UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1999
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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
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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
July 1, 1999
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements. Item 2. Management's Discussion
Provide the information required and Analysis of Financial
by Rule 10-01 of Regulation S-X Condition and Results of
(17CFR Part 210). Operations. Item 303 of
Regulation S-K (Sec. 229.303
of this chapter).
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION PAGE(S)
Statement of Operations
Six months ending 6/30/99 & 6/30/98 3
Consolidated Balance Sheet
As of 6/30/99 & 12/31/98 4 & 5
Statement of Cash Flows
Six months ended 6/30/99 & 6/30/98 6
Management's Discussion of Statement of
Income and Financial Condition 7 - 9
PART II - OTHER INFORMATION & SIGNATURES 10
Financial Data Summary 11
Page 2
<PAGE>
NEW SKY COMMUNICATIONS, INC.
STATEMENT OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR SIX MONTHS Ended
---------------------- --------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Gross Film Receipts $ 0 $ 0 $ 0 $ 0
Less: Amortized Film Costs $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Net Film Receipts $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
General and Administrative Expenses $ 11,345 $ 8,641 $ 18,845 $ 52,879
-------- -------- -------- --------
Income (Loss) Before Other Income
and Related Expenses $(11,345) $ (8,641) $(18,845) $(52,879)
-------- -------- -------- --------
Other Income (Loss) $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Income (Loss) $(11,345) $ (8,641) $(18,845) $(52,879)
======== ======== ======== ========
Net Per Common Share NIL NIL NIL NIL
======== ======== ======== ========
</TABLE>
Page 3
<PAGE>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of June 30, 1999 and December 31, 1998)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, 1999 DECEMBER 31, 1998
(UNAUDITED) (AUDITED)
-------------- -----------------
<S> <C> <C>
Current Assets:
Cash and Cash Items $ 0 $ 0
Accounts Receivable:
Trade Accounts 0 0
Current Amortizable Portion
of Film Inventory 0 0
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Total Current Assets $ 0 $ 0
---------- ----------
Fixed Assets:
Property and Equipment:
Property and Equipment 0 0
Film Inventory 1,159,166 1,159,166
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Total Property and Equipment 1,159,166 1,159,166
Less: Accumulated Depreciation 0 0
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Net Property and Equipment 1,159,166 1,159,166
---------- ----------
Other Assets 125,400 100,400
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TOTAL ASSETS $1,284,566 $1,259,566
========== ==========
</TABLE>
Page 4
<PAGE>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of June 30, 1999 and December 31, 1998)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
(UNAUDITED) (AUDITED)
------------- -----------------
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 173,185 $ 154,340
Notes Payable 25,000 0
Leases 2,068 2,068
Accrued Expenses 41,017 41,017
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Total Current Liabilities $ 241,270 $ 197,425
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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 June 30, 1999) $ 19,374 $ 19,374
Additional Paid-In Capital 5,962,028 5,962,028
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Total Paid-In Capital 5,981,402 5,981,402
Accumulated Deficit (4,938,106) (4,919,261)
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Total Stockholders' Equity 1,043,296 1,062,141
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,284,566 $ 1,259,566
=========== ===========
</TABLE>
Page 5
<PAGE>
NEW SKY COMMUNICATIONS, INC.
Statement Of Cash Flows
Six Months Ended June 30, 1999 and June 30, 1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
---------------- ----------------
Operating Activities:
<S> <C> <C>
Net Income (Loss) $(18,845) $(52,879)
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 43,845 25,328
Amortization of Film Costs 0 30,000
-------- --------
Net Cash Provided (Used) $ 25,000 $ 2,449
-------- --------
Investing Activities:
Additional Film Inventory $ 0 $ (2,505)
Investment in Web site 25,000 0
-------- --------
Net Cash Provided (Used) $(25,000) $ (2,505)
-------- --------
Financing Activities:
Net Cash Provided (Used) $ 0 $ 0
-------- --------
Increase (Decrease) In Cash
and Cash Equivalents $ 0 $ (56)
Cash and Cash Equivalents at
Beginning of Period $ 0 $ 56
-------- --------
Cash and Cash Equivalents
at End of Period $ 0 $ 0
======== ========
</TABLE>
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 June 30, 1999 and the results of operations and cash flows for
the six months then ended.
