SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 000-26037
VISUAL BIBLE INTERNATIONAL, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Florida 65-1030068
(State or Other Jurisdiction (IRS Employer Identification
of Incorporation) Number)
5100 Town Center Circle, Suite 330, Boca Raton, Florida 33486
-------------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(416) 216-8512
--------------
(Registrant's Telephone Number, Including Area Code)
N/A
---
(Former Name or Former Address, if Changed Since Last Report)
Check whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to the filing requirements for at least the past 90 days:
YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of
November 15, 2000, there were 23,137,762 shares of the Registrant's
$.001 par value common stock outstanding.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(a) Consolidated Balance Sheets as of September 31, 2000 and
December 31, 1999
(b) Consolidated Statements of Operations for the three and nine
month periods ended 9/30/00 and 9/30/99
(c) Consolidated Statements of Cash Flows for the three and nine
month periods ended 9/30/00 and 9/30/99
(d) Notes to Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults on Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Events.
Item 6. Exhibits, Lists and Reports on Form 8-K.
SIGNATURES
<PAGE>
Item 1. Financial Statements.
(a) Consolidated Balance Sheets as of September 31, 2000 and
December 31, 1999
VISUAL BIBLE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
September December
30, 2000 31, 1999*
__________________________
ASSETS
Current Assets:
Cash and cash equivalents $2,685,968 $75,345
Accounts receivable $1,098,144 $833,180
Due from affiliates $0 $60,459
Prepaid expenses and other $1,535,693 $61,793
current assets
__________________________
Total Current Assets $5,319,806 $1,030,777
Production in Progress $1,200,568 $0
Property, Plant and Equipment, net $293,865 $97,694
Intangible Assets
IBS rights $1,000,000 $1,000,000
Productions $697,527 $697,527
Less: Accumulated amortization ($262,109) $0
Other Assets $2,829 $2,839
__________________________
Total Assets $8,252,485 $2,828,837
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $1,914,757 $0
Accounts payable and accrued $1,619,279 $734,588
expenses
Due to stockholders $1,980,146 $0
Due to afffiliates $531,039 $0
__________________________
Total Current Liabilities $6,045,221 $734,588
Long Term Debt:
Notes Payable $90,000 $1,672,527
Deferred Income Taxes $0 $70,727
__________________________
Total Liabilities $6,135,221 $2,477,842
__________________________
Stockholders' Equity:
Common Stock, authorized $22,901 $611
150,000,000 shares, $.001
par value, issued and
outstanding, 22,901,262
at September 30, 2000, and
611,000 at December 31,
1999
Additional paid-in capital $5,603,476 $3,500
Retained earnings (deficit) ($3,509,113) $346,884
__________________________
Total Stockholders' Equity $2,117,264 $350,995
__________________________
Total Liabilities and $8,252,485 $2,828,837
Stockholders' Equity ==========================
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
*Restated
<PAGE>
(b) Consolidated Statements of Operations for the three and nine
month periods ended 9/30/00 and 9/30/99
VISUAL BIBLE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATION*
<TABLE>
<S> <C> <C> <C> <C>
For the Three Months For the Nine Months Ended
Ended September 30 September 30
2000 1999 2000 1999
______________________________________________________
Sales:
Product Sales $918,899 $818,996 $2,399,890 $2,902,085
Royalty Income $31,021 $0 $31,700 $0
______________________________________________________
Cost of Goods Sold ($428,792) ($388,769) ($1,024,706) ($1,287,768)
______________________________________________________
Gross Profit $521,128 $430,227 $1,406,884 $1,614,317
______________________________________________________
Costs and Expenses:
Selling, general and $1,566,480 $316,267 $4,296,222 $892,060
administrative
Salaries and benefits $91,487 $100,920 $611,621 $299,529
Royalty expenses $12,878 $5,331 $28,621 $20,048
Amortization expense $306,295 $0 $262,109 $0
Depreciation expense $8,699 $2,278 $29,142 $11,826
______________________________________________________
Total costs and $1,985,839 $424,796 $5,227,714 $1,223,463
expenses
______________________________________________________
Income(Loss) from ($1,464,710) $5,431 $3,820,830 $390,854
Operations
Other Income (Expense) ($22,511) ($118,038) ($57,828) ($354,269)
______________________________________________________
Net Income (Loss) from ($1,487,221) $112,607 $3,878,658 $36,585
Continuing Operations
Before Income Taxes
Provision (Credit) for $0 $0 ($87,528) $0
Income Taxes
______________________________________________________
Net Income (Loss) from ($1,487,221) ($112,607) ($3,791,130) $36,585
Continuing Operations
Loss from Discontinued ($64,867) $0 ($64,867) $0
Operations
______________________________________________________
Net Income (Loss) ($1,552,088) ($112,607) ($3,855,997) $36,585
======================================================
Income (Loss) per
Share:
Basic and diluted
income (loss) per share
From Continuing ($0.07) $0.00 ($0.18) $0.00
Operations
From Discontinued $0.00 $0.00 $0.00 $0.00
Operations
______________________________________________________
($0.07) $0.00 ($0.18) $0.00
______________________________________________________
Basic and diluted 22,290,429 21,808,262 21,968,984 21,808,262
common shares ======================================================
outstanding
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
*Restated.
