-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNHnShRozr0EyJPu0g3p5u9A+wvITxZSKd5RPXlzqFF0kQxdHTDdyJR2S81BZchu dWx3WA110KeIB4e3NfHK8Q== 0000945836-00-000013.txt : 20000209 0000945836-00-000013.hdr.sgml : 20000209 ACCESSION NUMBER: 0000945836-00-000013 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 20000208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVA INTERNATIONAL FILMS INC CENTRAL INDEX KEY: 0000773394 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 112717273 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 002-98997-NY FILM NUMBER: 526456 BUSINESS ADDRESS: STREET 1: PO BOX 6249 CITY: VANCOUVER STATE: WA ZIP: 98668-6249 BUSINESS PHONE: 2067376800 MAIL ADDRESS: STREET 1: PO BOX 6249 CITY: VANCOUVER STATE: WA ZIP: 98668-6249 10KSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended OCTOBER 31, 1999 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 2-98997-NY NOVA INTERNATIONAL FILMS, INC. (Name of Small Business Issuer in Its Charter) Delaware 11-2717273 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 6350 N.E. Campus Drive Vancouver, Washington 98661 (Address of principal (Zip Code) executive offices) Issuer's telephone number, including area code: (360) 737-6800 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: None Check whether the Issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] N/A State Issuer's revenues for its most recent fiscal year: $0. As of January 31, 2000, the aggregate market value of the Common Stock held by non-affiliates of the Issuer (18,083,000 shares) was approximately $180,830. The number of shares outstanding of the Common Stock ($.00001 par value) of the Issuer as of the close of business on January 31, 2000 was 96,583,000. Documents Incorporated by Reference: None PART I Item 1. Description of Business. General Development of Business Nova International Films, Inc. (the "Company" or the "Registrant") was incorporated in the State of Delaware on November 27, 1984. Prior to May 1993, the Company was principally engaged in the business of developing, financing and producing motion pictures (sometimes herein "film(s)") for distribution. In January 1986, the Company completed an initial public offering and raised gross proceeds of $1 million. During fiscal 1990, the Company was able to complete and release two films it placed into production in fiscal 1989. These films were entitled "Triumph of the Spirit" and "Firebirds". Additionally, in January 1990, the Company acquired from Epic Productions, Inc. ("Epic") all of the issued and outstanding capital stock of Byzantine Fire, Inc. which at the time owned the rights to the completed film property "Why Me?". This film was also released during fiscal year 1990. Other than the foregoing, the Company has not been involved in the release of any other films. The Company also had previously entered into an agreement in principle with Epic, whereby the Company had the option, should Epic produce, to co-produce a motion picture entitled "Carlito's Way" (the "Carlito's Way Rights"). The Company also had the contractual right (the "Van Damme Rights") to engage Jean Claude Van Damme as the lead actor in a motion picture subject to meeting certain terms and conditions set forth in an agreement between the parties. These two film rights, together with the three films described above, represented as of March 1993 all of the Company's interests in various film properties. As a result of the closing of the Acquisition Agreement in May 1993 (as described below under "Transfer of Film Business"), the Company has no current business operations and has begun and will continue to seek another business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful. Transfer of Film Business Pursuant to an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic, the Company on May 12, 1993 (the "Closing") sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc., a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation (collectively, the "Subsidiary Corporations"); (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?" (sometimes collectively herein the "Completed Films"), (iii) the Carlito's Way Rights and (iv) the Van Damme Rights. In connection with the financing of the film "Triumph of the Spirit", the Company was unable to pay to Credit Lyonnais Bank Nederland N.V. (the "Bank") the note payable (the "Bank Loan") incurred to finance such film at its original maturity date of March 31, 1991. As of April 30, 1993, such indebtedness totalled $9,188,864. The Company was able to negotiate an extension of the maturity date of this note until September 30, 1991, but since then the Company has been in default of its obligation. Pursuant to the Acquisition Agreement, at Closing, (a) the Company sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of the Subsidiary Corporations, (ii) the Completed Films, (iii) the Carlito's Way Rights and (iv) the Van Damme Rights, and in exchange therefor, (b) Epic assumed all debts and liabilities of the Company with respect to the assets acquired, paid the Company the sum of $50,000, acquired a substantial portion of the Bank Loan from the Bank as described below and modified the loan