1(A)
During the quarter, the Company and it's Co-Producing partner, Syracuse
Productions, LLC, debuted their feature film, "FREAK TALKS ABOUT SEX"
(formerly "SYRACUSE MUSE"), at the Seattle International Film Festival.
The film was well received by audiences in its World Premiere at the
Festival. As a result of the Festival the film received a favorable
review in Variety, the entertainment industry's daily newspaper. Since
the Festival, the producers have been screening the film for potential
distributors and purchasers of rights in the film. "FREAK TALKS ABOUT
SEX" is a comedy starring Steve Zahn, who has recently appeared in "OUT
OF SIGHT" and "YOU'VE GOT MAIL" and will star in the forthcoming Miramax
film "HAPPY TEXAS" and Josh Hamilton, who has recently appeared in the
NBC mini-series "THE 60'S." The Company owns one-third of the profits of
the film after the investors recoup their investment plus twenty percent
(20%). For proprietary reasons, the Company may not disclose the budget
of the film.
The Company is currently actively pursuing production of its film
property "THE GODMOTHER" (formerly "RESPECT YOUR GODFATHER"). The film is
a comedy co-written by, among others, Joel and Ethan Coen, who have
previously written "RAISING ARIZONA," "THE BIG LEBOWSKI" and "FARGO." The
Company has received letters of intent, subject to availability and
negotiation of contract terms, to appear in the film from Katherine
Helmond, star of television's "SOAP" and "WHO'S THE BOSS?", Alex Rocco,
best known for his role as Moe Green in "THE GODFATHER" and Max Casella,
co-star of the recent feature film "ANALYZE THIS" and "DOOGIE HOWSER" on
television. Both Helmond and Rocco starred in the Company's previous
film, "LADY IN WHITE." The Company is making final revisions to the
screenplay, attempting to raise financing and negotiating with other cast
and production personnel.
During the first quarter, the Company acquired a forty percent (40%)
interest in the business called The Movie Place, which owns and operates
the Internet site "movieplace.com." The Web site features movie reviews
and interviews with movie stars by nationally syndicated movie reviewer
Mike Cidoni, along with links to movie trailers and movie showing times
around the country. Successful coverage of "STAR WARS: THE PHANTOM
MENACE" and "SOUTH PARK" have significantly raised the page views of the
site. The site has retained an advertising broker to procure additional
advertising. The interest was purchased for $25,000.00,
Page 7
<PAGE>
which The Movie Place will expend to enhance and market the Web site and
for working capital. The Company procured the funds for the investment by
a loan on a promissory note from its Chairman and President, Carl R.
Reynolds. The Promissory Note is in the amount of $25,000.00, payable on
demand and bears interest at the rate of ten percent (10%) per annum. A
copy of the Promissory Note and the Agreement with The Movie Place were
annexed to the Form 10-Q for the period ending March 31, 1999. The
Company hopes to help develop the site into a significant Web site of
interest for movie fans and as an agent for raising production funds for
independent films by the Company and others.
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. All remaining outstanding
distribution agreements on the film expire in 2002, at which time all
rights will revert to the Company.
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, which are in development or completed: "FREAK TALKS ABOUT
SEX", "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 second 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, 1997 and 1998 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 8
<PAGE>
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 and 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 worldwide rights in all media, 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
profitability of an independent production company can vary greatly
year-to-year and project to project. 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). In the near
term, the Company will be dependent on revenues from its share of
profits, if any, derived from the film "FREAK TALKS ABOUT SEX" and
producers' fees, if any, payable from the budget of any film the Company
gets into production. In the meantime, the Company keeps its expenses at
a minimum.
2. The Company has an outstanding loan to its Chairman and President,
Carl R. Reynolds in the amount of $25,000.00 and current payables and
accrued expenses.
Page 9
<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 has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW SKY COMMUNICATIONS, INC.
Date: August 9, 1999. /S/ CARL R. REYNOLDS
--------------------
Carl R. Reynolds President/
Treasurer/
Chief Financial Officer
/S/ CARL R. REYNOLDS
- --------------------
DIRECTOR
- -------------------
AUGUST 9, 1999
- -------------------
Date
Page 10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,284,566
<CURRENT-LIABILITIES> 241,270
<BONDS> 0
<COMMON> 19,374
0
0
<OTHER-SE> 1,023,922
<TOTAL-LIABILITY-AND-EQUITY> 1,284,566
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 18,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,845)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,845)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,845)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
