SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1997
[ ] 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 2-98997-NY
NOVA INTERNATIONAL FILMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-2717273
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
501 S.E. Columbia Shores Boulevard
Suite 350
Vancouver, Washington 98661
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (360)737-6800
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
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
Common, $.00001 par value per share: 73,583,000 outstanding as of June 10, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOVA INTERNATIONAL FILMS, INC.
Index to Financial Information
Period Ended April 30, 1997
Item Page
Item 1 - Financial Statements
Balance Sheets 3
Statements of Operations 4-5
Statements of Cash Flows 6-7
Notes to Financial Statements 8-10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
BALANCE SHEETS
(Unaudited)
APRIL 30, OCTOBER 31,
1997 1996
ASSETS
Cash $ 11,874 $ 14,797
Furniture and equipment at cost,
less accumulated depreciation 195 390
Total assets $ 12,069 $ 15,187
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
LIABILITIES:
Accounts payable and
accrued expenses $ 3,800 $ 5,200
Total liabilities $ 3,800 $ 5,200
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock, $.00001 par
value; 100,000,000 shares
authorized, 73,583,000 shares
issued and outstanding,
respectively. $ 736 $ 736
Additional paid-in capital 8,197,260 8,197,260
Accumulated deficit (8,189,727) (8,188,009)
Total stockholders' equity
(deficit) $ 8,269 $ 9,987
Total liabilities and
stockholders' equity (deficit) $ 12,069 $ 15,187
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Quarter Ended Quarter Ended
April 30, 1997 April 30, 1996
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 1,440 $ 3,843
Depreciation and amortization 98 98
$ 1,538 $ 3,941
OPERATING LOSS $ (1,538) $ (3,941)
OTHER INCOME:
Interest income 59 108
LOSS BEFORE PROVISION FOR
INCOME TAXES $ (1,479) $ (3,833)
PROVISION FOR INCOME TAXES - -
NET LOSS BEFORE EXTRAORDINARY
INCOME $ (1,479) $ (3,833)
EXTRAORDINARY INCOME:
Forgiveness of Debt - -
NET INCOME (LOSS) $ (1,479) $ (3,833)
Net (Income loss) per share $ .00002 $ (.00005)
Average no. of shares outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Six For the Six
Mos. Ended Mos. Ended
April 30, 1997 April 30, 1996
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 1,653 $ 5,183
Depreciation and amortization 195 195
$ 1,848 $ 5,378
OPERATING LOSS $ (1,848) $ (5,378)
OTHER INCOME:
Interest income 130 231
LOSS BEFORE PROVISION FOR
INCOME TAXES $ (1,718) $ (5,147)
PROVISION FOR INCOME TAXES - -
NET LOSS BEFORE EXTRAORDINARY
INCOME $ (1,718) $ (5,147)
EXTRAORDINARY INCOME:
Forgiveness of Debt - 3,375,119
NET INCOME (LOSS) $ (1,718) $ 3,369,972
Net (Income loss) per share $ .00002 $ .04580
Average no. of shares outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Unaudited)
For the For the
Quarter Ended Quarter Ended
Apr. 30, 1997 Apr. 30, 1996
Cash flows from operating
activities:
Net loss $ (1,479) $ (3,833)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and amortization $ 98 $ 98
Net changes in assets and
liabilities:
Accounts payable (1,200) -
Total adjustment $ (1,102) $ 98
Net cash provided (used) by
operating activities $ (2,581) $ (3,735)
Net (decrease) increase in cash $ (2,581) $ (3,735)
Cash at beginning of period 14,455 21,466
Cash at end of period $ 11,874 $ 17,731
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Unaudited)
For the Six For the Six
Mos. Ended Mos. Ended
Apr. 30, 1997 Apr. 30, 1996
Cash flows from operating
activities:
Net loss $ (1,718) $ (5,147)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and amortization $ 195 $ 195
Net changes in assets
and liabilities:
Accounts payable (1,400) (936)
Total adjustments $ (1,205) $ (741)
Net cash provided (used) by
operating activities $ (2,923) $ (5,888)
Net (decrease) increase in cash $ (2,923) $ (5,888)
Cash at beginning of period 14,797 23,619
Cash at end of period $ 11,874 $ 17,731
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
1) Nature of Business and Organization Nova International Films, Inc.
(the Company) was incorporated on November 27, 1984 in the State of
Delaware. The Company was formed for the purpose of financing and
producing motion pictures for distribution in the theatrical, home video
and pay and free television markets throughout the world.
a. Issuance of Common Stock
On January 2, 1986, the Company completed a public offering,
whereby ten million (10,000,000) units were sold at $.10 per unit, each
unit consisting of one (1) share of Common Stock, $.00001 par value, and
one (1) Redeemable Common Stock Purchase Warrant. These warrants have now
lapsed.
b. Disposition of Assets
On May 12, 1993 (the "Closing"), the stockholders of the Company
approved an Acquisition Agreement dated March 3, 1993 (the "Acquisition
Agreement") by and between the Company and Epic Productions, Inc. ("Epic"),
pursuant to which the Company sold, assigned, transferred and conveyed to
Epic and Epic acquired from the Company (i) all of the issued and
outstanding shares of capital stock of each of Byzantine Fire, Inc. a
California corporation, Wings of the Apache, Inc., a California
corporation, and A/R Productions, Ltd., a California corporation
(collectively, the "Subsidiary Corporations"); (ii) all rights to
the completed films "Triumph of the Spirit","Firebirds" and "Why Me?",
(sometimes collectively herein the "Completed Films"); and (iii) the
Company's rights related to the film project "Carlito's Way" and Jean
Claude Van Damme. In exchange therefor, Epic assumed all debts and
liabilities of the Company with respect to the assets acquired, paid the
Company the sum of $50,000, acquired the Bank Loan from the Bank as
described in Note #5 "Debt" and modified the loan arrangements thereafter
plus other indebtedness due Epic from the Company.
