UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________.
Commission File Number 0-10039
MEDIAVEST, INC.
---------------
(Name of Small Business Issuer in its Charter)
New Jersey 22-2267658
---------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2121 Avenue of the Stars, Suite 1650. Los Angeles, CA 90067
- ------------------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
(310) 601-2500
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.0001 Per Share
(Title of Class)
Check whether the Issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. |_|
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 |_|
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-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 |X| No |_|
The Issuer's revenues for the fiscal year ended December 31, 2005: $0.
The aggregate market value of the Issuer's voting common equity held by
non-affiliates of the Issuer as of March 31, 2006 was $0. The common equity does
not actively trade.
Check whether the Issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |X|
As of April 7, 2006, the Issuer had 4,000,000 shares of common stock, par value
$0.0001 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
MEDIAVEST, INC.
ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2005
TABLE OF CONTENTS
PART I ....................................................................1
ITEM 1. DESCRIPTION OF BUSINESS.............................................1
ITEM 2. DESCRIPTION OF PROPERTY.............................................1
ITEM 3. LEGAL PROCEEDINGS...................................................2
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................2
PART II ....................................................................2
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES......................2
ITEM 6. MANAGEMENT'S PLAN OF OPERATION......................................3
ITEM 7. FINANCIAL STATEMENTS................................................8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
FINANCIAL DISCLOSURE................................................9
ITEM 8A. CONTROLS AND PROCEDURES.............................................9
ITEM 8B. OTHER INFORMATION...................................................9
PART III ...................................................................10
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT..................10
ITEM 10. EXECUTIVE COMPENSATION.............................................11
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS........................................11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................12
ITEM 13. EXHIBITS...........................................................13
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................14
i
This Annual Report on Form 10-KSB contains statements which constitute
forward-looking statements. These statements appear in a number of places in
this Form 10-KSB and include statements regarding the intent, belief or current
expectations of Mediavest, Inc. referred to in this report as "we," "us" and
"our") with respect to (i) our financing plans, (ii) trends affecting our
financial condition or results of operations, (iii) the impact of competition,
and (iv) the expansion of certain operations. Investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that the actual results may differ
materially from those in the forward-looking statements as a result of various
factors. The information contained in this Form 10-KSB, including, without
limitation, the information under "Risk Factors," "Management's Plan of
Operation" and "Description of Business," identifies important factors that
could cause or contribute to such differences. See "Description of Business-Risk
Factors-All forward looking statements should be read with caution."
PART I
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
Mediavest, Inc. (the "Company") was originally incorporated in the State
of Delaware on November 6, 1998 under the name EChannel Ventures Inc. On January
19, 1999, EChannel Ventures Inc. changed its name to EB2Buy Inc. which, in turn,
changed its name to eB2B Commerce, Inc. on March 19, 1999. On April 27, 2000,
eB2B Commerce, Inc., a Delaware corporation, merged into DynamicWeb Enterprises
Inc., a New Jersey corporation. DynamicWeb Enterprises, Inc. was the surviving
company and changed its name to eB2B Commerce, Inc. On April 13, 2005, eB2B
Commerce, Inc., changed its name to Mediavest, Inc., now a New Jersey
corporation. Through January 26, 2005, the Company and its subsidiaries were
engaged in providing business-to-business transaction management services
designed to simplify trading between buyers and suppliers.
We are currently a "shell" company with no operations and controlled by
Trinad Capital, L.P. ("Trinad"), our majority shareholder.
On October 27, 2004, and as amended on December 17, 2004, the Company
filed a plan (the "Plan") for reorganization under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York (the "Reorganization"). The Plan, as confirmed on January
26, 2005, provided for: (1) the net operating assets and liabilities to be
transferred to the holders of the secured notes of $3,738,000 in satisfaction of
the principal and accrued interest thereon; (2) $400,000 to be transferred to a
liquidation trust and used to pay administrative costs and certain preferred
creditors; (3) $100,000 to be retained by the Company to fund the expenses of
remaining public; (4) 3.5% of the new common stock of the Company (140,000
shares) to be issued to the holders of record of the Company's preferred stock
(2,261,081 shares) in settlement of their liquidation preferences; (5) 3.5% of
the new common stock of the Company (140,000 shares) to be issued to the holders
of record of the Company's common stock (7,964,170) as of January 26, 2005 in
exchange for all of the outstanding shares of common stock of the Company; and
(6) 93% of the new common stock of the Company (3,720,000 shares) to be issued
to the plan sponsor in exchange for $500,000 in cash.
As a result of the Reorganization; the historical financial statements are
not relevant to any assessment of our operations on an ongoing basis.
Accordingly, readers are advised not to rely on any historical financial
information in considering an investment in or the disposition of our stock.
ITEM 2. DESCRIPTION OF PROPERTY
Currently, we are utilizing the office space of our Plan sponsor, Trinad,
at no cost to us until an acquisition is consummated or a business is
established. The amount of office space currently utilized by us is
insignificant.
ITEM 3. LEGAL PROCEEDINGS
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
As a result of the Plan, holders of record of our common and preferred
stock as of January 26, 2005 were entitled to receive an aggregate of 7% of our
common stock, with 3.5% issued to the holders of each class of securities. The
remaining 93% was issued to Trinad. Such distribution of new common stock was
completed in August 2005.
Our common stock was quoted on the Nasdaq SmallCap Market under the symbol
"EBTB" from August 15, 2000 to August 26, 2002. After that time, our common
stock was quoted on the Over-the-Counter Bulletin Board maintained by the
National Association of Securities Dealers. Starting on September 21, 2004, our
common stock traded on the "Pink Sheets" under "penny stock" rules and traded
sporadically. Our common stock is currently not actively trading.
