<PAGE>
APPENDIX 2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2000
PEACE ARCH ENTERTAINMENT GROUP INC.
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(Translation of Registrant's name into English)
#302, 1132 Hamilton Street, Vancouver, B.C., Canada, V6B 2S2
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(Address of principal executive office)
[Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20F or Form 40-F.
Form 20-F [ X ] Form 40-F [___]]
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [___] No [ X ]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______________ )]
<PAGE>
Peace Arch Entertainment Logo
April 19, 2000
Dear Shareholder:
Today we are pleased to announce our operating results for the second quarter of
Fiscal Year 2000. For the three months ended February 29, 2000, the Company
reported earnings of $79,603, or $0.02 per diluted share, on revenue of $2.8
million. In the comparable quarter of last year, the Company reported earnings
of $163,000 or $0.05 per diluted share, on revenue of $15.1 million. The
weighted average number of common shares outstanding increased 25% to 3,793,533
in the most recent quarter, versus 3,025,935 a year earlier, as a result of the
Company's public stock offering in July 1999.
For the six months year-to-date ended February 29, 2000, the Company reported
earnings of $443,211 or $0.11 per diluted share compared with $1,009,000 or
$0.33 per diluted share in the comparable period of the prior year. As expected,
second quarter results were down over the prior comparable quarter due to the
fact that the delivery of the final episodes of season 2 of our television
series, FIRST WAVE, was pushed from the second quarter into the third quarter.
The second quarter was a busy and very productive one for all of us at Peace
Arch. On the production side, Q2 is typically at the end of the current
production cycle and the series that started production in the spring are in the
process of wrapping up. FIRST WAVE, our internationally acclaimed science
fiction series, completed production of its second 22 episode season and
immediately rolled into season 3. DEAD MAN'S GUN, which moved from Showtime to
the much larger audience of TNN during the quarter, has earned ratings that
surpassed TNN's initial expectations and we are actively negotiating the
production of additional episodes.
On the development and business affairs side, Q2 was an extremely busy time as
well, with two of the largest television trade shows in the world (MIPCOM in
southern France and NATPE in New Orleans) serving as bookends for the quarter.
For Peace Arch it was an unprecedented period of new deals and, almost as
importantly, new relationships.
At the end of November, Peace Arch, S.L. Feldman & Associates and The Global
Television Network, announced the signing of the creative team of David
Steinberg and Frank van Keeken for our music industry sitcom THE AGENCY. Global
went on to confirm an order for 22 episodes of the series. With this order were
able to secure sufficient funding to "green light" the series, while leaving
most of the world rights open for future sales. As we head towards production
later this spring, for a fall 2000 air date, broadcaster interest in the US and
key international territories is building.
During the quarter we also laid the groundwork for our new one hour action
adventure series THE IMMORTAL which was announced early in Q3. THE IMMORTAL,
featuring international television star Lorenzo Lamas, is set for first run US
syndication this fall and has been pre-sold in a number of key international
markets. THE
<PAGE>
IMMORTAL is our first Canada-UK co-production, our first partnership with
Britain's Studio Eight Productions and our first deal with L.A. based Hilltop
Entertainment. The principals of both Hilltop and Studio Eight have extensive
experience in of the film and television business, and both companies are what I
would consider lean, aggressive and effective. We are convinced that this type
of international co-production structure and these types of partnerships
represent the way of the future for this industry.
Peace Arch's new media operations were highlighted by the roll out of
Streamscapes.com. Streamscapes is our web based video streaming venture
initially aimed at both the B2B and the entertainment markets. Because of our
ability to marry our years of broadcast and narrowcast expertise, with the
worlds leading webcasting technology, Streamscapes provides ourselves, and our
customers, with true convergence opportunity. Our government and industry
clients can deliver full motion, real time presentations and demonstrations to
their offices and customers around the world. At the same time, we can provide
robust, full motion companion web-sites for all of our television shows as well
as those of our customers and entertainment industry partners. The fact that our
shows currently air in tens of millions of households in over 40 countries
around the globe, provides us with a unique ability to use our television shows
to promote our web sites and use our web sites to promote our television shows.
We have resisted the temptation to change our name to Peace Arch.com or to
artificially spin the Peace Arch story as a "Dot Com" story. The fact of the
matter is that we are a media company and that the World Wide Web and the
Internet represent the next and the natural evolution of our business.
Streamscapes is but one example of that.
I remain firmly convinced that the only companies that will survive the current
turmoil in the financial markets are companies that have real businesses that
make money. The companies that will truly prosper over the long haul, are
companies that offer evergreen products with international appeal, companies
with key strategic relationships, companies that are agile and companies that
are creative. Peace Arch is that type of company.
As I have said before, the growth of the 500 channel universe during the past
decade has created unprecedented opportunities for companies like ours. The more
recent explosive growth of the Internet has only served to heighten and
accelerate these opportunities and to break down many of the traditional
barriers to entry. Peace Entertainment is clearly in the right business at the
right time.
