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EX-10 - EXHIBIT 10.1 - Independent Film Development CORPiflmconvdebenture350k.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


[x]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended September 30, 2011


[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934


For the transition period from _____________ to _____________


Commission file number: 814-00758


INDEPENDENT FILM DEVELOPMENT CORPORATION

(Exact name of registrant as specified in its charter)



              Nevada              

 

             56-2676759            

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

6399 Wilshire Blvd., Suite 507

Los Angeles, California

 


        90048         

(Address of principal executive offices)

 

Zip Code)


Registrant’s telephone number, including area code (323) 782-0602


Securities registered pursuant to Section 12(b) of the Act:


Title of each class

Name of each exchange on which registered


         None

                 None


Securities registered pursuant to Section 12(g) of the Act:


Common stock, $0.0001 par value




(Title of class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes £     No    T 


Indicated by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.   Yes £     No    T 


Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months  (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     X    Yes             No


Indicate by checkmark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K(section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporate by reference in Part III of this From 10-K or any amendment to this Form 10-K.  _____

 



Indicate by checkmark wither the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  


Large accelerated filer ____

Accelerated filer ____

 

 

Non-accelerated filer ___ ( Do not check if a smaller  reporting company)

Smaller reporting company      X    



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

 Yes £ No T      


The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was: $2,138,884.


The number of shares outstanding of each of the registrant’s classes of common stock, as of January 10, 2012 was 24,120,991 shares.


 

 

 


2

 

Independent Film Development Corporation

(A Development Stage Company)

Table of Contents

 


PART I

 

 

Page

 

 

 

Item 1.

Business

4

 

 

 

Item 1A.

Risk Factors

11

 

 

 

Item 2.

Property

14

 

 

 

Item 3.

Legal Proceedings

14

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

14

 

 

 

PART II

 

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters  and Issuer Purchases of Equity Securities

15

 

 

 

Item 6.

Selected Financial Data

16

 

 

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

17

 

 

 

Item 7A.

Quantitative and Qualitative Disclosure About Market Risk

19

 

 

 

Item 8.

Consolidated Financial Statements and Supplementary Data

19

 

 

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

19

 

 

 

Item 9A.

Controls and Procedures

19

 

 

 

Item 9B.

Other Information

21

 

 

 

PART III

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

21

 

 

 

Item 11.

Executive Compensation

23

 

 

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management  and Related Stockholder Matters

24

 

 

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

25

 

 

 

Item 14.

Principal Accountant Fees and Services

26

 

 

 

PART IV

 

 

 

Item 15.

Exhibits, and Financial Statement Schedules

27

 

 

 

 

Signatures

28

 




3

 




PART I


Item 1.  BUSINESS


Business Development


Independent Film Development Corporation was incorporated in Nevada on September 14, 2007. The Company's fiscal year ends on September 30.  Effective April 24, 2008 we commenced operating as a Business Development Company ("BDC") under Section 54(a) of the Investment Company Act of 1940 ("1940 Act").  On September 30, 2009, our board of directors elected to cease operating as a BDC.  


Our current plan of operations is to acquire and develop independent films for production, sales and distribution, with a goal toward significant partnerships with mini-major and the major film studios, such as Lionsgate and Sony, while simultaneously emulating those companies’ recipes for success.


FORWARD LOOKING STATEMENTS


This report contains forward-looking statements. The Company’s expectation of results and other forward-looking statements contained in this registration statement involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expected are the following: business conditions and general economic conditions, competitive factors, such as pricing and marketing efforts, and the pace and success of product research and development. These and other factors may cause expectations to differ.


Current Business Plan of Operations


Independent Film Development Corporation’s (IFDC’s) overall plan of operations is to acquire and develop independent films for production, sales and distribution, with a goal toward significant partnerships with mini-major and the major film studios, such as Lionsgate and Sony, while simultaneously emulating those companies’ recipes for success.  

 

IFDC’s mission is to develop, produce and acquire films with high profit margins and built in “profit” safety nets. We will seek to leverage the combined talents of an experienced management/producing and sales/distribution team to develop, produce and acquire films for sale and distribution, IFDC will look to incorporate and acquire additional entertainment business’s that compliment and assist our current portfolio to increase the value of our overall securities, and enhance shareholder value.

 

IFDC’s plan of operations has three main components of film production and finance; Co-financing, acquiring product in the development stage, and its own film production.  This, coupled with film distribution through our parent company’s new film distribution subsidiary, makes up the new revenue model for the Company.



4

 

Co-Financing


Co-financing is where a company such as IFDC goes out looking for films that are already financed at 50% or more. This can afford IFDC an opportunity to come in with the remaining funds and as co-financier/executive producer.


This is beneficial for several reasons, first we are "last in", meaning we have a shorter investment span then other investors and we will also negotiate to be first out. Many times a film has to start by a certain date due to actor availability, state incentives, or other time limits that force the film to make favorable deals so as to not lose the film.


The average co-financing deal usually requires a project that, subject to our review, has:


A good script

A solid Director

Actors of some prominence


The film would also be required to have some type of distribution already in place from foreign, domestic or both.  If the project meets with our project requirements we would partner with the production and bring in the remaining cash.


For our investment we would expect an average of 110% to 130% return. Once IFDC and all other investors have recouped, then all additional income from the film would be split on a percentage basis based on the amount of the individual investor’s original investment.  In addition, IFDC would receive a presentation credit in the opening titles and normally one or two executive producer credits. This not only will build IFDC’s brand name nationally and internationally it also helps us gain the respect of our peers in the industry. IFDC will constantly be on the lookout for these types of co-financing projects.


Acquire and Develop Original Product in Development Stage


With this strategy we will seek projects at an early stage, usually with a finished script and possibly a director, producer or actor attached, or some amount of equity, usually in the range of 10% to 25%.

 

The requirements are very similar to all of our production strategies:


1.     Well written salable script with a genre that is on the wave of coming into popularity.

2.     Salable actors attached or interested

3.     Director of some prominence (actor directors for example)

4.     Projects that have some hard money attached

5.     Projects that have some form of distribution (rarely found at this stage)

6.     Projects that have some studio interest (rarely found at this stage)

 

IFDC will seek out projects that have many of the points listed above, then “option” the projects for a period of one to three years for as little money as possible, sometimes without any cash up front at all.


IFDC will then set about developing the project to get it to the point of funding. This will include script re-writes, and attaching actors. We will also use any director or producer already attached to the film to help with the work thus enabling IFDC to have several projects developing at once while not straining our resources; we have the individual filmmakers do the lion’s share of the work while we supervise and advise.

 

If the project gets to a point where we think it is strong enough, we will attempt to procure financing through traditional film financing sources such as foreign and domestic deals. If we think the individual project is strong enough, we can try to raise a portion or all of the money ourselves through private investors.

 

If we are unsuccessful at any stage of the game we can stop devoting resources to the project and allow its option to simply expire.

 

With this strategy IFDC plans to harvest the best and strongest projects to proceed forward into production.  The advantages to acquisitions at the development stage are: the ability to guide the development process along, gearing it for success, steering the important decisions such as cast, director etc in a direction that will help make a more successful and profitable film. In addition we will be able to gauge the viability of the project with a small investment and will not risk big dollars, resources, and time before we can establish if the film is marketable or not.


5

 

The negatives are simply that we will spend small amounts of cash developing projects, some of which we will not bring to fruition, and so those projects will be a loss, but the films we do move forward on will be much more assured of financial success.


Film Distribution


IFDC’s plan of operations includes developing a distribution arm with the help of its management, who have over 23 years of film experience.  


Each year, independent filmmakers produce over 15,000 films while only a small fraction are able to secure distribution for their product.  At the same time, the proliferation of theatrical and home entertainment outlets, including DVD/video (e.g., Netflix, Fox Video, Sony Video, Wal-Mart, Blockbuster), pay-per-view/video-on-demand (e.g., IN DEMAND), pay & free cable/satellite (e.g., HBO, Showtime), free television, new media (internet, pod-casting, web series, electronic delivery systems) and international markets, has resulted in an ever-increasing demand for filmed entertainment content around the globe.  However, the market connecting the filmmakers and the buyers of content is controlled by a few players in the industry.


The majority of the film distribution business will operate in a small, low risk, and profitable segment of the entertainment industry that connects the independent filmmakers and distribution outlets.  The company’s principal activities will consist of the following three complementary areas (in order of emphasis):


Sales agent – The Company licenses partially or fully completed films made by independent filmmakers to entertainment distributions companies such as those listed above.  The company recoups expenses and earns commissions from the first dollar collected under the licensing deals it generates.   Unlike film producers who make large investments in the production of their films (with little guarantee of return), the company is able to generate its revenue from these films with minimal investment and risk.


Negative pickups – The Company produces a film on behalf of a studio.  The company earns the difference between the predetermined budget and the actual cost of making the film, as well as a producer’s fee, typically generating between 5% - 10% of the total budget.


Film production – The Company identifies, produces, and secures distribution of a film.  The Company owns the film in perpetuity and directly participates in all revenue generated by the film.  The company will only produce films when distribution is secured in advance by its sales agent arm.


There are few significant players in the small independent film sales agent business. The more prominent companies in this sector now focus on larger independent films.  Companies such as New Line Cinema, LionsGate, and The Weinstein Company, all began selling and distributing low-budget independent films before being acquired by major studios or going public.  As these companies have grown, their business has progressed towards larger budget films, creating a large opportunity for The Company with smaller budgeted films.  In addition, investors such as Mark Cuban and Paul Allen are investing millions of dollars in entertainment production and distribution companies, such as Lions Gate, in order to secure content for their media outlets (HDNet and Charter Communications respectively).


Film Distribution Industry Overview


The motion picture industry continues to both grow and evolve.   In 2006 U.S. box office gross revenues reached approximately $8.8 billion (a 3.6% increase over 2001). Non-theatrical revenues grew 21% from 2001 to $12.3 billion making 2002 the first time that the home video revenue has surpassed that of theatrical grosses.


In the U.S. and international markets, the number of outlets for filmed entertainment continues to increase and fuel demand.  These outlets include: theaters, home video (DVD/Video purchases and rentals), television (pay per view (PPV), video on demand (VOD), premium and pay cable, free television, and satellite) and new media outlets.  In particular, the subscription growth in satellite and digital cable systems has providers scrambling to acquire programming for up to 500 channels.  As the number of home entertainment outlets continues to rise, the percentage of revenues earned by films in non-theatrical distribution outlets over all media outlets will continue to increase.


