-----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, UwpevXity+VkITQ8XEOA7Dk+7lQHBWTfP6JIiVfdzQJCwP0gGG29HyyTtv6GUWaz qVcBVVxqbYZOCVWBslXZyw== 0000945836-96-000012.txt : 19960613 0000945836-96-000012.hdr.sgml : 19960613 ACCESSION NUMBER: 0000945836-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960612 SROS: NONE 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-98997-NY FILM NUMBER: 96579882 BUSINESS ADDRESS: STREET 1: 501 S E COLUMBIA SHORES BLVD STREET 2: SUITE 350 CITY: VANCOUVER STATE: WA ZIP: 98661 BUSINESS PHONE: 2067376800 MAIL ADDRESS: STREET 1: 501 S E COLUMBIA SHORES BLVD SUITE 350 CITY: VANCOUVER STATE: WA ZIP: 98661 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 2-98997-NY NOVA INTERNATIONAL FILMS,INC. (Exact name of Registrant as specified in its charter) Delaware 11-2717273 (State or other jurisdiction I.R.S. Employer of incorporation or Identification organization) Number) 501 S.E. Columbia Shores Boulevard Suite 350 Vancouver, Washington (Address of principal 98661 executive offices) (Zip Code) Registrant's telephone number, including area code: (360)737-6800 Indicate by check mark 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. Yes X No Indicate the number of shares outstanding of each of the Issuer's classes of common stock, as of the latest practicable date: Common, $.00001 par value per share: 73,583,000 outstanding as of June 1, 1996 PART I - FINANCIAL INFORMATION Item 1. Financial Statements NOVA INTERNATIONAL FILMS, INC. Index to Financial Information Period Ended April 30, 1996
Item Page Item 1 - Financial Statements Balance Sheets 3 Statements of Operations 4-5 Statements of Cash Flows 6-7 Notes to Financial Statements 8-11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 12
NOVA INTERNATIONAL FILMS, INC. BALANCE SHEETS (Unaudited)
APRIL 30, OCTOBER 31, 1996 1995 ASSETS Cash $ 17,731 $ 23,619 Furniture and equipment at cost, less accumulated depreciation 586 781 Total assets $ 18,317 $ 24,400 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) LIABILITIES: Accounts payable and accrued expenses $ 5,000 $ 5,936 Debt - 3,375,119 Total liabilities $ 5,000 $ 3,381,055 COMMITMENTS AND CONTINGENCIE - - STOCKHOLDERS' EQUITY (DEFICIT): Common Stock, $.00001 par value; 100,000,000 shares authorized, 73,583,000 shares issued and outstanding, respectively. $ 736 $ 736 Additional paid-in capital 8,197,260 8,197,260 Accumulated deficit (8,184,679) (11,554,651) Total stockholders' equity (deficit) $ 13,317 $ (3,356,655) Total liabilities and stockholders' equity (deficit) $ 18,317 $ 24,400
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF OPERATIONS (Unaudited)
For the Quarter For the Quarter Ended Ended April 30, 1996 April 30, 1995 REVENUES $ - $ - COSTS AND EXPENSES: General and administrative 3,843 2,563 Depreciation and amortization 98 563 3,941 3,126 OPERATING LOSS (3,941) (3,126) OTHER INCOME: Interest income 108 201 108 201 OTHER EXPENSES: Interest expense - 77,191 - 77,191 LOSS BEFORE PROVISION FOR INCOME TAXES (3,833) (80,116) PROVISION FOR INCOME TAXES - - NET LOSS BEFORE EXTRAORDINARY INCOME (3,833) (80,116) EXTRAORDINARY INCOME: Forgiveness of Debt - - NET INCOME (LOSS) $ (3,833) $ (80,116) Net income (loss) per share (.00005) $ (0.0011) Average no. of shares outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF OPERATIONS (CONT'D.) (Unaudited)
For the Six Mos. For the Six Mos. Ended Ended April 30, 1996 April 30, 1995 REVENUES $ - $ - COSTS AND EXPENSES: General and administrative 5,183 7,018 Depreciation and amortization 195 1,127 5,378 8,145 OPERATING LOSS (5,378) (8,145) OTHER INCOME: Interest income 231 451 231 451 OTHER EXPENSES: Interest expense - 152,936 - 152,936 LOSS BEFORE PROVISION FOR INCOME TAXES (5,147) (160,630) PROVISION FOR INCOME TAXES - - NET LOSS BEFORE EXTRAORDINARY INCOME (5,147) (160,630) EXTRAORDINARY INCOME: Forgiveness of Debt 3,375,119 - NET INCOME (LOSS) $ 3,369,972 $ (160,630) Net income (loss) per share .04580 $ (0.0022) Average no. of shares outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (Unaudited)
For the Quarter For the Quarter Ended Ended Apr. 30, 1996 Apr. 30, 1995 Cash flows from operating activities: Net loss $ (3,833) $ (80,116) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 98 563 Net changes in assets and liabilities: Accounts payable - - Total adjustments 98 563 Net cash provided (used) by operating activities (3,735) (79,553) Cash flows from financing activities: Net proceeds from debt financing - 77,191 Net cash provided (used) by financing activities - 77,191 Net (decrease) increase in cash (3,735) (2,362) Cash at beginning of period 21,466 34,736 Cash at end of period $ 17,731 $ 32,374
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CASH FLOWS (CONT'D.) INCREASE (DECREASE) IN CASH (Unaudited)
For the Six Mos. For the Six Mos. Ended Ended Apr. 30, 1996 Apr. 30, 1995 Cash flows from operating activities: Net loss $ (5,147) $ (160,630) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 195 1,127 Net changes in assets and liabilities: Accounts payable (936) - Total adjustments (741) 1,127 Net cash provided (used) by operating activities (5,888) (159,529) Cash flows from financing activities: Net proceeds from debt financing - 152,936 Net cash provided (used) by financing activities - 152,936 Net (decrease) increase in cash (5,888) (6,593) Cash at beginning of period 23,619 38,967 Cash at end of period $ 17,731 $ 32,374
