-----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, MXp1/CGvVLxGQfXO65/N3ZLjM1JEh4QpfRT+GyNprB4ZzpZ/+mXwrzYiKiNAh2vx q/pfCc11QmPUhuoUO142/A== 0001000096-03-000588.txt : 20031119 0001000096-03-000588.hdr.sgml : 20031119 20031119172920 ACCESSION NUMBER: 0001000096-03-000588 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA CABLE & COMMUNICATION INC CENTRAL INDEX KEY: 0000773394 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 112717273 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 002-98997-NY FILM NUMBER: 031013818 BUSINESS ADDRESS: STREET 1: SUITE 805, ONE PACIFICE PLACE CITY: 88 QUEENSWAY STATE: K3 ZIP: XXXXX BUSINESS PHONE: 852 2591 1221 MAIL ADDRESS: STREET 1: SUITE 805, ONE PACIFICE PLACE CITY: 88 QUEENSWAY STATE: K3 ZIP: XXXXX FORMER COMPANY: FORMER CONFORMED NAME: CHINA CABLE & COMMUNICATIONS INC DATE OF NAME CHANGE: 20030801 FORMER COMPANY: FORMER CONFORMED NAME: NOVA INTERNATIONAL FILMS INC DATE OF NAME CHANGE: 19920703 10QSB 1 chinacable9302003.txt FORM 10-QSB (9-30-2003) U.S. SECURITIES EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: Commission File Number: September 30, 2003 2-98997-NY CHINA CABLE AND COMMUNICATION, INC. - -------------------------------------------------------------------------------- (Exact name of Company as specified in its charter) DELAWARE 11-2717273 ------------------------------ ---------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) Suite 805, One Pacific Place, 88 Queensway, Hong Kong - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (852) 2591 1221 - -------------------------------------------------------------------------------- (Company's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Company (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 Company was required to file such reports) and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- The number of shares of Common Stock outstanding as of September 30, 2003 was 72,057,760. Transitional Small Business Disclosure Format (check one): Yes No X ----- ----- CHINA CABLE AND COMMUNICATION, INC. FORM 10-QSB INDEX Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements..............................................1 Item 2. Management's Discussion and Analysis or Plan of Operations.......11 Item 3. Controls and Procedures..........................................16 PART II - OTHER INFORMATION Item 1. Legal Proceedings................................................17 Item 2. Changes in Securities; Recent Sales of Unregistered Securities...17 Item 3. Defaults Upon Senior Security Holders............................18 Item 4. Submission of Matters to a Vote of Security Holders..............18 Item 5. Other Information................................................18 Item 6. Exhibits and Reports on Form 8-K.................................19 SIGNATURES .................................................................20
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CHINA CABLE AND COMMUNICATION, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS September 30, December 31, 2003 2002 (unaudited) (audited) CURRENT ASSETS Cash at bank $ 3,911,399 $ -- Deferred merger cost -- 20,468 Deferred consulting fees 3,412,735 -- ------------ ------------ Total current assets 7,324,134 20,468 ------------ ------------ NON-CURRENT ASSETS Equity investment 7,394,510 7,218,860 ------------ ------------ Total assets $ 14,718,644 $ 7,239,328 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 363,466 $ 20,468 Amount due to a shareholder 127,276 -- Amount due to a director 2,500 -- ------------ ------------ Total liabilities 493,242 20,468 ------------ ------------ STOCKHOLDERS' EQUITY Preferred Stock, $0.0001 par value, 20,000,000 shares authorized, 2,758,621 8% convertible shares issued and outstanding 276 -- Common Stock, $.00001 par value; 100,000,000 shares authorized, 72,057,760 shares issued and outstanding 721 1,000 Additional paid-in capital 20,345,152 5,874,892 Retained earnings (deficit) (6,120,747) 1,342,968 ------------ ------------ Total stockholders' equity 14,225,402 7,218,860 ------------ ------------ Total liabilities and stockholders' equity $ 14,718,644 $ 7,239,328 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 1 CHINA CABLE AND COMMUNICATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (unaudited) 2003 2002 REVENUE $ -- $ -- EXPENSES Directors' compensation (755,437) -- Professional fees (79,909) -- Consulting fees (1,543,377) -- ------------ -------------- LOSS FROM OPERATIONS (2,378,723) -- OTHER INCOME (EXPENSES) Interest income 542 -- Equity in earnings of investment (64,911) (126,687) ------------ -------------- LOSS BEFORE TAXES (2,443,092) (126,687) PROVISION FOR INCOME TAXES -- -- ------------ -------------- NET LOSS (2,443,092) $ (126,687) ============ ============== Net loss per share - basic $ (0.04) $ (0.00) ============ ============== - diluted $ (0.04) $ (0.00) ------------ -------------- Weighted average no. of shares outstanding - basic 62,864,347 49,567,002 ------------ -------------- - diluted 62,924,976 49,567,002 ============ ============== Note: The number of weighted average shares outstanding as at September 30, 2002 is the amount of shares issued for the reverse merger and is for comparison purposes only. The accompanying notes are an integral part of these consolidated financial statements. 2 CHINA CABLE AND COMMUNICATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (unaudited) 2003 2002 REVENUE $ -- $ -- EXPENSES Directors' compensation (995,970) -- Professional fees (138,883) -- Consulting fees (2,734,842) -- ------------ ------------ LOSS FROM OPERATIONS (3,869,695) -- OTHER INCOME (EXPENSES) Merger costs (3,770,416) -- Interest income 867 -- Bank charges (121) -- Equity in earnings of investment 175,650 77,655 ------------ ------------ PROFIT (LOSS) BEFORE TAXES (7,463,715) 77,655 PROVISION FOR INCOME TAXES -- -- ------------ ------------ NET INCOME (LOSS) $ (7,463,715) $ 77,655 ============ ============ Net income (loss) per share - basic $ (0.12) $ 0.00 ============ ============ - diluted (0.12) 0.00 ------------ ------------ Weighted average no. of shares outstanding - basic 62,864,347 49,567,002 ------------ ------------ - diluted 62,924,976 49,567,002 ============ ============ Note: The number of weighted average shares outstanding as at September 30, 2002 is the amount of shares issued for the reverse merger and is for comparison purposes only. The accompanying notes are an integral part of these consolidated financial statements. 