<PAGE>
(c) Consolidated Statements of Cash Flows for the three and nine
month periods ended 9/30/00 and 9/30/99
VISUAL BIBLE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS*
<TABLE>
<S> <C> <C>
For the Nine Months Ended
September 30,
2000 1999
___________________________
Cash Flows from Operating Activities:
Net Income (Loss) $3,855,997 $36,585
Adjustments to reconcile net income (loss) to net
cash provided (used in) operating activities:
Depreciation and amortization $291,251 $11,836
Loss on discontinued operations $64,867 $0
Deferred tax adjustments ($70,727) $0
Decrease (Increase) In:
Accounts receivable ($264,964) $505,082
Prepaid expense and other assets ($1,473,900) $7,387
Other assets $10 $25,341
Increase (Decrease) In:
Accounts payable and accrued expenses $870,666 ($525,639)
Loans and advances to affiliates $591,498
___________________________
Net cash provided by (used in) operating
activities ($3,847,296) $60,592
===========================
Cash Flows from Investing Activities:
Purchase of property, plant and equipment ($225,313) ($70,053)
Production in progress ($1,200,568)
___________________________
Net cash used in operating activities ($1,425,881) ($70,053)
===========================
Cash Flows from financing activities:
Net proceeds from the sale of capital stock $6,134,997 $61
Principal payments on notes payable ($217,765) $0
Loans from stockholders $1,966,568 $0
___________________________
Net cash provided by financing activities $7,883,800 $61
___________________________
Net (Decrease) in Cash and Cash Equivalents $2,610,623 ($9,400)
Cash and Cash Equivalents, beginning of period $75,345 $176,838
___________________________
Cash and Cash Equivalents, end of period $2,685,968 $167,438
===========================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $0 $0
===========================
Income taxes $0 $0
===========================
Supplemental Disclosure of Noncash Investing and
Financing Activities:
Net assets acquired in reverse merger $37,264 $0
===========================
Notes payable issued for capital stock repurchases $549,995 $0
===========================
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
*Restated.
<PAGE>
(d) Notes to Financial Statements
VISUAL BIBLE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
THE COMPANY
On August 7, 2000 American Uranium, Inc and Visual Bible, Inc.
(collectively with its subsidiaries herein referred to as Visual
Bible) completed a planned Stock Exchange Agreement and Plan of
Merger. Under the terms of the agreement, one share of American
Uranium, Inc. common stock was issued and exchanged for one common
stock share of Visual Bible giving the stockholders of the merged
company, Visual Bible, Inc. controlling interest. Also, on August
7, 2000, American Uranium, Inc. changed its name to Visual Bible
International, Inc. (the "Company").
The merger was accounted for as a purchase. However, since the
stockholders of Visual Bible own approximately 58% of the
outstanding shares, and therefore have control, they will be deemed
to be the acquiror and no step up basis will be reflected and no
goodwill will be recorded by the company. This accounting treatment
is in accordance with the Securities and Exchange Commission staffs'
view that the acquisition by a public shell of assets of a business
from a private company for a significant number of shares should be
accounted for at historical costs and accounted for as a reverse
merger.