Any investor who purchases our common stock is not likely to find any
liquid trading market for our common stock and there can be no assurance that
any liquid trading market will develop. There is no assurance that the stock
will be approved for trading on the Over-the-Counter Bulletin Board or will be
liquid as a result of our reorganization and the issuance of the new common
stock in exchange for the old common and preferred stock.
There has never been a public trading market for any of our securities
other than our common stock.
2
Holders
As of April 13, 2006, there were 534 holders of record of our common
stock. There was also an undetermined number of holders who hold their stock in
nominee or "street" name.
DIVIDENDS
We have not declared cash dividends on our common stock since our
inception and we do not anticipate paying any cash dividends in the foreseeable
future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
As a result of the Reorganization, all of the outstanding securities
authorized for issuance under equity compensation plans were cancelled.
Accordingly, a description of such securities as of December 31, 2005 would not
be useful in determining whether to make an investment in our stock.
ITEM 6. MANAGEMENT'S PLAN OF OPERATION
In this section, "Management's Plan of Operations," references to "we,"
"us," "our," and "ours" refer to Mediavest, Inc.
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Financial Statements and the Notes thereto
included in this report. This discussion contains certain forward-looking
statements that involve substantial risks and uncertainties. When used in this
report the words "anticipate," "believe," "estimate," "expect" and similar
expressions as they relate to our management or us are intended to identify such
forward-looking statements. Our actual results, performance or achievements
could differ materially from those expressed in, or implied by, these
forward-looking statements. Historical operating results are not necessarily
indicative of the trends in operating results for any future period.
MANAGEMENT'S PLAN OF OPERATION
Trinad, a hedge fund dedicated to investing in micro-cap companies, is
seeking to raise additional capital with a view to making us an attractive
vehicle with which to acquire a business. It will then seek a suitable
acquisition candidate. No such business has been identified and we are therefore
subject to a number of risks, including the following: any acquisition
consummated by us may turn out to be unsuccessful; investors will not know what
operating business, if any, we will acquire, including the particular industry
in which the business operates and whether dilutive financing will be required
in connection therewith; the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the future;
we may acquire a company in the early stages of development causing us to incur
further risks; we may be dependent upon the management of an acquired business
which has not proven its abilities or effectiveness; we will be controlled by a
small number of stockholders and such control could prevent the taking of
certain actions that may be beneficial to other stockholders; our common stock
will likely be thinly traded, and the public market may provide little or no
liquidity for holders of our common stock.
Trinad has agreed that it will not dispose of any of its common stock
until an acquisition transaction has been consummated and a Current Report on
Form 8-K setting forth the terms of the acquisition and audited financial
statements of the acquisition target have been filed with the SEC.
On March 20, 2006, Trinad Capital Master Fund, Ltd., an affiliate of
Trinad, made a loan to us in the principal amount of $100,000. We believe that
this loan should be sufficient to satisfy our monetary needs for the balance of
the calendar year and that Trinad has the financial wherewithal and intent to
fund our
3
financial needs to the extent reasonably necessary. Since our emergence from
bankruptcy through the Reorganization, we have no liabilities related to the
Reorganization, we do not currently have an operating business and we have
extremely limited cash under new management.
As described more fully above, subsequent to the Reorganization, our plan
of operation is to merge or effect a business combination with a domestic or
foreign private operating entity. We may seek to raise additional capital first
to make ourselves more attractive to acquisition candidates. We believe that
there are perceived benefits to being a "reporting company" with a class of
publicly-traded securities which may be attractive to private entities. Other
than activities relating to such financing and attempting to locate such a
candidate, we do not currently anticipate conducting any operations.
We may enter into a definitive agreement with a wide variety of private
businesses without limitation as to their industry or revenues. It is not
possible at this time to predict when, if ever, we will enter into a business
combination with any such private company or the industry or the operating
history, revenues, future prospects or other characteristics of any such
company. Trinad intends to raise capital to make us a more attractive
acquisition vehicle and then seek a suitable merger candidate. Trinad has not
identified anyone for acquisition at this time.
CRITICAL ACCOUNTING POLICIES
Management's Plan of Operations are based upon our financial statements
included elsewhere in this Annual Report, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires that we make estimates and
judgments that affect the reported amounts of assets, liabilities, and expenses
and the related disclosure of contingent assets and liabilities. At each balance
sheet date, management evaluates its estimates. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances at the time the estimates are made. Actual
results may differ from these estimates under different assumptions or
conditions. The estimates and critical accounting policies that are most
important in fully understanding and evaluating our financial condition and
results of operations are discussed below
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
BANKRUPTCY ACCOUNTING
Since the Chapter 11 bankruptcy filing, we have applied the provisions of
SOP 90-7, which do not significantly change the application of accounting
principles generally accepted in the United States; however, it does require
that the financial statements for periods including and subsequent to filing the
Chapter 11 petition distinguish transactions and events that are directly
associated with the Reorganization from the ongoing operations of the business.
INCOME TAXES
The Company provides for deferred income taxes using the liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and the tax effect of net operating loss carry-forwards. A valuation
allowance is recorded against deferred tax assets if it is more likely than not
that such assets will not be realized.
4
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We currently have no floating rate indebtedness, hold no derivative
instruments, and do not earn foreign-sourced income. Accordingly, changes in
interest rates or currency exchange rates do not generally have a direct effect
on our financial position. Changes in interest rates may affect the amount of
interest we earn on available cash balances as well as the amount of interest we
pay on borrowings. To the extent that changes in interest rates and currency
exchange rates affect general economic conditions, we may also be affected by
such changes.
RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe that there are any recently issued, but not
yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.