arrangements thereunder plus other indebtedness due Epic from the Company. At Closing, Epic acquired all but $3 million of the indebtedness under the Bank Loan from the Bank and modified the payment terms of the Bank Loan assigned to it and other indebtedness of the Company to Epic (which other indebtedness was $983,069 as of April 30, 1993). All of such indebtedness acquired by Epic is hereinafter referred to as the "Primary Obligations". The terms of such modification were as follows: (i) principal shall be due and payable 18 years from Closing, and (ii) interest shall be 6% per annum payable within 45 days following the close of each fiscal year of the Company, payable in arrears commencing October 31, 1993, not to exceed 20% of the net profits of the Company during the applicable year. On October 29, 1993, the Company and Epic entered into an agreement whereby Epic assigned and contributed to the capital of the Company the indebtedness described above as the Primary Obligations of the Company to Epic of $7,171,933 plus accrued and unpaid interest of $201,600. As indicated above, $3 million of indebtedness under the Bank Loan was not acquired by Epic. In connection therewith, the Bank, Epic and the Company entered into an agreement at Closing which provided that such portion of the Bank Loan (the "Nonrecourse Obligations") be nonrecourse to the Company and payable interest and then principal only from operating receipts from "Triumph of the Spirit"which was acquired by Epic pursuant to the Acquisition Agreement. As of November 30, 1995, the Company assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon. As a result thereof, the Company has eliminated its bank indebtedness. Each of the Company and Epic have agreed to indemnify the other in respect of any claims, demands and losses (collectively, "Losses") that may be asserted against, imposed upon and incurred by the other resulting from the breach of any representations, warranties and obligations of the other as contained in the Acquisition Agreement. In addition, Epic has agreed to indemnify the Company for any Losses that arise out of or in any way are connected to or result from the assets being acquired by Epic or any of the Subsidiary Corporations, including without limitation, any claims arising under or with respect to the business, operations and assets of each of the Subsidiary Corporations. Excluded from the foregoing indemnity shall be Losses attributable to fraud or willful misconduct. Also, the Company has agreed to defend and hold Epic harmless against and in respect of any and all liabilities and costs attributable to the litigation which is being assumed by Epic described in the Acquisition Agreement, but only to the extent such liabilities and costs are covered by applicable insurance. As a result of the foregoing, and as stated above, the Company has no current business operations and has begun and will continue to seek another business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful. Financial Information about Industry Segments The Company, which has no current business operations, has begun and will continue to seek another business opportunity. The Company was previously engaged solely in the film industry. As a result, there are no separate industry segments in connection with the business of the Company. For financial information, reference is made to the financial statements included elsewhere herein. Search for Business Opportunities As described above, the Company has no current business operations. As such, the Company can now be defined as a "shell" corporation, whose principal business purpose at this time is to locate and consummate a merger or acquisition with a private entity. Because of the Company's current status, in the event the Company does successfully acquire or merge with an operating business opportunity, it is likely that the Company's present shareholders will experience substantial dilution and there will be a probable change in control of the Company. Management has begun and will continue to investigate, research and, if justified, potentially acquire or merge with one or more businesses or business opportunities. The Company currently has no commitment or arrangement, written or oral, to participate in any business opportunity and management cannot predict the nature of any potential business opportunity it may ultimately consider. Management has broad discretion in its search for and negotiations with any potential business or business opportunity. The Company has determined not to limit its search for a potential business or business opportunity to any specific industry or industries. In this regard, the Company has and will not restrict its search to any specific geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the business under this caption is purposefully general and not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities. No assurance can be given, however, that any transaction will in fact be consummated. Management anticipates that it may be able to participate in only one potential business venture, due primarily to the Company's limited financing. This lack of diversification should be