6

 

Another trend in the film industry is the significance of the independent film producers who produce over 15,000 films each year.  (Independent films are defined as films financed by any source other than a major studio.)  Independent film producers focus on raising money for the making and production of their films; they do not have the know-how or relationships to get their pictures distributed.  Accordingly, of the thousands of films produced each year, only several hundred generate any revenue at all while only a few dozen get distributed to theaters.  In fact, over 83% of DVDs in the market have never been released in theaters.


While the lion’s share of theatrical revenues continues to be generated from the major studio productions, the number of revenue generating films produced by independent filmmakers continues to rise.  In 2006, worldwide sales of independent films (all outlets) were estimated to be well over $6 billion.  Festivals like Sundance, Tribeca, Toronto, Berlin and others that showcase independent films are now major entertainment industry events.  In addition, each year several low-budget independent movies continue to “breakout” generating hundreds of millions in revenues (e.g., Little Miss Sunshine, Napoleon Dynamite, Cabin Fever, Saw, Diary of A Mad Black Woman, The Blair Witch Project.).  


The making and marketing of a movie can be broadly divided into two areas – production and distribution.


Production


The production of a film includes:


Identifying and acquiring the rights to a story.

Preproduction (budgeting, casting, location scouting, set design)

Principal photography

Post production (editing, scoring, credits, dubbing, and effects)


The aggregate costs associated with the production of a film are known as “negative costs”.  Independent filmmakers typically finance these costs with proceeds from “friends and family”, and occasionally individual investors.  The financial undertaking of independent film production represent the riskiest element in the economics of the film industry because even the best made film will generate no revenue without distribution.  Unbelievably, extremely few independent films have secured distribution before production commences and only a small fraction of films made get distributed at all.


Distribution


The distribution of a film encompasses marketing, advertising and duplicating in all of the outlets (as described above).  Films are usually distributed to markets in order of marginal revenue potential.  Typically the order will be as follows:


Domestic theatrical*

Foreign theatrical*

Worldwide DVD/Video

Pay per view (PPV)

Pay TV

Foreign TV

Network TV

Syndication


*(Note as stated above, only a small percentage of films are distributed to theaters.)


Financial success in the theatrical markets is as much determined by a film’s marketing budget (which can equal and even surpass a film’s negative cost) as much as it is by the characteristics of the film (e.g., “quality”, cast, genre).  Accordingly, most independent movies, many that appeal to niche audiences, skip theatrical outlets and go “straight to DVD/Video”.



7

 

With respect to domestic outlets, most film distribution (both theatrical and non-theatrical) is controlled by the major film entertainment companies (i.e., Disney, Fox, Paramount) as well as mini major companies (e.g., Lion’s Gate, Think Films, Focus Features).  Independent filmmakers that do get distribution for their films typically receive “net proceed” deals which mean they receive licensee fees after the distributor/sales agent collects their commissions and recoups their costs.


Domestic Theatrical Distribution


Most producers of independent films that get distributed to the domestic theatrical marketplace do so under “net proceeds” arrangements.  In these arrangements, the distributor retains a distribution fee from the “film rental” (amount received from the exhibitor) and recoups the costs incurred in distributing the film from proceeds.  After these costs are recovered, the remaining amounts constitute “net proceeds” which are typically allocated according to negotiated percentages.


Foreign Distribution


Films released into foreign theatrical markets are typically licensed by distributors who then sublicense the rights to all outlets to foreign sub distributors on a territorial basis.  With respect to independent films, these deals are usually done either on a net proceeds basis or on a flat fee basis.  


Worldwide DVD/Video Distribution


DVD/video cassettes are sold by distributor/sales agents directly to wholesalers who resell them to retailers who in turn rent or sell them to the public.  


Television Distribution


Films licensed for television distribution, which includes pay-per view/cable television, network television, satellite, VOD and television syndication, are typically done so for a fixed number of showings over a period usually commencing one to four years after the initial theatrical or DVD/video release of the picture.  With syndication, producers may license the right to broadcast a picture on local commercial television stations in the United States.  


Sales Agents


While there are purportedly a hundred plus companies that act as sales agents for independently produced films, there are only a handful of reputable companies with substantial backing and the ability to integrate and weather the ever changing marketplace.



Distribution Products and Services


The majority of the company’s distribution business will focus on the licensing of independently produced films to domestic and international distributors (as “sales agent”).  In addition, The company will produce small budget movies for major and sub-major studios (“negative pickups”) as well as produce movies that the Company will own (“internal productions”) in perpetuity.  All facets of The Company’s business are low-risk while the sales agent and internal production are highly complementary.


Sales Agent


The overwhelming majority of independent films are made without adequate financing and/or distribution arrangements.  Often independent filmmakers run out of money during the finishing stages of a film.  In some cases, films get “stuck” in post production due to lack of payment to suppliers or become foreclosed films held by financial institutions and/or post production houses.  Those that have managed to complete their films then have the daunting undertaking of marketing the film to distributors.


The company’s primary focus will be to act as a sales agent for independent film producers by providing the sales and marketing services for films.  The company acquires the rights to license these films (which are either fully or partially completed) from the filmmakers for little or no cash outlay.  The company then licenses the films to distributors in the various outlets (i.e., theatrical, home video, cable, TV, international).  The process usually takes between 1 – 12 months beginning when the sales agreement is effected with the filmmaker.  For a minimum cash outlay, The Company participates in the revenue streams of films that cost hundreds of thousands to millions of dollars to produce.   In addition, The Company earns commissions from the first dollar received and recoups its upfront expense before the producer receives any proceeds.


8

 

The company’s principals have the relationships and credibility with independent filmmakers, production suppliers and the distribution companies.    Further, the production experience of the company’s principals enables them to enable the completion of any unfinished films quickly and efficiently.


Acquisitions and Marketing


The company will identify films through its network of independent filmmakers as well as industry festivals and trade shows including Sundance, Tribeca, Cannes, and Toronto.   The company estimates that it will represent, as a sales agent, 60+ films in the five years in this plan.  These films are projected to have gross licensing fees ranging from $350,000 - $3,000,000 with the majority of films generating gross licensing fees in the high six figures.   While it is possible that one or more of these films is distributed in theaters, the projected gross licensing fees only include revenue from non-theatrical outlets.


The company will acquire the rights to license (as sales agent) films for a period of 7-25 years in return for a commission ranging from 10-30% of the licensing fees paid by the distributors.  In some cases, The Company will incur minimal upfront costs including: advances to the filmmaker, costs for finalizing the film, and marketing costs.  Upon signing a sales agent agreement, The Company and the filmmakers agree on the “market attendance fees”, trailer/artwork and other marketing costs.  These costs, along with any advances to the filmmaker and/or costs to complete the film, are recouped by The Company after its commission, but before any proceeds are paid to the filmmaker.  The company will incur costs of approximately $40-$150K per film to prepare marketing materials including the production of a trailer and artwork.


The company will market these films to distributors in all domestic and international outlets by utilizing its relationships with distributors for various markets as well as through industry shows and conferences (e.g., AFM, MIPCOM, NATPE).


Sample gross profit calculation for a typical sales agent arrangement:

 

Total

 

The company (gross profit)

 

 

 

 

 

 

Gross licensing fees

$500,000 

 

 

 

The company commission

(125,000)

 

$125,000

 

Acquisition cost

(50,000)

(A)

 

 

Marketing (trailer & artwork)

(50,000)

(A)

5,000

(B)

Market attendance fees

(70,000)

(A)

 45,500

(C)

Balance to producer

$205,000 

 

 

 

The company gross profit

 

 

$175,500

 



(A)

- Recoupable after commission

(B) - Marketing costs have a 10% margin

(C) - Market attendance fees typically have at least a 65% margin



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Negative Pickups


Studios often hire film production companies to produce lower budgeted films.  In these situations, known as “negative pickups”, the studio and the production company agree on a budget for the film and the production company keeps the difference of the budget and the actual cost of producing the film, as well as a producer’s fee, typically generating between 5% - 10% of the total budget.


The company’s principals have profitably produced low budget films.  The company’s ability to produce quality films at or under budget stems from low overhead and excellent relationships with industry suppliers.  As the company does not receive funds (other than the producer’s fee which is paid over the course of production) from the studio until after the film is delivered, a credit facility will be arranged to cover the cost of producing the film.  In


The company expects to produce approximately five films under negative pickup arrangements with budgets ranging from $1.4M to $3.8M in the five years covered by this plan generating estimated profits ranging from $300K to $900K per film.


Internal Production


The financing and production of movies is often the riskiest and most rewarding part of the entertainment business. The company will mitigate the inherent risks by only producing films that have secured distribution in some or all markets.  In addition, The Company will act as the sales agent for the films it produces.  In the five years covered by this plan, The Company plans on producing ten films with an average budget of $300,000.  These films are estimated to generated revenues ranging from $500,000 to $1,500,000 averaging $700,000.


Motion Picture Production


Initially, the Company will produce quality, moderately budgeted feature-length motion pictures, from a variety of genres, for worldwide distribution, which it will generally develop internally.  Said films will have a majority of the production budget pre-sold prior to embarking on production.  The Company will look to have approximately 75% of any individual budget covered by license fees to mitigate the downside risk of production.



 Late-Night Banner


Under a Late Night banner, the Company will produce feature-length motion pictures, generally budgeted at approximately $200,000 each (inclusive of corporate overhead and distribution expenses), with erotic R-Rated content that is produced to be distributed worldwide to cable television channels (e.g., HBO, Showtime, Cinemax and Playboy TV.) worldwide during “late-night” time slots, and to and through the home entertainment distribution window (e.g., video and DVD). Depending on the products' genre and the audience the company wants to reach, this will determine which strategy needs to be implemented.  IFDC has three strategies depending on the project:


1. Direct to Video (Home Video), Domestic and Foreign


2. Limited Theatrical, then Video, Domestic and Foreign


3. World Wide Theatrical then Video, Domestic and Foreign


All of these involve the company making a licensing agreement with a distribution company. We at IFDC strive to make strategic relationships with the best companies here in the United States and internationally. We will do this by fostering relationships at various festivals and film markets like MIPTV, MIFED, AFM and Cannes Market.


Direct to Video (Home Video) - this will be used to create equity by selling the licenses for our current back catalogue for home video market.


We will find a DVD label that is compatible with our vision for this title. They will make a good transfer and only use the best quality for production in the creation of the DVD.


The DVD label will do a cross-market promotion of IFDC and the title, via press releases, PR and various other media on the release of the DVD, and then reviews after the title is released.

 

 

10

 

IFDC's name and branding will be shared with the DVD Company on the DVD packaging.  IFDC will negotiate a good licensing fee with profits paid out every three months.