RISK FACTORS
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Annual Report on Form 10-KSB under the captions "Description
of Business," "Management's Plan of Operation," and elsewhere in this Form
10-KSB, as well as statements made in press releases and oral statements that
may be made by us or any of our officers, directors or employees acting on our
behalf that are not statements of historical fact, constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, including those described in this Form 10-KSB
under the caption "Risk Factors," that could cause our actual results to be
materially different from the historical results or from any future results
expressed or implied by such forward-looking statements. In addition to
statements which explicitly describe such risks and uncertainties, readers are
urged to consider statements with the terms "believes," "belief," "expects,"
"plans," "anticipates," or "intends," to be uncertain and forward-looking. All
cautionary statements made in this Form 10-KSB should be read as being
applicable to all related forward-looking statements wherever they appear.
Investors should consider the following risk factors as well as the risks
described elsewhere in this Form 10-KSB.
WE MAY NOT BE SUCCESSFUL IN IDENTIFYING AND EVALUATING SUITABLE BUSINESS
OPPORTUNITIES OR IN CONSUMMATING A BUSINESS COMBINATION.
Trinad intends to raise capital to make us a more attractive acquisition
vehicle and then seek a suitable merger candidate. Trinad has not identified
acquisition candidates at this time. There can be no assurance that Trinad will
be successful in raising capital on favorable terms, or at all, or in finding a
suitable merger candidate for us. No particular industry or specific business
within an industry has been selected for a target company. Accordingly, we may
enter into a merger or other business combination with a business entity having
no significant operating history, losses, limited or no potential for immediate
earnings, limited assets, negative net worth or other negative characteristics,
such as dependency on management that has not proven its abilities or
effectiveness. In the event that we complete a merger or other business
combination, the success of our operations will be dependent upon the management
of the target company and numerous other factors beyond our control. There is no
assurance that we will be able to negotiate a merger or business combination on
favorable terms, or at all.
5
WE MAY BE SUBJECT TO REGULATION UNDER THE INVESTMENT COMPANY ACT OF 1940 IF WE
WERE TO ENGAGE IN CERTAIN ACTIVITIES OR BUSINESS COMBINATIONS.
In the event that we engage in a business combination or engage in other
activities that result in our holding passive investment interests in a number
of entities, we could be subject to regulation under the Investment Company Act
of 1940. In such event, we would be required to register as an investment
company and could be expected to incur significant registration and compliance
costs.
WE DO NOT ANTICIPATE PAYING DIVIDENDS.
We have never paid cash or other dividends on our common stock. Payment of
dividends on our common stock is within the discretion of our Board of Directors
and will depend upon our earnings, our capital requirements and financial
condition, and other factors deemed relevant by the Board of Directors. However,
the earliest the Board of Directors would likely consider a dividend is after
the acquisition has occurred if the acquired entity generated excess cash flow.
WE MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS.
We need to raise additional funds in order to make ourselves a more
attractive acquisition vehicle. There is no assurance that we will be able to
consummate the financing on favorable terms or at all. Any such financing will
dilute the percentage ownership of existing stockholders.
WE CURRENTLY DO NOT HAVE ANY FULL-TIME EMPLOYEES AND ARE DEPENDENT ON TRINAD,
INDEPENDENT CONTRACTORS AND CONSULTANTS FOR THE OPERATION OF OUR BUSINESS.
We are currently a "shell" company with no operations or employees. We are
controlled by Trinad, our majority stockholder, and our officers and directors
are affiliated with Trinad. Trinad provides certain services to us without
remuneration and we hire independent contractors or consultants for certain
services. There is no assurance that we will be able to hire employees qualified
for the work required, or that such qualified employees could be hired and
retained at a reasonable level of compensation.
WE ARE CONTROLLED BY ONE STOCKHOLDER.
Trinad currently owns 93% of our common stock and controls our Board of
Directors. Such control could prevent the taking of certain actions that may be
beneficial to other stockholders.
OUR COMMON STOCK DOES NOT TRADE AND THE MARKET PRICE OF OUR SECURITIES COULD
FLUCTUATE SIGNIFICANTLY.
Our common stock is not traded on any exchange at this time, but we may
seek to have it listed in the future. At the time of such listing, factors such
as announcements by us of the financial results, changes in management and
regulatory changes, among other things, could cause the market price of our
securities to fluctuate significantly upon such trading.
6
LIQUIDITY
On March 20, 2006, the Company executed a loan agreement with Trinad
Capital Master Fund, Ltd., an affiliate of Trinad, pursuant to which it agreed
to loan the Company up to a principal amount of $100,000 (the "Loan"), at any
time and from time to time, prior to the Company's consummation of a Next
Financing (as defined below). Trinad shall make advances to the registrant in
such amounts as the registrant shall request from time to time. The Loan bears
interest at the rate of 10% per annum. The entire outstanding principal amount
of the Loan and any accrued interest thereon shall be due and payable by the
Company upon, and not prior to, the consummation of a sale of securities (other
than a sale of shares of the Company's common stock, $0.0001 par value per
share, to officers, directors or employees of, or consultants to, the Company in
connection with their provision of services to the Company), to a third party or
parties with proceeds to the registrant of not less than $200,000 (a "Next
Financing").
7
ITEM 7. FINANCIAL STATEMENTS
Mediavest, Inc.
INDEX TO FINANCIAL STATEMENTS
Report Of Independent Registered Public Accounting Firm......................F-1
Balance Sheet................................................................F-2
Statements Of Operations.....................................................F-3
Statement Of Stockholders' Deficit...........................................F-4
Statements Of Cash Flows.....................................................F-5
Notes To Financial Statements................................................F-6
8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Mediavest, Inc.
We have audited the accompanying balance sheet of Mediavest, Inc, as of
December 31, 2005 and the related statements of operations, stockholders'
deficit and cash flows for the two years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mediavest, Inc. as of
December 31, 2005 and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally accepted
in the United States of America.
/s/ Most & Company, LLP
-------------------------
New York, New York Most & Company, LLP
March 29, 2006
F-1
MEDIAVEST, INC.