considered a substantial risk to the Company because it will not permit the Company to offset potential losses from one venture against gains from another. The Company may seek a business opportunity in the form of firms which have recently commenced operations, are developing companies in need of additional funds for expansion into new products or markets, are seeking to develop a new product or service, or are established businesses which may be experiencing financial or operating difficulties and are in need of additional capital. In some instances, a business opportunity may involve the acquisition or merger with a company which does not need substantial additional cash but which desires to establish a public trading market for its Common Stock. A company which seeks the Company's participation in attempting to consolidate its operations through a merger, reorganization, asset acquisition, or some other form of combination may desire to do so to avoid what it may deem to be adverse consequences of undertaking a public offering itself. Factors considered may include time delays, significant expense, loss of voting control and the inability or unwillingness to comply with various federal and state laws enacted for the protection of investors. The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, management believes that there are numerous firms seeking even the limited additional capital which the Company has and/or the benefits of a publicly traded corporation. Such perceived benefits of a publicly traded corporation may include facilities or improving the terms on which additional equity financing may be sought, providing liquidity for the principals of a business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all shareholders, and other factors. Potentially available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. The Company has insufficient capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will offer owners of business opportunities the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than is required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. The Company will also incur significant legal and accounting costs in connection with the acquisition of a business opportunity including the costs of preparing Form 8-K's, agreements and related reports and documents. Nevertheless, Management of the Company has not conducted market research and is not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity. The analysis of new business opportunities will be undertaken by or under the supervision of the Company's Chairman of the Board, who is not a professional business analyst. Management intends to concentrate on identifying preliminary prospective business opportunities which may be brought to its attention through present associations. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial, and managerial resources; working capital and other financial requirements; history or operation, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. Management of the Company will meet personally with management and key personnel of the firm sponsoring the business opportunity as part of its investigation. To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors. It may be anticipated that any opportunity in which the Company participates will present certain risks. Many of these risks cannot be adequately identified prior to selection of the specific opportunity, and shareholders of the Company must, therefore, depend on the ability of management to identify and evaluate such risks. In the case of some of the opportunities available to the Company, it may be anticipated that the promoters thereof have been unable to develop a going concern or that such business is in its development stage in that it has not generated significant revenues from its principal business activity prior to the Company's participation, and there is a risk, even after the Company's participation in the activity and the related expenditure of the Company's funds, that the combined enterprises will still be unable to become a going concern or advance beyond the development stage. Many of the opportunities may involve new and untested products, processes, or market strategies which may not succeed. Such risks will be assumed by the Company and, therefore, its shareholders. In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business. It should be noted that the Company likely has insufficient capital with which to make any acquisitions. Accordingly, in any of the transactions alluded to herein, it is likely that the consideration utilized to make any acquisitions will consist of equity securities. In the event that an acquisition is made utilizing primarily equity securities (as is expected to be the case), the percentage ownership of present shareholders will be diluted, the extent of dilution depending upon the amount so issued. Persons acquiring shares in connection with any acquisition of a business may obtain an amount of equity securities sufficient to control the Company. In addition, the Company's Directors may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of the Company's shareholders. Further, if the Company were