3 CHINA CABLE AND COMMUNICATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (unaudited) 2003 2002 Cash flows from operating activities: Net (loss) income $(7,463,715) $ 77,655 Adjustments to reconcile net loss to net cash used in operating activities: Stock issued for consulting fees 2,734,842 -- Stock issued for directors' compensation 931,080 -- Stock issued for financial advisory services 10,350 -- Merger costs paid by the issue of shares 3,689,000 -- Equity in earnings of investment (175,650) (77,655) Changes in operating assets and liabilities: Decrease in deferred merger costs 20,468 -- Increase in accounts payable and accrued liabilities 342,998 -- ----------- ----------- Net cash generated from operating activities 89,373 -- ----------- ----------- Cash flows from financing activities: Cash received from exercise of options 50,000 -- Cash received from issuance of 8% convertible preferred stock, net of direct expenses 3,642,150 Cash received in merger 1,809 Increase in amounts due to a shareholder and a director 129,776 -- Repayment of short term loan from related party (1,709) -- ----------- ----------- Net cash provided by financing activities 3,822,026 -- ----------- ----------- Net increase in cash 3,911,399 -- Cash at beginning of period -- -- ----------- ----------- Cash at end of period $ 3,911,399 $ -- =========== =========== Supplemental schedule of non-cash investing and financing activities: Common shares issued for consulting and directors' fees $ 7,078,657 $ -- Common shares issued for merger costs $ 3,689,000 $ -- The accompanying notes are an integral part of these consolidated financial statements. 4
CHINA CABLE AND COMMUNICATION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (UNITED STATES DOLLARS) 1. DESCRIPTION OF BUSINESS AND BUSINESS COMBINATION China Cable and Communication, Inc., formerly Nova International Films, Inc. (the "Company"), was incorporated on November 27, 1984 in the State of Delaware. During February 2003, the Company acquired (the "Acquisition") all of the issued and outstanding shares of Solar Touch Limited ("Solar Touch") from Kingston Global Co. Limited ("Kingston") in a reverse merger. As consideration for Solar Touch's shares, the Company issued 49,567,002 shares of its common stock to Kingston and Sino Concept Enterprises Limited (the "Sellers"). In addition to the common stock issued to the Sellers, the Company also issued 4,760,931 shares to the Seller's financial consultants. The consideration for the Acquisition was determined through arms' length negotiations between the management of the Company and the Sellers. Solar Touch is a British Virgin Islands corporation which owns a 49% equity interest in Baoding Pascali Broadcasting Cable TV Integrated Information Networking Co., Limited ("Baoding"). Baoding is a Sino-foreign joint venture. Baoding Pascali Multimedia Transmission Networking Co. Limited ("Baoding Multimedia"), which is a subsidiary of Baoding Pascali Group Limited, a state-owned enterprise established in the Peoples Republic of China ("PRC"), owns the remaining 51% interest in the joint venture. Baoding, a company established in the PRC and located in the city of Baoding, was formed pursuant to a joint venture agreement dated July 23, 1999 and signed between Baoding Multimedia and Solar Touch. Baoding is to operate for a period of 20 years and is principally engaged in the construction and operation of a cable integrated TV transmission network system in the same area. 2. BASIS OF PRESENTATION The interim consolidated financial statements have been prepared by the Company and include all material adjustments which in the opinion of management are necessary for a fair presentation of financial results for the nine months ended September 30, 2003 and 2002. All adjustments and provisions included in these statements are of normal recurring nature. The December 31, 2002 audited balance sheet only includes the balances of Solar Touch Limited and is for comparative purposes only. The information contained herein is condensed from that which would appear in the annual financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the Solar Touch financial statements and related notes thereto included in the Form 8-K dated February 28, 2003 filed by the Company with the Securities and Exchange Commission. In addition, the financial statements included herein should be read in conjunction with the financial statements of the Company included in the Form 10-KSB for the year ended October 31, 2002 and the Forms 10-QSB for the quarters ended January 31, 2003, March 31, 2003 (as amended), and June 30, 2003 (as amended). The results of operations for the interim period presented are not necessarily indicative of the results that can be expected for the entire year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results. 