BALANCE SHEET
DECEMBER 31, 2005
ASSETS
Current assets:
Cash $ 3,366
---------
TOTAL ASSETS $ 3,366
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accrued expenses $ 74,424
---------
TOTAL LIABILITIES 74,424
---------
Stockholders' deficit:
Preferred stock, 1,000,000 shares authorized at $.0001 par value,
no shares issued or outstanding
Common stock, 19,000,000 shares authorized at $.0001 par value,
4,000,000 shares issued and outstanding 400
Additional paid-in capital 99,600
Accumulated deficit (171,058)
---------
TOTAL STOCKHOLDERS' DEFICIT (71,058)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 3,366
=========
See notes to financial statements.
F-2
MEDIAVEST, INC.
STATEMENTS OF OPERATIONS
SUCCESSOR PREDECESSOR
COMPANY COMPANY
----------- ------------------------------
JANUARY 27, JANUARY 1,
TO TO YEAR ENDED
DECEMBER 31, JANUARY 26, DECEMBER 31,
2005 2005 2004
----------- -------------- -------------
Revenues
Continuing operations
General and administrative expenses $ (171,058)
----------- -------------
Discontinued operations
Loss on discontinued operations $ (27,101) $ (504,734)
----------- -------------- -------------
Net Loss $ (171,058) $ (27,101) $ (504,734)
=========== ============== =============
Basic net loss per common share
Loss from continuing operations $ (0.04) * *
Loss from discontinued operations * *
----------- -------------- -------------
Net loss per share $ (0.04) * *
=========== ============== =============
Weighted average common shares
outstanding,- basic and diluted 4,000,000 * *
=========== ============== =============
- -----------
* Not presented
See notes to financial statements.
F-3
MEDIAVEST, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
SERIES A SERIES B SERIES C
------------------------- -------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ---------- ------------- ----------- ---------- ---------
PREDECESSOR COMPANY
Balance at January 1, 2004 7 $ -- 2,003,674 $ -- 661,390 $ --
Conversion of Series B Preferred
stock -- -- (267,106) -- -- --
Conversion of Series C Preferred
stock -- -- -- -- (136,884) --
Net loss -- -- -- -- -- --
------------ ---------- ------------- ----------- ---------- ---------
Balance at December 31, 2004 7 -- 1,736,568 -- 524,506 --
Net loss -- -- -- -- -- --
------------ ---------- ------------- ----------- ---------- ---------
Balance at January 26, 2005,
immediately before cancellation and
transfer to Liquidation Trust for
Reorganization 7 $ -- 1,736,568 $ -- 524,506 $ --
============ ========== ============= =========== ========== =========
SUCCESSOR COMPANY
Capital contribution at
reorganization -- $ -- -- $ -- -- $ --
Net loss -- -- -- -- -- --
------------ ---------- ------------- ----------- ---------- ---------
Balance at December 31, 2005 -- $ -- -- $ -- -- $ --
============ ========== ============= =========== ========== =========
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED TOTAL
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------ ---------- ------------- -------------- --------------
PREDECESSOR COMPANY
Balance at January 1, 2004 4,544,672 -- $ 157,322,081 $ (161,381,747) $ (4,059,666)
Conversion of Series B Preferred
stock 521,725 -- -- -- --
Conversion of Series C Preferred
stock 2,897,773 -- -- -- --
Net loss -- -- -- (504,734) (504,734)
------------ ---------- ------------- -------------- --------------
Balance at December 31, 2004 7,964,170 -- 157,322,081 (161,886,481) (4,564,400)
Net loss -- -- -- (27,101) (27,101)
------------ ---------- ------------- -------------- --------------
Balance at January 26, 2005,
immediately before cancellation and
transfer to Liquidation Trust for
Reorganization 7,964,170 $ -- $ 157,322,081 $ (161,913,582) $ (4,591,501)
============ ========== ============= ============== ==============
SUCCESSOR COMPANY
Capital contribution at
reorganization 4,000,000 $ 400 $ 99,600 $ -- $ 100,000
Net loss -- -- -- (171,058) (171,058)
------------ ---------- ------------- -------------- --------------
Balance at December 31, 2005 4,000,000 $ 400 $ 99,600 $ (171,058) $ (71,058)
============ ========== ============= ============== ==============
See notes to financial statements.
F-4
MEDIAVEST, INC.
STATEMENTS OF CASH FLOWS
SUCCESSOR PREDECESSOR
COMPANY COMPANY
------------ ----------------------
JANUARY 27, JANUARY 1,
TO TO
DECEMBER 31, JANUARY 26,
2005 2005 2004
------------ ----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $ (171,058)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in assets and liabilities:
Accrued expenses 74,424
------------
Net cash used in continuing operating activities (96,634)
Net cash provided by (used in) discontinued operations -- $ (386,000) $ 339,000
------------ ----------- ---------
Net cash provided by (used in) operating activities (96,634) (386,000) 339,000
------------ ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in discontinued operations -- -- (199,000)
------------ ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash from reorganization 100,000
Net cash provided by discontinued opeations -- -- 100,000
------------ ----------- ---------
Net cash provided by financing activities 100,000 -- 100,000
------------ ----------- ---------
Net increase (decrease) in cash 3,366 (386,000) 240,000
Cash, beginning of period -- 386,000 146,000
------------ ----------- ---------
Cash, end of period $ 3,366 $ -- $ 386,000
============ =========== =========
See notes to financial statements.
F-5
MEDIAVEST, INC.,
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
NOTE 1. ORGANIZATION AND OPERATIONS
Mediavest, Inc. (Company) was originally incorporated in the State of
Delaware on November 6, 1998 under the name eB2B Commerce, Inc. On April 27,
2000, it merged into Dynamic Web Enterprises Inc., a New Jersey corporation, the
surviving company, and changed its name to eB2B Commerce, Inc. On April 13,
2005, the Company changed its name to Mediavest, Inc. Through January 26, 2005,
the Company and its subsidiaries were engaged in providing business-to-business
transaction management services designed to simplify trading between buyers and
suppliers. Subsequent to January 26, 2005, the Company was inactive.