PEACE ARCH ENTERTAINMENT GROUP INC.
"TIMOTHY GAMBLE"
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PRESIDENT
THIS LETTER INCLUDES STATEMENTS THAT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS,
USUALLY CONTAINING THE WORDS BELIEVE, ESTIMATE, PROJECT, EXPECT OR SIMILAR
EXPRESSIONS. THESE STATEMENTS ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS
INHERENTLY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. FACTORS THAT WOULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, CONTINUED
ACCEPTANCE OF THE COMPANY'S PRODUCTS AND SERVICES IN THE MARKETPLACE,
COMPETITIVE FACTORS, DEPENDENCE UPON THIRD-PARTY VENDORS, AND OTHER RISKS
DETAILED IN THE COMPANY'S PERIODIC REPORT FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. BY MAKING THESE FORWARD-LOOKING STATEMENTS, THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE THESE STATEMENTS FOR REVISIONS OR CHANGES
AFTER THE DATE OF THIS RELEASE.
<PAGE>
[LOGO]
PEACE ARCH
ENTERTAINMENT GROUP INC.
American Stock Exchange - Symbol PAE
Toronto Stock Exchange - Symbol PAE.A, PAE.B
SECOND QUARTER REPORT
For the Six Months Ended
February 28, 1999 and February 29, 2000
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<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED BALANCE SHEETS
AS AT FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
=======================================================================================
1999 2000
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 445 $ 5,585
Accounts receivable 4,228 1,271
Tax credits receivable 13,213 16,949
Productions in progress 3,771 2,898
Prepaid expenses and deposits 112 623
Investment in television programming 9,534 11,654
Property and equipment 9,565 7,007
Deferred costs 214 488
Goodwill and trademarks 2,479 3,129
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$ 43,561 $ 49,604
=======================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 9,357 $ 8,121
Accounts payable and accrued liabilities 3,604 5,755
Income taxes payable -- 630
Loans due to directors and shareholders -- --
Deferred revenue 2,947 2,953
Deferred gain -- 349
Future income taxes 205 1,311
Debt 8,104 4,130
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24,217 23,249
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Shareholders' equity:
Share capital 26,644 32,368
Authorized:
100,000,000 Class A Multiple Voting Shares
Issued - 1,454,583 (Feb 28, 1999 - 1,512,965)
100,000,000 Class B Subordinate Voting Shares
Issued - 2,366,163 (Feb 28, 1999 - 1,512,970)
25,000,000 Preference Shares, issuable in series
Issued - nil
Other paid-up capital 136 136
Deficit (7,436) (6,149)
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19,344 26,355
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$ 43,561 $ 49,604
=======================================================================================
</TABLE>
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<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars except per share information)
================================================================================================================================
3 MONTHS ENDED 6 MONTHS ENDED
1999 2000 1999 2000
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $ 15,128 $ 2,752 $ 30,252 $ 11,280
EXPENSES:
Amortization of television programming 12,553 1,381 25,067 7,400
Other costs of production and sales 747 309 1,508 957
Depreciation and amortization 117 132 204 277
Selling, general and administrative 784 846 1,330 1,665
Interest 273 96 489 324
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14,474 2,764 28,598 10,623
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Earnings (loss) from operations before undernoted 654 (12) 1,654 657
Gain on sale of asset - 129 - 216
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Earnings before income taxes 654 117 1,654 873
Income taxes 491 38 645 430
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NET EARNINGS FOR THE PERIOD $ 163 $ 79 $ 1,009 443
Deficit, beginning of period (7,599) (6,228) (8,445) (6,592)
- --------------------------------------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD (7,436) (6,149) $ (7,436) $ (6,149)
================================================================================================================================
BASIC NET EARNINGS PER COMMON SHARE $ 0.05 $ 0.02 $ 0.33 $ 0.11
=================================================================================================================================
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.05 $ 0.02 $ 0.33 $ 0.11
=================================================================================================================================
Weighted average number of shares outstanding
during the period (000's) 3,026 3,794 3,026 3,790
</TABLE>
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<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
===============================================================================================
3 MONTHS ENDED 6 MONTHS ENDED
1999 2000 1999 2000
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating activities:
Net earnings $ 163 $ 79 $ 1,009 $ 443
Items not involving cash:
Depreciation and amortization 12,743 1,482 25,610 7,632
Future income taxes 289 225 289 514
Recognition of deferred gain -- (58) -- (165)
Other -- 8 -- 17
Changes in non-cash working capital (828) 1,623 (6,018) 583
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12,367 3,359 20,890 9,024
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Investing activities:
Investment in television programming (14,568) (1,547) (29,307) (8,780)
Increase in deferred costs (51) (215) (97) (295)
Increase in goodwill and trademarks -- (20) -- (29)
Property and equipment acquired (65) (32) (161) (37)
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(14,684) (1,814) (29,565) (9,141)
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Financing activities:
Issue of common shares, net -- 185 -- 185
Repayments to directors and shareholders (386) -- (386) --
Increase in bank indebtedness 1,377 57 6,708 1,189
Increase in debt -- -- 1,200 --
Repayment of debt (204) (64) (278) (127)
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787 178 7,244 1,247
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Increase (decrease) in cash and cash equivalents (1,530) 1,723 (1,431) 1,130
Cash and cash equivalents, beginning of period 1,975 3,862 1,876 4,455
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Cash and cash equivalents, end of period $ 445 5,585 $ 445 $ 5,585
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Supplementary information:
Interest paid (net of amounts capitalized) $ 250 $ 154 $ 489 $ 265
Income taxes paid -- -- -- --
</TABLE>
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<PAGE>
[PEACE ARCH LOGO]
25th April 2000
TO WHOM IT MAY CONCERN:
Dear Sir or Madam:
Re: Quarterly Report, Peace Arch Entertainment Group Inc.