5 CHINA CABLE AND COMMUNICATION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMEBR 30, 2003 AND 2002 (UNAUDITED) (UNITED STATES DOLLARS) 3. EQUITY INVESTMENT The equity investment represents a 49% equity interest in Baoding, a company established in the PRC and principally engaged in the construction and operation of a cable integrated TV transmission network system in Baoding, the PRC. Baoding maintains its books and records in Renminbi ("RMB"), the PRC's currency. Translation of amounts in United States dollars ("US$") has been made at the single rate of exchange of US$1.00:RMB8.3. No representation is made that RMB amounts have been or could be, converted into US$ at that rate. On January 1, 1994, the PRC government introduced a single rate of exchange as quoted daily by the People's Bank of China (the "Unified Exchange Rate"). This quotation of exchange rates does not imply free convertibility of RMB to other foreign currencies. All foreign exchange transactions continue to take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rate quoted by the People's Bank of China. Approval of foreign currency payments by the Bank of China or other institutions requires submitting a payment application form together with suppliers' invoices, shipping documents and signed contracts. As of September 30, 2003, the unaudited condensed balance sheet of Baoding was as follows: Current assets $ 2,331,055 Non-current assets 16,998,463 ----------- Total assets $19,329,518 =========== Current liabilities $ 4,182,107 Capital and reserves 15,147,411 ----------- Total liabilities and equity $19,329,518 =========== The unaudited results of operations of Baoding for the three months ended September 30, 2003 and 2002 are summarized as follows:
2003 2002 Net sales $ 464,697 $ 451,976 ========= ========= Loss from operations $(175,702) $(256,717) Other income (expenses) 5,869 (1,827) --------- --------- Income (Loss) before tax provision (169,833) (258,544) Income tax 37,361 -- --------- --------- Net income (loss) $(132,472) $(258,544) ========= ========= The Company's equity in earnings of Baoding (49%) $ (64,911) $(126,687) ========= ========= 6 The unaudited results of operations of Baoding for the nine months ended September 30, 2003 and 2002 are summarized as follows: 2003 2002 Net sales $ 2,691,755 $ 2,395,462 =========== =========== Income from operations $ 481,440 $ 161,819 Other income (expenses) 5,956 (3,339) ----------- ----------- Income before tax provision 487,396 158,480 Income tax (128,927) -- ----------- ----------- Net income $ 358,469 $ 158,480 =========== =========== The Company's equity in earnings of Baoding (49%) $ 175,650 $ 77,655 =========== ===========
4. AMOUNTS DUE TO A SHAREHOLDER AND A DIRECTOR The amounts due to a shareholder and a director are unsecured, non-interest bearing and repayable on demand. 5. 8% CONVERTIBLE PREFERRED STOCK On September 25, 2003, the Company completed the sale of 2,758,621 shares of the Company's restricted 8% Convertible Preferred Stock, par value $.0001 per share (the "Preferred Stock"), to Gryphon Master Fund, L.P., a Bermuda limited partnership (the "Purchaser"), for $1.45 per share or an aggregate purchase price of $4,000,000. The purchase price is equal to 90% of the moving average closing price of the Company's common stock for the 60 trading days immediately prior to the entering into of the agreement. In connection with this transaction, the Company also issued to the Purchaser warrants to purchase up to 827,586 shares of the Company's restricted common stock for $2.18 per share until September 24, 2008 (the "Warrants"). The sale of the Preferred Stock and the Warrants to the Purchaser was made in a private placement transaction in reliance upon an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company intends to use the proceeds from this transaction for working capital purposes, and for possible future acquisitions, of which there is no assurance. The Preferred Stock accrues dividends at the rate of 8% of the purchase price per share per annum, payable when, as and if declared by the Board of Directors on September 30 and March 31 of each year commencing with March 31, 2004. The Preferred Stock is senior to the common stock with respect to the payment of dividends, redemption payments and rights upon liquidation, dissolution or winding up of the affairs of the Company. Upon liquidation, the 7 Preferred Stock is entitled to receive a liquidation preference equal to the purchase price plus the amount of accrued and unpaid dividends. The Company may redeem the Preferred Stock at any time after September 25, 2004 if the market price of the common stock for a period of any 20 out of 30 trading days equals or exceeds 200% of the conversion price then in effect. The conversion price currently in effect is equal to the purchase price of $1.45 per share. Until redeemed, the Preferred Stock can be converted into common stock at a rate per share equal to the purchase price, subject to adjustment. 6. INCOME TAXES Solar Touch is a British Virgin Islands investment holding company and does not carry on any business and does not maintain any offices in the United States of America. No provision for income taxes or tax benefits for the Company has been made. Boading is a Sino-foreign joint venture established in PRC. Boading is subject to 33% income tax on the results for the year after adjusting for items which are non-assessable or disallowed. Certain items of income and expense are recognized for tax purposes in a different accounting period from that in which they are recognized in the income statement. No provision for income tax has been made in 2002 as Boading was granted a tax benefit and was exempted from income tax for the years of 2001 and 2002. The Company provides for deferred income taxes using the liability method, by which deferred income taxes are recognized for all significant temporary differences between the tax and financial statement bases of assets and liabilities. The tax consequences of those differences are classified as current or non-current based upon the classification of the related asset and liabilities in the financial statements. No provision for deferred taxation has been made, as there are no temporary differences at the balance sheet date. 7. EARNINGS (LOSS) PER COMMON SHARE Basic EPS amounts are based on the weighted average shares of common stock outstanding. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible preferred stock, unless the effect is to reduce a loss or increase earnings per share. For presentation and comparative purposes, the Company has assumed 49,567,002 shares were outstanding during 2002 to the date of the reverse merger of the Company and Solar Touch Limited. 