<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 July, 2000
PEACE ARCH ENTERTAINMENT GROUP INC.
------------------------------------------------------------------------------
(Translation of Registrant's name into English)
#302, 1132 Hamilton Street, Vancouver, B.C., Canada, V6B 2S2
-------------------------------------------------------------------------------
(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 GRAPHIC OMITTED]
AMERICAN STOCK EXCHANGE - SYMBOL PAE
TORONTO STOCK EXCHANGE - SYMBOL PAE.A, PAE.B
THIRD QUARTER REPORT
FOR THE NINE MONTHS ENDED
MAY 31, 1999 AND MAY 31, 2000
<PAGE>
MESSAGE TO SHAREHOLDERS
JULY 20, 2000
WE ARE PLEASED TO ANNOUNCE OUR OPERATING RESULTS FOR THE THREE MONTHS ENDED MAY
31, 2000. NET INCOME INCREASED 24% TO APPROXIMATELY $493,000, OR $0.12 PER
DILUTED SHARE, WHEN COMPARED WITH NET INCOME OF $398,000, OR $0.12 PER DILUTED
SHARE, IN THE THIRD QUARTER OF FY1999. REVENUE TOTALED $7.2 MILLION IN THE
QUARTER ENDED MAY 31, 2000, VERSUS $8.7 MILLION IN THE YEAR-EARLIER QUARTER.
DILUTED EARNINGS PER SHARE WERE CALCULATED ON 4,223,439 WEIGHTED AVERAGE SHARES
OUTSTANDING IN THE MOST RECENT QUARTER, COMPARED WITH 3,150,543 WEIGHTED AVERAGE
SHARES IN THE PRIOR-YEAR PERIOD. THE 34% INCREASE IN THE NUMBER OF DILUTED
SHARES OUTSTANDING WAS THE RESULT OF ADDITIONAL SHARES ISSUED PURSUANT TO A
PUBLIC OFFERING IN JULY 1999.
For the nine-month period ended May 31, 2000, the Company earned $0.9 million,
or $0.23 per diluted share, on revenue of approximately $18.4 million. This
compared with earnings of $1.4 million, or $0.45 per diluted share, and revenue
of approximately $39 million, in the year-earlier period. The number of weighted
average diluted shares outstanding totaled 4,130,189 during the first nine
months of FY2000, compared with 3,304,543 in the corresponding period of the
previous fiscal year.
THE COLLECTION OF REFUNDABLE TAX CREDITS ALLOWED US TO REPAY A SUBSTANTIAL
PORTION OF OUR OPERATING LINE OF CREDIT EARLY IN THE QUARTER, WHICH RESULTED IN
A SIGNIFICANT DECLINE IN INTEREST EXPENSE. AT MAY 31, 2000, BORROWINGS AGAINST
THE COMPANY'S $25 MILLION OPERATING CREDIT LINE TOTALED LESS THAN $2 MILLION.
The seasonal pattern of television programming deliveries typically causes
revenue in our third quarter to be the lowest of any three-month period during
most fiscal years.
Although not reflected in revenue and earnings, our third quarter was one of the
most productive periods since Peace Arch was founded. We entered our third
season of programming for our highly successful cable-television series, FIRST
WAVE, and are now underway with the largest production slate in our Company's
history.
At the start of this year, we set a number of goals for ourselves. The main one
was to add two new series to our existing production slate. After many months of
hard work, which included screening dozens of projects, our goal became a
reality in the third quarter as we green lit THE IMMORTAL and BIG SOUND. In
addition to nearly tripling our proprietary production slate, these shows
represent important new milestones for Peace Arch.
THE IMMORTAL, which features international television star Lorenzo Lamas,
combines action, intrigue, spectacular special effects and a liberal dose of
humour, to create a truly entertaining show. It is our first Canada - UK
co-production, which will greatly enhance the economics of the show as well as
facilitate international sales. It is the first time we have teamed up with LA
based, Hilltop Entertainment, which has already led to key sales in major
international territories, such as France, Germany and Italy. It is also the
first time that we have produced a show for the first run syndication market in
the US. The show has already cleared over 80% of the country, including key
network affiliates in New York, Los Angeles and Chicago, setting the stage for a
major launch this fall.
We are equally proud of our second new series BIG SOUND, which commenced
pre-production at the end of the quarter and went to camera last week. BIG
SOUND, our 22 episode half hour comedy series, is set in the frenetic world of a
music talent agency and follows the day to day life of an agent in the throes of
a mid-life crisis. The series, which was conceived by Peace Arch, in
collaboration with one of North America's leading music managers, Sam Feldman,
will feature guest appearances from prominent recording artists and
film/television stars. Initial episodes will feature Melissa Etheridge, David
Foster, Randy Bachman and Steve Schirripa from the hit series THE SOPRANO'S.
<PAGE>
The show will be taking its creative direction from producer/director David
Steinberg, who's television credits include MAD ABOUT YOU, SEINFELD and FRIENDS,
and writer Frank van Keeken, whose recent credits include MAD ABOUT YOU and the
new NBC animated series SAMMY.
These two new proprietary series will have a major impact upon our growing
program library. Initial deliveries of THE IMMORTAL and BIG SOUND are scheduled
to begin late in the current fiscal quarter, with the full financial impact of
programming deliveries for the new series anticipated in the first quarter of
Fiscal 2001 and beyond.
Revenue and earnings should increase significantly in the upcoming fiscal year,
which begins September 1, 2000. We currently estimate that we will surpass our
Fiscal 2000 numbers, some time during the second quarter of Fiscal 2001.