29th February 2000
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I hereby confirm that the Unaudited Consolidated Financial Statements for the
Six Months Ended February 29, 2000 were sent by first class mail to the
shareholders of the supplemental mailing list of Peace Arch Entertainment Group
Inc. on 25th April 2000.
I trust you will find the above in order
Yours truly,
PEACE ARCH ENTERTAINMENT GROUP INC.
/s/ REBECCA PATERSON
- ---------------------------
Rebecca Paterson
Assistant to Juliet Jones, Chief Financial Officer
/enclosures
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Peace Arch Entertainment Group Inc.
-----------------------------------
(Registrant)
Date April 25th, 2000 By /s/ JULIET JONES
---------------------------- -----------------------------------
(Signature)*
- ---------------------------------- Juliet Jones, CFO
*Print the name and title under the signature of the signing officer.
GENERAL INSTRUCTIONS
A. Rule as to Use of Form 6-K,
This form shall be used by foreign private issuers which are required to furnish
reports pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of
1934.
B. Information and Document required to be Furnished,
Subject to General Instruction D herein, an issuer furnishing a report on this
form shall furnish whatever information, not required to be furnished on Form
40-F or previously furnished, such issuer (I) makes or is required to make
public pursuant to the law of the jurisdiction of its domicile or in which it is
incorporated or organized, or (ii) files or is required to file with a stock
exchange on which its securities are traded and which was ;made public by that
exchange, or (iii) distributes or is required to distribute to its security
holders.
The information required to be furnished pursuant to (I), (ii) or (iii) above is
that which is material with respect to the issuer and its subsidiaries
concerning: changes in business; changes in management or control; acquisitions
or dispositions of assets; bankruptcy or receivership; changes in registrant's
certifying accountants; the financial condition and results of operations;
material legal proceedings; changes in securities or in the security for
registered securities; defaults upon senior securities; material increases or
decreases in the amount outstanding of securities or indebtedness; the results
of the submission of matters to a vote of security holders; transactions with
directors, officers or principal security holders; the granting of options or
payment of other compensation to directors or officers; and any other
information which the registrant deems of material importance to security
holders.
This report is required to be furnished promptly after the material contained in
the report is made public as described above. The information and documents
furnished in this report shall not be deemed to be "filed" for the purpose of
Section 18 of the Act or otherwise subject to the liabilities of that section.
If a report furnished on this form incorporates by reference any information not
previously filed with the Commission, such information must be attached as an
exhibit and furnished with the form.
C. Preparation and Filing of Report
This report shall consist of a cover page, the document or report furnished by
the issuer, and a signature page. Eight complete copies of each report on this
form shall be deposited with the Commission. At least one complete copy shall be
filed with each United States stock exchange on which any security of the
registrant is listed and registered under Section 12(b) of the Act. At least one
of the copies deposited with the Commission and one filed with each such
exchange shall be manually signed. Unsigned copies shall be conformed.
D. Translations of Papers and Documents into English
Reference is made to Rule 12b-12(d) [17 CFR 240.12b-12(d)]. Information required
to be furnished pursuant to General Instruction B in the form of press releases
and all communications or materials distributed directly to security holders of
each class of securities to which any reporting obligation under Section 13(a)
or 15(d) of the Act relates shall be in the English language. English versions
or adequate summaries in the English language of such materials may be furnished
in lieu of original English translations.
Notwithstanding General Instruction B, no other documents or reports, including
prospectuses or offering circulars relating to entirely foreign offerings, need
be furnished unless the issuer otherwise has prepared or caused to be prepared
English translations, English versions or summaries in English thereof. If no
such English translations, versions or summary have been prepared, it will be
sufficient to provide a brief description in English of any such documents or
reports. In no event are copies of original language documents or reports
required to be furnished.
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