8. OPTION AGREEMENT On February 28, 2003, the Company granted an option to DSS Associates, Carter Fleming International Ltd., Grand Unison Limited, and Emerging Growth Partners, Inc. (the "Optionees") to purchase an aggregate of 4,750,000 shares of common stock of the Company for $50,000. The optionees facilitated the acquisition of the Company and Solar Touch. On April 30, 2003, the optionees exercised the 4,750,000 options. In accordance with Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation ("SFAS 123") and the Emerging Issues Task Force Consensus in Issue No. 96-18 "Accounting for Equity Investments that are Issued to Other than Employees for Acquiring, or in Conjunction with selling, Goods or Services" ("EIFT 96-18"), the Company expensed $2,945,000 associated with these options and included this expense in "Merger Costs" for the nine months ended September 30, 2003. 9. DIRECTORS' COMPENSATION During the nine months ended September 30, 2003, 280,000 shares of the Company's common stock were issued in lieu of cash to three of its directors, Mr. George Raney, Mr. Raymond Ying-Wai Kwan, and Mr. Yau-Sing Tang as compensation for their services rendered to the Company. In addition, on August 8, 2003, the Company approved another director's compensation agreement with Mr. Jun-Tang Zhao to compensate him for acting as a director and head of project development in China for a period of two years starting from February 28, 2003 by issuing 1,000,000 shares of the Company's common stock. The director compensation agreement with Mr. Zhao was terminated on October 27, 2003 and the remaining director's compensation of $516,668 was expensed immediately in the three months ended September 30, 2003. In accordance with SFAS 123 and EITF 96-18, the Company has accounted for the directors' compensation based on the approximate fair market value of the Company's stock for the periods the services were rendered. For the three months and nine months ended September 30, 2003, the Company expensed $755,437 and $995,970 respectively, as directors' compensation. 10. CONSULTING AGREEMENTS On February 28, 2003, the Company entered into one-year consulting agreements with GCA Consulting Limited ("GCA") and Orient Financial Services, Inc. ("Orient"). The services to be rendered include consultation and advisory services relating to administrative and corporate development of the Company and other managerial assistance as mutually agreed upon between the parties hereto. As consideration for the services to be rendered, the Company issued 2,960,931 and 1,800,000 shares of common stock to GCA and Orient, respectively. 8 On May 3, 2003, the Company entered into a one-year consulting agreement with Mr. Patrick J. Ko. The services to be rendered include consultation and advisory services relating to management and identification of potential strategic partners in the United States. As consideration for the services to be rendered, the Company issued 500,000 shares of common stock and five-year warrants to purchase 250,000 shares of common stock, with an exercise price equal to $0.45 per share. On May 30, 2003, the Company entered into a one-year consulting agreement with Mr. Rong-song Ni. The services to be rendered include consultation and advisory services relating to the strategic planning of the Company and identification of a potential joint venture partner in China. As consideration for the services to be rendered, the Company issued 1,000,000 shares of common stock and five-year warrants to purchase 1,000,000 shares of common stock, with an exercise price of $0.45 per share. On June 26, 2003, the Company entered into a one-month consulting agreement with Mr. Jason M. Genet who is primarily focused on identification of potential merger and acquisition activities and strategic partnership. As consideration for the services rendered, the Company issued 75,000 shares of common stock to him. On July 3, 2003 and July 7, 2003, the Company entered into one-year consulting agreements with each of Mr. Chiu-wing Chiu and Mr. Wai Tam, respectively. The services to be rendered include identifying targets for the acquisition by using the Company's equity securities. As consideration for the services to be rendered, the Company issued 600,000 and 2,200,000 shares of common stock to Mr. Chiu and Mr. Tam, respectively. On September 2, 2003, the Company entered into another one-year consulting agreement with Mr. Jason M. Genet, who is primarily focused on identification of potential merger and acquisition activities and strategic partnerships. As consideration for these services, the Company issued 65,000 shares of common stock to him. On August 22, 2003 the Company entered into an agreement with Friedland Capital Inc. ("Friedland") pursuant to which Friedland agreed to provide financial advisory services to the Company for a monthly fee. On August 22, 2003, the Company issued 5,000 shares of restricted common stock to Friedland, in consideration for services performed. Pursuant to Friedland's engagement letter with the Company, Friedland's fees are payable in cash or registered shares of Company common stock only. On October 6, 2003, the Company cancelled the 5,000 shares of common stock and paid the outstanding fees payable to Friedland in cash of $15,000. In accordance("SFAS 123") and ("EITF 96-18"), the Company has accounted for the consulting agreements based on the fair market value of the Company's stock at the commencement date of the agreement. For the three months and nine months ended September 30, 2003, the Company expensed $1,543,377 and $2,734,842, respectively associated with these agreements and recorded deferred consulting fees of $3,412,735 at September 30, 2003. 9 11. SHARES ISSUED TO MR. YAU-SING TANG By a directors' resolution dated August 8, 2003, the Company's board of directors approved the issuance of 1,200,000 shares of the Company's common stock to Mr. Yau-Sing Tang for his services rendered in connection with the acquisition of Solar Touch Limited on February 28, 2003. In accordance with SFAS 123 and EITF 96-18, the Company expensed $744,000 associated with the issuance of these shares and recorded this expense in "Merger Costs" for the nine months ended September 30, 2003. 