to issue substantial additional securities in any acquisition, such issuance might have an adverse effect on the trading market in the Company's securities in the future. As part of the Company's investigation, Management of the Company intends to meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company's limited financial resources and management expertise. The manner in which the Company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity, and the relative negotiating strength of the Company and such other management. With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of the Company which target company shareholders would acquire in exchange for their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's shareholders. The Company will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to such closing, will outline the manner of bearing costs if the transaction is not closed, will set forth remedies on default, and will include miscellaneous other terms. Motion Picture Industry Overview The procedures and practices described in the following generalized discussion are intended only to provide a background against which the previous business of the Company may be evaluated. The Company, which has no current business operations, has begun and will continue to seek another business opportunity, which may but may not be in the film industry. The Company was previously engaged solely in the film industry. As stated above, the Company has determined not to limit its search for a potential business or business opportunity to any specific industry or industries. There can be no assurance that the procedures and practices described in the following generalized discussion has applied (or will ever apply) in any particular instances to the business of the Company. Production The process by which an idea or a story becomes a finished motion picture includes several distinct steps, which are described in chronological sequence below. The "producer" is primarily responsible for the execution and implementation of this process. First, a producer acquires the rights to an existing literary property, e.g., a novel, play or short story, or the producer commissions the preparation of a story outline based on an original concept or idea. Next, the producer, with his own funds or funds obtained from others, finances the first draft of a screenplay based on the literary material and also finances any additions, revisions or redrafts that may be required. After a screenplay has been prepared, the producer options or otherwise assembles the director, principal actors and other key creative personnel, and prepares a budget. This phase of making a film is known as "development". Once the project is fully developed, and if not already arranged, the producer must provide or locate financing. The number and combination of financing sources and vehicles is limited only by the imagination. Once the financing has been arranged or committed, the project is ready for "pre-production". During the following approximately three months, locations are secured, casting is completed and the shooting schedule is planned. Next, the principal photography, or the actual "shooting" of the motion picture is commenced. Principal photography is usually ten to twelve weeks in duration. During the "post-production" phase, the film is edited, music and special effects are added, and the sound-track and film are synchronized to produce the master negative from which the prints for the theater projection are made. The post-production phase may take from four to eight months. Distribution Arrangements for the distribution of a motion picture vary greatly. Typically, a motion picture will be released to theaters in the United States and Canada for exhibition first - the "domestic" theatrical market; usually, thereafter, the film is distributed abroad - the "foreign" market. Following domestic and foreign exhibition of a film, the motion picture is distributed further by release of video cassettes, by exhibition on pay television (principally cable and subscription TV), by release to non-theatrical markets (including airlines, ships and schools) and then by exhibition on network and/or syndicated television. Depending upon the actual film product, it is sometimes necessary to alter the foregoing steps in distributing a film. The revenues available from these markets, the time of the receipt of revenues and the relative importance of the various markets have changed dramatically in recent years with the growth of pay television and home video and the increased demand for projects created by and for these markets. The profits of an enterprise involved in the motion picture industry are greatly dependent upon public taste, which is both unpredictable and susceptible to change without warning or explanation. As a result, it is impossible to predict accurately the success or failure of a motion picture. The success of a project may also be significantly affected by the popularity of other motion pictures then being distributed. Moreover, significant problems are often encountered during the production of a motion picture which cannot be reliably ascertained in