SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended OCTOBER 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 2-98997-NY
NOVA INTERNATIONAL FILMS, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 11-2717273
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6350 N.E. Campus Drive
Vancouver, Washington 98661
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: (360) 737-6800
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
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
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B not contained in this form, and no disclosure will
be contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ] N/A
State Issuer's revenues for its most recent fiscal year: $0.
As of January 31, 2000, the aggregate market value of the Common Stock
held by non-affiliates of the Issuer (18,083,000 shares) was
approximately $180,830. The number of shares outstanding of the Common
Stock ($.00001 par value) of the Issuer as of the close of business on
January 31, 2000 was 96,583,000.
Documents Incorporated by Reference: None
PART I
Item 1. Description of Business.
General Development of Business
Nova International Films, Inc. (the "Company" or the "Registrant")
was incorporated in the State of Delaware on November 27, 1984. Prior
to May 1993, the Company was principally engaged in the business of
developing, financing and producing motion pictures (sometimes herein
"film(s)") for distribution.
In January 1986, the Company completed an initial public offering
and raised gross proceeds of $1 million.
During fiscal 1990, the Company was able to complete and release
two films it placed into production in fiscal 1989. These films were
entitled "Triumph of the Spirit" and "Firebirds". Additionally, in
January 1990, the Company acquired from Epic Productions, Inc. ("Epic")
all of the issued and outstanding capital stock of Byzantine Fire, Inc.
which at the time owned the rights to the completed film property "Why
Me?". This film was also released during fiscal year 1990. Other than
the foregoing, the Company has not been involved in the release of any
other films.
The Company also had previously entered into an agreement in
principle with Epic, whereby the Company had the option, should Epic
produce, to co-produce a motion picture entitled "Carlito's Way" (the
"Carlito's Way Rights"). The Company also had the contractual right
(the "Van Damme Rights") to engage Jean Claude Van Damme as the lead
actor in a motion picture subject to meeting certain terms and
conditions set forth in an agreement between the parties. These two
film rights, together with the three films described above, represented
as of March 1993 all of the Company's interests in various film
properties.
As a result of the closing of the Acquisition Agreement in May
1993 (as described below under "Transfer of Film Business"), 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.
Transfer of Film Business
Pursuant to an Acquisition Agreement dated March 3, 1993 (the
"Acquisition Agreement") by and between the Company and Epic, the
Company on May 12, 1993 (the "Closing") 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"), (iii)
the Carlito's Way Rights and (iv) the Van Damme Rights.
In connection with the financing of the film "Triumph of the
Spirit", the Company was unable to pay to 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. As of April
30, 1993, such indebtedness totalled $9,188,864. The Company was able
to negotiate an extension of the maturity date of this note until
September 30, 1991, but since then the Company has been in default of
its obligation.
Pursuant to the Acquisition Agreement, at Closing, (a) 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 the Subsidiary Corporations, (ii) the Completed Films,
(iii) the Carlito's Way Rights and (iv) the Van Damme Rights, and in
exchange therefor, (b) Epic assumed all debts and liabilities of the
Company with respect to the assets acquired, paid the Company the sum of
$50,000, acquired a substantial portion of the Bank Loan from the Bank
as described below and modified the loan arrangements thereunder plus
other indebtedness due Epic from the Company.
At Closing, Epic acquired all but $3 million of the indebtedness
under 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
(which other indebtedness was $983,069 as of April 30, 1993). All of
such indebtedness acquired by Epic is hereinafter referred to as the
"Primary Obligations". The terms of such modification were as follows:
(i) principal shall be due and payable 18 years from Closing, and (ii)
interest shall be 6% per annum payable within 45 days following the
close of each fiscal year of the Company, payable in arrears commencing
October 31, 1993, not to exceed 20% of the net profits of the Company
during the applicable year.
On October 29, 1993, the Company and Epic entered into an
agreement whereby Epic assigned and contributed to the capital of the
Company the indebtedness described above as the Primary Obligations of
the Company to Epic of $7,171,933 plus accrued and unpaid interest of
$201,600.
As indicated above, $3 million of indebtedness under the Bank Loan
was not acquired by Epic. In connection therewith, the Bank, Epic and
the Company entered into an agreement at Closing which provided that
such portion of the Bank Loan (the "Nonrecourse Obligations") be
nonrecourse to the Company and 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, 1995, the Company assigned to Epic and Epic
assumed the remaining $3 million Nonrecourse Obligations plus interest
thereon. As a result thereof, the Company has eliminated its bank
indebtedness.