12. SHARES ISSUED IN CONNECTION WITH GRYPHON TRANSACTION On September 25, 2003, the Company issued 2,758,621 shares of Preferred Stock to Gryphon Master Fund, L.P. ("Gryphon") for a purchase price of $1.45 per share and also issued five year warrants to purchase 827,586 shares of Common Stock at a price per share of $2.18 until September 25, 2008. 13. RELATED PARTY TRANSACTIONS During the nine month period ended September 30, 2003, the Company did not have any full-time employees. However, two full-time employees of the Company's holding company, China Convergent Corporation Limited ("CCCL"), work for the Company at the direction of CCCL. Their salaries are paid by CCCL. In addition, the Company shares offices with CCCL. The monthly lease payments are paid by CCCL. 10 Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS This quarterly report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company's future financial performance. The Company has attempted to identity forward-looking statements by terminology including "anticipates," "believes," "expects," "can," "continue," "could," estimates," "intends," "may," "plans," "potential," "predict," "should" or "will" or the negative of these terms or other comparable terminology. Although the Company believes that the expectation reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of activity, performance or achievements. The Company expectations are as of the date this Form 10-QSB is filed, and the Company does not intend to update any of the forward-looking statements after the date this quarterly report on Form 10-QSB is filed to confirm these statements to actual results, unless required by law. Overview China Cable and Communication, Inc., formerly Nova International Films, Inc. (the "Company") was incorporated on November 27, 1984 in the State of Delaware. Prior to May 1993, the Company was principally engaged in the business of developing, financing and producing motion pictures for distribution. Since May 1993, however, the Company did not have current business operations until February 2003 when, pursuant to a Share Exchange Agreement (the "Exchange Agreement"), the Company acquired a 100% ownership interest in Solar Touch Limited ("Solar Touch") in exchange for 49,567,002 (post-split) shares of the Company's common stock. In addition, the Exchange Agreement provided for the issuance of approximately 4,760,931 (post-split) shares to certain financial consultants. Solar Touch is a British Virgin Islands corporation, which owns a 49% equity interest in Baoding Pascali Broadcasting Cable TV Integrated Information Networking, Co., Ltd. ("Baoding"). Baoding is a Sino-foreign joint venture. Baoding Pascali Multimedia Transmission Networking Co. Limited ("Baoding Multimedia"), which is a subsidiary of Baoding Pascali Group Limited, a state-owned enterprise established in the PRC, owns the remaining 51% interest in the joint venture Baoding, a company established in the People's Republic of China ("PRC"), owns and operates an exclusive cable TV network ("Baoding network") in the municipality of Baoding, near Beijing, in the PRC. Baoding network is one of the major backbone cable television networks in Hebei Province in the PRC. Located 85 miles south of Beijing, Baoding network currently has 200,000 subscribers within a population of approximately 10 million, comprising approximately 1.9 million households. With its fiber optic network, Baoding network is capable of transmitting 37 analog television programs, 6 digital signals and 1 FM music program. Baoding currently offers 39 channels within Baoding city and 8 channels to the Baoding metropolitan area. Pursuant to the Exchange Agreement, on February 28, 2003 (the "Closing Date"), the Company acquired (the "Acquisition") from Kingston Global Co. Limited ("Kingston") all of the issued and outstanding equity interests of Solar Touch (the "Solar Touch Shares"). As consideration for the Solar Touch Shares, the Company issued 49,567,002 shares of its common stock to Kingston and Sino Concept Enterprises Limited (the "Sellers"). In addition to the common stock issued to the Sellers, the Company also issued 4,760,931 shares to the Seller's financial consultants. The consideration for the Acquisition was determined through arms' length negotiations between the management of the Company and the Sellers. On the Closing Date, Mr. Martin Rifkin resigned as President, Treasurer and a Director of the Company. On the same day, Mr. William Rifkin resigned as Chairman of the Board, Secretary and a Director of the Company. Effective March 1, 2003, Messrs. Jun-Tang Zhao, Raymond Ying-Wai Kwan, Yau-Sing Tang and George Raney began serving their terms as members of the Board of Directors of the Company. The newly elected directors appointed Mr. Raymond Ying-Wai Kwan as Chief Executive Officer and Mr. Yau-Sing Tang as Chairman of the Board of Directors and Chief Financial Officer. 11 On February 28, 2003, the Company granted an option to DSS Associates, Carter Fleming International Ltd, Grand Unison Ltd, and Emerging Growth Partners Inc. (the "Optionees") to purchase an aggregate of 4,750,000 (post-split) shares of common stock in the Company for a total of $50,000. On April 30, 2003, the Optionees exercised the option in full by delivering to the Company a duly executed Notice of Exercise and by wire transferring the aggregate exercise price for the shares to the Company. On July 1, 2003, the Company changed its name from Nova International Films, Inc. to China Cable and Communication, Inc. Results of operations Three months ended September 30, 2003 and 2002: Revenue The Company had no revenue for the three months ended September 30, 2003 and 2002 respectively (See Equity in earnings of investment below). Loss from operations For the three months ended September 30, 2003, the Company had a loss from operations of $2,378,723 as compared to a loss from operation of $0 for the three months ended