advance and which are beyond the control of the entities involved. Such problems may include cost overruns, labor problems, delays or inabilities to obtain supplies, props or costumes, equipment breakdowns, injury, illness or death to cast members or the director and weather delays. Accordingly, no assurances can be made that a project will ever be completed, or if completed, that it can be done so in a timely manner. As a result, enterprises involved in the motion picture industry may, therefore, experience delays in generating revenues, if any. In addition, even if a project is completed, any problem encountered during the production of a motion picture may add to the costs of the project which could significantly affect a project's chances of achieving financial success. Employees Other than its two officers, the Company currently has no employees. Competition In connection with its search for another business opportunity, the Company will remain an insignificant participant among firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company's limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors. Item 2. Description of Property. The Company maintains its offices on a rent-free month-to-month basis in office space provided by one of its officers. The office is located at 6350 N.E. Campus Drive, Vancouver, Washington 98661. Item 3. Legal Proceedings. At the present time, there is no material litigation pending or, to management's knowledge, threatened against the Company. Item 4. Submission of Matters to a Vote of Security-Holders. No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders. PART II Item 5. Market for Common Equity and Related Stockholder Matters. The Company's Common Stock is traded in the over-the-counter market and is listed on the OTC Bulletin Board and quoted in the "pink sheets" promulgated by the National Quotation Bureau, Incorporated. To date, there has been only sporadic trading of the Company's Common Stock. The high and low bid quotations for the Company's Common Stock tabulated below represent prices between dealers and do not include retail markups, markdowns, commissions or other adjustments and may not represent actual transactions. Bid Prices Period High Low Fiscal Year Ended October 31, 1998: Nov. 1, 1997 to Jan. 31, 1998 $.01 $.01 Feb. 1, 1998 to April 30, 1998 $.01 $.01 May 1, 1998 to July 31, 1998 $.01 $.01 Aug. 1, 1998 to Oct. 31, 1998 $.01 $.01 Fiscal Year Ended October 31, 1999: Nov. 1, 1998 to Jan. 31, 1999 $.00 $.00 Feb. 1, 1999 to April 30, 1999 $.02 $.01 May 1, 1999 to July 31, 1999 $.16 $.01 Aug. 1, 1999 to Oct. 31, 1999 $.0625 $.01 As of January 31, 2000, there were approximately 625 record holders of the Company's Common Stock. No dividends have been declared or paid on the Company's Common Stock since inception. The Company presently intends to retain earnings, if ever achieved, for use in its business and, therefore, there is no assurance when, or if ever, dividends may be paid. In January 2000, the Company issued 20,000,000 shares of Common Stock to Martin Rifkin and 3,000,000 shares to David M. Kaye. All of such shares were issued at par value ($.00001 per share) for an aggregate consideration of $230 and were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, for "transactions by the issuer not involving any public offering". Item 6. Management's Discussion and Analysis or Plan of Operation. The following discussion should be read in conjunction with the Financial Statements and Notes thereto and is qualified in its entirety by the foregoing. The Company had no revenues for the fiscal years ended October 31, 1998 and 1999. During the fiscal year ended October 31, 1999, the Company had a net loss of $ $(4,433) as compared to a net loss of $(4,254) during the fiscal year ended October 31, 1998. On October 31, 1999, the Company had a working capital deficit and stockholders'deficit of $(2,361), $1,063 in cash, total assets of $1,063 and total liabilities of $3,424. The working capital deficit and stockholders' deficit is principally due to a short term loan made by the President of the Company in order to allow the Company to meet certain working capital needs. At the current time, the Company's sole means to pay for its overhead operations is its existing cash in the total amount of $1,063 as of October 31, 1999. Accordingly, the Company has significantly reduced its overhead. In connection therewith, the Company does not pay any officer salaries and rent. Its costs primarily include only those costs necessary to retain its corporate charter, file necessary tax returns and report to the Securities and Exchange Commission, and certain expenses in seeking business opportunities. In addition, as a result of the closing of the Acquisition Agreement (see Notes to the Financial Statements included elsewhere herein), the Company has no current business operations and has begun and will continue to seek another business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful. Management has indicated that it will cover all operating costs for the foreseeable future. Year 2000 Issue The year 2000 issue is the result of computer programs being written using two digits, rather