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 January 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
March 10, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOVA INTERNATIONAL FILMS, INC.
Index to Financial Information
Period Ended January 31, 1997
Item Page
Item 1 - Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6-8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
NOVA INTERNATIONAL FILMS, INC.
BALANCE SHEETS
(Unaudited)
JANUARY 31, OCTOBER 31,
1997 1996
ASSETS
Cash $ 14,455 $ 14,797
Furniture and equipment at cost, less
accumulated depreciation 293 390
Total assets $ 14,748 $ 15,187
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Accounts payable and accrued expenses $ 5,000 $ 5,200
Total liabilities $ 5,000 $ 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 (8,188,248) (8,188,009)
Total stockholders' equity (deficit) $ 9,748 $ 9,987
Total liabilities and stockholders'
equity (deficit) $ 14,748 $ 15,187
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Quarter Ended Quarter Ended
Jan. 31, 1997 Jan. 31, 1996
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative 213 1,340
Depreciation and amortization 97 97
310 1,437
OPERATING LOSS (310) (1,437)
OTHER INCOME:
Interest income 71 123
71 123
OTHER EXPENSES:
Interest expense - -
- -
LOSS BEFORE PROVISION FOR
INCOME TAXES (239) (1,314)
PROVISION FOR INCOME TAXES - -
NET LOSS BEFORE
EXTRAORDINARY INCOME (239) (1,314)
EXTRAORDINARY INCOME:
Forgiveness of Debt - 3,375,119
NET INCOME (LOSS) $ (239) $ 3,373,805
Net (Income loss) per share $ .00000 $ .04585
Average no. of shares outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Unaudited)
For the For the
Quarter Ended Quarter Ended
Jan. 31, 1997 Jan. 31, 1996
Cash flows from operating activities:
Net loss $ (239) $ (1,314)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 97 97
Net changes in assets and
liabilities:
Accounts payable (200) (936)
Total adjustments (103) (839)
Net cash provided (used) by
operating activities (344) (2,153)
Net (decrease) increase in cash (342) (2,153)
Cash at beginning of period 14,797 23,619
Cash at end of period $ 14,455 $ 21,466
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
January 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 year 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.
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
January 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:
January 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 48,794 48,697
$ 293 $ 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.
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
January 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 $14,455
as of January 31, 1997. Accordingly, the Company has significantly
reduced its overhead.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
Results of Operations
The Company had no revenues for the quarters ended January
31, 1997 and 1996. During the fiscal quarter ended January 31,
1997, the Company had a net loss of $(239) as compared to net
income of $3,373,805 for the fiscal quarter ended January 31,
1996. The net income for the fiscal quarter ended January 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 $14,455 as of January 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.
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.
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: March 12, 1997 By: /s/William Rifkin
William Rifkin,
Chairman of the Board
(Principal Executive Officer)
Dated: March 12, 1997 By: /s/William Rifkin
William Rifkin, Principal
Financial Officer
<PAGE>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM NOVA INTERNATIONAL FILMS, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED
JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-END> JAN-31-1997
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<OTHER-EXPENSES> 213
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (239)
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