September 30, 2002. The loss is attributable to directors' compensation of $755,437, professional fees of $79,909 and consulting fees of $1,543,377. Merger costs For the three months ended September 30, 2003 and 2002, there were no additional merger costs incurred. Equity in earnings of investment This represents the Company's 49% share of undistributed earnings of its investment in Baoding. For the three months ended September 30, 2003, the Company's 49% share of losses of its investment in Baoding was $64,911 which was a $61,776 or 48.8% decrease from $126,687 for the three months ended September 30, 2002. The decrease in the Company's 49% share of losses of its investment in Baoding is primarily attributable to the decrease in Baoding's net loss from $258,544 for the three months ended September 30, 2002 to $132,472 for the three months ended September 30, 2003. The decrease in Baoding's net loss results from the decrease in provision for doubtful accounts over the prior year. Net income (loss) The Company recorded a net loss of $2,443,092 for the three months ended September 30, 2003 as compared to a net loss of $126,687 for the three months ended September 30, 2002. This is primarily due to directors' compensation of $755,437, professional fees of $79,909 and consulting fees of $1,543,377. Nine months ended September 30, 2003 and 2002: Revenue The Company had no revenue for the nine months ended September 30, 2003 and 2002 respectively (See Equity in earnings of investment below). 12 Loss from operations For the nine months ended September 30, 2003, the Company had a loss from operations of $3,869,695 as compared to a loss from operation of $0 for the nine months ended September 30, 2002. The loss is attributable to directors' compensation of $995,970, professional fees of $138,883 and consulting fees of $2,734,842. Merger costs For the nine months ended September 30, 2003, the Company incurred merger costs of $3,770,416 as a result of the Company's acquisition of Solar Touch in a reverse merger whereas there was no such expense for the nine months ended September 30, 2002. Equity in earnings of investment This represents the Company's 49% share of undistributed earnings of its investment in Baoding. For the nine months ended September 30, 2003, the Company's 49% share of earnings of its investment in Baoding was $175,650 which was a $97,995 or 126% increase from $77,655 for the nine months ended September 30, 2002. This is primarily due to the increase in net sales of Baoding by $296,293 or 12% from $2,395,462 for the nine months ended September 30, 2002 to $2,691,755 for the nine months ended September 30, 2003 and accordingly, the increase in net income of Baoding by $199,989 or 126% from $158,480 for the nine months ended September 30, 2002 to $358,469 for the nine months ended September 30, 2003. The increase in net income is primarily attributable to the decrease in provisions for doubtful accounts over the prior period. Net income (loss) The Company recorded a net loss of $7,463,715 for the nine months ended September 30, 2003 as compared to a net profit of $77,655 for the nine months ended September 30, 2002. This is primarily due to the merger costs of $3,770,416 incurred in relation to the Company's acquisition of Solar Touch in a reverse merger, directors' compensation of $995,970, professional fees of $138,883 and consulting fees of $2,734,842. Financial condition, liquidity, capital resources For the nine months ended September 30, 2003, we received $50,000 from the issuance of 4,750,000 shares of common stock due to the exercise of 4,750,000 options by the optionees on April 30, 2003 and $4,000,000 from the issuance of 2,758,621 shares of the Company's restricted 8% convertible preferred stock, par value of $0.0001 per share, to Gryphon Master Fund, L.P. for $1.45 per share. We also generated cash of $89,373 during the nine months ended September 30, 2003 in operating activities. As of September 30, 2003, the Company has cash at bank of $3,911,399. Our current assets include deferred consulting fees of $3,412,735 and our current liabilities include accrued expenses of $298,576, accrued directors' compensation of $64,890, the amount due to a shareholder of $127,276 and the amount due to a director of $2,500. We had no significant capital expenditure commitments outstanding as of September 30, 2003. Plan of Operation With a cash balance of $3,911,399, the Company has sufficient working capital to fund its future operations and finance its intended acquisition of additional 2% of Baoding from Baoding Multimedia. 13 Exchange rate Fluctuations of currency exchange rates between Renminbi and United States dollar could adversely affect our business since our sole investment conducts its business primarily in China, and its revenue from operations is settled in Renminbi. The Chinese government controls its foreign reserves through restrictions on imports and conversion of Renminbi into foreign currency. Although the Renminbi to United States dollar exchange rate has been stable since January 1, 1994 and the Chinese government has stated its intention to maintain the stability of the value of Renminbi, there can be no assurance that exchange rates will remain stable. The Renminbi could devalue against the United States dollar. Exchange rate fluctuations may adversely affect our revenue arising from the sales of products in China and denominated in Renminbi and our financial performance when measured in United States dollar. Recent accounting pronouncements In April 2002, The Financial Accounting Standards Board (FASB) issued SFAS No. 145, "Recission of FASB Statements No. 4, 22 and 64. Amendment of FASB Statement No. 13, and Technical Corrections." The Statement addresses the accounting for extinguishment of debt, sale-leaseback transactions and certain lease modifications. The Statement is effective for transactions occurring after May 15, 2002. The adoption of SFAS No. 145 did not have material impact on the Company's financial statement presentation or disclosure. In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and supercedes Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company's financial statement presentation or disclosure. In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain Financial Institutions. The Company does not expect this standard will have any effect on its financial statement presentation or disclosure. In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of FIN 45 is not expected to have a material effect on the Company's financial position, results of operations, or cash flows. 