than four, to define the applicable year. Software programs and hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations causing disruptions of operations, including a temporary inability to engage in normal business activities. As a result, many companies have been required to undertake major projects to address the year 2000 issue. Year 2000 issues are not currently material to the Company's business, operations or financial condition in view of the Company's current lack of business operations. However, year 2000 issues may become material to the Company in the event the Company acquires or participates in another business opportunity. Management intends to address this potential problem with any prospective merger, acquisition candidate or other participant and adopt a plan and a budget for addressing such issues, if necessary. Item 7. Financial Statements. See the Financial Statements annexed to this report. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. Set forth below are the present directors and executive officers of the Company. Note that there are no other persons who have been nominated or chosen to become directors nor are there any other persons who have been chosen to become executive officers. There are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers serve at the discretion of the Board of Directors. Present Position Has Served As Name Age and Offices Director Since William Rifkin 79 Chairman of the Board, December 1984 Secretary and Director Martin Rifkin 38 President, Treasurer April 1985 and Director WILLIAM RIFKIN has been Chairman of the Board and a Director of the Company since December 1984. Since October 1994, he has also been Secretary of the Company. From March 1990 to October 1994, he was also the Company's President. From 1985 through 1991, Mr. Rifkin was a Director of Memory Sciences Corporation, a public company involved in the computer industry, and was its Treasurer from April 1987 to January 1990. Since 1984, he has also been President and a director of Profit Merchandising Corp., a public company engaged in the distribution of weatherstripping products. Mr. Rifkin is the father of Martin Rifkin. MARTIN RIFKIN has been President and Treasurer of the Company since October 1994 and a Director since April 1985. In addition, from April 1985 to October 1994, he was Vice President of the Company. Since December 1985, Mr. Rifkin has been a Director of Nutrition Now, Inc., a public company which manufactures and markets nutritional supplements and since November 1987, he has been its Secretary and Treasurer and since February 1992, its President. Also, from August 1988 to February 1992, he was its Vice President. In addition, Mr. Rifkin has been Treasurer and Director of Profit Merchandising Corp. (see biography of William Rifkin above) since September 1983 and Vice President since June 1985. Since February 1994, Mr. Rifkin has been a Director of Cyberia Holdings, Inc., formerly known as NW Venture Corp. Also, from February 1994 to January 1997, he was its President, Secretary and Treasurer. Martin Rifkin is the son of William Rifkin. Item 10. Executive Compensation. For the fiscal year ended October 31, 1999, none of the Company's executive officers received compensation from the Company. Since inception, no director has received any compensation for his services as such. However, in the past, directors have been and will continue to be reimbursed for reasonable expenses incurred on the Company's behalf. Item 11. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of January 31, 2000, by (i) each person who is known by the Company to own beneficially more than 5% of the Company's outstanding Common Stock; (ii) each of the Company's directors; and (iii) directors and officers of the Company as a group: Number Percent of Shares of Name and Address Owned Class William Rifkin 53,050,000(1) 54.9% 6350 N.E. Campus Drive Vancouver, WA Martin Rifkin 25,450,000(2) 26.4% 6350 N.E. Campus Drive Vancouver, WA All Officers and 78,500,000(1)(2) 81.3% Directors as a Group (consisting of 2 persons) (1) Includes 2,000,000 shares owned of record by the wife of William Rifkin, which shares may be deemed to be beneficially owned by him. (2) Includes 850,000 shares owned of record by the wife of Martin Rifkin, which shares may be deemed to be beneficially owned by him, and 150,000 shares held by Martin Rifkin as custodian for his daughter under the Uniform Gifts to Minors Act. Item 12. Certain Relationships and Related Transactions. During the fiscal year ended October 31, 1999, Martin Rifkin made a short term loan to the Company in order to allow the Company to meet certain working capital needs. As of October 31, 1999, the principal balance owing was in the amount of $2,624. Such loan is without interest and is payable on demand. Item 13. Exhibits, List and Reports on Form 8-K. (a) Exhibits. 3.1 Certificate of Incorporation of Registrant with filing receipt(1) 3.2 Certificate of Amendment of Certificate of Incorporation with filing receipt (filed November 17, 1989)(2) 3.3 By-Laws of Registrant(1) 4.1 Specimen of Common Stock Certificate of Registrant(1) 4.2 Promissory Note in the principal amount of $7,171,933(3) 4.3 Promissory Note in the principal amount of $3,000,000(3) 10.1 Loan Agreement and Security Assignment (for the film "Triumph of the Spirit")(4) 99.1 Acquisition Agreement dated as of March 3, 1993 by and between Nova International Films, Inc. and Epic Productions, Inc.