Direct to video will also be a possible route for some of IFDC’s smaller budget films that don’t meet to the standards of theatrical but are made with a small enough budget have a smaller overhead and so would be fine with a direct to video release.


Limited Theatrical


3 to 4 months, of festival support to garner hype and awards in various film festivals, both domestically and internationally


We will then carry this hype and PR on to one of the major film markets where we will acquire a distribution deal with a sales company or a studio (if a deal is not already in place). In the deal we will attempt to procure a limited theatrical release based on the success and exposure of the film at the markets and festivals.


After the limited theatrical run we will sell the rights to both foreign and domestic for DVD rights, via the direct-to-video plan mentioned in our first strategy.


Full Theatrical


This is where we would sell all rights to a studio or mini major, they in turn would handle all distribution and advertisement for both theatrical and home video markets.


Employees


As of September 30, 2011, we employed a total of 4 people, three of whom are management and one clerical personnel.  We may require additional employees in the future. There is intense competition for capable, experienced personnel and there is no assurance the Company will be able to obtain new qualified employees when required.   


The Company believes its relations with its employees are good.



Patents


The Company holds no patents for its products.


Government Regulation


Government approval is not necessary for the Company’s business and government regulations have a negligible effect on its business.


Competition


We compete with other companies which have greater financial resources and experience than us. Our competitors include other, larger entities, which have substantially greater financial and other resources than us.



Item 1A.  RISK FACTORS


We are subject to various risks which may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occur, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

 

 

11

 

We are a relatively young company with no operating history

 

Since we are a young company, it is difficult to evaluate our business and prospects. At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment. Our future operating results will depend on many factors, including the ability to generate sustained and increased demand and acceptance of our products, the level of our competition, and our ability to attract and maintain key management and employees. While management believes their estimates of projected occurrences and events are within the timetable of their business plan, there can be no guarantees or assurances that the results anticipated will occur.

 

We expect to incur net losses in future quarters.

 

If we do not achieve profitability, our business may not grow or operate. We may not achieve sufficient revenues or profitability in any future period. We will need to generate revenues from the sales of our products or take steps to reduce operating costs to achieve and maintain profitability. Even if we are able to generate revenues, we may experience price competition that will lower our gross margins and our profitability. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis.

 

We will require additional funds to operate in accordance with our business plan

 

We may not be able to obtain additional funds that we may require. We do not presently have adequate cash from operations or financing activities to meet our short or long-term needs.  If unanticipated expenses, problems, and unforeseen business difficulties occur, which result in material delays, we will not be able to operate within our budget. If we do not achieve our internally projected sales revenues and earnings, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue our business. If we are unsuccessful in obtaining those funds, we cannot assure you of our ability to generate positive returns to the Company. Further, we may not be able to obtain the additional funds that we require on terms acceptable to us, if at all. We do not currently have any established third-party bank credit arrangements. If the additional funds that we may require are not available to us, we may be required to curtail significantly or to eliminate some or all of our development, manufacturing, or sales and marketing programs.

 

We may seek to obtain them primarily through equity or debt financings. Such additional financing, if available on terms and schedules acceptable to us, if available at all, could result in dilution to our current stockholders and to you. We may also attempt to obtain funds through arrangement with corporate partners or others. Those types of arrangements may require us to relinquish certain rights to our intellectual property or resulting products.

 

 

We are highly dependent on Jeff Ritchie, our CEO. The loss of Mr. Ritchie, whose knowledge, leadership, and technical expertise upon which we rely, would harm our ability to execute our business plan

 

We are largely dependent on Jeff Ritchie, our CEO, for specific proprietary technical knowledge. Our ability to successfully market and distribute our products may be at risk from an unanticipated accident, injury, illness, incapacitation, or death of Mr. Ritchie. Upon such occurrence, unforeseen expenses, delays, losses and/or difficulties may be encountered.  Our success may also depend on our ability to attract and retain other qualified management and sales and marketing personnel.


We compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do. We cannot give you any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.


If  capital  is  not  available  to  us to expand our business operations,  we  will  not  be able to pursue our business plan


We will require substantial additional capital to acquire additional properties and to participate in the development of those properties.  Cash flows from operations, to the extent available, will be used to fund these expenditures.  


 

12

 

 

We intend to seek additional capital from loans from current shareholders and from public and private equity offerings.  Our  ability  to  access  capital  will  depend  on  its  success  in participating  in  properties that are successful in exploring for and producing oil  and gas at profitable prices.  It will also be dependent upon the status of the capital markets at the time such capital is sought.  Should sufficient capital not be available, the development of our business plan could be delayed and, accordingly, the implementation of the USD Energy's business strategy would be adversely affected. In such event it would not be likely that investors would obtain a profitable return on their investments or a return of their investments.



Nevada Law and Our Charter May Inhibit a Takeover of Our Company That Stockholders May Consider Favorable


Provisions of Nevada law, such as its business combination statute, may have the effect of delaying, deferring or preventing a change in control of our company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.


Our Officers and Directors Have the Ability to Exercise Significant Influence Over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other Stockholders


Our executive officers and directors, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, acquisitions, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these executive officers and directors may differ from the interests of the other stockholders.


Tbe Market for Our Common Stock Is Illiquid


The market for our common stock is volatile and illiquid.   As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.


The Penny Stock Rules cover our stock, which may make it difficult for a broker to sell investors’ shares.  This may make our stock less marketable, and liquid, and result in a lower market price


 Our common stock is a penny stock, which means that SEC rules require broker dealers who make transactions in the stock to comply with additional suitability assessments and disclosures than they would in stock that were not penny stocks, as follows:


Prior to the transaction, to approve the person's account for transactions in penny stocks by obtaining information from the person regarding his or her financial situation, investment experience and objectives, to reasonably determine based on that information that transactions in penny stocks are suitable for the person, and that the person has sufficient knowledge and experience in financial matters that the person or his or her independent advisor reasonably may be expected to be capable of evaluating the risks of transactions in penny stocks. In addition, the broker or dealer must deliver to the person a written statement setting forth the basis for the determination and advising in highlighted format that it is unlawful for the broker or dealer to effect a transaction in a penny stock unless the broker or dealer has received, prior to the transaction, a written agreement from the person. Further, the broker or dealer must receive a manually signed and dated written agreement from the person in order to effectuate any transactions is a penny stock.


Prior to the transaction, the broker or dealer must disclose to the customer the inside bid quotation for the penny stock and, if there is no inside bid quotation or inside offer quotation, he or she must disclose the offer price for the security transacted for a customer on a principal basis unless exempt from doing so under the rules.


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Prior to the transaction, the broker or dealer must disclose the aggregate amount of compensation received or to be received by the broker or dealer in connection with the transaction, and the aggregate amount of cash compensation received or to be received by any associated person of the broker dealer, other than a person whose function in solely clerical or ministerial.


The broker or dealer who has affected sales of penny stock to a customer, unless exempted by the rules, is required to send to the customer a written statement containing the identity and number of shares or units of each such security and the estimated market value of the security. Imposing these reporting and disclosure requirements on a broker or dealer make it unlawful for the broker or dealer to effect transactions in penny stocks on behalf of customers. Brokers or dealers may be discouraged from dealing in penny stocks, due to the additional time, responsibility involved, and, as a result, this may have a deleterious effect on the market for IFDC 's stock.


Our Officers and Directors Have the Ability to Exercise Significant Influence Over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other Stockholders


Our executive officers and directors, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, acquisitions, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these executive officers and directors may differ from the interests of the other stockholders.



Item 2.  PROPERTIES


We sublease our executive offices in Los Angeles, California from our Secretary/Director Kenneth Eade, who agreed to cover certain operating expenses for our first years of operations.  We consider our existing facilities to be adequate for our current needs.  We own the distribution rights to the following intellectual motion picture and television properties:


•       L.A. Bounty

•       Say it In Russian

•       A Man of passion (with Anthony Quinn)

•       Rush Week

•       Trapper County War

•       Kamillions

•       Hostage

•      Autograph celebrity interview series

•      Sleep of Death (worldwide TV rights until 2015)


Item 3.  LEGAL PROCEEDINGS


We are not a party to any material pending legal proceedings and, to the best of our knowledge, no such action by or against the Company has been threatened, except that, on or about September 1, 2011, the company and its Chief Executive Officer and Chief Compliance Officer filed a complaint in federal court, Central District of California, Case No. CV-11-07233 DMG (MRWx), to recover 6,500,000 shares of common stock transferred to Consultants Marc Cifelli and Arriva Capital, LLC on the grounds of fraud and failure of consideration.  Both defendants were served on October 4, 2011 and the company is in the process of taking their defaults.


 

Item 4.  (Removed and Reserved)



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PART II


Item 5.  MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

              MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


The following securities were sold and/or issued by the registrant from inception (September 17, 2007) to September 30, 2011, that were not registered under the Securities Act:


On September 24, 2007, 125 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $500 cash

 

On November 29, 2007, 1,000,000 shares of common stock were issued to officer and director Kenneth Eade, in exchange for preferred stock of Imperia Entertainment, Inc., pursuant to Section 4(2) of the Securities Act of 1933.  

 

On November 29, 2007, 1,000,000 shares of common stock were issued to officer and director George Ivakhnik, in exchange for preferred stock of Imperia Entertainment, Inc., pursuant to Section 4(2) of the Securities Act of 1933.

 

On December 30, 2007, 1,245 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $4,980 cash.  

 

On March 31, 2008, 2,691 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $10,764 in cash.

 

On June 30, 2008, 9,439 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $1,800 in cash and $35,396 in forgiveness of debt.

 

On August 22, 2008, 525 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.

 

On August 26, 2008, the entire transaction by which shares of Imperia Entertainment, Inc. were acquired was mutually rescinded and the transaction was accounted for as follows

 

On August 28, 2008, 1,250 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.

 

On September 12, 2008, 125 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.

 

On September 27, 2008, 717 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.

 

On or about December 16, 2009, 27,500 shares of common stock were issued to a non-affiliate investor, pursuant to Section 4(2) of the Securities Act of 1933, and Regulation D, Rule 506, in exchange for a $110,000 subscription, $25,000 of which was paid in cash and $85,000 of which was due on February 26, 2009.

 

On or about September 30, 2008, 3,573 shares of common stock were issued to affiliate Kenneth Eade, in exchange for cash and forgiveness of debt.

 

On or about September 30, 2009, 200,000 shares each were issued to Directors Robert Searcy and Patrick Peach, as compensation for two years’ services rendered, pursuant to Section 4(2) of the Securities Act of 1933.