NOTE 2. REORGANIZATION
On October 27, 2004 and as amended on December 17, 2004, the Company filed
a plan (Plan) for reorganization under Chapter 11 of the United States
Bankruptcy Code. The Plan, as confirmed on January 26, 2005, provided for: (1)
the net operating assets and liabilities to be transferred to the holders of the
secured notes of $3,738,000 in satisfaction of the principal and accrued
interest thereon; (2) $400,000 to be transferred to a liquidation trust and used
to pay administrative costs and certain preferred creditors; (3) $100,000 to be
retained by the Company to fund the expenses of remaining public; (4) 3.5% of
the new common stock of the Company (140,000 shares) to be issued to the holders
of record of the Company's preferred stock (2,261,081 shares) in settlement of
their liquidation preferences; (5) 3.5% of the new common stock of the Company
(140,000 shares) to be issued to the holders of record of the Company's common
stock (7,964,170) as of January 26, 2005 in exchange for all of the outstanding;
and (6) 93% of the new common stock of the Company (3,720,000 shares) to be
issued to the plan sponsor in exchange for $500,000 in cash.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements include the accounts of the Company presented in
accordance with generally accepted accounting principles in the United States.
F-6
FRESH START REPORTING
The Company has accounted for the reorganization using fresh start
reporting. Accordingly, the Company's accumulated deficit has been eliminated
and all assets and liabilities are reflected at their fair value at the time of
the reorganization. Upon reorganization the Company had no liabilities and its
only asset was the aforementioned cash of $100,000. Although not required under
fresh start accounting, prior period results of operations have been presented.
In accordance with fresh start reporting, results of operations and cash flows
for prior periods are designated "Predecessor" and for the current period as
"Successor".
INCOME TAXES
Deferred income taxes are provided for temporary differences between
financial statement and income tax reporting under the liability method, using
expected tax rates and laws that are expected to be in effect when the
differences are expected to reverse. A valuation allowance is provided when it
is more likely than not, that the deferred tax assets will not be realized.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and accrued expenses approximate fair value due
to the short maturities of such instruments and management believes that there
is little risk of loss.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk is cash. Cash is deposited with high credit
quality financial institutions.
LOSS PER COMMON SHARE
Basic net loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period. Diluted
net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and potentially outstanding shares of common
stock during each period. Diluted net loss per share is not presented, as it is
anti-dilutive. The Company's successor operations are neither representative nor
comparable to that of the Company's predecessor operations and, accordingly,
loss per share is not presented for predecessor periods.
F-7
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in prior period financial statements have been
reclassified to conform to the current presentation.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accountings Standards Board has issued FASB Statement No.
154, "Accounting Changes and Error Corrections", which changes the requirements
for the accounting for and reporting accounting changes and error corrections
for both annual and interim financial statements, effective for 2006 financial
statements. The Company has not determined what the effect, if any, will be on
the Company's financial statements.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 4. COMMON STOCK
In April 2005, the Company decreased their authorized common shares to
19,000,000 shares, $0.0001 par value.
Under the Plan, the holders of record of all of the Company's common stock
received 3.5% of the shares of the new common stock, 140,000 shares.
NOTE 5. PREFERRED STOCK
In April 2005, the Company decreased its authorized preferred shares to
1,000,000, $0.0001 par value. At the time of the reorganization, the Predecessor
had Series A, B and C preferred shares outstanding, all of which were exchanged
for common stock of the Successor in accordance with the Plan.
Under the Plan, the holders of record of all of the Predecessor's
preferred stock received 3.5% of the shares of the Successor's common stock,
140,000 shares.
F-8
NOTE 6. WARRANTS
As of the effective date of the Plan, and as provided for under the
provisions of the Plan, all outstanding warrants expired worthless.
NOTE 7. STOCK OPTION AND DEFINED CONTRIBUTION PLANS
STOCK OPTION PLAN
The Company had a stock option plan. As of the effective date of the Plan
and as provided for under the provisions of the Plan, all outstanding options
expired and the stock option plan was terminated.
DEFINED CONTRIBUTION PLAN
The Company had a defined contribution savings plan. During the period
January 1, 2005 to January 26, 2005 and the year ended December 31, 2004, the
Company did not make any contributions to the defined contribution savings plan.
Under the Plan, the defined contribution savings plan was terminated and assets
distributed to the participants.
NOTE 8. INCOME TAXES
As of December 31, 2005, the Company had approximately $39 million of net
operating loss (NOL) carryforwards to reduce future Federal income taxes,
expiring in various years ranging from 2019 to 2025. During both 2000 and in
January 2005, the Company may have had ownership changes, as defined by the
Internal Revenue Service, which may subject the NOL's to annual limitations
which could reduce or defer the use of the NOL's to approximately $171,000.
As of December 31, 2005, realization of the Company's net deferred tax
asset of approximately $15,072,000 related to the NOL carryforwards was not
considered more likely than not and, accordingly, a valuation allowance of
$15,072,000 has been provided. During the year ended December 31, 2005, the
valuation allowance increased by $72,000.