14 In December 2002, the FASB issued SFAS No.148, "Accounting for Stock-Based Compensation. Transition and Disclosure" SFAS No. 148 amends SFAS No. 123 "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for fiscal years beginning after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The company has consistently used the fair value recognition method in accounting for stock-based compensation. Therefore, the Company does not expect the adoption of SFAS No. 148 to have a material effect on our financial position, results of operations, or cash flows. In January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities (an interpretation of ARB No. 51) ("FIN-46")." FIN46 addresses consolidation by business enterprises of certain variable interest entities, commonly referred to as special purpose entities. The Company will be required to implement the other provisions of FIN46 in 2003. The adoption of FIN46 is not expected to have a material impact on the Company's consolidated financial statements. In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." It is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designed after June 30, 2003. All provisions of SFAS No. 149 should be applied prospectively. The adoption of SFAS 149 is not expected to have a material impact on the Group's consolidated financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS 15 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classifies a financial instrument that is within its scope as a liability (or as an asset in some circumstances). It is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. Restatement is permitted. The adoption of SFAS No. 150 is not expected to have a material impact on the Company's consolidated financial statements. 15 ITEM 3. CONTROLS AND PROCEDURES 1) Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act of 1934 is accumulated and communicated to the Company's management, including its principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company conducted an evaluation under the supervision and with the participation of the principal executive officer and principal financial officer of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d- 15(e) under the Exchange Act. Based on this evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. 2) Changes in Internal Control There was no change in the Company's internal control over financial reporting during the Company's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect the Company's internal control over financial reporting. 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds. On February 28, 2003, we issued 49,567,002 shares of our common stock as consideration for the acquisition of all of the issued and outstanding equity interests of Solar Touch Limited. These shares were issued to two parties located in the People's Republic of China pursuant to Section 4(2) of the Securities Act of 1933, as amended. In addition, we also issued 4,760,931 shares to the Sellers' financial consultants. The consideration for the acquisition was determined through arms length negotiations between the management of the Company and the Sellers. On April 30, 2003, we issued 4,750,000 shares of our common stock pursuant to the exercise of options by DSS Associates, Carter Fleming International Ltd., Grand Unison Limited, and Emerging Growth Partners, Inc. (the "Optionees") for $50,000. The Optionees facilitated the acquisition of Solar Touch by the Company. During the nine months ended September 30, 2003, compensation to three of our directors, Mr. George Raney, Mr. Yau-Sing Tang and Mr. Raymond Ying-Wai Kwan, were paid by the issuance of 280,000 shares in lieu of cash. On July 3, 2003 and July 7, 2003, the Company entered into one-year consulting agreements with each of Mr. Chiu-wing Chiu and Mr. Wai Tam, respectively. The services to be rendered include identifying targets for the acquisition by using the Company's equity securities. As consideration for the services to be rendered, the Company issued 600,000 and 2,200,000 shares of common stock to Mr. Chiu and Mr. Tam, respectively. On August 22, 2003, the Company entered into another one-year consulting agreement with Mr. Jason M. Genet, who is primarily focused on identification of potential merger and acquisition activities and strategic partnerships. As consideration for these services, the Company issued 65,000 shares of common stock to him. On August 8, 2003, we issued 1,000,000 shares of common stock to Mr. Jun-Tang Zhao, a director of the Company, as compensation for services to the Company. On October 27, 2003, the Company terminated the director's compensation agreement with Mr. Zhao. As a result of such termination, all the services for this agreement were expensed for the nine months ended September 30, 2003 (see Note 9 to the consolidated financial statements). Also on August 8, 2003, the Company issued 1,200,000 shares of common stock to Mr. Yau-Sing Tang, a director of the Company, for his services rendered in connection with the acquisition of Solar Touch Limited on February 28, 2003 (see Note 11 to the consolidated financial statements). On August 22, 2003 the Company entered into an agreement with Friedland Capital Inc. ("Friedland") pursuant to which Friedland agreed to provide financial advisory services to the Company for a monthly fee. On August 22, 2003, the Company issued 5,000 shares of restricted common stock to Friedland, in consideration for services performed. Pursuant to Friedland's engagement letter with the Company, Friedland's fees are payable in cash or registered shares of Company common stock only. On October 6, 2003, the Company cancelled the 5,000 shares of common stock and paid the outstanding fees payable to Friedland in cash of $15,000. 