INTERIM PRESENTATION
The interim consolidated financial statements are prepared pursuant
to the requirements for reporting on Form 10-QSB. These statements
include the accounts of Visual Bible International, Inc. and all of
its wholly owned and majority owned subsidiaries. The December 31,
1999 balance sheet was derived from the consolidated annual
financial statements of Visual Bible, Inc. restated to reflect their
merger with Guardian Productions, LLC, which occurred on July 14,
2000 and has been retroactively restated within these financial
statements. The Merger has been accounted for in accordance with
the accounting treatment required in a reverse merger whereby Visual
Bible, Inc. has been deemed the acquirer for accounting and
financial reporting purposes. The historical financial statements
presented herein are the restated financial statements of Visual
Bible, Inc. restated to reflect the merger Guardian Productions, LLC
as if that merger took place at the beginning of such periods with
the financial statements of American Uranium being included as
discontinued operations from the date of the Merger. The interim
financial statements and notes thereto do not include all
disclosures required by generally accepted accounting principles and
should be read in conjunction with the financial statements and
notes in the Company's Form 8-K/A dated October 16, 2000. In the
opinion of management, the interim financial statements reflect all
adjustments of a normal recurring nature necessary for a fair
statement of the results for the interim periods presented. The
current period results of operations are not necessarily indicative
of results which ultimately will be reported for the full year
ending December 31, 2000.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share are based on the weighted average number
of common shares outstanding including common stock equivalents.
For the periods reported within these consolidated financial
statements all prior period financial statements have been restated
as if the merger took place at the beginning of such periods.
Earnings (loss) per share have been restated to reflect this
accounting treatment.
NEW ACCOUNTING PRONOUNCEMENTS
FASB 139:
The Financial Accounting Standards Board recently issued FASB 139
which requires that all producers or distributors that own or hold
rights to distribute or exploit films follow the guidance in AICPA
Statement of Position 00-2 "Accounting by Producers or Distributors
of Films." FASB 139 shall be effective for financial statements for
fiscal years beginning after December 15, 2000.
FASB 121:
Financial Accounting Standards Board issued FASB 121 "Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." FASB 121 will require that the company review
long-lived assets to be held and used in operations when events and
changes in circumstances indicate that the assets might be impaired.
The carrying value of long-lived assets will be considered impaired
when the identifiable undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of
those assets. In that event, a loss will be recognized based on the
amount by which the carrying value exceeds the fair value of the
long-lived asset.
ADVERTISING COSTS:
FASB 139 and SOP 00-2 now require that entities involved in the film
industry which were originally excluded from the scope of SOP 93-7
"Reporting on Advertising Costs" should now account for advertising
costs in accordance with the provision of SOP 93-7.
ACQUISITION OF VISUAL ENTERTAINMENT, INC.
On June 20, 2000, Visual Bible, Inc. acquired in a stock exchange
agreement, all of the outstanding capital stock of Visual
Entertainment, Inc. ("VE"). In connection with this transaction, in
May 2000, VE entered into redemption agreements with all of its
shareholders but one and repurchased their shares through the
issuance of notes payable totaling $549,995.
MERGER AGREEMENT WITH GUARDIAN PRODUCTIONS, LLC
On July 14, 2000, Visual Bible, Inc. completed a transaction in
which Guardian Productions, LLC. was merged with and into Visual
Bible, Inc.
NOTES PAYABLE
The notes payable at September 30, 2000 are comprised as follows:
Installment notes payable with former VE
Shareholders and CEO requiring 24 monthly
payments of $7500 through May 2002. $ 107,500
Convertible notes payable to the former VE
Shareholders were due September 1, 2000 and
were convertible upon non-payment on that
due date. The Company is currently
negotiating new repayment terms with the
note holders. $ 324,995
Convertible notes payable issued in connection
With the December 16, 1999, asset purchase by
Guardian Productions, LLC were due September 1,
2000 and were convertible upon non-payment on
that due date. The Company is currently
negotiating new repayment terms with this note
holder. $1,572,262
----------
$2,004,757
==========
STOCKHOLDERS' EQUITY
During the third quarter of the 2000 fiscal year, the Company issued
12,750,001 shares of common stock in connection with their
acquisition of Visual Bible, Inc. The Company made such issuances
in reliance upon Section 4(2) of the Securities Act of 1933, as
amended. This transaction has been previously reported in the 8-K
filed August 16, 2000 and within the Company's Form 8-K/A filed
October 16, 2000.
Also during the third quarter of the 2000 fiscal year, the Company
issued 600,000 shares of common stock to four U.S. Person purchasers
hereof without registration under the Securities Act of 1933, as
amended in reliance upon Regulation S promulgated thereunder for net
aggregate consideration of approximately $2,850,000 after aggregate
placement fees of approximately $150,000 in connection with
"Offering One". The Company has agreed to file a registration
statement on an appropriate form as to all of the shares sold in
Offering One on behalf of the holders of such shares.