 

On or about September 30, 2009, 200,000 shares and 500,000 shares were issued to Jeff Ritchie for compensation for two years’ services rendered, and 10 million shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933.


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On or about September 30, 2009, 200,000 shares and 500,000 shares were issued to Kenneth Eade for compensation for two years’ services rendered, 500,000 for two years’ legal services rendered, and 10,000,000 shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933.


During the three months period ended September 30, 2009 the Company issued 90,000 common stock shares for total consideration of $45,000.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


During the three months period ended June 30, 2010 the Company issued 216,000 common shares for total consideration of $119,595.   The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


During the three months period ended June 30, 2010, the Company issued 4,000 common shares for services totaling $2,000.   The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


During the three months ended September 30, 2010, the Company issued 130,000 common shares for total consideration of $32,500.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


During the year ended September 30, 2010 the Company received $22,660 on its subscription receivable.


On or about March 29, 2011, 250,000 common shares were issued to an investor in exchange for $19,975 cash.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


On May 9, 2011 the Company issued 6,000 common shares for a lock up agreement in which the stockholder agreed not to transfer any of his shares for an agreed upon time. The Company recorded an expense of $2,280 based on the value of the common stock on the date of issuance. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


On May 10, 2011 the Company issued 300,000 common shares for cash proceeds of $6,975 and a subscription receivable in the amount of $8,025. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


On or about May 10, 2011, 6,000 shares of common stock were issued to an investor who signed a subscription agreement and paid for the shares in 2009, but the shares were not issued in error.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


On or about June 24, 2011, 550,000 shares of common stock were issued in exchange for consulting services.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


On or about July 1, 2011, a $350,000 convertible debenture was issued to Junior Capital, Inc.  To date, none of the debenture has been funded.  The debenture was issued pursuant to Section 4(2) of the Securities Act of 1933.


On or about October 25, 2011, a $20,000 convertible debenture was issued to Junior Capital, Inc.  To date, $15,000 of the debenture has been funded.  The debenture was issued pursuant to Section 4(2) of the Securities Act of 1933.


On or about September 22, 2011, 25,000 common shares were issued to an investor in exchange for $5,000 cash.  The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.


 No underwriters were used in any of the above-referenced sales.


ISSUER PURCHASES OF EQUITY SECURITIES. The Company did not repurchase any of its securities during the fiscal year ended September 30, 2011.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. The Company currently does not maintain any equity compensation plans.


Item 6.  SELECTED FINANCIAL DATA


The registrant is a smaller reporting company, pursuant to Rule 229.10(f)(1), and is not required to report this information.  The financial statements of the issuer are attached.


 


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Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

               RESULTS OF OPERATIONS.



Results of Operations

For the year ended September 30, 2011 Compared to the year ended September 30, 2010

Revenues

There were no revenues in either twelve month period.

Operating Expenses

Professional fees for the year ended September 30, 2011 were $429,657, as compared to $5,600 for the year ended September 30, 2010.  The increase in the year ended September 30, 2011 was primarily attributed to legal expense of $109,757, accounting and auditing expense of $15,900 and $304,000 in the form of stock for other services primarily for investor and public relations.


Officer compensation expense for the year ended September 30, 2011 was $810,000, as compared to $12,400 for the year ended September 30, 2010.  The expense consisted of cash payments, accrued salary and stock. The increase during the year ended September 30, 2011, was primarily attributed to salaries payable to the Company’s Chief Executive Officer and Chief Compliance Officer in accordance with their employment agreements. Director’s fees for the year ended September 30, 2011 were $38,000 compared to $0 in the prior year, General and administrative expense for the year ended September 30, 2011 was $30,698 as compared to $199,881 for the year ended September 30, 2010. The decrease in general and administrative expense was mainly attributed to a decrease in spending due to available funds.


Net Income (Loss)

We recorded a net loss of $1,405,502 for the year ended September 30, 2011, as compared to a net loss of $217,881 for the year ended September 30, 2010.  The increase in net loss is primarily attributed to an increase in professional fees of $424,057, officer compensation of $797,700 and $97,047 of interest expense, of which $88,225 was for amortization of debt discount.  


LIQUIDITY AND CAPITAL RESOURCES


At September 30, 2011, we had an accumulated deficit of $3,915,107 and a working capital deficit of $12,400. For the year ended September 30, 2011, net cash used in operating activities amounted to $53,947, as compared to $215,881 for the year ended September 30, 2010.


 At September 30, 2011, we had no material commitments for capital expenditures.


OFF-BALANCE SHEET ARRANGEMENTS

None.


PLAN OF OPERATIONS


IFDC’s overall plan of operations is to acquire and develop independent films for production, sales and distribution, with a goal toward significant partnerships with mini-major and the major film studios, such as Lionsgate and Sony, while simultaneously emulating those companies’ recipes for success.


The majority of IFDC’s Sales/Distribution business will operate in a small, low risk, and profitable segment of the entertainment industry that connects the independent filmmakers directly to the domestic and foreign distribution outlets worldwide.


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IFDC’s mission is to develop, produce and acquire films with high profit margins and built in “profit” safety nets. We will seek to leverage the combined talents of an experienced management/producing and sales/distribution team to develop, produce and acquire films for sale and distribution, IFDC will look to incorporate and acquire additional entertainment business’s that compliment and assist our current portfolio to increase the value of our overall securities, and enhance shareholder value.


During the next twelve months, we plan to satisfy our cash requirements by funding from our principals and additional equity financing.  However, we may be unsuccessful in raising additional equity financing, and, thus, be able to satisfy its cash requirements.


We will need a minimum of $500,000 to satisfy our cash requirements for the next twelve months.  We will not be able to operate if it we do not obtain equity financing through subsequent private offerings, or contributions from our principals.  If only a minimal amount of financing is raised, we will continue to satisfy our cash requirements by contributions from our principals, which we expect will continue to contribute for the next twelve months.   We depend upon capital to be derived from future financing activities such as subsequent offerings of our stock. Management believes that, if this offering and the subsequent private placements are successful, we will be able to generate revenue and become profitable from advertising sales and achieve liquidity within the next twelve months.


Critical Accounting Estimates and Policies


The discussion and analysis of our financial condition and plan of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates including, among others, those affecting revenue, the allowance for doubtful accounts, the salability of inventory and the useful lives of tangible and intangible assets. The discussion below is intended as a brief discussion of some of the judgments and uncertainties that can impact the application of these policies and the specific dollar amounts reported on our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. Many of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed below and elsewhere in this Registration Statement. We do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances.


We have identified below some of our accounting policies that we consider critical to our business operations and the understanding of our results of operations. This is not a complete list of all of our accounting policies, and there may be other accounting policies that are significant to us. For a detailed discussion on the application of these and our other accounting policies, see note 1 to the financial statements for the period ended September 30, 2011, included in this Form 10-K.


Stock Based Compensation.


Shares of the Company’s common stock may be issued for services. These issuances are valued at the fair market value of the services provided and the number of shares issued is determined based upon what the price of the common stock is on the date of each respective transaction.


Estimates.


The presentation 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.



18

 

Fair Value of Financial Instruments.


The carrying amounts for the Company’s cash, and related party payables approximate fair value due to the short-term maturity of these instruments.


Income Taxes


In February 1992, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” SFAS No. 109 required a change from the deferred method of accounting for income taxes of Accounting Principles Board (“APB”) Opinion No. 11 to the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


Earnings (Loss) Per Share.

Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.


Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company’s business activities contain elements of risk. The Company considers a principal type of market risk to be a valuation risk. All assets are valued at fair value as determined in good faith by or under the direction of the Board of Directors (which is based, in part, on quoted market prices). Market prices of common equity securities in general, are subject to fluctuations which could cause the amount to be realized upon sale to differ significantly from the current reported value. The fluctuations may result from perceived changes in the underlying economic characteristics of the Company’s portfolio companies, the relative prices of alternative investments, general market conditions and supply and demand imbalances for a particular security.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1 through F-15.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

               FINANCIAL DISCLOSURE


On July 27, 2011, the Company engaged M&K CPAS, PLLC, as its new independent accountant, as the Company’s former independent accountant informed them that it would not stand for re-election.  The decision to change accountants was approved by the registrant’s board of directors.


Item 9A.  CONTROLS AND PROCEDURES


As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2011. In designing and evaluating the Company’s disclosure controls and procedures, the Company recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, the Company’s management was required to apply its reasonable judgment.


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Based upon that evaluation, the Certifying Officers concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. We have identified material weaknesses discussed below in the Report of management on internal control over financial reporting.


Report of Management on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:


(i)           Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)           Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)           Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.


Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will not be prevented or detected.

 

In the course of management’s assessment, we have identified the following material weaknesses in internal control over financial reporting:


          Segregation of Duties As a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.

 

          Maintenance of Current Accounting Records This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.


We are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. Management has engaged an accountant as a consultant to assist with the financial reporting process in an effort to mitigate some of the identified weaknesses. The Company intends on hiring the necessary staff, including a qualified Chief Financial Officer, to address the weaknesses once full operations have commenced.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



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Changes in Internal Control over Financial Reporting


There have been no changes in internal control over financial reporting during the last fiscal quarter of year 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Attestation Report of Independent Public Accounting Firm


This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because as a smaller reporting company we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.  



Item 9B.  OTHER INFORMATION


None.



PART III


Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


            Name             

    Age    

                Position             

 

 

 

Jeff Ritchie

50

Chief Executive Officer, Director

 

 

 

Kenneth Eade

54

Chief Compliance Officer, Chief Financial Officer, Secretary, Director

Erick Geisler

40

Vice President Production

Patrick Peach

49

Director

 

 

 

Robert Searcy

49

Director



Affiliate Officers and Directors


Jeff Ritchie.  Jeff Ritchie is the current Chief Executive Officer and director of the company, since 2008.  Ritchie began his film career in post-production by using advancements in computer technology to create a cost-effective computer graphics company with such clients as Disney and CBS.  Having a lifelong passion for filmmaking, Ritchie sold his company and started working in film production. Ritchie worked for various studios, completing over 15 films, during that time Ritchie quickly rose up the ranks of feature film producer, and has produced over a dozen feature films, written three produced scripts and produced numerous commercials all in the last eight years.  Ritchie has experience in managing private production companies, working for such production companies as Crystal Sky Communications (Ghost Rider, Baby Geniuses), Roger Corman’s New Horizon (The Haunting of Hell House), has become a mainstay in the film industry and has developed solid relationships with studios and mini majors along with working relationships with production companies, sales distribution companies and with management and talent agencies.  Ritchie’s film credits include 'SOULKEEPER'  a film made on a very modest budget, which premiered on the sci-fi channel in 2001 and scored in the top non-theatrical sales week after week at video stores.


