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, 2000
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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
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(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_____________
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_______________
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 August 1, 2000
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements. Item 2. Management's Discussion and
Provide the information Analysis of Financial Condition
required by Rule 10-01 and Results of Operations.
of Regulation S-X (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
Six months ending 6/30/00 & 6/30/99 3
Consolidated Balance Sheet
As of 6/30/00 & 12/31/99 4 & 5
Statement of Cash Flows
Six months ended 6/30/00 & 6/30/99 6
Management's Discussion of Statement of
Income and Financial Condition 7 - 11
PART II - OTHER INFORMATION & SIGNATURES 12
Financial Data Summary 13
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<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
STATEMENT OF INCOME (LOSS)
(UNAUDITED)
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
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June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
<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 $ 8,308 $ 11,345 $ 18,913 $ 18,845
-------- -------- -------- --------
Income (Loss) Before Other Income
and Related Expenses $ (8,308) $(11,345) $(18,913) $(18,845)
-------- -------- -------- --------
Other Income (Loss) $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
Income (Loss) $ (8,308) $(11,345) $(18,913) $(18,845)
======== ======== ======== ========
Net Per Common Share NIL NIL NIL NIL
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of June 30, 2000 and December 31, 1999)
ASSETS
June 30, 2000 December 31, 1999
(UNREVIEWED) (AUDITED)
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Current Assets:
<S> <C> <C>
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
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Fixed Assets:
Property and Equipment:
Property and Equipment 0 0
Film Inventory 1,259,166 1,259,166
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Total Property and Equipment 1,259,166 1,259,166
Less: Accumulated Depreciation 0 0
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Net Property and Equipment 1,259,166 1,259,166
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Other Assets 25,400 25,400
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TOTAL ASSETS $1,284,566 $1,284,566
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
BALANCE SHEET
(As of June 30, 2000 and December 31, 1999)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2000 December 31, 1999
(UNREVIEWED) (AUDITED)
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Current Liabilities:
<S> <C> <C>
Accounts Payable $ 208,124 $ 189,211
Notes Payable 25,000 25,000
Leases 2,068 2,068
Accrued Expenses 41,016 41,016
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Total Current Liabilities $ 276,208 $ 257,295
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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 August 31, 2000) $ 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 (4,973,044) (4,954,131)
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Total Stockholders' Equity 1,008,358 1,027,271
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TOTAL LIABILITIES ANDb
STOCKHOLDERS' EQUITY $ 1,284,566 $ 1,284,566
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</TABLE>
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<TABLE>
<CAPTION>
NEW SKY COMMUNICATIONS, INC.
Statement Of Cash Flows
Six Months Ended June 30, 2000 and June 30, 1999
Six Months Six Months
Ended Ended
JUNE 30, 2000 JUNE 30, 1999
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Operating Activities:
<S> <C> <C>
Net Income (Loss) $(18,913) $ (7,500)
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 18,913 32,500
Amortization of Film Costs 0 0
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Net Cash Provided (Used) $ 0 $ 25,000
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Investing Activities:
Additional Film Inventory $ 0 $ 0
Investment in Web site 0 25,000
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Net Cash Provided (Used) $ 0 $(25,000)
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Financing Activities:
Net Cash Provided (Used) $ 0 $ 0
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Increase (Decrease) In Cash
and Cash Equivalents $ 0 $ 0
Cash and Cash Equivalents at
Beginning of Period $ 0 $ 0
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Cash and Cash Equivalents
at End of Period $ 0 $ 0
======== ========
</TABLE>
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<PAGE>
STATEMENT OF MANAGEMENT
In the opinion of management, the accompanying unreviewed financial statements
contain all adjustments necessary to present fairly the financial position of
the Company as of June 30, 2000 and the results of operations and cash flows for
the six months then ended.
1(A) In 1997, the Company entered into a joint venture agreement with Syracuse
Productions, LLC to Co-Produce a feature film entitled "FREAK TALKS ABOUT SEX."