Each of the Company and Epic have agreed to indemnify the other in
respect of any claims, demands and losses (collectively, "Losses") that
may be asserted against, imposed upon and incurred by the other
resulting from the breach of any representations, warranties and
obligations of the other as contained in the Acquisition Agreement. In
addition, Epic has agreed to indemnify the Company for any Losses that
arise out of or in any way are connected to or result from the assets
being acquired by Epic or any of the Subsidiary Corporations, including
without limitation, any claims arising under or with respect to the
business, operations and assets of each of the Subsidiary Corporations.
Excluded from the foregoing indemnity shall be Losses attributable to
fraud or willful misconduct. Also, the Company has agreed to defend and
hold Epic harmless against and in respect of any and all liabilities and
costs attributable to the litigation which is being assumed by Epic
described in the Acquisition Agreement, but only to the extent such
liabilities and costs are covered by applicable insurance.
As a result of the foregoing, and as stated above, 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.
Financial Information about Industry Segments
The Company, which has no current business operations, has begun
and will continue to seek another business opportunity. The Company was
previously engaged solely in the film industry. As a result, there are
no separate industry segments in connection with the business of the
Company. For financial information, reference is made to the financial
statements included elsewhere herein.
Search for Business Opportunities
As described above, the Company has no current business
operations. As such, the Company can now be defined as a "shell"
corporation, whose principal business purpose at this time is to locate
and consummate a merger or acquisition with a private entity. Because
of the Company's current status, in the event the Company does
successfully acquire or merge with an operating business opportunity, it
is likely that the Company's present shareholders will experience
substantial dilution and there will be a probable change in control of
the Company.
Management has begun and will continue to investigate, research
and, if justified, potentially acquire or merge with one or more
businesses or business opportunities. The Company currently has no
commitment or arrangement, written or oral, to participate in any
business opportunity and management cannot predict the nature of any
potential business opportunity it may ultimately consider. Management
has broad discretion in its search for and negotiations with any
potential business or business opportunity.
The Company has determined not to limit its search for a potential
business or business opportunity to any specific industry or industries.
In this regard, the Company has and will not restrict its search to any
specific geographical location, and the Company may participate in a
business venture of virtually any kind or nature.
The discussion of the business under this caption is purposefully
general and not meant to be restrictive of the Company's virtually
unlimited discretion to search for and enter into potential business
opportunities. No assurance can be given, however, that any transaction
will in fact be consummated.
Management anticipates that it may be able to participate in only
one potential business venture, due primarily to the Company's limited
financing. This lack of diversification should be considered a
substantial risk to the Company because it will not permit the Company
to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity in the form of firms
which have recently commenced operations, are developing companies in
need of additional funds for expansion into new products or markets, are
seeking to develop a new product or service, or are established
businesses which may be experiencing financial or operating
difficulties and are in need of additional capital. In some instances,
a business opportunity may involve the acquisition or merger with a
company which does not need substantial additional cash but which
desires to establish a public trading market for its Common Stock. A
company which seeks the Company's participation in attempting to
consolidate its operations through a merger, reorganization, asset
acquisition, or some other form of combination may desire to do so to
avoid what it may deem to be adverse consequences of undertaking a
public offering itself. Factors considered may include time delays,
significant expense, loss of voting control and the inability or
unwillingness to comply with various federal and state laws enacted for
the protection of investors.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Because of general economic conditions, rapid technological
advances being made in some industries, and shortages of available
capital, management believes that there are numerous firms seeking even
the limited additional capital which the Company has and/or the benefits
of a publicly traded corporation. Such perceived benefits of a publicly
traded corporation may include facilities or improving the terms on
which additional equity financing may be sought, providing liquidity for
the principals of a business, creating a means for providing incentive
stock options or similar benefits to key employees, providing liquidity
(subject to restrictions of applicable statutes) for all shareholders,
and other factors. Potentially available business opportunities may
occur in many different industries and at various stages of development,
all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and
complex.
The Company has insufficient capital with which to provide the
owners of business opportunities with any significant cash or other
assets. However, management believes the Company will offer owners of
business opportunities the opportunity to acquire a controlling
ownership interest in a public company at substantially less cost than
is required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant post-merger or
acquisition registration costs in the event they wish to register a
portion of their shares for subsequent sale. The Company will also
incur significant legal and accounting costs in connection with the
acquisition of a business opportunity including the costs of preparing
Form 8-K's, agreements and related reports and documents. Nevertheless,
Management of the Company has not conducted market research and is not
aware of statistical data which would support the perceived benefits of
a merger or acquisition transaction for the owners of a business
opportunity.
