UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
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 _________________________________________________________
NEW SKY COMMUNICATIONS, INC.
----------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 16-1229730
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
720 REYNOLDS ARCADE, 16 EAST MAIN STREET, ROCHESTER, NEW YORK 14614
(Address of principal executive offices)
(716) 454-5490
(Registrant's telephone number, including area code)
---------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes____X______ No___________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12,13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _________ No___________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 190,736,923 as of November 1,
1997.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements Item 2. Management's Discussion and
Provide the information required Analysis of Financial Condition
by Rule 10-01 of Regulation S-X and Results of Operations.
(17CFR Part 210). Furnish the information required by
Item 303 of Regulation
S-K(ss.229.303 of this chapter).
INDEX
-----
PART I - FINANCIAL INFORMATION PAGE(S)
- ------------------------------ -------
Statement of Income (Loss) 3
Nine months ending 9/30/97& 9/30/96
Consolidated Balance Sheet
As of 9/30/97 & 12/31/96 4 & 5
Statement of Cash Flows
Nine months ended 9/30/97 & 9/30/96 6
Management's Discussion of Statement of
Income and Financial Condition 7 & 8
PART II - OTHER INFORMATION & SIGNATURES 8 & 9
- ----------------------------------------
Page 2
<PAGE>
<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
STATEMENT OF INCOME (LOSS)
(UNAUDITED)
FOR NINE MONTHS ENDED FOR THREE MONTHS ENDED
--------------------- ----------------------
SEPTEMBER 30 SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross Film Receipts $ 25,946 $ 8,729 $ 20,000 $ 0
Less Amortized
Film Costs $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------
Net Film Receipts $ 25,946 $ 8,729 $ 20,000 $ 0
-------- -------- -------- -------
General and Administrative
Expenses $ 45,695 $ 20,589 $ 32,195 $ 7,500
-------- -------- -------- -------
Income (Loss) Before
Other Income and
Related Expenses $(19,749) $(11,860) $(12,195) $(7,500)
-------- -------- -------- -------
Other Income (Loss) $ 0 $(55,556) $ 0 $ 0
-------- -------- -------- -------
Income (Loss) $(19,749) $(67,416) $(12,195) $(7,500)
======== ======== ======== =======
Net Per Common Share NIL NIL NIL NIL
======== ======== ======== =======
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
----------------------------
BALANCE SHEET
(As of September 30, 1997 and December 31, 1996)
ASSETS
------
SEPTEMBER 30, 1997 DECEMBER 31, 1996
(UNAUDITED) (AUDITED)
----------- ---------
Current Assets:
<S> <C> <C>
Cash and Cash Items $ 886 $ 1,150
Accounts Receivable:
Trade Accounts 0 0
Current Amortizable Portion
of Film Inventory 0 0
---------- ----------
Total Current Assets $ 886 $ 1,150
---------- ----------
Property and Equipment:
Property and Equipment 0 0
Film Inventory 1,677,143 1,506,865
---------- ----------
Total Property and Equipment 1,677,143 1,506,865
Less: Accumulated Depreciation 0 0
---------- ----------
Net Property and Equipment 1,677,143 1,506,865
---------- ----------
Other Assets 400 400
---------- ----------
TOTAL ASSETS $1,678,429 $1,508,415
========== ==========
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
----------------------------
BALANCE SHEET
(As of September 30, 1997 and December 31, 1996)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, 1997 DECEMBER 31, 1996
(UNAUDITED) (AUDITED)
----------- ---------
Current Liabilities:
<S> <C> <C>
Accounts Payable $ 99,054 $ 104,291
Leases 2,068 2,068
Accrued Expenses 37,016 37,016
----------- -----------
Total Current Liabilities $ 138,138 $ 143,375
----------- -----------
Stockholders' Equity:
Common Stock $.0001 Par Value
200,000,000 Shares Authorized
190,736,923 Shares Issued and
Outstanding (190,736,923 Shares
On September 30, 1997) $ 19,074 $ 14,274
Additional Paid-In Capital 5,932,328 5,742,128
----------- -----------
Total Paid-In Capital 5,951,402 5,756,402
Accumulated Deficit (4,411,111) (4,391,362)
----------- -----------
Total Stockholders' Equity 1,540,291 1,365,040
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,678,429 $ 1,508,415
=========== ===========
</TABLE>
Page 5
<PAGE>
NEW SKY COMMUNICATIONS, INC.
Statement of Cash Flows
Nine Months Ended September 30, 1997 and September 30, 1996
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
Operating Activities:
Net Income (Loss) $(19,749) $(67,416)
Adjustments to reconcile
Net Income and Net Cash:
Depreciation and Amortization 0 0
(Increase) Decrease in Accounts
Receivable 0 0
(Increase) Decrease in Prepaid
Expenses 0 0
Increase (Decrease) in Accounts
Payable and Accrued Expenses 24,485 8,010
Amortization of Film Costs 0 5,000
-------- --------
Net Cash Provided (Used) $ 4,736 $(54,406)
-------- --------
Investing Activities:
Mortgage Writedown $ 0 $ 55,556
Additional Film Inventory $ (5,000) $ 0
-------- --------
Net Cash Provided (Used) $ (5,000) $ 55,556
-------- --------
Financing Activities:
Net Cash Provided (Used) $ 0 $ 0
-------- --------
Increase (Decrease) in Cash
And Cash Equivalents $ (264) $ 1,150
Cash and Cash Equivalents at
Beginning of Period 1,150 0
-------- --------
Cash and Cash Equivalents
at End of Period $ 886 $ 1,150
======== ========
Page 6
<PAGE>
STATEMENT OF MANAGEMENT
-----------------------
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the
financial position of the Company as of September 30, 1997 and the
results of operations and cash flows for the nine months then ended.