As of December 31, 2005, the components of the net deferred tax asset
consisted of the following:
Deferred tax assets:
Net operating loss carryforwards $ 15,072,000
Valuation allowance (15,072,000)
------------
None
============
F-9
The provision for income taxes differs from the amount computed by
applying the statutory Federal income tax rate to income before the provision
for income taxes, as follows:
YEAR ENDED DECEMBER 31,
2005 2004
--------- ---------
Federal income tax, at statutory rate $ (58,000) $(200,000)
State income tax, net of federal benefit (14,000) (40,000)
Other (360,000)
Underaccrual of prior years state taxes 42,000
Change in valuation allowance 72,000 600,000
--------- ---------
Income taxes, as recorded None $ 42,000
========= =========
NOTE 9. SUBSEQUENT EVENT
On March 20, 2006, the Company entered into an agreement with an
affiliated company to borrow up to $100,000 (Loan), until a Next Financing (as
defined below) occurs. Loan under the agreement bears interest at 10%, per
annum, and principal and accrued interest thereon shall be due upon the Next
Financing, of a sale of securities (other than a sale of shares of the Company's
common stock, to officers, directors or employees of, or consultants to, the
Company in connection with their provision of services to the Company), to third
parties with proceeds to the Company of not less than $200,000.
F-10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
DISCLOSURE
As previously disclosed, on October 27, 2004, we filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. On
December 17, 2004, we filed an Amended Plan of Reorganization, which was
confirmed by the United States Bankruptcy Court for the Southern District of New
York on January 26, 2005. Prior to filing for bankruptcy, Miller, Ellin &
Company, LLP ("Miller") served as our independent registered public accounting
firm. Miller has not audited any financial statements of the Company for any
date or period subsequent to the year ended December 31, 2003.
On February 8, 2005, Miller resigned as our independent registered public
accounting firm based exclusively on the affiliation Miller has with Robert
Ellin (who became Chairman, Chief Executive Officer and President pursuant to
the Amended Plan of Reorganization) by virtue of the fact that Mr. Ellin's
father is a senior partner at Miller. Accordingly, Miller could no longer be
considered independent. Miller's report with respect to the financial statements
for the fiscal year ended December 31, 2003 did not contain an adverse opinion
or a disclaimer of opinion and was not qualified or modified with respect to
uncertainty, audit scope, or accounting principles, except that the report
contained an explanatory paragraph concerning matters that raised substantial
doubt about our ability to continue as a going concern.
During the fiscal years ended December 31, 2003 and 2004 and the
subsequent interim period through the date of Miller's resignation, there were
no disagreements with Miller on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Miller's satisfaction, would have caused it to make reference
to the subject matter of the disagreement(s) in connection with its reports on
our consolidated financial statements.
On April 1, 2005 we engaged Most & Company, LLP ("Most") as our
independent registered public accounting firm. The decision to retain Most as
our independent registered public accounting firm was made by our Board of
Directors. We engaged Most to audit our financial statements for the fiscal year
ended December 31, 2004. During the years ended December 31, 2004 and December
31, 2003 and through April 1, 2005, neither we nor anyone on our behalf has
consulted with Most regarding the application of accounting principles to a
specific transaction, either completed or proposed, or the type of audit opinion
that might be rendered on our financial statements.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. Our principal
executive officer and principal financial officer, after evaluating the
effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) on December 31, 2005, have concluded that,
based on such evaluation, our disclosure controls and procedures were adequate
and effective to ensure that material information relating to us, including our
consolidated subsidiaries, was made known to them by others within those
entities, particularly during the period in which this Annual Report on Form
10-KSB was being prepared.
(b) Changes in Internal Controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in our internal controls.
Accordingly, no corrective actions were required or undertaken.
ITEM 8B. OTHER INFORMATION.
None.
9
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
In connection with the Reorganization, on February 8, 2005, Robert S.
Ellin became Chairman of our Board of Directors, our Chief Executive Officer,
and President, Jay A. Wolf became a Director, our Chief Financial Officer, Chief
Operating Officer, and Secretary, and Barry Regenstein became a Director.
ROBERT S. ELLIN, AGE 40. Mr. Ellin is a Managing Member of Trinad, a hedge fund
dedicated to investing in micro-cap public companies. Mr. Ellin is also a
director of ProLink Holdings Corp. ("ProLink") and a director and officer of
U.S. Wireless Data, Inc. ("USWD") and Command Security Corporation ("Command").
Prior to joining Trinad, Mr. Ellin was the founder and President of Atlantis
Equities, Inc., a private investment company. Founded in 1990, Atlantis actively
managed an investment portfolio of small capitalization public companies as well
as select private company investments. Mr. Ellin played an active role in
Atlantis investee companies including Board representation, management
selection, corporate finance and other advisory services. Through Atlantis and
related companies, Mr. Ellin completed a leveraged buyout of S&S Industries,
Inc. where he also served as President from 1996 to 1998. Prior to founding
Atlantis Equities, Mr. Ellin worked in Institutional Sales at LF Rothschild and
prior to that he was the Manager of Retail Operations at Lombard Securities. Mr.
Ellin received a Bachelor of Arts from Pace University.
JAY A. WOLF, AGE 33. Mr. Wolf is a Managing Director of Trinad, a hedge fund
dedicated to investing in micro-cap public companies. Mr. Wolf is also a
director of ProLink and a director and officer of Shells Seafood Restaurants,
Inc., Starvox Communications, Inc and USWD. Mr. Wolf has ten years of investment
and operations experience in a broad range of industries. Mr. Wolf's investment
experience includes: senior and subordinated debt, private equity (including
leveraged transactions), mergers & acquisitions and public equity investments.
Prior to joining Trinad, Mr. Wolf served as the Executive Vice President of
Corporate Development for Wolf Group Integrated Communications Ltd. where he was
responsible for the company's acquisition program. Prior to that he worked at
Canadian Corporate Funding, Ltd., a Toronto based merchant bank, in the Senior
Debt Department, and subsequently for Trillium Growth Capital, the firm's
venture capital fund. Mr. Wolf received a Bachelor of Arts from Dalhousie
University.