The analysis of new business opportunities will be undertaken by
or under the supervision of the Company's Chairman of the Board, who is
not a professional business analyst. Management intends to concentrate
on identifying preliminary prospective business opportunities which may
be brought to its attention through present associations. In analyzing
prospective business opportunities, management will consider such
matters as the available technical, financial, and managerial
resources; working capital and other financial requirements; history or
operation, if any; prospects for the future; nature of present and
expected competition; the quality and experience of management services
which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors
not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trades; name identification; and
other relevant factors. Management of the Company will meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of its investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation
to evaluate the above factors.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity,
and shareholders of the Company must, therefore, depend on the ability
of management to identify and evaluate such risks. In the case of some
of the opportunities available to the Company, it may be anticipated
that the promoters thereof have been unable to develop a going concern
or that such business is in its development stage in that it has not
generated significant revenues from its principal business activity
prior to the Company's participation, and there is a risk, even after
the Company's participation in the activity and the related expenditure
of the Company's funds, that the combined enterprises will still be
unable to become a going concern or advance beyond the development
stage. Many of the opportunities may involve new and untested products,
processes, or market strategies which may not succeed. Such risks will
be assumed by the Company and, therefore, its shareholders.
In implementing a structure for a particular business acquisition,
the Company may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another
corporation or entity. It may also purchase stock or assets of an
existing business. It should be noted that the Company likely has
insufficient capital with which to make any acquisitions. Accordingly,
in any of the transactions alluded to herein, it is likely that the
consideration utilized to make any acquisitions will consist of equity
securities.
In the event that an acquisition is made utilizing primarily
equity securities (as is expected to be the case), the percentage
ownership of present shareholders will be diluted, the extent of
dilution depending upon the amount so issued. Persons acquiring shares
in connection with any acquisition of a business may obtain an amount of
equity securities sufficient to control the Company. In addition, the
Company's Directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of
the Company's shareholders. Further, if the Company were to issue
substantial additional securities in any acquisition, such issuance
might have an adverse effect on the trading market in the Company's
securities in the future.
As part of the Company's investigation, Management of the Company
intends to meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited financial resources
and management expertise.
The manner in which the Company participates in an opportunity
will depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity, and the relative negotiating strength of the Company and
such other management.
With respect to any mergers or acquisitions, negotiations with
target company management will be expected to focus on the percentage
of the Company which target company shareholders would acquire in
exchange for their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a lesser percentage
ownership interest in the Company following any merger or acquisition.
The percentage ownership may be subject to significant reduction in the
event the Company acquires a target company with substantial assets.
Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by
the Company's shareholders.
The Company will participate in a business opportunity only after
the negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted, generally
such agreements will require specific representations and warranties by
all of the parties thereto, will specify certain events of default,
will detail the terms of closing and the conditions which must be
satisfied by each of the parties prior to such closing, will outline
the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms.
Motion Picture Industry Overview
The procedures and practices described in the following
generalized discussion are intended only to provide a background against
which the previous business of the Company may be evaluated. The
Company, which has no current business operations, has begun and will
continue to seek another business opportunity, which may but may not be
in the film industry. The Company was previously engaged solely in the
film industry. As stated above, the Company has determined not to limit
its search for a potential business or business opportunity to any
specific industry or industries. There can be no assurance that the
procedures and practices described in the following generalized
discussion has applied (or will ever apply) in any particular instances
to the business of the Company.
Production
The process by which an idea or a story becomes a finished motion
picture includes several distinct steps, which are described in
chronological sequence below. The "producer" is primarily responsible
for the execution and implementation of this process.
First, a producer acquires the rights to an existing literary
property, e.g., a novel, play or short story, or the producer
commissions the preparation of a story outline based on an original
concept or idea. Next, the producer, with his own funds or funds
obtained from others, finances the first draft of a screenplay based on
the literary material and also finances any additions, revisions or
redrafts that may be required. After a screenplay has been prepared,
the producer options or otherwise assembles the director, principal
actors and other key creative personnel, and prepares a budget. This
phase of making a film is known as "development".
Once the project is fully developed, and if not already arranged,
the producer must provide or locate financing. The number and
combination of financing sources and vehicles is limited only by the
imagination.
Once the financing has been arranged or committed, the project is
ready for "pre-production". During the following approximately three
months, locations are secured, casting is completed and the shooting
schedule is planned. Next, the principal photography, or the actual
"shooting" of the motion picture is commenced. Principal photography is
usually ten to twelve weeks in duration.
During the "post-production" phase, the film is edited, music and
special effects are added, and the sound-track and film are synchronized
to produce the master negative from which the prints for the theater
projection are made. The post-production phase may take from four to
eight months.