The Company is a special limited partner in the financing limited partnership
for the film and is entitled to one-third of the profits from the sale of the
film after the investors receive their investment plus a twenty percent (20%)
return on their investment. In addition, the Company has agreed to pay, from its
share of profits, five percent (5%) of film profits to Steve Zahn, one of the
stars of the film. The Company may not disclose the budget or cost of the film
for proprietary reasons, but the film qualifies as a "low-budget" film. The film
debuted as a Cinemax Friday Night Premiere in December 1999 and January 2000.
During the quarter, the Producers entered into an agreement for the grant of
U.S. video rights to the film to Lions Gate Films. The film will debut on video
late in 2000. The sales agent retained to sell foreign rights to the film has
taken the film to The American Film Market and Cannes Film Festivals and has
begun closing sales of rights to individual foreign territories. During the
quarter, the financing limited partnership continued paying the investors on
their investment. The Joint Venture Agreement has been previously filed as an
Exhibit in an earlier Form 10Q for the Company and the Company's 1997 Form 10-K.
To procure the Company's position as Co-Producer of the film, it issued
20,000,000 common shares of stock in the Company, with restrictive legend, to
Charles M. LaLoggia in 1997. Mr. LaLoggia is the former President and Chairman
of the Company. Mr. LaLoggia was the original Executive Producer of the film and
is a significant investor in the financing limited partnership. The Company has
capitalized the market value cost of the issuance of the stock, $100,000, under
"Film Inventory" on the Balance Sheet. "FREAK TALKS ABOUT SEX" is a comedy
starring Steve Zahn, who has recently appeared in "OUT OF SIGHT" and "YOU'VE GOT
MAIL" and stars in the current Miramax film "HAPPY TEXAS" and Josh Hamilton, who
has recently appeared in the NBC mini-series "THE 60'S."
In 1999, 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. The interest was
purchased for $25,000.00, which The Movie Place expended 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,
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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 are were
annexed to the Company's Form 10-K for 1999 as exhibits. The Company hopes to
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. Movieplace.com intends to be a premiere Internet site for movie fans,
motion picture industry professionals, stock market investors with a particular
interest in entertainment, media, communications and internet stocks and
investors who are interested in participating in the financing of independent
motion pictures.
The Movieplace.com business plan has three essential elements:
FIRST, it will provide timely, interesting, informative and proprietary content
which draws viewers to the Movieplace.com web site. This content includes
reviews of current movies and news from the world of entertainment; exclusive
"One On One" interviews with major motion picture stars conducted by
Movieplace.com Chief Executive Officer and Managing Editor Mike Cidoni in full
streaming video; a regular internet "television" program, "The Critics", a full
streaming video production featuring reviews of current movie releases and
commentary on classic films and video releases; "The Movieplace Radio Hour", a
weekly one-hour audio streaming program that discusses films and videos,
featuring guests commentators and journalists from around the country and which
also includes interactivity with the listening audience; "Everybody's A Critic",
an audio interactive message board feature which allows Movieplace.com visitors
to express their views on movies and other topics in a voice/audio format; and
"Spotlight On Wall Street", which features proprietary columns and other
information dealing mainly (but not exclusively) with media, entertainment and
communications stocks which would be of interest to stock market investors,
provided partially as free, advertiser-supported content and also offering
"premium" content on a subscription basis. Other content includes movie and
entertainment industry news, links to movie showing times at theaters around the
country, full video streaming movie music videos, message boards for interactive
comment, e-commerce trade in movie-related items and 24-hour video and audio
streaming television and radio programming.
SECOND, Movieplace.com intends to provide a mechanism through which selected
independent film makers can promote the production of their independent films
and to secure full or partial financing for their projects over the
Movieplace.com web site. It is anticipated that Movieplace.com will receive
equity interests in films financed in this manner in return for presenting the
projects on the site. The size of the interest will vary from project to
project, and Movieplace.com may, in certain instances, provide partial funding
and additional services for certain projects.
