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 June 30, 1998
-------------
[ ] 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.
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(Exact name of registrant as specified in its charter)
NEW YORK 16-1229730
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
731 POWERS BUILDING, 16 WEST MAIN STREET, ROCHESTER, NEW YORK 14614
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(Address of principal executive offices)
(716) 454-5490
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(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
PROCEEDING 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. 193,736,923 as of
July 31, 1998.
PART I - 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
(sec.229.303 of this
chapter).
<PAGE>
INDEX
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PART I -- FINANCIAL INFORMATION PAGE(S)
- ------------------------------- -------
Statement of Income (Loss)
Six months ending 6/30/98 & 6/30/97 3
Consolidated Balance Sheet
As of 6/30/98 & 12/31/97 4 & 5
Statement of Cash Flows
Six months ended 6/30/98 & 6/30/97 6
Management's Discussion of Statement of
Income and Financial Condition 7 & 8
PART II -- OTHER INFORMATION & SIGNATURES 8 & 9
Financial Data Summary 10
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<PAGE>
NEW SKY COMMUNICATIONS, INC.
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STATEMENT OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED FOR THREE MONTHS ENDED
-------------------- ----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
-------------------- ----------------------
<S> <C> <C> <C> <C>
Gross Film Receipts $ 0 $ 5,946 $ 0 $ 5,946
Less: Amortized Film Costs $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Net Film Receipts $ 0 $ 5,946 $ 0 $ 5,946
-------- -------- -------- --------
General and Administrative Expenses $ 52,879 $ 13,500 $ 8,641 $ 6,000
-------- -------- -------- --------
Income (Loss) Before Other Income
and Related Expenses $(52,879) $ (7,554) $ (8,641) $ (54)
-------- -------- -------- --------
Other Income (Loss) $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Income (Loss) $(52,879) $ (7,554) $ (8,641) $ (54)
======== ======== ======== ========
Net Per Common Share NIL NIL NIL NIL
======== ======== ======== ========
</TABLE>
-3-
<PAGE>
NEW SKY COMMUNICATIONS, INC.
----------------------------
BALANCE SHEET
(As of June 30, 1998 and December 31, 1997)
ASSETS
------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
----------- ------------
Current Assets:
<S> <C> <C>
Cash and Cash Items $ 0 $ 56
Accounts Receivable:
Trade Accounts 0 0
Current Amortizable Portion
of Film Inventory 0 0
---------- ----------
Total Current Assets $ 0 $ 56
---------- ----------
Property and Equipment:
Property and Equipment 0 0
Film Inventory 1,253,166 1,250,660
---------- ----------
Total Property and Equipment 1,253,166 1,250,660
Less: Accumulated Depreciation 0 0
---------- ----------
Net Property and Equipment 1,253,166 1,250,660
---------- ----------
Other Assets 400 400
---------- ----------
TOTAL ASSETS $1,253,566 $1,251,116
========== ==========
</TABLE>
-4-
<PAGE>
NEW SKY COMMUNICATIONS, INC.
----------------------------
BALANCE SHEET
(As of June 30, 1998 and December 31, 1997)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
----------- ------------
Current Liabilities:
<S> <C> <C>
Accounts Payable $ 131,883 $ 106,554
Leases 2,068 2,068
Accrued Expenses 39,016 39,016
---------- -----------
Total Current Liabilities $ 172,967 $ 147,638
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Stockholders' Equity:
Common Stock $.0001 Par Value
200,000,000 Shares Authorized
193,736,923 Shares Issued and
Outstanding (193,736,923 Shares
on July 31, 1998) $ 19,374 $ 19,074
Additional Paid-In Capital 5,962,028 5,932,328
---------- -----------
Total Paid-In Capital 5,981,402 5,951,402
Accumulated Deficit (4,900,803) (4,847,924)
----------- -----------
Total Stockholders' Equity 1,080,599 1,103,478
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,253,566 $ 1,251,116
=========== ===========
</TABLE>
-5-
<PAGE>
NEW SKY COMMUNICATIONS, INC.