2) General
The financial statements for the years ended October 31, 1996 are
unaudited. However, it is management's opinion that all adjustments
necessary for fair presentation of these financial statements have been
made and are included herein.
3) Summary of Significant Accounting Policies
a. Financial Statement Presentation
In accordance with the provisions of Statement of Financial
AccountingStandards No. 53, the Company has elected to present an
unclassified balance sheet.
b. Depreciation and Amortization
Furniture and equipment is recorded at cost and is depreciated on a
straight-line basis over the estimated useful lives of the related assets,
which is typically five years.
c. Per Share Amounts
Per share amounts are based on the weighted average number of shares
outstanding during the period.
4) Furniture and Equipment
The following is a summary of Furniture and Equipment at cost, less
accumulated depreciation:
April 30, October 31,
1997 1996
Office/Computer Equipment $ 38,153 $ 38,153
Telephone Equipment 10,934 10,934
Furniture & Equipment
at cost $ 49,087 $ 49,087
Accumulated Depreciation 48,892 48,697
$ 195 $ 390
5) Debt
In connection with the financing of the film "Triumph of the Spirit",
the Company was unable to pay Credit Lyonnais Bank Nederland N.V. (the
"Bank")the note payable (the "Bank Loan") incurred to finance such film at
its original maturity date of March 31, 1991. The Company was able to
negotiate an extension of the maturity date of this note until September
30, 1991, but thereupon the Company became in default of its obligation.
Upon the Closing of the Acquisition Agreement, Epic acquired the Bank
Loan from the Bank and modified the payment terms of the Bank Loan assigned
to it and other indebtedness of the Company to Epic. In October 1993, Epic
assigned and contributed to the capital of the Company all of such
indebtedness of the Company to Epic plus accrued and unpaid interest. In
addition, at the Closing, $3 million of indebtedness (plus interest
thereon) under the Bank Loan was not acquired by Epic, pursuant to which the
Bank, Epic and the Company agreed that such portion of the Bank Loan (The
"Nonrecourse Obligations") be payable interest and then principal only from
operating receipts from "Triumph of the Spirit" which was acquired by Epic
pursuant to the Acquisition Agreement.
As of November 30, 1996, Nova assigned to Epic and Epic assumed the
remaining $3 million Nonrecourse Obligations plus interest thereon. As such
no interest was accrued for Fiscal Year Ended October 31, 1996.
7) Liquidity and Capital Resources
At the current time, the Company's sole means to pay for its overhead
operations is its existing cash reserves in the total amount of $11,874 as
of April 30, 1997. Accordingly, the Company has significantly reduced its
overhead.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
Results of Operations
The Company had no revenues for the three and six months ended April
30, 1997 and 1996. For the three and six months ended April 30, 1997, the
Company had a net loss of $(1,479) and $(1,718), respectively, as compared
to a net loss of $(3,833) for the three months ended April 30, 1996 and
net income of $3,369,972 for the six months ended April 30, 1996. The net
income for the six months ended April 30, 1996 is principally due to the
forgiveness of debt of $3,375,119 resulting from Epic assuming as of
November 30, 1995 the remaining $3 million Nonrecourse Obligations. As a
result of the foregoing, the Company has eliminated its bank indebtedness.
Liquidity and Capital Resources
At the current time, the Company's sole means to pay for its overhead
operations is its existing cash reserves in the total amount of $11,874 as
of April 30, 1997. Accordingly, the Company has significantly reduced its
overhead. In connection therewith, the Company does not pay any officer
salaries and rent. Its costs primarily include only those costs necessary
to retain its corporate charter, file necessary tax returns and report to
the Securities and Exchange Commission, and certain expenses in seeking
business opportunities.
In addition, as a result of the closing of the Acquisition Agreement
(see Notes to the Financial Statements included elsewhere herein), the
Company has no current business operations and has begun and will continue
to seek another business opportunity. As of the date of this report, the
Company has no agreement, understanding or arrangement to acquire or
participate in any specific business opportunity. No assurance can be
given that the Company will be able to consummate any such arrangements or,
if consummated, that such business opportunity will be successful.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-Q.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the quarter for
which this report is filed:
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NOVA INTERNATIONAL FILMS, INC.
(Registrant)
Dated: June 10, 1997 By: /s/William Rifkin
William Rifkin,
Chairman of the Board
(Principal Executive Officer)
Dated: June 10, 1997 By: /s/William Rifkin
William Rifkin,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM NOVA INTERNATIONAL FILMS, INC.'S QUARTERLY REPORT FOR THE QUARTER
ENDED APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,069
<PP&E> 195
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,069
<CURRENT-LIABILITIES> 3,800
<BONDS> 0
<COMMON> 736
0
0
<OTHER-SE> 8,197,260
<TOTAL-LIABILITY-AND-EQUITY> 12,069
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,718)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,718)
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<NET-INCOME> (1,718)
<EPS-PRIMARY> .000
<EPS-DILUTED> .000
</TABLE>