Also during the third quarter of the 2000 fiscal year, the Company
commenced an offering of up to 1,500,000 shares of their common
stock ("Offering Two") without registration under the Securities Act
of 1933, as amended in reliance upon Regulation S promulgated
thereunder. Offering Two is continuing, but, as of September 30,
2000, the Company has issued 493,000 shares of common stock for net
aggregate consideration of approximately $3,280,000 after placement
fees of approximately $171,000 in connection with Offering Two. The
Company has agreed to file a registration statement on an
appropriate form as to all of the shares sold in Offering Two on
behalf of the holders of such shares.
Also during the third quarter of the Company's 2000 fiscal year, the
Company commenced an offering of up to 3,000,000 shares of their
common stock ("Offering Three") to accredited investors without
registration under the Securities Act of 1933, as amended in
reliance upon Section 4(2) thereof. Offering Three is continuing,
and, as of the date hereof, the Company has not sold any of its
common stock in connection with Offering Three. The terms of
Offering Three provide that the Company will file a registration
statement on an appropriate form as to all of the shares sold in
Offering Three.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Forward Looking Statements
When used in this Form 10-QSB and in future filings by Visual Bible
International, Inc. with the Securities and Exchange Commission, the
words or phrases "will likely result," "management expects," or
"Visual Bible International, Inc. or the Company expects," "will
continue," "is anticipated," "estimated" or similar expressions are
intended to identify "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking
statements, each of which speaks only as of the date made. These
statements are subject to risks and uncertainties, some of which are
described below. Actual results may differ materially from
historical earnings and those presently anticipated or projected.
Visual Bible International, Inc. has no obligation to publicly
release the result of any revisions which may be made to any
forward-looking statements to reflect anticipated events or
circumstances occurring after the date of such statements.
Management's Discussion and Analysis
The following discussion of the financial condition and results of
operations of the company should be read in conjunction with the
financial statements and the notes to the statement included
elsewhere in this Report.
Overview
On August 7, 2000, our wholly owned subsidiary, American Uranium,
Inc., merged into Visual Bible, Inc, a Florida corporation, (the
"Merger"). Prior to the Merger, we had limited operations and were
looking to consummate a business combination with another company
which had operations. As a result of the Merger, Visual Bible, Inc.
the Florida corporation, became our wholly owned subsidiary, and the
shareholders of the Florida corporation received 51% of our
outstanding common stock. On August 7, 2000, we changed our name
from American Uranium, Inc. to Visual Bible International, Inc. For
accounting purposes, the Merger was treated as Visual Bible, Inc.,
acquiring American Uranium, Inc., and hence for this Management's
Discussion section and accounting purposes, references to the
"company," "us" and "we" refer to the operations of Visual Bible
International, Inc.
Visual Bible International, Inc. is a global faith-based media
company positioned to become a leading developer, distributor and
broadcaster of faith-related products. The faith-based market is
estimated to be $5.7 billion in the United States alone. Foreign
markets are estimated at four to five times this size, indicating a
global market projected to be $40 billion by 2004. The market has
been growing at a striking 12% per annum for more than five years.
The Company has, with its flagship product The Visual Bible(TM),
locked up the visual Bible market by securing exclusive visual and
digital rights to the most popular versions of the Bible. It cannot
be matched by others and is the world's only word-for-word visual
Bible. The Company has produced and successfully released the books
of Matthew and Acts. The feature films for the word-for-word books
of Mark, Luke, and John are currently in production in Morocco.
The Company is in pre-development of the motion pictures based on
the five books of Moses and has active plans to produce movies of
the entire 66 books of the Bible. It is acquiring an extensive
library of written, visual and musical content, and it has strong
proven expertise in event production, film and television program
development and production.
The Company's primary strengths are its exclusive intellectual
property rights to the visual representation of the most popular
versions of the Bible, its production ability, and its marketing,
sales and distribution networks. The Company seeks to be fully
integrated with a unique global vision and a broad geographic reach.
It is structured to generate profit levels that it hopes will
attract capital infusion, and it has the financial discipline that
will ensure its long-term growth and strength. Profits will be
continually re-invested into the acquisition and development of new
products and services and a continually stronger distribution and
sales network. The Company is organized to focus its two existing
core strengths, product development and content delivery, to the
global Christian and general markets.
The Company is actively acquiring additional intellectual property
rights, producing new products, building its sales and distribution
channels, developing it financial strength and expanding its
strategic alliances.
