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 July 31, 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 September 3,
1997
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOVA INTERNATIONAL FILMS, INC.
Index to Financial Information
Period Ended July 31, 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)
JULY 31, OCTOBER 31,
1997 1996
ASSETS
Cash $ 9,826 $ 14,797
Furniture and equipment
at cost, less
accumulated depreciation 98 390
Total assets $ 9,924 $ 15,187
LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)
LIABILITIES:
Accounts payable and
accrued expenses $ 2,800 $ 5,200
Total liabilities $ 2,800 $ 5,200
COMMITMENTS AND
CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
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 (8,190,872) (8,188,009)
Total stockholders' equity $ 7,124 $ 9,987
Total liabilities and
stockholders' equity $ 9,924 $ 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 Quarter
Ended Ended
July 31, 1997 July 31, 1996
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 1,048 $ 1,466
Depreciation and amortization 97 98
$ 1,145 $ 1,564
OPERATING (LOSS) $ (1,145) $ (1,564)
OTHER INCOME:
Interest income - 78
- 78
OTHER EXPENSES:
Interest expense - -
- -
(LOSS) BEFORE PROVISION
FOR INCOME TAXES $ (1,145) $ (1,486)
PROVISION FOR INCOME TAXES - -
NET (LOSS) BEFORE
EXTRAORDINARY INCOME $ (1,145) $ (1,486)
EXTRAORDINARY INCOME:
Forgiveness of Debt - -
NET INCOME (LOSS) $ (1,145) $ (1,486)
Net Income (loss) per share $ .00002 $ (.00002)
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 (CONT'D.)
(Unaudited)
For the Nine Mos. For the Nine Mos.
Ended Ended
July 31, 1997 July 31, 1996
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 2,701 $ 6,649
Depreciation and amortization 292 293
$ 2,993 $ 6,942
OPERATING (LOSS) $ (2,993) $ (6,942)
OTHER INCOME:
Interest income 130 309
130 309
OTHER EXPENSES:
Interest expense - -
- -
(LOSS) BEFORE PROVISION
FOR INCOME TAXES $ (2,863) $ (6,633)
PROVISION FOR INCOME TAXES - -
NET (LOSS) BEFORE
EXTRAORDINARY INCOME $ (2,863) $ (6,633)
EXTRAORDINARY INCOME:
Forgiveness of Debt - 3,375,119
NET INCOME (LOSS) $ (2,863) $ 3,368,486
Net income (loss) per share $ .00004 $ .04578
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
July 31, 1997 July 31, 1996
Cash flows from operating
activities:
Net (loss) $ (1,145) $ (1,486)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and amortization $ 97 $ 98
Net changes in assets and
liabilities:
Accounts payable (1,000) -
Total adjustments $ (903) $ 98
Net cash provided (used) by
operating activities $ (2,048) $ (1,388)
Cash flows from financing
activities:
Net proceeds from debt financing - -
Net cash provided (used) by
financing activities - -
Net (decrease) increase in cash $ (2,048) $ (1,388)
Cash at beginning of period 11,874 17,731
Cash at end of period $ 9,826 $ 16,343
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 Nine For the Nine
Mos. Ended Mos. Ended
July 31, 1997 July 31, 1996
Cash flows from operating
activities:
Net (loss) $ (2,863) $ (6,633)
Adjustments to reconcile
net loss to net cash provided
by operating activities:
Depreciation and amortization $ 292 $ 293
Net changes in assets and
liabilities:
Accounts payable (2,400) (936)
Total adjustments $ (2,108) $ (643)
Net cash provided (used) by
operating activities $ (4,971) $ (7,276)
Cash flows from financing
activities:
Net proceeds from debt
financing - -
Net cash provided (used) by
activities - -
Net (decrease) increase in cash $ (4,971) $ (7,276)
Cash at beginning of period 14,797 23,619
Cash at end of period $ 9,826 $ 16,343
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 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
Accounting Standards No. 53, the Company has elected to present an
unclassified balance sheet.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 1997
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:
July 31, 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 48,989 48,697
$ 98 $ 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.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 1997
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 $9,826 as
of July 31, 1997. Accordingly, the Company has significantly reduced its
overhead.
<PAGE>
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 nine months ended July
31, 1997 and 1996. For the three and nine months ended July 31, 1997, the
Company had a net loss of $(1,145) and $(2,863), respectively, as compared
to a net loss of $(1,486) for the three months ended July 31, 1996 and net
income of $3,368,486 for the nine months ended July 31, 1996. The net
income for the nine months ended July 31, 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 $9,826 as
of July 31, 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: September 3, 1997 By: /s/William Rifkin
William Rifkin,
Chairman of the Board
(Principal Executive
Officer)
Dated: September 3, 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 JULY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JUL-31-1997
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<ALLOWANCES> 0
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<CURRENT-ASSETS> 9,924
<PP&E> 98
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,924
<CURRENT-LIABILITIES> 2,800
<BONDS> 0
<COMMON> 736
0
0
<OTHER-SE> 8,197,260
<TOTAL-LIABILITY-AND-EQUITY> 9,924
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,701
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,863)
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<EPS-DILUTED> .000
</TABLE>