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1996 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. Issuance of Common Stock 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 #5 "Debt" and modified the loan arrangements thereafter plus other indebtedness due Epic from the Company. 2) General The financial statements for the year ended October 31, 1995 are unaudited. However, it is management's opinion that all adjustments necessary for fair presentation of these financial statements have been made and are included herein. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1996 3) 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. Film Costs Film costs, including related interest and production overhead, are capitalized as incurred. Film costs also include costs associated with film promotion and distribution. The individual film forecast method is used to amortize film costs based upon the revenue recognized in proportion to management's estimate of ultimate revenues to be received. Estimated future revenues are reviewed periodically by management and revised when appropriate. Profit participation, if any, are accrued in the same manner. Unamortized film costs are compared with net realizable values on a film-by-film basis and losses are provided when appropriate. c. Revenue Recognition Film rental revenues are recognized in accordance with the provisions of Statement of Financial Accounting Standards No. 53. Revenues from theatrical distribution of films in the United States and Canada are recognized on the dates of exhibition. Revenues from foreign, home video, television and pay television license agreements are recognized when the license period begins and the film is available for release pursuant to the terms of the license agreement between the distributor and the sub-distributor. Amounts received from the distributor prior to the availability of the films are recorded as deferred revenue. Once completed, a typical theatrical film will generally be made available for license as follows:
Months After Market place Initial Release Period Domestic theatrical 6 months All foreign markets 2 to 5 years Domestic home video 6 months 6 months Domestic cable/pay television 12 to 18 months 1 to 2 years Domestic syndication television 30 to 60 months 5 to 7 years
NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1996 d. Depreciation and Amortization Furniture and equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of the related assets, which is typically five years. e. Per Share Amounts Per share amounts are based on the weighted average number of shares outstanding during the period. 4) Furniture and Equipment The following is a summary of Furniture and Equipment at cost, less accumulated depreciation:
April 30, October 31, 1996 1995 Office/Computer Equipment $38,153 $38,153 Telephone Equipment 10,934 10,934 Furniture & Equipment at cost 49,087 49,087 Accumulated Depreciation 48,501 48,306 $ 586 $ 781
5) 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. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS April 30, 1996 As of November 30, 1996, Nova assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon. As such no interest was accrued for Fiscal Year Ended October 31, 1995. 7) 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 $17,731 as of April 30, 1996. Accordingly, the Company has significantly reduced its overhead. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations During the fiscal quarter ended April 30, 1996, the Company had a net loss of $(3,833) as compared to a net loss of $(80,116) for the fiscal quarter ended April 30, 1995. For the six months ended April 30, 1996, the Company had net income of $3,369,972 as compared to a net loss of $(160,630) for the six months ended April 30, 1995. The net income for the six months ended April 30, 1996 is principally due to the forgiveness of debt of $3,375,119 resulting from Epic assuming as of November 30, 1995 the remaining $3 million Nonrecourse Obligations. As a result of the foregoing, the Company has eliminated its bank indebtedness. 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 $17,731 as of April 30, 1996. Accordingly, the Company has significantly reduced its overhead. In addition, as a result of the closing of the Acquisition Agreement (see Notes to the Financial Statements included herein), the Company has no current business operations and has begun and will continue to seek another business opportunity which may or may not be in the film industry. 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. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security-Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. There are no exhibits applicable to this Form 10-Q. (b) Reports on Form 8-K. Listed below are reports on Form 8-K filed during the quarter for which this report is filed: None. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOVA INTERNATIONAL FILMS, INC. (Registrant) Dated: June 10, 1996 By: /s/William Rifkin William Rifkin, Chairman of the Board (Principal Executive Officer) Dated: June 10, 1996 By: /s/William Rifkin William Rifkin, Principal Financial Officer EX-27 2 ART. 5 FDS FOR SECOND QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NOVA INTERNATIONAL FILMS, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED APRIL 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS OCT-31-1996 APR-30-1996 17,731 0 0 0 0 17,731 586 0 18,317 5,000 0 736 0 0 8,197,260 18,317 0 0 0 0 5,378 0 0 (5,147) 0 (5,147) 0 3,375,119 0 3,369,972 .046 .046
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