He produced and wrote 'COOKERS' a hardcore, gritty drug/horror story that has made the rounds at many film festivals including Milan Film Festival where it won Best Film, Best Cinematography, Best Editing and Best Music. It also won best film and best script at Screamfest and has garnered awards at many other film festivals around the world. Cookers also enjoyed a small but successful theatrical release.   Ritchie wrote and produced 'AMERICAN CRIME', a psychological thriller which stars Rachel Leigh Cook, Kip Pardue, Annabella Sciorra and Carey Elwes. He followed it with the release of the heartwarming romantic Comedy 'MR. FIXIT' starring David Boreanz.  Both films had overseas theatrical releases and garnered high sales domestically.


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Kenneth G. Eade.  Mr. Eade is the current Secretary, Chief Compliance Officer, and Director of the Company, since inception. He currently serves as the Chief Financial Officer of the Company, since December 2008.  From September through October 2011, he served as a director of Red Rock Pictures Holdings, Inc,.  He has served as the Chairman of Imperia Entertainment, Inc., from July 2005 through December 2007, and served as its CEO from March 2007 through December 2007.  From February 2007 through September 2007, he served as the President of Muller Media, Inc.   From 1998 to the present time, he has been engaged in the practice of corporate and securities law, doing public and private offerings, SEC filings, blue sky state filings, mergers and acquisitions, and helping small to medium sized development stage companies to obtain quotations of their securities on recognized quotation mediums.  From 1987 through 1998, he was engaged in the practice of general law, emphasizing corporate and securities law.  He is a member of the California Bar, and the federal District Court for the Central District of California.  He holds a Juris Doctor in Law from Southwestern University School of Law and a B.A. in Liberal Studies from California State University, Northridge.  


Erick Geisler.  Mr. Geisler has acted as Vice President of Production since October 2009.  He has worked hands-on in every aspect of post-production from software programming, film scanning and recording, on-line and sound-fx editing, music score to visual effects supervision. Over the past ten years, he has collaborated with some of the industry’s top film makers and visual effects companies, including Industrial Light and Magic and Digital Domain.


In recent years, Erick acted as Director of Technical Entertainment for the Fremont Street experience in Las Vegas, Nevada, where he produced content for the largest video screen in the world (spanning over 5 football fields long.) He most recently performed as the Director of 3D Animation as Visual Effects Supervisor for Larry Levinson Productions in Los Angeles where he completed 22 television mini-series and movies of the week for the Hallmark Channel. He received his BFA at the Art Center, Pasadena, in Illustration & Design as well as a BFA in Computer Science. Erick has worked on hit television series including “Supernova”, “The Curse of King Tut’s Tomb” and in mega block-buster films such as “Total Recall” and “Jurassic Park.”


Today Erick’s career has expanded from visual effects to a very successful career in producing. He is currently producing two features, ”November 2nd” and “Duel of Legends”  and he is set to direct his third produced film “Yakuza,” starring Armand Assante, “American Gangster”, “Gotti”, “Memoirs of a Geisha” and “Pearl Harbor”.


Non-interested directors


Patrick Peach.  Patrick Peach has been an independent director of the company since April 21, 2008.  Mr. Peach started his entertainment career as a literary agent, and produced his first film at the age of 23.  As an independent producer, his credits include, Prey of the Chameleon, A Showtime world premiere in 1992, The Chinatown Connection, Big Bad John, Bitter Harvest, and the Glass Shield.  Through his own production company, Peach produced When the Bough Breaks (1993), Mother (1994) and Galaxis.  From 1994 through 1995, Peach served as Supervising Producer for Film Finances, Inc. on the completion of eight visual effects intensive features by Full Moon Entertainment, including Josh Kirby: Time Warrior, Pre Hysteria II, and The Wee Folk I & II.    In 1995, he produced Maximum Surge, an interactive game and movie for Digital Pictures.  In 1996 he produced Sticks and Stones for Hallmark Entertainment, co-produced, DNA, an HBO World Premiere, and was Supervising Producer on Bombshell, a Sci-Fi Channel World Premiere.  He also produced Suicide Kings (1998) for Artisan Entertainment.  Since 1998, Peach has produced P.U.N.K.S., a Disney Original Picture, and worked on several films for Miramax, Lions Gate, and Dimension Films.  In 2000, he co-produced Highlander: Endgame, and worked for Miramax on Equilibrium and Imposter.  In 2001, as a result of his work on Project Greenlight, Peach produced Stolen Summer, released by Miramax in 2002.  Since then, he has co-produced the Theme Park Attraction, StarTrek Voyager: Borg Encounter, Outin Riley (2004), Icon (2004), Canes, and has worked on Cookers (2005), the Guardian (2006), and Nanking.  Peach also produces commercials for clients Renault, Volkswagen, Nickelodeon and Comedy Central.  He has studied entertainment law, film production; screenwriting, distribution, marketing and finance at UCLQ, USC, AFI and Writer’s Boot Camp.


Robert Searcy.  Robert Searcy has been an independent director of the company since August 8, 2008.  Mr. Searcy is the current principal of Terra Firma Services since 1995, a company which specializes in land use planning and project management and development.  At the helm of Terra Firma, Mr. Searcy has managed telecommunications sites for AT&T Wireless, L.A. Cellular and Bechtel, and for Sprint and Lucent Technologies.  From 2004 through 2007, he was employed as a Land use and Entitlement manager for MWH Development Corporation.  From 1995 through 1996 he was employed as the Principal Planner for the City of Calabasas, managing the day to day operations of the Planning and Environmental Services Departments and served as the City Council and Planning Commission Coordinator/Liaison.  From 1990 through 1995, he served as Senior Planner for the City of Diamond Bar.  He holds a Masters Degree in Urban Planning (1989) from Kansas University and a B.A. in Political Science (1985) from Washburn University.  He has served on the board of directors of the Century City Chamber of Commerce, and the San Gabriel Fair Housing Council.

 

 

22

 

Item 11.  EXECUTIVE COMPENSATION

The following table provides information as to cash compensation of all officers of the Company, for each of the Company’s last two fiscal years.



SUMMARY COMPENSATION TABLE



Name and principal position

Year

Salary

Stock Awards

Option Awards

Non-Equity Incentive Plan Compensation Earnings

Nonqualified

Deferred Compensation Earnings

All Other Compensation

Total

Kenneth Eade, CCO, CFO, Sec.


2011

2010


$150,000

$0


$0

$0


$0

$0


$0

$0


$0

$0


$0

$0


$0

$0


Erick Geisler, V.P.


2011

2010


$0
$0


$0

$0


$0

$0


$0

$0


$0

$0


$0

$0


$0

$0

 

 

 

 

 

 

 

 

 

Jeff Ritchie, CEO

2011

2010

$150,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0



The company has entered into employment contracts with our Chief Executive Officer and Chief Compliance Officer, providing for the payment of $150,000 each in annual salaries, commencing the first quarter of fiscal year 2012.  To date, we have not been able to fully compensate our officers with full cash payments, and they are due accrued salaries.  There are no outstanding equity awards or options to officers issued or outstanding.


The following table provides information concerning the compensation of the directors of the Company for the past fiscal year:


DIRECTOR COMPENSATION


Name

Fees Earned or Paid in Cash

Stock Awards

Option Awards

Non-Equity Incentive Plan Compensation

Non-Qualified Deferred Compensation Earnings

All Other Compensation

Total

Kenneth   Eade   

$0

$0

$0

$0

$0

$0

$0

Jeff Ritchie

$0

$0

$0

$0

$0

$0

$0

Rob Searcy

$0

$

$0

$0

$0

$0

$0

Patrick Peach

$0

$

$0

$0

$0

$0

$0


There are no outstanding equity awards or options to directors issued or outstanding.




23

 


Corporate Governance


The Board of Directors is committed to maintaining strong corporate governance principles and practices. The Board periodically reviews evolving legal, regulatory, and best practice developments to determine those that will best serve the interests of our shareholders.


Meetings and Attendance


Our Board of Directors is required by our bylaws to hold regularly scheduled annual meetings.  In addition to the annual meetings, it has the authority to call regularly scheduled meetings and special meetings by resolution.   Our Board met 2 times during the past fiscal year.


All incumbent directors attended 100% or more of the Board meetings during the last fiscal year.


Nominations of Directors


There are no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.


Audit Committee


The Company has standing audit committee, established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934, consisting of interested director Kenneth Eade and independent directors Patrick Peach and  Robert Searcy.  No member of the audit committee may accept directly or indirectly any consulting, advisory, or other compensatory fee from the company or any subsidiary, not including fixed amounts of compensation under a retirement plan for prior service, and may not be an “interested person” as defined in section 2(a)(19) of the Investment Company Act of 1940.


Item 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

               AND RELATED STOCKHOLDER MATTERS.


The following table sets forth information furnished to us with respect to the beneficial ownership of our common stock by (i) each executive officer, director and nominee, and by all directors and executive officers as a group, and (ii) each beneficial owner of more than five percent of our outstanding common stock, in each case as of September 30, 2011. Unless otherwise indicated, each of the persons listed has sole voting and dispositive power with respect to the shares shown as beneficially owned.



24

 


Title of Class

Name and Address of

 Beneficial Owner

Amount of Beneficial Ownership


Percent of Class

Common Stock

Kenneth Eade

6399 Wilshire Blvd. suite 507

Los Angeles, CA  90048



7,713,500



32%

 

 

 

 


Common Stock

Jeff Ritchie

6399 Wilshire Blvd. suite 507

Los Angeles, CA  90048



7,250,000



30%

 

 

 

 


Common Stock

Patrick Peach

6399 Wilshire Blvd. suite 507

Los Angeles, CA  90048



   200,000

1%

 

 

 

 


      Common Stock

Erick Geisler

6399 Wilshire Blvd. Suite 507

Los Angeles, CA  90048

                        0

                0%

 

 

 

 

Common Stock


 

 

 

Common Stock

Marc Cifelli

Arriva Capital, LLC

16 Glenwood Way

Caldwell, NJ 07006


Robert Searcy

6399 Wilshire Blvd. suite 507

Los Angeles, CA  90048




6,000,000



200,000




24.9%



1%

 

 

 

 

 

Shares of directors and executive officers as a group

 15,363,500

64%


The issuer is not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

                 INDEPENDENCE.