BARRY I. REGENSTEIN, AGE 49. Mr. Regenstein is the Executive Vice President and
Chief Operating Officer of Command and a director of USWD. Trinad is a
significant shareholder of Command and Mr. Regenstein has served as a consultant
for Trinad. Mr. Regenstein has over 25 years of experience with 21 years of such
experience in the aviation services industry. Mr. Regenstein was formerly Senior
Vice President and Chief Financial Officer of Globe Ground North America
(previously Hudson General Corporation), and previously served as the
Corporation's Controller and as a Vice President. Prior to joining Hudson
General Corporation in 1982, he had been with Coopers & Lybrand in Washington,
D.C. since 1978. Mr. Regenstein is a Certified Public Accountant and received
his Bachelor of Science in Accounting from the University of Maryland and an
M.S. in Taxation from Long Island University.
AUDIT COMMITTEE
We do not currently have an Audit Committee because we are not an
operating company. If and when we find a suitable merger candidate and we
successfully enter into a merger transaction whereby a company with assets and
operations survives, we intend to establish an Audit Committee that fulfills the
independent and other requirements promulgated by the SEC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers, directors, and
persons owning more than ten percent of a registered class of our equity
securities ("ten percent stockholders") to file reports of ownership and changes
of ownership with the SEC. Officers, directors, and ten-percent stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a)
reports they file with the SEC. To the best of our knowledge, based solely on
review of the copies of such reports and amendments thereto
10
furnished to us, we believe that during our fiscal year ended December 31, 2005,
all Section 16(a) filing requirements applicable to our officers, directors, and
ten percent stockholders were met.
CODE OF ETHICS
We do not currently have a code of ethics because we are not an operating
company. If and when we find a suitable merger candidate and we successfully
enter into a merger transaction whereby a company with assets and operations
survives, we intend to establish code of ethics.
ITEM 10. EXECUTIVE COMPENSATION
On February 8, 2005, Robert S. Ellin became the Chairman of the Board of
Directors, our Chief Executive Officer, and President, Jay A. Wolf became a
Director, our Chief Financial Officer, Chief Operating Officer, and Secretary,
and Barry Regenstein became a Director. None of our current directors and
officers receives any compensation paid by us.
Prior to our reorganization, our former directors and officers received
compensation paid by us. After our emergence from Chapter 11 of the Bankruptcy
Code, none of our former directors and officers have any current affiliation
with us and accordingly do not receive compensation paid by us.
In accordance with the Plan, all of the options and warrants held by our
former directors and officers prior to the reorganization were canceled. None of
our current directors and executive officers hold any options or warrants of our
Company.
We have no plan for compensating our directors for their service in their
capacity as directors, although such directors are expected in the future to
receive stock options to purchase common shares as awarded by our Board of
Directors or (as to future stock options) a compensation committee which may be
established. Directors are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings
of our Board of Directors. Our Board of Directors may award special remuneration
to any director undertaking any special services on our behalf other than
services ordinarily required of a director. No director received or accrued any
compensation for their services as a director, including committee participation
or special assignments.
There are no management agreements with our directors or executive
officers and we do not anticipate that written agreements will be put in place
in the foreseeable future.
We have no plans or arrangements with respect to remuneration received or
that may be received by our executive officers to compensate such officers in
the event of termination of employment (as a result of resignation, retirement,
change of control) or a change of responsibilities following a change of
control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following tables set forth certain information regarding the
beneficial ownership of our common stock as of December 31, 2005, by the (i)
named executive officers (our former executive officers and directors), (ii) all
persons, including groups, known to us to own beneficially more than five
percent (5%) of the outstanding common stock, and (iii) all current executive
officers and directors as a group. A person (or group) is deemed to be a
beneficial owner of common stock that can be acquired by such person or group
within 60 days from December 31, 2005, upon the exercise of warrants, options or
other rights exercisable for, or convertible into, common stock. As of December
31, 2005, there were a total of 4,000,000 shares of common stock outstanding.
Except as otherwise indicated, the address of each of the following
persons is c/o Mediavest, Inc., 2121 Avenue of the Stars, Suite 1650, Los
Angeles, CA 90067:
11
CERTAIN HOLDERS OF COMMON STOCK
- --------------------------------------------------------------------------------
BENEFICIALLY OWNED AS OF
NOVEMBER 28, 2005 (1)
- --------------------------------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
OF OWNER
- --------------------------------------------------------------------------------
Trinad Capital, L.P. 3,720,000(2) 93%
- --------------------------------------------------------------------------------
Current directors or officers:
- --------------------------------------------------------------------------------
Robert S. Ellin -- (2) *
- --------------------------------------------------------------------------------
Jay A. Wolf -- (2) *
- --------------------------------------------------------------------------------
Barry I. Regenstein -- (2) *
- --------------------------------------------------------------------------------
Former directors and officers:
- --------------------------------------------------------------------------------
Richard S. Cohan
c/o Enable Corporation
665 Broadway
New York, NY 11003 -- *
- --------------------------------------------------------------------------------
Robert Bacchi
c/o Enable Corporation
665 Broadway
New York, NY 11003 1,754 *
- --------------------------------------------------------------------------------
All current directors and named executive 3,720,000(2) 93%
officers as a group (three persons)
- --------------------------------------------------------------------------------
- ----------
* Represents less than 1% of outstanding shares.
(1) Except as specifically indicated in the footnotes to this table, the
persons named in this table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable. Beneficial ownership
is determined in accordance with the rules of the SEC. In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, shares of common stock subject to options,
warrants or rights held by that person that are currently exercisable or
exercisable, convertible or issuable within 60 days of December 31, 2005,
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other person.
