consolidated
financial statements included in the Company's Quarterly Reports on Form 10-QSB
for each of those years was $15,000.
-37-
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Principal
Executive Officer, Principal Financial Officer, and Principal Accounting
Officer)
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Plan of Merger dated October 21,1998, and Articles of Merger by and among Raven Moon Entertainment, Inc.,
Ybor City Shuttle Service, Inc. and International Resorts and
Entertainment Group, Inc. dated December 18,1998
Amendment to the Articles of
Incorporation of Raven Moon International, Inc. filed with the Florida
Department of State on December 4, 2000, effective January 1,2001
Amendment to the Articles of
Incorporation of Raven Moon International, Inc. filed with the Florida
Department of State on March 9, 2001, effective March 25,2001
Amendment to the Articles of
Incorporation of Raven Moon International, Inc. filed with the Florida
Department of State on May 24, 2001, effective May 25,2001
Amendment to the Articles of
Incorporation of Raven Moon International, Inc. filed with the Florida
Department of State on August 7, 2001, effective September 1,2001
Amended General Business Affairs
Consulting Agreement between Raven Moon and David D. Mouery, J.D., dated
as of August 14, 2002, amended on December 1,2002