1(A) During the quarter, the Company received $20,000.00 as its producer's
fee from the production budget of the feature film "SYRACUSE MUSE",
which has been tentatively re-titled "FREAK TALKS ABOUT SEX". Principal
photography of the film,"FREAK TALKS ABOUT SEX", was completed on
August 17, 1997 and has thereafter been in post-production to the
current date. The film has been submitted to the Sundance Film Festival
for consideration to be included therein. The Company is awaiting the
results of that submission. The Company, along with its co-producer,
Syracuse Productions, L.L.C., has interviewed several candidates to act
as producer's representative to assist the producers in procuring
distribution of the film.
The Company issued 4,000,000 shares of its common stock to Starr
Securities, Inc. pursuant to an Agreement dated July 31, 1997 whereby
Starr will render investment banking services to the Company over a
period of two years. The stock has been registered with the S.E.C. on
Form S-8 dated August 20,1997. A copy of the Agreement is annexed
hereto as an exhibit.
The Company continues to carry its investments in feature films as an
asset of the Company under Film Inventory, amortizing these costs when
funds are received on the various film investments and at other times
management believes a write-down of the unamortized costs is
appropriate.
The Company has title to and/or interests in the following feature film
properties in development: "THE GIANT" "THE GODMOTHER", "SOMEWHERE IS
CALLING", "CHEAP TRICKS" and "ARRIVEDERCI, VENICE". The Company has
released two feature films: "FEAR NO EVIL" and "LADY IN WHITE". The
Company is also an investor in a feature film entitled "GRAVE SECRETS",
produced by Planet Productions, Inc.
The Company has not filed Federal or New York State tax returns for the
years 1992, 1993 and 1994 and has not paid any tax due for those years
nor for 1995 or 1996 because of lack of funds for the preparation of
the returns and the payment of tax. The Company believes no Federal tax
would be due due to the Company's continuing losses. However, the
Company believes it owes New York State tax based upon capital and has
been accruing estimated amounts for such tax since 1992.
Page 7
<PAGE>
1(B) Financial Condition -
1. Working capital is inadequate. (Current Ratio is nil)
2. The Company has no outstanding debt other than current payables
and accrued expenses.
PART II
-------
Other Information and Signatures
NEW SKY COMMUNICATIONS, INC.
----------------------------
Item 1. Legal Proceedings - None.
Item 2. Change in Security - None.
Item 3. Defaults upon Senior Securities - None.
Item 4. Submission of matters to a vote of securities holders - None.
Item 5. Other information - None.
Page 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.
NEW SKY COMMUNICATIONS, INC.
Date: NOVEMBER 14, 1997 /s/ Carl R. Reynolds
-----------------------------
Carl R. Reynolds President /
Treasurer/
Chief Financial Officer
Page 9
CONSULTING AGREEMENT
--------------------
AGREEMENT made this 31st day of July, 1997 by and between NEW SKY
COMMUNICATIONS INC., with offices at 720 Reynolds Arcade, 16 East Main Street,
Rochester, New York 14614 and STARR SECURITIES, INC. with officers at 19 Rector
Street, 16th Floor, New York, New York 10006.
WHEREAS New Sky is desirous of retaining the services of Starr as a
consultant to New Sky, and
WHEREAS, Starr is desirous of rendering such services to New Sky. NOW
THEREFORE, the parties hereto agree as follows:
1. Starr does hereby agree to render services to New Sky on a
nonexclusive basis as a consultant and New Sky does hereby agree to retain the
services of Starr as a consultant for a term of two (2) years commencing with
the date of this Agreement.
2. The services to be rendered shall be: (1) as reasonably required by
the Board of Directors of New Sky from time to time, and (2) to provide
investment banking advice to New Sky.
3. As compensation for such services as a consultant, New Sky shall pay
to Starr a fee in the form of 4,000,000 common shares of New Sky stock which
shall be deemed immediately earned.
4. Starr agrees to not disclose in any manner or form any information
regarding the business of New Sky, its manner of operation, plans or other data
whether or not such information would be deemed confidential or material, unless
authorized by New Sky, or reasonably necessary to
-1-
<PAGE>
further the services to be rendered by Starr hereunder.
5. The parties hereto agree that this Agreement is made under the laws
of the State of New York and the Supreme Court of such State at Rochester, New
York shall have exclusive jurisdiction and be the sole convenient venue and
forum to hear disputes arising out of this Agreement.
6. Upon the issuance of the shares to Starr hereunder, New Sky agrees
to cooperate with Starr in filing an S-8 registration for such stock, if
available.
7. This Agreement shall not be assignable as it is for unique personal
services.
IN WITNESS WHEREOF the parties have executed this Agreement the day and
date first above written.
NEW SKY COMMUNICATIONS, INC.
SEAL
By: /s/ Carl R. Reynolds
---------------------
President
STARR SECURITIES, INC.
SEAL
By: /s/ Martin Vegh
----------------------
President
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000771999
<NAME> NEW SKY COMMUNICATIONS, INC.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<CASH> 886
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 886
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,678,429
<CURRENT-LIABILITIES> 138,138
<BONDS> 0
<COMMON> 19,074
0
0
<OTHER-SE> 1,521,217
<TOTAL-LIABILITY-AND-EQUITY> 1,678,429
<SALES> 25,946
<TOTAL-REVENUES> 25,946
<CGS> 0
<TOTAL-COSTS> 45,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (19,749)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,749)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,749)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