(2) Trinad owns 93% of our outstanding common stock. Robert Ellin and Jay
Wolf, two of our directors and executive officers, are principals of
Trinad and Barry Regenstein, our other director, is affiliated with
Trinad. Robert Ellin and Jay Wolf may be deemed to beneficially own the
stock that Trinad owns.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement the operation of which
may at a subsequent date result in a change in control of our company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As described under "Item 1. Description of Business," the Company filed
the Plan under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Southern District of New York. The Plan, as
confirmed on January 26, 2005, provided for: (1) the net operating assets and
liabilities to be transferred to the holders of the secured liabilities in
satisfaction of the notes and accrued interest, (2) $400,000 to be transferred
to a liquidation trust and used to pay administrative costs and creditors, (3)
$100,000 to be retained by the Company to fund the expenses of remaining public,
(4) 3.5% of the new common stock of the Company (140,000 shares) to be issued to
the holders of record as of January 26, 2005 of the Company's preferred stock in
settlement of their liquidation preferences, (5) 3.5% of the new common stock of
the Company (140,000 shares) to be issued to common stockholders of record as of
January 26, 2005 in exchange for all the old common stock of the Company, and
(6) 93% of the new common stock of the Company (3,720,000 shares) to be issued
to the Plan sponsor in exchange for $500,000.
12
There were no funds available to pay any of the liquidation preference of the
preferred stock, which shares were cancelled in exchange for 3.5% of the new
common stock of the company, as part of the Plan.
In connection with the Plan, on February 8, 2005, Robert S. Ellin became
the Chairman of the Board of Directors, our Chief Executive Officer, and
President, Jay A. Wolf became a Director, our Chief Financial Officer, Chief
Operating Officer, and Secretary, and Barry Regenstein became a Director. Robert
S. Ellin and Jay A. Wolf are the Managing Member and Managing Director of
Trinad, respectively, while Barry Regenstein is an outside consultant to Trinad.
Certain information with respect to Messrs. Ellin, Wolf and Regenstein is set
forth in "Item 9" of this Form 10-KSB.
ITEM 13. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- --------------------------------------------------------------------
2.1 Amended Disclosure Statement filed with the United States Bankruptcy
Court for the Southern District of New York(1)
2.2 Amended Plan of Reorganization filed with the United States
Bankruptcy Court for the Southern District of New York(1)
2.3 Order Confirming Amended Plan of Reorganization issued by the United
States Bankruptcy Court for the Southern District of New York(1)
3.1 Restated Certificate of Incorporation(1)
3.2 Certificate of Amendment to the Certificate of Incorporation(1)
3.3 Restated Bylaws(1)
10.1 Loan Agreement with Trinad Capital Master Fund, Ltd., dated March
20, 2006. (2)
16. Letter from Miller, Ellin & Company, LLP, dated June 24, 2005(1)
31.1 Certification of Chief Executive Officer *
31.2 Certification of Chief Financial Officer *
32.1 Certification of Principal Executive Officer pursuant to U.S.C.
Section 1350 *
32.2 Certification of Principal Financial Officer pursuant to U.S.C.
Section 1350 *
- ----------
* Filed herewith.
(1) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
dated December 31, 2004, and filed with the SEC on December 2, 2005.
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated March 21, 2006, and filed with the SEC on March 23, 2006.
13
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table presents fees for professional audit services rendered
by Most & Company, LLP for the audit of our annual financial statements and fees
for other services for the years ended December 31, 2005 and 2004:
2005 2004
------- -------
Audit fees: (1) $24,000 $40,000
Audit related fees: (2) None None
Tax fees: (3) None None
All other fees: (4) None None
------- -------
Total $24,000 $40,000
POLICY ON PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT AUDITORS
Consistent with SEC policies regarding auditor independence, the Board of
Directors has responsibility for appointing, setting compensation and overseeing
the work of the independent auditor. In recognition of this responsibility, the
Board of Directors has established a policy to pre-approve all audit and
permissible non-audit services provided by the independent auditor.
Prior to engagement of the independent auditor for the next year's audit,
management will submit an aggregate of services expected to be rendered during
that year for each of the following four categories of services to the Board of
Directors for approval.
1. AUDIT services include audit work performed for the audit and review of
financial statements, as well as work that generally only the independent
auditor can reasonably be expected to provide, including comfort letters,
statutory audits, and attest services and consultation regarding financial
accounting and/or reporting standards.
2. AUDIT-RELATED services are for assurance and related services that are
traditionally performed by the independent auditor, including due diligence
related to mergers and acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements.
3. TAX services include all services performed by the independent
auditor's tax personnel except those services specifically related to the audit
of the financial statements, and includes fees in the areas of tax compliance,
tax planning, and tax advice.
4. OTHER FEES are those associated with services not captured in the other
categories.
Prior to engagement, the Board of Directors pre-approves these services by
category of service. The fees are budgeted and the Board of Directors require
the independent auditor and management to report actual fees versus the budget
periodically throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
auditor for additional services not contemplated in the original pre-approval.
In those instances, the Board of Directors requires specific pre-approval before
engaging the independent auditor.
The Board of Directors may delegate pre-approval authority to one or more
of its members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Board of
Directors at its next scheduled meeting.
Our Board of Directors pre-approved the retention of Most & Company, LLP
for all audit services during fiscal 2005.
14
SIGNATURES
In accordance with Section 13 or 15 of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MEDIAVEST, INC.
Dated: April 17,2006
By: /s/ Robert S. Ellin
---------------------------
Robert S. Ellin
Chairman of the Board,
Chief Executive Officer
and President
In accordance with the requirements of the Exchange Act, this Report has been
signed below by the following persons in the capacities and on the dates
indicated.
SIGNATURES TITLE DATE
- -------------------- -------------------------------------- --------------
/s/ Robert S. Ellin Chairman of the Board, Chief Executive April 17, 2006
- -------------------- Officer, President and Director
Robert S. Ellin
/s/ Jay A. Wolf Director, Chief Financial Officer, April 17, 2006
- -------------------- Chief Operating Officer, Secretary
Jay A. Wolf and Director
/s/ Barry Regenstein Director April 17, 2006
- --------------------
Barry Regenstein
15