On September 24, 2007, 125 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $500 cash

  

On December 30, 2007, 1,245 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $4,980 cash.  


On March 31, 2008, 2,691 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $10,764 in cash.


On June 30, 2008, 9,439 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $1,800 in cash and $35,396 in forgiveness of debt.


On August 22, 2008, 525 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.


On November 29, 2007, 1,000,000 shares of common stock were issued to officer and director Kenneth Eade, in exchange for preferred stock of Imperia Entertainment, Inc., pursuant to Section 4(2) of the Securities Act of 1933.  


On November 29, 2007, 1,000,000 shares of common stock were issued to officer and director George Ivakhnik, in exchange for preferred stock of Imperia Entertainment, Inc., pursuant to Section 4(2) of the Securities Act of 1933.  


25

 

On August 26, 2008, the entire transaction by which shares of Imperia Entertainment, Inc. were acquired was mutually rescinded and the transaction was accounted for as follows:


On September 24, 2007, 125 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933.


On December 30, 2007, 1,245 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $4,980 cash.  


 On March 31, 2008, 2,691 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $10,764 in cash.


 On June 30, 2008, 9,439 shares of common stock were issued to Kenneth Eade, pursuant to Section 4(2) of the Securities Act of 1933, in exchange for $1,800 in cash and $35,396 in forgiveness of debt.


On August 28, 2008, 1,250 shares of common stock were issued to non-affiliate investors, pursuant to Section 4(2) of the Securities Act of 1933, and other applicable exemptions.


On or about September 30, 2008, 3,573 shares of common stock were issued to affiliate Kenneth Eade, in exchange for cash and forgiveness of debt.


On or about September 30, 2009, 200,000 shares each were issued to Directors Robert Searcy and Patrick Peach, as compensation for two years’ services rendered, pursuant to Section 4(2) of the Securities Act of 1933.


On or about September 30, 2009, 200,000 shares and 500,000 shares were issued to Jeff Ritchie for compensation for two years’ services rendered, and 10 million shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933.


On or about September 30, 2009, 200,000 shares and 500,000 shares were issued to Kenneth Eade for compensation for two years’ services rendered, 500,000 for two years’ legal services rendered, and 10,000,000 shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933.


On March 31, 2011 the Company’s Board of Directors authorized the issuance of 750,000 shares each to Jeff Ritchie, the Company’s CEO and Kenneth Eade the Company’s CFO for compensation for services rendered in 2010, and an additional 200,000 shares to Kenneth Eade for legal services rendered, for total consideration of $646,000, based on the value of the common stock on the date of authorization. As of September 30, 2011 these shares had not yet been issued and therefore have been recorded as a stock payable.


On or about August 31, 2010, Jeff Ritchie gifted 3,000,000 shares and Kenneth Eade gifted 3,000,000 shares to Arriva Capital, to fund a consulting contract for services to be rendered to the company.


Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES


On July 27, 2011, the Company engaged M&K CPAS, PLLC, as its new independent accountant, as the Company’s former independent accountant informed them that it would not stand for re-election. Our former independent accountant’s reports on the financial statements for the Registrant for the last two years of financial statements reported has not contained an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except for the fact that the accountant included an opinion that, due to the Registrant’s significant losses from operations and dependence on financing to continue its operations, there is doubt about the Registrant’s ability to continue as a going concern.


During the two most recent fiscal years, there have been no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the accountant, would have caused it to make reference to the subject matter of the disagreements in connection with the reports.  



26

 

The Company’s Audit Committee consists of interested director Kenneth Eade and independent directors Patrick Peach and Robert Searcy.  The Audit Committee verified the following with respect to our independent accountants:


1.

The accountant is and has been in good standing within the jurisdiction of its practice.

2.

The accountant is a member in good standing of the Public Accountancy Oversight Board (PAOB).

3.

The accountant is capable of exercising objective and impartial judgment on all issues encompassed within its potential engagement, and that no member of the firm had any interest or relationship with any officer, director or principal shareholder.


Audit Fees


The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements is approximately $11,000 for fiscal year 2011 and $7,000 for fiscal year 2010 all of which related to the review and audit of Company’s financial statements.


Tax Fees


No fees were paid to the former accountant for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning.


All Other Fees


 No other fees were paid to the former accountant for any other services.

Item 15.  EXHIBITS

Exhibit

Exhibit Description

Filed herewith

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

10.1

Convertible Debenture for $350,000 dated November 16, 2011 to Junior Capital, Inc.

X

10.2

Convertible Debenture for $20,000 dated October 25, 2011 to Junior Capital Inc.

X

10.3

Convertible Debenture for $20,000 dated October 28, 2011 to Editor Newswire Inc.

X

10.4

Convertible Debenture for $25,000 dated November 18, 2011 to Editor Newswire Inc.

X



27

 


INDEPENDENT FILM DEVEOPMENT CORPORATION

(A Development Stage Company)

INDEX TO FINANCIAL STATEMENTS




Report of Independent Registered Public Accounting Firm

F-2

Report of Independent Registered Public Accounting Firm

F-3

Balance Sheets as of September 30, 2011 and 2010

F-4

Statements of Operations for the years ended September 30, 2011 and 2010,

    and from inception on September 14, 2007 through September 30, 2011

F-5


Statements of Cash Flows for years ended September 30, 2011 and 2010,

    and from inception on September 14, 2007 through September 30, 2011

F-6


Statement of Stockholders’ Equity (Deficit) from inception on September 14, 2007

  through September 30, 2011

F-7


Notes to the Financial Statements

F-9










F-1

 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Independent Film Development Corporation

(A Development Stage Company)

  

We have audited the accompanying balance sheet of Independent Film Development Corporation (a development stage company) as of September 30, 2011, and the related statements of operations, changes in stockholders' deficit, and cash flows for the year then ended. The financial statements for the year ended September 30, 2010 were audited by other auditors whose reports expressed unqualified opinions on those statements. The financial statements for the period September 14, 2007 (date of inception) through September 30, 2011, insofar as it relates to amounts for prior periods through September 30, 2010, is based solely on the report of other auditors. 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Independent Film Development Corporation as of September 30, 2011, and the results of its operations, changes in stockholders' deficit and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has reported recurring losses from operations and had a working capital deficit at September 30, 2011, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ M&K CPAS, PLLC 

www.mkacpas.com

Houston, Texas

January 11, 2012

F-2

 

Report of Independent Registered Public Accounting Firm


To The Board of Directors and Stockholders of

Independent Film Development Corporation


We have audited the accompanying balance sheet of Independent Film Development Corporation (a Development Stage Company) as of September 30, 2010 and the related statements of operations, changes in stockholders’ deficit and cash flows for the year ending September 30, 2010 and  the period from September 14, 2007 (inception) to September 30, 2010 .  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 the Company’s internal control over its 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides 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 Independent Film Development Corporation as of September 30, 2010 and the results of its operations and cash flows for the year ended September 30, 2010 and for the period from September 14, 2007 (inception) to September 30, 2010, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As described in Note 8 to the financial statements   the Company has not generated any significant revenue during the period September 14, 2007 (inception) through September 30, 2010 and has funded its operations primarily through the issuance of equity.  This matter raises substantial doubt about the Company’s ability to continue as a going concern unless it is able to generate sufficient cash flows through the issuance of additional debt or equity financing to meet its obligations and sustain its operations.  Management’s plans regarding those matters are also described in Note 8.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Gruber & Company, LLC

    Gruber & Company, LLC

    Lake Saint Louis, Missouri

    February 14, 2011


 

F-3

 

 

 

 

 

 

 

Independent Film Development Corporation

(a Development Stage Company)

Balance Sheets

 

 

 

 

 

September 30, 2011

 

 

September 30, 2010

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

   Cash

 $

5,222 

 

 $

 3,882

         Total Current Assets

 

5,222

 

 

 3,882

Other Assets

 

 

 

 

 

    Website property

 

350,000

 

 

-

          Total Assets

 $

355,222 

 

 $

 3,882

 

 

 

 

 

 

LIABILITIES AND STOCKHOLERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 Current Liabilities

 

 

 

 

 

   Accounts payable

 $

43,498 

 

 $

 -

   Accrued officer compensation

 

218,450

 

 

-

   Accrued interest

 

8,822

 

 

-

   Advances from officers

 

7,837

 

 

 -

   Due to a related party

 

790

 

 

290

   Convertible debentures (net of discount of $276,775 and $0, respectively) (see Note 5)

 

88,225

 

 

-

          Total Liabilities

 

367,622

 

 

 290

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

  Common stock , $.0001 par value, 485,000,000

 

 

 

 

 

shares authorized, 24,120,991 and 22,983,991   issued and outstanding, respectively

 

2,412 

 

 

 2,298 

  Preferred Stock, $.0001 par value, 15,000,0000

   shares authorized, none issued and outstanding

 

-

 

 

-

  Additional paid in capital

 

3,191,660 

 

 

 2,573,239 

  Common stock subscribed

 

779,000 

 

 

 - 

  Stock subscription receivable

 

 (70,365)

 

 

 (62,340)

  Deficit accumulated during development stage          

 

 (3,915,107)

 

 

 (2,509,605)

          Total Stockholders' Equity (Deficit)

 

 (12,400)

 

 

 3,592 

          Total Liabilities and Stockholders' Equity  (Deficit)

$

355,222 

 

 

 3,882 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 





F-4

 

 

 

 

 

 

 

 

 

 

Independent Film Development Corporation

(a Development Stage Company)

Statements of Operations

 

 

For the Years Ended September 30,

 

 

September 14, 2007 (inception) through

 

 

2011

 

 

2010

 

 

September 30, 2011

 

 

 

 

 

 

 

 

 

Investment income

$

-

 

$

-

 

$

                -

 

 

 

 

 

 

 

 

 

Total income

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

  Officer compensation

 

810,000

 

 

12,400

 

 

822,500

  Professional fees

 

429,657

 

 

5,600

 

 

435,257

  Director fees

 

38,000

 

 

-

 

 

38,000

  General and administrative

 

30,698

 

 

199,881

 

 

2,522,303

    Total operating expenses

 

1,308,455

 

 

217,881

 

 

3,818,060

Net loss from operations

$

(1,308,455)

 

$

(217,881)

 

$

(3,818,060)

 

 

 

 

 

 

 

 

 

Other income and (expense)

 

 

 

 

 

 

 

 

   Interest expense

 

(97,047)

 

 

-

 

 

(97,047)

Total other expense

 

(97,047)

 

 

-

 

 

(97,047)

Net loss

$

(1,405,502)

 

