UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] AMENDED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________ to _____________________________
Commission file number 0-14621
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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 Identification
incorporation or organization) 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)
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(Former name, former address and fiscal year, if changed since last report)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities and
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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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 November 1, 1998
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). Item 303 of Regulation S-K
(Sec. 229.303 of this chapter).
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION PAGE(S)
Statement of Operations
Nine months ending 9/30/98 & 9/30/97 3
Consolidated Balance Sheet
As of 9/30/98 & 12/31/97 4 & 5
Statement of Cash Flows
Nine months ended 9/30/98 & 9/30/97 6
Management's Discussion of Statement of
Income and Financial Condition 7 & 8
PART II - OTHER INFORMATION & SIGNATURES 9 & 10
Financial Data Summary 11
Page 2
<PAGE>
NEW SKY COMMUNICATIONS, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED FOR THREE MONTHS ENDED
--------------------- ----------------------
September September September September
30, 1998 30, 1997 30, 1998 30, 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross Film Receipts $ 0 $ 25,946 0 $ 20,000
Less: Amortized Film Costs $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Net Film Receipts $ 0 $ 25,946 $ 0 $ 20,000
-------- -------- -------- --------
General and Administrative Expenses $ 60,637 $ 45,695 $ 7,758 $ 32,195
-------- -------- -------- --------
Income (Loss) Before Other Income
and Related Expenses $(60,637) $(19,749) $ (7,758) $(12,195)
-------- -------- -------- --------
Other Income (Loss) $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Income (Loss) $(60,637) $(19,749) $ (7,758) $(12,195)
======== ======== ======== ========
Net Per Common Share NIL NIL NIL NIL
======== ======== ======== ========
</TABLE>
Page 3
<PAGE>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of September 30, 1998 and December 31, 1997)
<TABLE>
<CAPTION>
ASSETS
September 30, 1998 December 31, 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
---------- ----------
Fixed Assets:
Property and Equipment:
Property and Equipment 0 0
Film Inventory 1,253,166 1,250,660
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Total Property and Equipment 1,253,166 1,250,660
Less: Accumulated Depreciation 0 0
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Net Property and Equipment 1,253,166 1,250,660
---------- ----------
Other Assets 400 400
---------- ----------
TOTAL ASSETS $1,253,566 $1,251,116
========== ==========
</TABLE>
Page 4
<PAGE>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of September 30, 1998 and December 31, 1997)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September December
30, 1998 31, 1997
(UNAUDITED) (AUDITED)
----------- ---------
Current Liabilities:
<S> <C> <C>
Accounts Payable $ 142,640 $ 106,554
Leases 2,068 2,068
Accrued Expenses 39,016 39,016
----------- -----------
Total Current Liabilities $ 183,724 $ 147,638
----------- -----------
Stockholders' Equity:
Common Stock $.0001 Par Value
200,000,000 Share s Authorized
193,736,923 Shares Issued and
Outstanding (193,736,923 Shares
on October 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 (4,911,560) (4,847,924)
----------- -----------
Total Stockholders' Equity 1,069,842 1,103,478
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,253,566 $ 1,251,116
=========== ===========
</TABLE>
Page 5
<PAGE>
NEW SKY COMMUNICATIONS, INC.
Statement Of Cash Flows
Nine Months Ended September 30, 1998 and September 30, 1997
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
Operating Activities:
Net Income (Loss) $(60,637) $(19,749)
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 36,086 24,485
Amortization of Film Costs 30,000 0
-------- --------
Net Cash Provided (Used) $ 5,449 $ 4,736
-------- --------
Investing Activities:
Additional Film Inventory $ (5,505) $ (5,000)
-------- --------
Net Cash Provided (Used) $ (5,505) $ (5,000)
-------- --------
Financing Activities:
Net Cash Provided (Used) $ 0 $ 0
-------- --------
Increase (Decrease) In Cash
and Cash Equivalents $ (56) $ (264)
Cash and Cash Equivalents at
Beginning of Period $ 56 $ 1,150
-------- --------
Cash and Cash Equivalents
at End of Period $ 0 $ 886
======== ========
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, 1998 and the results of operations and cash
flows for the nine months then ended.
1(A)
During the quarter, the Company and it's Co-Producing partner, Syracuse
Productions, LLC, completed editing of and post-production work on the
feature film entitled "FREAK TALKS ABOUT SEX" (formerly "SYRACUSE MUSE").
The producers are pursuing various methods of marketing of the film to
potential distributors, including submission of the film for acceptance
into the 1999 Sundance Film Festival.
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 FACTS" from the author, Lynne Adams. The
two Companies will co-produce the film. The Companies have entered into
an option agreement with Winchester Entertainment, PLC to provide part,
or all, of the production financing for the film. Winchester has
currently engaged two screen writers to revise the script. The companies
are also 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 on 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 have engaged a screen writer who has produced an
initial draft of a screenplay. It is currently being revised. The
Companies are also seeking production and/or development financing for
the film project from major studios. The Producers anticipate that a film
based upon 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 film investments and at other times
management believes a write-down of the unamortized costs is appropriate.
Page 7
<PAGE>
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 FACTS", 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.
The Company received no revenues in the third quarter.
Management believes that the Company has no material risk or costs
associated with the Year 2000 problem as its records are not
computerized. 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. The
Company does intend to inquire of any potential future licensees
regarding their Year 2000 compliance as part of the negotiations for any
licensing or royalty 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 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.
The Company is an independent motion picture production company.
Independent motion picture production involves a number of risks and
elements that must coalesce to produce a successful feature film. These
elements include: procuring rights to a screenplay, securing financing to
finance the budget of the film, procuring talent for production,
direction, acting and post-production, which includes editing, music and
mixing and obtaining distribution of the completed film. Inadequate
performance of any of these elements, or miscalculation of the tastes of
the movie-going public can cause the film to not obtain distribution
and/or be a box-office failure. The potential market for motion pictures
is divided into two components: foreign and domestic (U.S and Canada).
Within each of these markets there are several different potential
revenue streams: theatrical, pay television, free television, video
cassette and new emerging sources such as CD-ROM, laser disc and DVD.
Distribution of an independent film may be accomplished by a single
distributor acquiring "the world", or the markets and elements of each
can be sold off by the producer to separate distributors. The lead time
from original acquisition of a screenplay to final cut of the film and
ultimate exhibition, if any, and receipt of revenues can take several
years. Therefore, the revenue streams and profitabilty of
Page 8
<PAGE>
an independent production company can vary greatly year-to-year. There is
significant competition in the independent film business. Many more films
are produced each year than receive distribution or recover their
investment. In addition, independent films compete against major studios
who have significantly greater resources and can therefore employ the
most talented people to make films and better promote their films. The
Company employs only one person, the President, Carl R. Reynolds, but has
working relationships with other persons who provide access to different
elements needed to produce a film, including financing, production and
securing talent.
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 9
<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: February 11, 1999. /S/ CARL R. REYNOLDS
--------------------
Carl R. Reynolds
President/
Treasurer/
Chief Financial Officer
/S/CARL R. REYNOLDS
- -------------------
DIRECTOR
FEBRUARY 11, 1999
- -----------------
Date
Page 10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-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> 183,724
<BONDS> 0
<COMMON> 19,374
0
0
<OTHER-SE> 1,050,468
<TOTAL-LIABILITY-AND-EQUITY> 1,253,566
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 60,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (60,637)
<INCOME-TAX> 0
<INCOME-CONTINUING> (60,637)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,637)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