Our goal is to build long term library assets as we build our revenues and
earnings. However, seasonal production schedules and long development cycles can
lead to periodic fluctuations in results. We have achieved a number of important
milestones so far this year - including new shows, new relationships and new
customers.
Peace Arch Entertainment Group Inc.
Timothy Gamble, President
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED BALANCE SHEETS
AS AT MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
=================================================================================================================
1999 2000
-----------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,664 $ 2,275
Accounts receivable 2,398 3,675
Tax credits receivable 14,110 5,979
Productions in progress 6,710 11,981
Prepaid expenses and deposits 183 632
Investment in television programming 7,985 12,680
Property and equipment 9,572 7,295
Deferred costs 440 443
Future income tax 38 -
Goodwill and trademarks 2,447 3,089
-----------------------------------------------------------------------------------------------------------------
$ 45,547 $ 48,049
=================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 8,070 $ 1,910
Accounts payable and accrued liabilities 6,693 7,437
Deferred revenue 4,032 5,766
Deferred gain - 291
Future income tax - 1,559
Debt 7,009 4,228
-----------------------------------------------------------------------------------------------------------------
25,804 21,191
-----------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Share capital 26,644 32,378
Authorized:
100,000,000 Class A Multiple Voting Shares
Issued - 1,400,999 (May 31, 1999 - 1,512,965)
100,000,000 Class B Subordinate Voting Shares
Issued - 2,421,748 (May 31, 1999 - 1,512,978)
25,000,000 Preference Shares, issuable in series
Issued - nil
Other paid-up capital 136 136
Deficit (7,037) (5,656)
-----------------------------------------------------------------------------------------------------------------
19,743 26,858
-----------------------------------------------------------------------------------------------------------------
$ 45,547 $ 48,049
=================================================================================================================
</TABLE>
5
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars except per share information)
================================================================================================================
3 MONTHS ENDED 9 MONTHS ENDED
1999 2000 1999 2000
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $ 8,729 $ 7,214 $ 38,981 $ 18,494
EXPENSES:
Amortization of television programming 6,322 4,984 31,388 12,384
Other costs of production and sales 325 274 1,833 1,231
Depreciation and amortization 147 183 352 460
Selling, general and administrative 668 911 1,998 2,592
Interest 403 67 892 316
----------------------------------------------------------------------------------------------------------------
7,865 6,419 36,463 16,983
----------------------------------------------------------------------------------------------------------------
Earnings (loss) from operations before undernoted 864 795 2,518 1,511
Gain on sale of asset - 58 - 214
----------------------------------------------------------------------------------------------------------------
Earnings before income taxes 864 853 2,518 1,725
Income taxes 466 360 1,111 789
----------------------------------------------------------------------------------------------------------------
NET EARNINGS FOR THE PERIOD $ 398 $ 493 $ 1,407 $ 936
Deficit, beginning of period (7,435) (6,149) (8,444) (6,592)
----------------------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ 7,037 $ 5,656 $ 7,037 $ 5,656
================================================================================================================
BASIC NET EARNINGS PER COMMON SHARE $ 0.13 $ 0.13 $ 0.46 $ 0.24
================================================================================================================
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.12 0.12 $ 0.45 $ 0.23
================================================================================================================
Weighted average number of shares outstanding
during the period (000's) 3,026 3,726 3,026 3,801
Fully diluted weighted average number of shares
outstanding during the period (000's) 3,151 4,223 3,305 4,130
</TABLE>
6
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
===============================================================================================================
3 MONTHS ENDED 9 MONTHS ENDED
1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 398 $ 493 $ 1,407 $ 936
Items not involving cash:
Depreciation and amortization 5,739 5,163 31,350 12,794
Future income taxes 139 252 428 766
Recognition of deferred gain - (58) - (223)
Other 87 8 87 25
Changes in non-cash working capital 1,769 3,337 (4,268) 3,922
---------------------------------------------------------------------------------------------------------------
8,132 9,195 29,004 18,220
---------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Investments in marketable securities (105) - (105) -
Investment in television programming (4,043) (6,006) (33,350) (14,787)
Increase in deferred costs (296) (13) (393) (308)
Increase in goodwill and trademarks - (3) - (32)
Property and equipment acquired (105) (369) (246) (406)
---------------------------------------------------------------------------------------------------------------
(4,549) (6,391) (34,094) (15,533)
---------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Issue of common shares, net - 6 - 191
Repayments to directors and shareholders - - (386) -
Increase in bank indebtedness (1,286) (6,210) 5,421 (5,021)
Increase in debt - 171 1,200 171
Repayment of debt (1,182) (81) (1,462) (208)
---------------------------------------------------------------------------------------------------------------
(2,468) (6,114) 4,773 (4,867)
---------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 1,115 (3,310) (317) (2,180)
Cash and cash equivalents, beginning of period 549 5,585 1,981 4,455
---------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,664 $ 2,275 $ 1,664 $ 2,275
===============================================================================================================
Supplementary information:
Interest paid (net of amounts capitalized) $ 403 $ 134 $ 892 $ 281
Income taxes paid - 526 7 526
</TABLE>
7
<PAGE>
PEACE ARCH LOGO
27th July 2000
TO WHOM IT MAY CONCERN:
Dear Sir or Madam:
Re: Quarterly Report, Peace Arch Entertainment Group Inc.
31st May 2000
-------------------------------------------------------------------------------
I hereby confirm that the Unaudited Consolidated Financial Statements for the
Nine Months Ended May 31, 2000 were sent by first class mail to the shareholders
of the supplemental mailing list of Peace Arch Entertainment Group Inc. on 27th
July 2000.
I trust you will find the above in order.
Yours truly,
PEACE ARCH ENTERTAINMENT GROUP INC.
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 JULY 27, 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.
9