KEY PRODUCTS, EVENTS AND SERVICES
The Company is a leading developer and distributor of faith-related
products, events and services. The Company's expected product line
is a library of word-for-word motion pictures of each book of the
Bible, from Genesis to Revelation, which it intends to deliver to
the world. The Company is in active discussions to acquire the
rights for developing additional works considered to be, or inspired
by, God's Word and God's Love. All derivative products will reflect
the spiritual values and growth opportunities inherent in these
works.
The Company's product line includes full length films for theater,
video, DVD and television markets, as well as television series and
radio shows for broadcast and interactive broadband markets. In
addition, it will include merchandise for the mass market, stage
productions and traveling stadium shows.
The movie versions of the books of Mark, Luke and John are now in
production and are expected to be delivered over the next nine
months. Given the initial success of Matthew, the Company has
already covered the production cost of Mark, Luke and John through
pre-distribution sales agreements with very strong, well established
direct response companies. The Company is now in pre-development on
the five Books of Moses (Genesis, Exodus, Leviticus, Numbers and
Deuteronomy) and has plans to produce, subject to available
financing, the entire 66 books of the Bible.
The Company is also negotiating or in pre-production on shorter
animation and live action films for kids, such as Fingles (a highly
successful series of children's books that has been popularized in
parts of Europe and is ideally suited to a full line of products),
the Ten Commandments for Kids and animated Visual Bible for Kids films.
The Company hopes to produce a series of behind-the-scenes gift and
topical books to enhance the film and video lines. Ancillary
products are expected to include clothing, cards, posters,
calendars, toys, study guides, games and souvenirs, and will be
designed to support and maximize revenue from both television shows
and film projects. Other publications are planned for future
development.
DISTRIBUTION
The Company continues to expand its distribution channels through
strategic distribution alliances to specific segments of the market.
The Company has initiated discussions with several alliance
partners in each of the following market segments: Book Retailing,
VHS/DVD Channels, Direct-to-Consumer, Mass Merchandising and
Infomercials.
The strategy the Company has adopted is to maintain control over the
choice of partners in order to control risk due to the nature of the
content - the Holy Bible. The Company is sensitive to the market
and has divided the market into the two segments: the Christian
marketplace and the secular marketplace. To that end, the Company's
licensing agreements with ABS and Broadman & Holman contain elements
allowing these organizations to distribute to their specific
Christian markets.
The Company has also begun to deploy human and capital resources to
the development of its e-commerce strategy. Through its production
capability and its defined content, the Company believes it is
uniquely positioned to be the predominant religious portal within
the Christian community. While its near term objective is sales of
product through e-commerce, its long-term strategy is to develop
streaming video and merchandising strategies to further enhance the
overall online revenue plan.
RESULTS OF OPERATIONS
We had revenues from product sales of $918,899 and $2,399,890,
respectively, for the three and nine months ended September 30,
2000, as compared to $818,996 and $2,902,085 for the three and nine
months ended September 30, 1999. We had revenues from royalty
income of $31,021 and $31,700, respectively, for the three and nine
months ended September 30, 2000, and $0 revenues for the three and
nine months ended September 30, 1999. Our gross profit was $521,128
for the three months, and $1,406,884 for the nine months ended
September 30, 2000, as compared to $430,227 and $1,614,317,
respectively, for the three and nine months ended September 30, 1999.
These results reflect sales from the existing religious marketplace.
We are seeking to rapidly expand our channels of distribution to
serve, respectively, the direct response and mass consumer markets.
For the three months and nine months ended September 30, 2000, other
expenses totaled $22,511 and $57,828, respectively, which consisted
of the following:
Three months Nine months
Ended 9/30/00 Ended 9/30/00
Interest Expense: $ 22,526 $ 51,373
Interest Expense: 15 544
FTR Expense: 0 7,000
Total $ 22,511 $ 57,828
For the three and nine months ended September 30, 2000, we incurred
total expenses of $1,985,839 and $5,227,714 respectively.
As a result of the foregoing, we had a net loss from continuing
operations of $1,487,221 for the three months, and $3,791,130 for
the nine months ended September 30, 2000, as compared to $112,607
for the three months, and a net income of $36,585 for the nine
months ended September 30, 1999. For the three and nine months
ended September 30, 2000, we incurred a loss on discontinued
operations of $64,867 as a result of the merger with American
Uranium, Inc.
The increased loss reflects increased investment in human resources,
expanded expenses in connection with acquisition of new distribution
channels, and pre-production expenses.