----------------------------
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1998 and June 30, 1997
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
Operating Activities:
<S> <C> <C>
Net Income (Loss) $ (52,879) $ ( 7,554)
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 25,328 (2,446)
Amortization of Film Costs 30,000 0
---------- ----------
Net Cash Provided (Used) $ 2,449 $ (10,000)
---------- ----------
Investing Activities:
Additional Film Inventory $ (2,505) 0
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Net Cash Provided (Used) $ (2,505) 0
---------- ----------
Financing Activities:
Net Cash Provided (Used) $ 0 $ 10,000
---------- ----------
Increase (Decrease) In Cash
and Cash Equivalents $ (56) $ 0
Cash and Cash Equivalents at
Beginning of Period 56 1,150
---------- ----------
Cash and Cash Equivalents
at End of Period $ 0 $ 1,150
========== ==========
</TABLE>
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<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 June 30, 1998 and the results
of operations and cash flows for the six months then ended.
1(A) During the quarter, the Company and its Co-Producing partner,
Syracuse Productions, LLC, undertook a slight re-edit of and continued
post-production work on the feature film entitled "FREAK TALKS ABOUT
SEX" (formerly "SYRACUSE MUSE"). The producers are considering various
options for marketing the film to potential distributors, including
direct marketing to distributors and various film festivals.
The Company and Owasco Entertainment, whose principals are the same as
Syracuse Productions, LLC, have an option to produce a feature film
based upon a screenplay entitled "FACE VALUE" from the author, Lynne
Adams. The two companies will co-produce the film and they are
currently negotiating with companies for production financing and
negotiating with so-called "A" list talent to appear in the film and an
"A" list director to direct the film. The Co-Producers hope to commence
principal photography of the film in early 1999.
The Company and Owasco Entertainment have obtained an option on the
novel THE HELL CANDIDATE by Graham Masterton, a prolific British horror
novelist. The companies are negotiating with an "A" list screen writer
to adapt the novel into a screenplay and are seeking financing and/or
development financing from major studios. The Producers anticipate that
a film based on the novel will be a "large" budget film.
The Company entered into a distribution agreement for a so-called
"Director's Cut" of its feature film "LADY IN WHITE" which was released
on DVD format during the first quarter of 1998.
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 write-down of the unamortized costs
is appropriate.
The Company has title to and/or interests in the following feature film
properties, which are in development or completed: "FREAK TALKS ABOUT
SEX," "FACE VALUE," THE HELL CANDIDATE, " "THE GIANT" and "THE
GODMOTHER." The Company has released two feature films: "FEAR NO EVIL"
and "LADY IN WHITE." The Company was also an investor, in 1989, in a
feature film entitled "GRAVE SECRETS," produced by Planet Productions,
Inc.
-7-
<PAGE>
The Company received no revenues on account of film distribution
royalties in the second quarter.
Management believes that the company has no material risk or costs
associated with the Year 2000 problem. The Company cannot assess the
risk of third-party vendors or licensees of films already in release,
but the Year 2000 problem could affect the accounting of any licensees
to the Company for royalties due. The Company does intend to inquire of
any potential future licensees or distributors regarding their Year
2000 compliance as part of the negotiations for any licensing, royalty
or distribution agreement.
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, 1996 or 1997 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 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.
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.
-8-
<PAGE>
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.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW SKY COMMUNICATIONS, INC.
Date: August 17, 1998 -----------------------------
--------------- Carl R. Reynolds President/
Treasurer/
Chief Financial Officer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,253,566
<CURRENT-LIABILITIES> 172,967
<BONDS> 0
<COMMON> 19,374
0
0
<OTHER-SE> 1,061,225
<TOTAL-LIABILITY-AND-EQUITY> 1,253,566
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 55,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (55,879)
<INCOME-TAX> 0
<INCOME-CONTINUING> (55,879)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,879)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