$

(217,881)

 

$

(3,915,107)

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

 

 

 

 

  Basic and diluted

$

(0.06)

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding basic and  diluted

 

23,344,668

 

 

  22,484,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 


F-5

 

Independent Film Development Corporation

(a Development Stage Company)

Statement of Stockholders’ Equity (Deficit)

 

 

Number of Shares Outstanding

 

 

Common Stock at Par Value

 

 

Paid in Capital   

 

 

Deficit Accumulated During

Development

 

 

Common Stock Subscribed

 

 

Stock Subscription Receivable

 

 

Total     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

                              -

 

$

                   -

 

$

               -

 

$

                      -

 

$

                  -

 

$

                     -

 

$

                    -

Stock issued for cash

                         125

 

 

                   -

 

 

           500

 

 

                      -

 

 

                  -

 

 

                     -

 

 

500  

Balance at September 30, 2007

125

 

 

                   -

 

 

500

 

 

                      -

 

 

                  -

 

 

                     -

 

 

500

Stock issued for cash

18,492

 

 

2

 

 

35,940

 

 

                      -

 

 

-

 

 

-

 

 

35,942

Net loss for the  year ended September 30, 2008

                              -

 

 

                   -

 

 

               -

 

 

   (33,413)

 

 

                  -

 

 

                     -

 

 

(33,413)

Balance at September 30, 2008

18,617

 

 

2

 

 

36,440

 

 

    (33,413)

 

 

                  -

 

 

                     -

 

 

3,029

Stock issued for cash

34,803

 

 

3

 

 

109,997

 

 

                      -

 

 

-

 

 

(85,000)

 

 

25,000

Stock issued for compensation

22,300,000

 

 

2,230

 

 

2,227,770

 

 

-

 

 

-

 

 

-

 

 

2,230,000

Net loss for year ended September 30, 2009

                              -

 

 

 -

 

 

               -

 

 

(2,258,311)

 

 

 -

 

 

 -

 

 

(2,258,311)

Balance at September 30, 2009

22,353,420

 

 

2,235

 

 

2,374,207

 

 

(2,291,724)

 

 

-

 

 

(85,000)

 

 

(282)

Stock issued for cash

626,571

 

 

63

 

 

197,032

 

 

-

 

 

-

 

 

-

 

 

197,095

Stock issued for compensation

4,000

 

 

-

 

 

2,000

 

 

-

 

 

-

 

 

-

 

 

2,000

Stock subscription receivable

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

22,660

 

 

22,660

Net loss for year ended September 30, 2010

-

 

 

-

 

 

-

 

 

(217,881)

 

 

-

 

 

-

 

 

(217,881)

Balance at September 30, 2010

22,983,991

 

 

2,298

 

 

2,573,239

 

 

(2,509,605)

 

 

-

 

 

(62,340)

 

 

3,592

Stock for other services

556,000

 

 

56

 

 

211,224

 

 

-

 

 

171,000

 

 

-

 

 

382,280

Stock for officer compensation

-

 

 

-

 

 

-

 

 

-

 

 

570,000

 

 

-

 

 

570,000


F-6

 


 

Stock for Director fees

-

 

 

-

 

 

-

 

 

-

 

 

38,000

 

 

-

 

 

38,000

Stock issued for cash

575,000

 

 

57

 

 

39,918

 

 

-

 

 

-

 

 

(8,025)

 

 

31,950

Common stock issued for lock up agreement

6,000

 

 

1

 

 

2,279

 

 

-

 

 

-

 

 

-

 

 

2,280

Discount on Conversion Note

-

 

 

-

 

 

365,000

 

 

-

 

 

-

 

 

-

 

 

365,000

Net loss for the year ended September 30, 2011

-

 

 

-

 

 

               -

 

 

(1,405,502)

 

 

-

 

 

-

 

 

(1,405,502)

Balance at September 30, 2011

24,120,991

 

$

2,412

 

$

3,191,660

 

$

(3,915,107)

 

$

779,000

 

$

(70,365)

 

$

(12,400)




The accompanying notes are an integral part of these financial statements.



F-7

 

 

 

 

 

 

 

 

 

 

 

 

Independent Film Development Corporation

(a Development Stage Company)

Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended

 

 

September 14, 2007

 

 

September 30,

 

 

(inception) through

 

 

2011

 

2010

 

 

September 30, 2011

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,405,502)

 

$

(217,881)

 

$

(3,915,107)

Adjustments to reconcile net loss to total cash used in operations:

 

 

 

 

 

 

 

 

 

      Common stock for compensation

 

 

570,000

 

 

2,000

 

 

2,802,000

      Common stock for other services

 

 

384,560

 

 

-

 

 

384,560

      Common stock for Director's fees

 

 

38,000

 

 

-

 

 

38,000

      Amortization of debt discount

 

 

88,225

 

 

-

 

 

88,225

   Change in assets and liabilities:

 

 

 

 

 

 

 

 

 

       Increase in accounts payable

 

 

43,498

 

 

-

 

 

43,498

       Increase in accrued interest

 

 

8,822

 

 

-

 

 

8,822

       Increase in accrued compensation

 

 

218,450

 

 

-

 

 

218,450

           Net cash used in operating activities

 

 

(53,947)

 

 

 (215,881)

 

 

(331,552)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 -

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

      Proceeds from loan, related party

 

 

500

 

 

-

 

 

790

      Proceeds from debenture

 

 

15,000

 

 

-

 

 

15,000

      Proceeds from subscriptions receivable

 

 

-

 

 

22,660

 

 

22,660

      Advances from officers

 

 

7,837

 

 

-

 

 

7,837

      Proceeds from the sale of common stock

 

 

31,950

 

 

197,095

 

 

290,487

          Net cash provided by financing activities

 

 

55,287

 

 

219,755

 

 

336,774

Net increase in cash

 

 

1,340

 

 

3,874

 

 

5,222

Cash at beginning of period

 

 

3,882

 

 

8

 

 

-

Cash at end of period

 

$

5,222

 

$

3,882

 

$

5,222

 

 

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

 

   Interest

 

$

-

 

$

-

 

$

-

   Taxes

 

$

-

 

$

-

 

$

-

Supplemental disclosure of non cash activities

 

 

 

 

 

 

 

 

 

Website property acquired with convertible  debenture

 

$

350,000

 

$

-

 

$

350,000

Beneficial conversion feature

 

$

365,000

 

$

-

 

$

365,000


The accompanying notes are an integral part of these financial statements.


F-8

 

 

Independent Film Development Corporation

(A Development Stage Company)

Notes to Financial Statements

September 30, 2011



NOTE 1: HISTORY OF OPERATIONS


Business Activity


Independent Film Development Corporation was incorporated in the State of Nevada on September 14, 2007. Effective April 24, 2008 we commenced operating as a Business Development Company ("BDC") under Section 54(a) of the Investment Company Act of 1940 ("1940 Act").  On September 30, 2009, our board of directors elected to cease operating as a BDC.  


Our current plan of operations is to acquire and develop independent films for production, sales and distribution, with a goal toward significant partnerships with mini-major and the major film studios, such as Lionsgate and Sony, while simultaneously emulating those companies’ recipes for success.


The Company is in the development stage as defined under Statement on Financial Accounting Standards Accounting Standards Codification FASB ASC 915-205 "Development-Stage Entities.”



NOTE 2: SIGNIFICANT ACCOUNTING POLICIES



Cash and Cash Equivalents


For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2011 and 2010.


Stock Based Compensation


We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.



Use of Estimates


The presentation 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.


Fair Value of Financial Instruments

The carrying amount of cash, notes receivable, accounts payable, accrued liabilities and notes payable, as applicable, approximates fair value due to the short-term nature of these items. The fair value of the related party notes payable cannot be determined because of the Company's affiliation with the parties with whom the agreements exist. The use of different assumptions or methodologies may have a material effect on the estimates of fair values.

F-9

 


ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:



· Level 1:  Observable inputs such as quoted prices in active markets;


· Level 2:  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and


· Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.


The following table represents our assets and liabilities by level measured at fair value on a recurring basis at September 30, 2011.

 

 

 

 

 

 

 

Description

 

Level 1

 

Level 2

 

Level 3

 

 

none

 

none

 

none


Long Lived Assets


Long lived assets are carried at cost and amortized over their estimated useful lives, generally on a straight-line basis. The Company reviews identifiable amortizable assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value.


 Income Taxes


Accounting Standards Codification Topic No. 740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under the asset and 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. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


Accounting for Convertible Debentures


The outstanding convertible debentures issued by the Company have a fixed monetary amount known at time of issue and are therefore accounted for based on ASU 470-20 of the Financial Accounting Standards Board (FASB). These convertible debentures have a fixed face amount that is payable by cash plus interest, or can be converted into common shares of the Company determined by the discounted rate specified on the debenture itself. 


In accordance with accounting for convertible debt the Company records a beneficial conversion cost based on the conversion option of the debenture that equals the value of the specified discount at the time of conversion. The beneficial conversion cost is recorded as additional paid in capital at the time the convertible security is first issued and is then amortized over the term of the debenture.

F-10

 

Net deferred tax assets consist of the following components as of September 30:


 

2011

2010

NOL

 (277,605)

 (61,724)

Net Loss

 (1,405,502)

 (217,881)

Common stock for Director's fees

38,000

-

Common stock for other services

384,560

-

Common stock for compensation

570,000

2,000

NOL at end of period

 (690,547)

 (277,605)

Effective Rate

0.34

0.34

Deferred Tax Asset

 (234,786)

 (94,386)

Valuation

234,786

94,386

Deferred Tax Asset

-

-


In June 2006, the FASB interpreted its standard for accounting for uncertainty in income taxes, an interpretation of accounting for income taxes.  This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance the minimum recognition threshold and measurement attributable to a tax position taken on a tax return is required to be met before being recognized in the financial statements. The FASB’s interpretation had no material impact on the Company’s financial statements for the year ended September 30, 2011.



The FASB’s interpretation had no material impact on the Company’s financial statements for the year ended September 30, 2011. As of September 30, 2011, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $689,500 that may be offset against future taxable income through 2027. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry forwards will expire unused. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount.

 

Earnings (Loss) Per Share


Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later. At September 30, 2011, the Company had no outstanding options or warrants.



NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS


In September 2011 Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for impairment. This ASU's objective is to simplify the process of performing impairment testing for Goodwill. With this update a company is allowed to asses qualitative factors, first, to determine if it is more likely than not (greater than 50%) that the FV is less than the carrying amount. This would be done, prior to performing the two-step goodwill impairment testing, as prescribed by Topic 350.  Prior to this ASU, all entities were required to test, annually, their good will for impairment by Step 1 - comparing the FV to the carrying amount, and if impaired, then step 2 - calculate and recognize the impairment. Therefore, the fair value measurement is not required, until the "more likely than not" reasonableness test is concluded. Effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.



