SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1999
[ ] 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 Small Business Issuer as Specified in its Charter)
Delaware 11-2717273
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
6350 N.E. Campus Drive
Vancouver, Washington 98661
(Address of Principal Executive Offices)
(360) 737-6800
(Issuer's Telephone Number, including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, $.00001 par value per share: 73,583,000
outstanding as of July 31, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOVA INTERNATIONAL FILMS, INC.
Index to Financial Information
Period Ended July 31, 1999
Item Page
Item 1 - Financial Statements
Balance Sheets 3
Statements of Operations 4-5
Statements of Cash Flows 6
Notes to Financial Statements 7-8
Item 2 - Management's Discussion and Analysis
or Plan of Operation 9
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
BALANCE SHEETS
(Unaudited)
JULY 31, OCTOBER 31,
1999 1998
ASSETS
Cash $ 1,482 $ 3,872
Total assets $ 1,482 $ 3,872
LIABILITIES AND
STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable
and accrued expenses $ 800 $ 1,800
Loans & Exchanges 1,624 $ -
Total liabilities $ 2,424 $ 1,800
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 (8,198,938) (8,195,924)
Total stockholders' equity $ (942) $ 2,072
Total liabilities and
stockholders' equity $ 1,482 $ 3,872
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
July 31, 1999 July 31, 1998
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 526 $ 1,464
$ 526 $ 1,464
OPERATING (LOSS) $ (526) $ (1,464)
OTHER INCOME:
Interest income 0 0
(LOSS) BEFORE PROVISION
FOR INCOME TAXES $ (526) $ (1,464)
PROVISION FOR INCOME TAXES - -
NET INCOME (LOSS) $ (526) $ (1,464)
Net Income (loss) per share $ (.00001) $ (.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
(Unaudited)
For the Nine For the Nine
Mos. Ended Mos. Ended
July 31, 1999 July 31, 1998
REVENUES $ - $ -
COSTS AND EXPENSES:
General and administrative $ 3,014 $ 2,647
$ 3,014 $ 2,647
OPERATING (LOSS) $ (3,014) $ (2,647)
OTHER INCOME:
Interest income 0 0
(loss) BEFORE PROVISION
FOR INCOME TAXES $ (3,014) $ (2,647)
PROVISION FOR INCOME TAXES - -
NET INCOME (LOSS) $ (3,014) $ (2,647)
Net Income (loss) per share $ (.00004) $ (.00004)
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 Nine For the Nine
Mos. Ended Mos. Ended
July 31, 1999 July 31, 1998
Cash flows from
operating activities:
Net (loss) $ (3,014) $ (2,647)
Net changes in assets
and liabilities:
Accounts payable $ (1,000) $ (1,500)
Loans & Exchanges 1,624 0
Total adjustments $ 624 $ (1,500)
Net cash provided (used) by
operating activities $ (2,390) $ (4,147)
Net (decrease) increase
in cash $ (2,390) $ (4,147)
Cash at beginning of period 3,872 9,126
Cash at end of period $ 1,482 $ 4,979
The accompanying notes are an integral part of these statements.
<PAGE>
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
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 quarter ended July 31, 1999 and for the
years ended October 31, 1998 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, 1999
b. Per Share Amounts
Per share amounts are based on the weighted average number of shares
outstanding during the period.
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 the quarter ended January 31, 1997.
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 $1,482 as
of July 31, 1999. Accordingly, the Company has significantly reduced its
overhead, and unless it raises additional capital will not be able to
continue.
<PAGE>
Item 2. Management's Discussion and Analysis
or Plan of Operation.
The Company had no revenues for the three and nine months ended July
31, 1999. For the three months ended July 31, 1999, the Company had a net
loss of $(526) as compared to a net loss of $(1,464) for the three months
ended July 31, 1998. For the nine months ended July 31, 1999, the Company
had a net loss of $(3,014) as compared to a net loss of $(2,647) for the
nine months ended July 31, 1998.
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 $1,482 as
of July 31, 1999. 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.
YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs being written
using two digits, rather than four, to define the applicable year.
Software programs and hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a major system failure or
miscalculations causing disruptions of operations, including a temporary
inability to engage in normal business activities. As a result, many
companies will be required to undertake major projects to address the year
2000 issue.
Because the Company has nominal assets, including no personal property
such as computers, it is not anticipated that the Company will incur any
negative impact as a result of this potential problem. However, it is
possible that this issue may have an impact on the Company in the event the
Company acquires or participates in another business opportunity.
Management intends to address this potential problem with any prospective
merger, acquisition candidate or other participant. There can be no
assurances that management of the Company will be able to avoid a problem
in this regard in the event the Company acquires or participates in another
business opportunity.
<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-QSB.
(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 8, 1999 By: /s/William Rifkin
William Rifkin,
Chairman of the Board
(Principal Executive Officer)
Dated: September 8, 1999 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, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> JUL-31-1999
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<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,482
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,482
<CURRENT-LIABILITIES> 2,424
<BONDS> 0
<COMMON> 736
0
0
<OTHER-SE> 8,197,260
<TOTAL-LIABILITY-AND-EQUITY> 1,482
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,014
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,014)
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<EPS-DILUTED> .000
</TABLE>