As a result of the foregoing, we had a net loss of $1,552,088 and
$3,855,997 for the three and nine months ended September 30, 2000 as
compared to a net loss of $112,607 for the three months ended
September 30, 1999 and net income of $36,585 for the nine months
ended September 30, 1999. The loss per basic and diluted share was
$.07 for the three months, and $.18 for the nine months, ended
September 30, 2000 as compared to a loss per basic and diluted share
for the three months, and for the nine months, ended September 30,
1999 of $0.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, we had a working capital deficit of
$725,415. In order to continue to finance our operations, we will
continue to rely upon loans from stockholders and possible capital
contributors, and other equity or debt financing. Any sale of
additional equity securities will result in dilution to our
shareholders. Likewise, potential debt financing may include equity
elements that will result in dilution to our shareholders. There
can be no assurance that additional financing when required will be
available to the Company in amounts or on terms that are acceptable.
Until we obtain sufficient funds necessary to capitalize the growth
of our operations, expenditures required to increase revenue may be
substantially limited. Should we be unable to obtain continued
funding, our operation may be adversely affected.
Since inception, we have financed our operations primarily through
private equity financing. For the nine months ended September 30,
2000, we received net proceeds in the amount of $6,134,997 from the
sale of shares of our common stock.
During the third quarter of the 2000 fiscal year, we issued 600,000
shares of common stock to four U.S. Person purchasers hereof without
registration under the Securities Act of 1933, as amended in
reliance upon Regulation S promulgated thereunder for net aggregate
consideration of approximately $2,850,000 after aggregate placement
fees of approximately $150,000 in connection with such offering. We
have agreed to file a registration statement on an appropriate form
as to all of the shares sold in such offering on behalf of the
holders of such shares.
During the third quarter of the 2000 fiscal year, we also commenced
an offering of up to 1,500,000 shares of our common stock without
registration under the Securities Act of 1933, as amended in
reliance upon Regulation S promulgated thereunder. Such offering is
continuing, but, as of September 30, 2000, the Company has issued
493,000 shares of common stock for net aggregate consideration of
approximately $3,280,000 after placement fees of approximately
$171,000. We have agreed to file a registration statement on an
appropriate form as to all of the shares sold in such offering on
behalf of the holders of such shares.
During the third quarter of the 2000 fiscal year, we also commenced
an offering of up to 3,000,000 shares of our common stock to
accredited investors without registration under the Securities Act
of 1933, as amended in reliance upon Section 4(2) thereof. Such
offering is continuing, but, as of the date hereof, we have not sold
any of our common stock in connection with such offering. The terms
of such offering provide that we will file a registration statement
on an appropriate form as to all of the shares sold in such offering.
For the nine months ended September 30, 2000, we used $3,847,296
from operating activities. We also used $1,425,881 in investing
activities which consisted of the purchase of fixed assets for
$225,313 and the investment in production in progress of $1,200,568.
For the nine months ended September 30, 2000, we received $7,883,800
from financing activities, which included the proceeds from the sale
of common stock and loan proceeds from stockholders of $1,966,568
less repayment of certain notes amounting to $217,765.
As a result of the foregoing, for the nine months ended September
30, 2000, cash increased by $2,610,623 to $2,685,968.
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
The negotiations of our subsidiary Visual Bible, Inc ("VB")with TD
Global Finance on behalf of various financial institutions for a
loan in the amount of $12,500,000 have terminated. We and our
subsidiary are, however, continuing to negotiate with other parties
in connection with loans on similar terms. There can be no
assurance, however, that such financing will be available to us or
in amounts or on terms that are acceptable.
On November 1, 2000, we entered into two agreements with The
Columbia House Company. One such agreement relates to VB's video
products (the "Video Agreement") and the other such agreement
relates to its audio products (the "Audio Agreement"). The Video
Agreement has a term (the "Term") beginning on the date of execution
and ending December 31, 2003, during which VB has agreed to assign
to The Columbia House Company the exclusive right to manufacture,
advertise, market, distribute and sell Video Devices (as defined in
the Video Agreement) by Direct Response Distribution (as defined in
the Agreement) within the United States, Canada, Mexico and their
territories and possessions ( the"Territory"). As part of the Video
Agreement, we have agreed to pay a fixed royalty (the"Fixed
Royalty") to The Columbia House Company for each Video Device
containing an Audiovisual Work (as defined in the Video Agreement)
based upon the Book of Matthew distributed during the Term in the
Territory by methods other than Direct Response Distribution. In
turn, The Columbia House Company has agreed to pay Visual Bible
certain Royalties on Net Paid Sales (as defined in the Video
Agreement) of Video Devices and to provide internet online
fulfillment of orders of Video Devices from visitors to our website.