F-11

 

In May 2011, FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.    This ASU clarifies the board's intent of current guidance, modifies and changes certain guidance and principles, and adds additional disclosure requirements concerning the 3 levels of fair value measurements. Specific amendments are applied to FASB ASC 820-10-35, Subsequent Measurement and FASB ASC 820-10-50, Disclosures. This ASU is effective for interim and annual periods beginning after December 15, 2011.


In June 2011, FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. - ASU 2011-05. Current US GAAP allows companies to present the components of comprehensive income as a part of the statement of changes in stockholders' equity. This ASU eliminates that option. in this Update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income This ASU is effective interim and annual periods beginning after December 15, 2011.  This ASU should be applied retrospectively. There are no specific transition disclosures


In December 2010, the FASB Accounting Standards Update 2010-29 Business Combinations Topic 805, which requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. Effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.


The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.



NOTE 4: WEBSITE PROPERTY


During the fourth quarter the Company hired a third party to develop HollywoodIndy.com a website planned to be launched in the second quarter of fiscal year 2012. The website promises to be an Internet based entertainment web property specializing in social networking and resourcing, production, development and distribution for independent film and television industry. The revenue model is to sell and market services to the community of entertainment professionals and non professionals in the form of classifieds, education forums, advertising as well as providing a stable for unique projects to fit in the overall company umbrella. The model provides a unique revenue platform that includes anyone from established professionals looking for the next generation talent to young up-and-coming professionals breaking into the industry. The initial cost of the website of $350,000 has been capitalized due to the future economic benefits it will bring to the company. The cost will be amortized over the useful life (to be determined) once the website is fully implemented and operating. On July 1, 2011 the company executed a convertible debenture for $350,000 (Note 5) as payment for the development of the website.



F-12

 

NOTE 5: CONVERTIBLE DEBENTURE


On October 25, 2011 the Company issued a convertible debenture/note payable to Junior Capital, Inc. for $20,000; $15,000 of this amount was advanced to the Company prior to signing the debenture and prior to September 30, 2011. The Debenture accrues interest of 10% beginning on October 25, 2011 and matures on October 25, 2012. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. Based on the terms of the note the company has calculated and recorded a $15,000 debt discount as a result of the convertible feature. The debt discount was booked to additional paid in capital and will be amortized over a one year term beginning on the day the funds were received using the straight line method as it approximates the effective method given the short term. As of September 30, 2011 $965 of the $15,000 debt discount has been amortized and charged to interest expense.


On July 1, 2011, the Company entered into an exchange agreement with Junior Capital Inc. (“Junior”), pursuant to which Junior exchanged a $350,000 promissory note for a $350,000 convertible debenture (the “Junior Debenture”). The Junior Debenture accrues interest of 10% and matures on July 1, 2012. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance, or $0.05 per share of common stock on the date of conversion as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. Based on the terms of the note the company has calculated and recorded a $350,000 debt discount as a result of the convertible feature. The debt discount was booked to additional paid in capital and will be amortized over the one year term of the loan using the straight line method as it approximates the effective method given the short term. As of September 30, 2011 $87,260 has been amortized and charged to interest expense.



NOTE 6: COMMON STOCK TRANSACTIONS


During the period from September 14, 2007 (inception) through September 30, 2007 the Company issued 125 common shares for $500 cash.


During the year ended September 30, 2008 the Company issued 18,492 common shares for $35,942 cash.


During the year ended September 30, 2009 the Company issued 34,803 common shares for $25,000 cash and a subscription receivable in the amount of $85,000.


On September 30, 2009 the Company’s Board of Directors authorized the issuance of 200,000 common shares to Directors Robert Searcy and Patrick Peach, as compensation for two years’ services rendered, pursuant to Section 4(2) of the Securities Act of 1933. Due to the volatility of the market and the limited trading of the Company’s stock, shares were valued at $0.10 by the Board of Directors.


On September 30, 2009 the Company’s Board of Directors authorized the issuance of, 200,000 shares and 500,000 shares to Jeff Ritchie, the Company’s President and Director for compensation for two years’ services rendered, and 10 million shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933. Due to the volatility of the market and the limited trading of the Company’s stock, shares were valued at $0.10 by the Board of Directors.


On September 30, 2009 the Company’s Board of Directors authorized the issuance of, 200,000 shares and 500,000 shares to Kenneth Eade, an Officer and Director for compensation for two years’ services rendered, 500,000 for two years’ legal services rendered, and 10,000,000 shares in exchange for business opportunities assigned to the company, pursuant to Section 4(2) of the Securities Act of 1933. Due to the volatility of the market and the limited trading of the Company’s stock, shares were valued at $0.10 by the Board of Directors.


F-13


 

During the three month period ended December 31, 2009 the Company issued 90,000 common stock shares for total consideration of $45,000.


During the three months ended June 30, 2010 the Company issued 406,571 common shares for total consideration of $119,595.


During the three months ended June 30, 2010, the Company issued 4,000 common shares for services totaling $2,000. Due to the volatility of the market and the limited trading of the Company’s stock, shares were valued at $0.10 by the Board of Directors.


During the three months ended September 30, 2010, the Company issued 130,000 common shares for total consideration of $32,500.


During the year ended September 30, 2010 the Company received $22,660 on its subscription receivable.



On March 31, 2011 the Company’s Board of Directors authorized the issuance of 100,000 common shares for Director’s fees totaling $38,000, based on the value of the common stock on the date of authorization. As of September 30, 2011 these shares had not yet been issued and therefore have been recorded as a stock payable.


On March 31, 2011 the Company’s Board of Directors authorized the issuance of 750,000 shares each to Jeff Ritchie, the Company’s CEO and Kenneth Eade the Company’s CFO for compensation for services rendered in 2010, and an additional 200,000 shares to Kenneth Eade for legal services rendered, for total consideration of $646,000, based on the value of the common stock on the date of authorization. As of September 30, 2011 these shares had not yet been issued and therefore have been recorded as a stock payable.


During the three month period ended March 31, 2011, the Company authorized the issuance of 250,000 common shares for services valued at $95,000, based on the value of the common stock on the date of authorization. As of September 30, 2011 these shares had not yet been issued and therefore have been recorded as a stock payable.


On May 10, 2011 the Company issued 300,000 common shares for cash proceeds of $6,975 and a subscription receivable in the amount of $8,025.


On May 9, 2011 the Company issued 6,000 common shares for a lock up agreement in which the stockholder agreed not to transfer any of his shares for an agreed upon time. The Company recorded an expense of $2,280 based on the value of the common stock on the date of issuance.


On May 10, 2011 the Company issued 6,000 common shares to a stockholder for shares authorized in a prior period. The Company recorded an expense of $2,280 based on the value of the common stock on the date of issuance.


On June 24, 2011, the Company authorized the issuance of 550,000 common shares for services valued at $209,000, based on the value of the common stock on the date of authorization. The shares were issued in July.


During the year ended September 30, 2011, the Company issued 275,000 common shares for total consideration of $24,975.



NOTE 7: RELATED PARTY TRANSACTION


As of September 30, 2011, the Company owed its officers a total of $7,837. The money was loaned to the company to cover certain operating expenses. In addition, a relative of one of the Company’s officers is owed $500 and a shareholder is owed $290, for funds advanced to cover certain expenses. Amounts are due on demand and have no stated rate of interest.


F-14

 

NOTE 8: GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not generated any revenue during the period September 14, 2007 (inception) through September 30, 2011, has an accumulated deficit of $3,915,107 and has funded its operations primarily through the issuance of equity. This matter raises substantial doubt about the Company's ability to continue as a going concern.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Accordingly, the Company’s ability to accomplish its business strategy and to ultimately achieve profitable operations is dependent upon its ability to obtain additional debt or equity financing. Management plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence.


Management intends to raise financing through private equity financing or other means and interests that it deems necessary.  The Company, as described above, is in the business of investing in operations of other companies. There can be no assurance that the Company will be successful in its endeavor.



NOTE 9: COMMITMENTS


On March 31, 2011, the Company signed a common stock purchase agreement with Crisnic Fund, SA, (“Crisnic”), whereby the Company has the right, but not the obligation, to sell to Crisnic, up to $2 million worth of common stock, subject to the filing of a registration statement, at 99% of the market price on the first business day following the effective date of the registration statement.


NOTE 10: SUBSEQUENT EVENTS

 

The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements except for the following.


On November 16, 2011, the Company entered into an exchange agreement with Junior Capital Inc. (“Junior”), pursuant to which Junior exchanged a $20,000 promissory note for a $20,000 convertible debenture (the “Junior Debenture”). $15,000 of this amount was advanced to the Company prior to signing the debenture and prior to September 30, 2011. The Junior Debenture accrues interest of 10% and matures on October 25, 2012. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. As of January 3, 2012, $20,000 of principal face value of the Junior Debenture remains outstanding.


On November 16, 2011, the Company entered into an exchange agreement with Editor Newswire Inc. (“Editor”), pursuant to which Editor exchanged a $20,000 promissory note for a $20,000 convertible debenture (the “Editor Debenture”). The Editor Debenture accrues interest of 10% and matures on October 28, 2012. Editor has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. As of January 3, 2012, $20,000 of principal face value of the Editor Debenture remains outstanding.


F-15

 

On November 18, 2011, the Company entered into an exchange agreement with Editor Newswire Inc. (“Editor”), pursuant to which Editor exchanged a $25,000 promissory note dated November 18, 2011 for a $25,000 convertible debenture (the “Editor Debenture”). The Editor Debenture accrues interest of 10% and matures on November 18, 2012. Editor has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. As of January 3, 2012, $25,000 of principal face value of the Editor Debenture remains outstanding.




F-16

 


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.


Date: January 13, 2012


INDEPENDENT FILM DEVELOPMENT CORP (REGISTRANT)


By:  Jeff Ritchie


/s/ Jeff Ritchie
Jeff Ritchie

CEO Principal Executive Officer) and Director

 

 

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.



Dated: January 13, 2012

By: /s/ Jeff Ritchie

Jeff Ritchie, CEO (Principal Executive Officer) and Director

 

 

Dated: January 13, 2012

By: /s/ Kenneth Eade

Kenneth Eade, CFO (Principal Accounting and    Financial Officer) and Director




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