17 On September 25, 2003, the Company completed the sale of 2,758,621 shares of the Company's restricted 8% Convertible Preferred Stock, par value $.0001 per share (the "Preferred Stock"), to Gryphon Master Fund, L.P., a Bermuda limited partnership (the "Purchaser"), for $1.45 per share or an aggregate purchase price of $4,000,000. The purchase price is equal to 90% of the moving average closing price of the Company's common stock for the 60 trading days immediately prior to the entering into of the agreement. In connection with this transaction, the Company also issued to the Purchaser warrants to purchase up to 827,586 shares of the Company's restricted common stock for $2.18 per share until September 24, 2008 (the "Warrants"). The Preferred Stock accrues dividends at the rate of 8% of the purchase price per share per annum, payable when, as and if declared by the Board of Directors on September 30 and March 31 of each year commencing with March 31, 2004. The Preferred Stock is senior to the common stock with respect to the payment of dividends, redemption payments and rights upon liquidation, dissolution or winding up of the affairs of the Company. Upon liquidation, the Preferred Stock is entitled to receive a liquidation preference equal to the purchase price plus the amount of accrued and unpaid dividends. The Company may redeem the Preferred Stock at any time after September 25, 2004 if the market price of the common stock for a period of any 20 out of 30 trading days equals or exceeds 200% of the conversion price then in effect. The conversion price currently in effect is equal to the purchase price of $1.45 per share. Until redeemed, the Preferred Stock can be converted into common stock at a rate per share equal to the purchase price, subject to adjustment. The Warrants may be exercised until September 24, 2008 at an exercise price of $2.18 per share. If the Company fails to have a registration statement in effect covering the resale of the shares underlying the Preferred Stock and issuable upon exercise of the Warrants, then beginning after September 25, 2004, the Purchaser may exercise the Warrants on a "cashless" basis utilizing the equity value of a portion of the Warrants to pay the Purchase Price for the exercise of other portions of the Warrants. In connection with the sale of the Preferred Stock and Warrants, the Company and the Purchaser entered into a Registration Rights Agreement. Pursuant to this agreement, the Company agreed to file and to use its best efforts to become effective a registration statement covering the resale of the shares of common stock issuable upon conversion of the Preferred Stock and exercise of the Warrants. If the registration statement is not filed within 30 days after September 25, 2003 and is not declared effective by the Securities and Exchange Commission within 120 days after September 25, 2003, the Company agrees to pay the Purchaser liquidated damages equal to 2% of the purchase price of the Preferred Stock for each 30-day period after that date until the registration statement is declared effective. The Company will pay all expenses incurred in connection with the registration statement. On September 25, 2003, the Company issued 18,391 shares of restricted Common Stock and warrants to purchase 91,954 shares of Common Stock at a price per share of $2.18 until September 25, 2008 as a finder's fee to the party that introduced Gryphon to the Company. All issuances described above were made pursuant to Section 4(2) of the Securities Act of 1933, as amended, and pursuant to Regulation D promulgated thereunder. Item 3. Defaults Upon Senior Securities None. 18 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: Exhibit number Description ------ ----------- 31 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certifications of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K: During the three months ended and subsequent to September 30, 2003, the Company filed the following reports on the Form 8-K: Form Filing date Items reported ---- ----------- -------------- 8-K September 29, 2003 Items 5 and 7 8-K October 3, 2003 Items 4 and 7 8-K October 9, 2003 Item 5 19 SIGNATURES In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHINA CABLE AND COMMUNICATION, INC. Date: November 18, 2003 /s/ Raymond Ying-Wai Kwan --------------------------------------- Name: Raymond Ying-Wai Kwan Title: Chief Executive Officer Date: November 18, 2003 /s/ Yau-Sing Tang --------------------------------------- Name: Yau-Sing Tang Title: Chief Financial Officer 20 EX-31 3 chinacable9302003exh31.txt CERTIFICATION Exhibit 31 CERTIFICATION I, Raymond Ying-Wai Kwan, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China Cable and Communication, Inc.: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 18, 2003 /s/ Raymond Ying-Wai Kwan ------------------------- Raymond Ying-Wai Kwan Chief Executive Officer I, Yau Sing Tang certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China Cable and Communication, Inc.: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 18, 2003 /s/ Yau-Sing Tang ------------------------- Yau-Sing Tang Chief Financial Officer EX-32 4 chinacable9302003exh32.txt CERTIFICATION Exhibit 32 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Nova International Films, Inc. (the Company), does hereby certify, to such officer's knowledge, that: The Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003 of the Company fully complies, in all material respects, with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 18, 2003 /s/ Raymond Ying-Wai Kwan ----------------------------------- Raymond Ying-Wai Kwan Chief Executive Officer Date: November 18, 2003 /s/ Yau-Sing Tang ----------------------------------- Yau-Sing Tang Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----