The terms of the Audio Agreement are generally similar to the terms
of the Video Agreement, but the Audio Agreement relates to sound
reproductions in all formats from Master Recordings owned or
controlled by VB. Likewise, the amount and method of determination
of Royalties to be paid by The Columbia House Company to Visual
Bible differs from the Video Agreement. We have not yet
specifically determined the effect that such agreements will have on
our future operating results. We expect, however, that revenues
generated under such agreements will significantly exceed the
obligations upon us thereunder.
On November 12, 2000 VB executed a distribution agreement with
Stewart House, Inc. The agreement has a term (the "Term") beginning
on the date of execution of the Agreement and ending December 31,
2005, unless earlier terminated pursuant to the terms of the
Agreement, during which VB has appointed Stewart House, Inc. as the
exclusive distributor within certain distribution channels (as
specified in the agreement) of audio-visual devices embodying
programs owned or controlled by VB (a "Videogram") in the United
States and Canada (the "Territory"). The Term of the agreement may
be automatically extended in the event that certain minimum purchase
requirements (as described in the agreement) are met by Stewart
House, Inc. Stewart House, Inc. has the right to terminate the
agreement upon 90 days' written notice prior to the expiration of
the first year of the Term. During the Term, Stewart House, Inc.
has agreed to purchase certain amounts of Videograms at the price
specified in the agreement. Payment for Videograms purchased by
Stewart House, Inc. is to be made upon the earlier to occur of the
date that Stewart House, Inc. receives payment from its sale of such
Videograms or 180 days after the date of shipment of the Videograms
from BV to Stewart House, Inc., provided that Stewart House, Inc. is
permitted to retain a 20% holdback for the possibility of returns.
The agreement places an obligation upon Stewart House, Inc. to
purchase a minimum of one million Videograms during the first year
of the Term at a price of $27.50 each. The maximum amount of revenue
that could be realized by us as a result of Stewart House, Inc.'s
first year minimum purchase requirement is $27,500,000. However,
our ability to realize such revenue is subject to many factors,
including but not limited to Stewart House, Inc.'s ability to resell
all of the one million Videograms, the manner in which Stewart
House, Inc. is paid for such Videograms and the financial abilities
of Stewart House, Inc. Since the relationship with Stewart House,
Inc. has just recently been concluded and we do not yet have any
basis to know whether such relationship will continue or be
successful, there can be no assurance of the amount, if any, of the
revenue that we may generate under the Stewart House, Inc. agreement.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
During the third quarter of our 2000 fiscal year, we issued
12,750,001 shares of our common stock in connection with our
acquisition of Visual Bible, Inc. We made such issuances in
reliance upon Section 4(2) of the Securities Act of 1933, as
amended. Such transaction has been previously reported in our 8K
filed August 16,2000.
During the third quarter of our 2000 fiscal year, we issued 599,640
shares of our common stock to four U.S Person purchasers hereof
without registration under the Securities Act of 1933, as amended in
reliance upon Regulation S promulgated thereunder for aggregate
consideration of approximately $3,000,000.00 ("Offering One"). We
paid aggregate placement fees of approximately $150,000.00 in
connection with Offering One. We have agreed to file a registration
statement on an appropriate form as to all of the shares sold in
Offering One on behalf of the holders of such shares.
During the third quarter of our 2000 fiscal year, we commenced an
offering of up to 1,500,000 shares of our common stock ("Offering
Two") without registration under the Securities Act of 1933, as
amended in reliance upon Regulation S promulgated thereunder.
Offering Two is continuing, but, as of the date hereof, we have
issued 729,500 shares of our common stock to seven non U.S. Person
purchasers thereof for aggregate consideration of approximately
$5,167,000.00, and we have paid aggregate placement fees of
approximately $255,000.00 in connection with Offering Two. We have
agreed to file a registration statement on an appropriate form as to
all of the shares sold in Offering Two on behalf of the holders of
such shares.
During the third quarter of our 2000 fiscal year, we commenced an
offering of up to 3,000,000 shares of our common stock ("Offering
Three") to accredited investors without registration under the
Securities Act of 1933, as amended in reliance upon Section 4(2)
thereof. Offering Three is continuing, and, as of the date hereof,
we have not sold any of our common stock. The terms of Offering
Three provide that we will file a registration statement on an
appropriate form as to all of the shares sold in Offering Three on
behalf of the holders thereof.