(3) 99.2 Amendment to Loan Agreement and Security Assignment dated as of May 12, 1993 by and between Credit Lyonnais Bank Nederland, N.V., Nova International Films, Inc. and Epic Productions, Inc.(3) 99.3 Amendment to Loan Agreement dated as of May 12, 1993 by and between Epic Productions, Inc. and Nova International Films, Inc.(3) 99.4 Assignment Agreement/Contribution to Capital dated October 29, 1993(5) 99.5 Letter Agreement dated November 30, 1995 (re: Nonrecourse Obligations)(6) (1) Incorporated herein by reference from Registrant's Registration Statement on Form S-18, effective November 12, 1985. (2) Incorporated herein by reference from Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1989. (3) Incorporated herein by reference from Registrant's Current Report on Form 8-K (dated: May 12, 1993). (4) Incorporated herein by reference from Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1990. (5) Incorporated herein by reference from Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1993. (6) Incorporated herein by reference from Registrant's Annual Report on Form 10-K for the fiscal year ended October 31, 1995. (b) Reports on Form 8-K. Listed below are reports on Form 8-K filed during the last quarter of the period covered by this report: None. 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. NOVA INTERNATIONAL FILMS, INC. (Registrant) By: /s/Martin Rifkin Martin Rifkin, President Dated: February 8, 2000 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: Signature Title Date /s/William Rifkin Chairman of the Board, 2/8/00 William Rifkin Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) /s/Martin Rifkin President, Treasurer, 2/8/00 Martin Rifkin and Director GLASSER & HAIMS, P.C. CERTIFIED PUBLIC ACCOUNTANTS 99 WEST HAWTHORNE AVENUE VALLEY STREAM, N.Y. 11580 ALVIN M. GLASSER, C.P.A. (516) 568-2700 IRWIN M. HAIMS, C.P.A. TELECOPIER (516) 568-2911 REPORT OF CERTIFIED PUBLIC ACCOUNTANTS THE BOARD OF DIRECTORS NOVA INTERNATIONAL FILMS, INC. We have audited the accompanying balance sheets of Nova International Films, Inc. as of October 31, 1999 and the related statements of operations, stockholder's equity, and cash flows for the period November 1, 1997 through October 31, 1999. 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 audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evi- dence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Nova International Films, Inc. as of October 31, 1999 and the results of its operations and cash flows for the period indicated above in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has no revenues and business operations which raise substantial doubts about its ability to continue as a going concern, Management's plans in regard to these matters are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. GLASSER & HAIMS, P.C. Valley Stream, New York February 1, 2000 NOVA INTERNATIONAL FILMS, INC. BALANCE SHEETS OCTOBER 31, 1999 ASSETS Cash $1,063 Total assets $ 1,063 LIABILITIESANDSTOCKHOLDERS'EQUITY(DEFICIT) LIABILITIES: Accounts payable and accrued expenses $ 800 Short term loan 2,624 Total liabilities $ 3,424 COMMITMENTS AND CONTINGENCIES - STOCKHOLDERS' EQUITY (DEFICIT): Common Stock, $.00001 par value; 100,000,000 shares authorized, 73,583,000 shares issued and outstanding, respectively. $ 736 Additional paid-in capital 8,197,260 Accumulated deficit (8,200,357) Total stockholders' (deficit) (2,361) Total liabilities and stockholders' (deficit) $1,063 The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF OPERATIONS For the Year For the Year Nov. 1, 1998 Nov. 1, 1997 Through Through Oct. 31, 1999 Oct. 31, 1998 REVENUES $ - $- COST AND EXPENSES: Selling, general and administration expenses $4,434 $4,254 OPERATING LOSS $(4,434) $(4,254) OTHER INCOME Interest income $1 $- LOSS BEFORE PROVISION FOR INCOME TAXES $ (4,433) $(4,254) PROVISION FOR INCOME TAXES - - NET (LOSS) (4,433) $ (4,254) Net (loss) per share $ (.00006) $(.00006) Average no. of share outstanding 73,583,000 73,583,000 The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) YEARS ENDED OCTOBER 31, 1998 AND 1999 Common Stock $.00001 Par Value Additonal No. of Paid-in Shares Amount Capital Balance at October 31, 1997 73,583,000 $ 736 $ 8,197,260 Net Income from 11/1/97 thru 10/31/98 Balance at October 31, 1998 73,583,000 $ 736 $ 8,197,260 Net Income from 11/1/98 thru 10/31/99 Balance at October 31, 1999 73,583,000 $ 736 $ 8,197,260 NOVA INTERNATIONAL FILMS, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (continued) YEARS ENDED OCTOBER 31, 1998 AND 1999 Accumulated Deficit Total Balance at October 31, 1997 $ (8,191,670) $ 6,326 Net Income from 11/1/97 thru 10/31/98 (4,254) (4,254) Balance at October 31, 1998 $ (8,195,924) $ 2,072 Net Income from 11/1/98 thru 10/31/99 (4,433) (4,433) Balance at October 31, 1999 $ (8,200,357) $ (2,361) The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH For the