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<PAGE>
THIRD, Movieplace.com will acquire internet rights to selected independent
films, videos and television programming for presentation on the Movieplace.com
web site either as advertiser-supported free programming or for presentation on
a pay-per-view basis.
The goals of Movieplace.com are as follows:
(1) To turn "Movieplace" into a brand name which is readily recognizable to
anyone with an interest in movies, the business of movies or the entertainment
industry in general, including moviegoers who will ultimately be attending films
produced by "Movieplace", television viewers who will be watching programming
produced by "Movieplace", newspaper readers who are reading columns written by
Movieplace writers, radio listeners who are listening to movie reviews from
Movieplace critics and stock market investors who are watching interviews or
reading about recommendations from analysts who write for Movieplace's
"Spotlight On Wall Street" section;
(2) To attract as many visitors as possible to the Web site by using a variety
of unique and proprietary content targeted to different elements and interests
relating not only to movies but to the business of movies and other forms of
media and communications;
(3) To use the proprietary content of the Web site to allow the "Movieplace"
brand name to migrate to other forms of media, including television and radio
syndication, newspaper columns, newsletters, books and motion picture production
so that the "Movieplace" brand name becomes familiar to users of "traditional"
media, allowing both the Web site and its "traditional" media offshoots to
cross-promote each other without necessitating the exorbitant advertising
expenditures other "dot.com" businesses are burdened with; and
(4) To make the assets of Movieplace.com increasingly valuable over time to a
potential partner or purchaser seeking to expand its presence on the Web. There
is no guarantee that Movieplace.com will be able to accomplish all of the goals
of its business plan. There is significant competition among movie-content Web
sites, many of which, have a been in existence longer and have significantly
more financial resources than Movieplace.com to provide features and advertising
and promotion for a Web site.
The Company is exploring various options with a view toward both maximizing the
value of its holdings in Movieplace.com and also toward providing Movieplace.com
sufficient capital to achieve its goal of becoming the leading "brand name"
among movie/entertainment web sites. The Company has been advised that, due to
the recent weakness in the market for Internet stocks, an Initial Public
Offering of Movieplace.com is not feasible at the present time.
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<PAGE>
Pre-production activities for the Company's next feature film, "THE GODMOTHER,"
began in Los Angeles on May 1, 2000. During the quarter, the casting process was
initiated. The Company has obtained commitments for financing. pending the
procurement of certain additional cast members, and principal photography is
tentatively scheduled to begin late this year or in early 2001.
"THE GODMOTHER" is a comedy written in part by Joel and Ethan Coen, who won an
academy award for "Fargo". New Sky says it has received letters of intent from
Katherine Helmond ("Soap" and "Who's The Boss?") , Alex Rocco ("The Godfather
II"; "Get Shorty"); and Max Casella ("Doogie Howser, M.D."; "Analyze This") to
appear in the film, and that other cast members are expected to be announced
during the pre-production process, which is expected to last approximately six
months. The film will be Co-Executive Produced by Charles M. LaLoggia and
Leonard Shapiro.
During the quarter the Company also announced the filing of registration
documents for a public offering by its production partner, Bellacasa
Productions, Inc., for the financing of its feature film "THE GIANT." The film
examines artistic inspiration and the political turmoil surrounding
Michaelangelo's carving of the David. New Sky is entitled to a producer's fee
and fifteen percent (15%) of Producer's profits from the film.
The Company entered into a distribution agreement for a so-called "Director's
Cut" of its feature film "LADY IN WHITE" which has been released on DVD format.
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.
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, 1998 and 1999 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
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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 all rights in "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 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 an outstanding loan to its Chairman and President,
Carl R. Reynolds in the amount of $25,000.00 and current payables and
accrued expenses.
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<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 7, 2000. /S/ CARL R. REYNOLDS
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Carl R. Reynolds President/
Treasurer/Chief
Financial Officer
/S/ CARL R. REYNOLDS
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DIRECTOR
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AUGUST 7, 2000
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Date
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