Each of the persons to whom securities were or are to be issued in
connection with Offering One, Offering Two or Offering Three made or
will have made an informed investment decision based upon
negotiation with the with us and was provided with or will be
provided with an appropriate offering document and access to
material information regarding us. The Company believes that all
purchasers of its securities pursuant to Offering One, Offering Two
and Offering Three had knowledge and experience in financial matters
such that they were capable of evaluating the merits and risks of
acquisition of our securities. All certificates representing the
shares sold or to be sold in Offering One, Offering Two and Offering
Three bear or will bear an appropriate legend restricting the
transfer of such shares, except in accordance with the Securities
Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable
ITEM 5. OTHER EVENTS.
(a) The negotiations of our subsidiary Visual Bible, Inc. ("VB ")
with TD Global Finance on behalf of various financial
institutions for a loan in the amount of $12,500,000.00 as
reported in our 8K filed August 16,2000, have terminated. VB
is, however, continuing to negotiate with other parties in
connection with loans on similar terms.
(b) On November 1, 2000 we entered into two agreements with The
Columbia House Company. One such agreement relates to VB's
video products (the "Video Agreement") and the other such
agreement relates to its audio products (the "Audio
Agreement"). The Video Agreement has a term (the "Term")
beginning on the date of execution and ending December 31, 2003
during which VB has agreed to assign to The Columbia House the
exclusive right to manufacture, advertise, market, distribute
and sell Video Devices (as defined in the Video Agreement) by
Direct Response Distribution (as defined in the Agreement)
within the United States, Canada, Mexico and their territories
and possessions (the "Territory"). As part of the Video
Agreement, we have agreed to pay a fixed royalty (the "Fixed
Royalty") to The Columbia House for each Video Device
containing an Audiovisual Work (as defined in the Video
Agreement) based upon the Book of Matthew distributed during
the Term in the Territory by methods other than Direct Response
Distribution. In turn, The Columbia House has agreed to pay
Visual Bible certain Royalties on Net Paid Sales (as defined in
the Video Agreement) of Video Devices and to provide internet
online fulfillment of orders for Video Devices from visitors to
our website. The terms of the Audio Agreement are generally
similar to the terms of the Video Agreement, but the Audio
Agreement relates to sound reproductions in all formats from
Master Recordings owned or controlled by VB. Likewise, the
amount and method of determination of Royalties to be paid by
The Columbia House to Visual Bible differs from the Video
Agreement.
(c) On November 12, 2000 VB executed a distribution agreement with
Stewart House, Inc. The agreement has a term (the "Term")
beginning on the date of execution of the Agreement and ending
December 31, 2005, unless earlier terminated pursuant to the
terms of the Agreement, during which VB has appointed Stewart
House as the exclusive distributor within certain distribution
channels (as specified in the agreement) of audio-visual
devices embodying programs owned or controlled by VB (a
"Videogram") in the United States and Canada (the "Territory").
The Term of the agreement may be automatically extended in the
event that certain minimum purchase requirements (as described
in the agreement) are met by Stewart House. Stewart House has
the right to terminate the agreement upon 90 days written
notice prior to the expiration of the first year of the Term.
During the Term, Stewart House has agreed to purchase certain
amounts of Videograms at the price specified in the agreement.
Payment for Videograms purchased by Stewart House is to be made
upon the earlier to occur of the date that Stewart House
receives payment from its sale of such Videograms or 180 days
after the date of shipment of the Videograms from VB to Stewart
House, provided that Stewart House is permitted to retain a 20%
holdback for the possibility of returns.
<PAGE>
ITEM 6. EXHIBITS, LISTS AND REPORTS ON FORM 8-K:
(a) Exhibits.
Exhibit
Number Description Location
27 Financial Data Schedule Filed Electronically Herewith
(b) Reports on Form 8-K.
Form 8-K, dated August 16, 2000 reporting on Item 1, "Changes in
Control of Registrant "; Item 2, "Acquisition and Disposition of
Assets "; and Item 5, "Other Events".
Form 8-K/A, dated October 16, 2000 reporting on Item 7, "Financial
Statements".
SIGNATURES
In accordance with the requirements of the Securities and Exchange
Act of 1934, the Registrant has caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VISUAL BIBLE INTERNATIONAL, INC.
Date: 11/20/00 By: /s/ Bess V. Fotopoulos
-----------------------------
Bess V. Fotopoulos, President