Year For the Year Nov. 1, 1998 Nov. 1, 1997 Through Through Oct.31,1999 Oct.31,1998 Cash flows from operating activities: Net loss $(4,433) $(4,254) Adjustments to reconcile net loss to net cash provided by operating activities: Net changes in assets and liabilities: Accounts payable $(1,000) $(1,000) Total adjustments $(1,000) $(1,000) Net cash (used) by operating activities $(5,433) $(5,254) Cash flows from investing activities: Short term loan $2,624 $- Net cash provided by investing activities $2,624 $- Net (decrease) in cash $ (2,809) $ (5,254) Cash at beginning of period 3,872 9,126 Cash at end of period $1,063 $3,872 The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS October 31, 1999 1) Nature of Business and Organization Nova International Films, Inc. (the Company) was incorporated on November 27, 1984 in the State of Delaware. The Company was formed for the purpose of financing and producing motion pictures for distribution in the theatrical, home video and pay and free television markets throughout the world. a. IssuanceofCommonStock On January 2, 1986, the Company completed a public offering, whereby ten million (10,000,000) units were sold at $.10 per unit, each unit consisting of one (1) share of Common Stock, $.00001 par value, and one (1) Redeemable Common Stock Purchase Warrant. These warrants have now lapsed. b. Disposition of Assets On May 12, 1993 (the "Closing"), the stockholders of the Company approved an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic Productions, Inc. ("Epic"), pursuant to which the Company sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc. a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation (collectively, the "Subsidiary Corporations"); (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?", (sometimes collectively herein the "Completed Films"); and (iii) the Company's rights related to the film project "Carlito's Way" and Jean Claude Van Damme. In exchange therefor, Epic assumed all debts and liabilities of the Company with respect to the assets acquired, paid the Company the sum of $50,000, acquired the Bank Loan from the Bank as described in Note #4 "Debt" and modified the loan arrangements thereafter plus other indebtedness due Epic from the Company. 2) Summary of Significant Accounting Policies a. Financial Statement Presentation In accordance with the provisions of Statement of Financial Accounting Standards No. 53, the Company has elected to present an unclassified balance sheet. b. Per Share Amounts Per share amounts are based on the weighted average number of shares outstanding during the period. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS October 31, 1999 3) Short term loan During the fiscal year ended October 31, 1999, an officer of the Company made a short term loan to the Company in order to allow the Company to meet certain working capital needs. Such loan is without interest and payable on demand. 4) Debt In connection with the financing of the film "Triumph of the Spirit", the Company was unable to pay Credit Lyonnais Bank Nederland N.V. (the "Bank") the note payable (the "Bank Loan") incurred to finance such film at its original maturity date of March 31, 1991. The Company was able to negotiate an extension of the maturity date of this note until September 30, 1991, but thereupon the Company became in default of its obligation. Upon the Closing of the Acquisition Agreement, Epic acquired the Bank Loan from the Bank and modified the payment terms of the Bank Loan assigned to it and other indebtedness of the Company to Epic. In October 1993, Epic assigned and contributed to the capital of the Company all of such indebtedness of the Company to Epic plus accrued and unpaid interest. In addition, at the Closing, $3 million of indebtedness (plus interest thereon) under the Bank Loan was not acquired by Epic, pursuant to which the Bank, Epic and the Company agreed that such portion of the Bank Loan (The "Nonrecourse Obligations") be payable interest and then principal only from operating receipts from "Triumph of the Spirit" which was acquired by Epic pursuant to the Acquisition Agreement. As of November 30, 1995, Nova assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon. 5) Liquidity and Capital Resources At the current time, the Company's sole means to pay for its overhead operations is its existing cash reserves in the total amount of $1,062. Accordingly, the Company has significantly reduced its overhead. The Company has no current business operations and has begun and will continue to seek another business opportunity. At this time the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements, or if consummated, that such business opportunity will be successful. Management has indicated that it will cover all operating costs for the foreseeable future. EX-27 2 ART. 5 FDS FOR FISCAL YEAR 10-KSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NOVA INTERNATIONAL FILMS, INC.'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR OCT-31-1999 OCT-31-1999 1,063 0 0 0 0 1,063 0 0 1,063 3,424 0 736 0 0 8,197,260 1,063 0 0 0 0 4,434 0 0 (4,433) 0 (4,433) 0 0 0 (4,433) .000 .000
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