Distribution
Arrangements for the distribution of a motion picture vary
greatly. Typically, a motion picture will be released to theaters in
the United States and Canada for exhibition first - the "domestic"
theatrical market; usually, thereafter, the film is distributed abroad -
the "foreign" market. Following domestic and foreign exhibition of a
film, the motion picture is distributed further by release of video
cassettes, by exhibition on pay television (principally cable and
subscription TV), by release to non-theatrical markets (including
airlines, ships and schools) and then by exhibition on network and/or
syndicated television. Depending upon the actual film product, it is
sometimes necessary to alter the foregoing steps in distributing a film.
The revenues available from these markets, the time of the receipt
of revenues and the relative importance of the various markets have
changed dramatically in recent years with the growth of pay television
and home video and the increased demand for projects created by and for
these markets.
The profits of an enterprise involved in the motion picture
industry are greatly dependent upon public taste, which is both
unpredictable and susceptible to change without warning or explanation.
As a result, it is impossible to predict accurately the success or
failure of a motion picture. The success of a project may also be
significantly affected by the popularity of other motion pictures then
being distributed.
Moreover, significant problems are often encountered during the
production of a motion picture which cannot be reliably ascertained in
advance and which are beyond the control of the entities involved. Such
problems may include cost overruns, labor problems, delays or
inabilities to obtain supplies, props or costumes, equipment breakdowns,
injury, illness or death to cast members or the director and weather
delays. Accordingly, no assurances can be made that a project will ever
be completed, or if completed, that it can be done so in a timely
manner. As a result, enterprises involved in the motion picture
industry may, therefore, experience delays in generating revenues, if
any. In addition, even if a project is completed, any problem
encountered during the production of a motion picture may add to the
costs of the project which could significantly affect a project's
chances of achieving financial success.
Employees
Other than its two officers, the Company currently has no
employees.
Competition
In connection with its search for another business opportunity,
the Company will remain an insignificant participant among firms which
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's limited financial
resources and limited management availability, the Company will continue
to be at a significant competitive disadvantage compared to the
Company's competitors.
Item 2. Description of Property.
The Company maintains its offices on a rent-free month-to-month
basis in office space provided by one of its officers. The office is
located at 6350 N.E. Campus Drive, Vancouver, Washington 98661.
Item 3. Legal Proceedings.
At the present time, there is no material litigation pending or,
to management's knowledge, threatened against the Company.
Item 4. Submission of Matters to a Vote of Security-Holders.
No matter was submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders.
PART II
Item 5. Market for Common Equity
and Related Stockholder Matters.
The Company's Common Stock is traded in the over-the-counter
market and is listed on the OTC Bulletin Board and quoted in the "pink
sheets" promulgated by the National Quotation Bureau, Incorporated. To
date, there has been only sporadic trading of the Company's Common
Stock. The high and low bid quotations for the Company's Common Stock
tabulated below represent prices between dealers and do not include
retail markups, markdowns, commissions or other adjustments and may not
represent actual transactions.
Bid Prices
Period High Low
Fiscal Year Ended October 31, 1998:
Nov. 1, 1997 to Jan. 31, 1998 $.01 $.01
Feb. 1, 1998 to April 30, 1998 $.01 $.01
May 1, 1998 to July 31, 1998 $.01 $.01
Aug. 1, 1998 to Oct. 31, 1998 $.01 $.01
Fiscal Year Ended October 31, 1999:
Nov. 1, 1998 to Jan. 31, 1999 $.00 $.00
Feb. 1, 1999 to April 30, 1999 $.02 $.01
May 1, 1999 to July 31, 1999 $.16 $.01
Aug. 1, 1999 to Oct. 31, 1999 $.0625 $.01
As of January 31, 2000, there were approximately 625 record
holders of the Company's Common Stock.
No dividends have been declared or paid on the Company's Common
Stock since inception. The Company presently intends to retain
earnings, if ever achieved, for use in its business and, therefore,
there is no assurance when, or if ever, dividends may be paid.
In January 2000, the Company issued 20,000,000 shares of Common
Stock to Martin Rifkin and 3,000,000 shares to David M. Kaye. All of
such shares were issued at par value ($.00001 per share) for an
aggregate consideration of $230 and were issued in reliance upon the
exemption from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended, for "transactions by the issuer not involving
any public offering".
Item 6. Management's Discussion and Analysis or Plan of
Operation.
The following discussion should be read in conjunction with the
Financial Statements and Notes thereto and is qualified in its entirety
by the foregoing.
The Company had no revenues for the fiscal years ended October 31,
1998 and 1999. During the fiscal year ended October 31, 1999, the
Company had a net loss of $ $(4,433) as compared to a net loss of
$(4,254) during the fiscal year ended October 31, 1998.
On October 31, 1999, the Company had a working capital deficit and
stockholders'deficit of $(2,361), $1,063 in cash, total assets of
$1,063 and total liabilities of $3,424. The working capital deficit and
stockholders' deficit is principally due to a short term loan made by
the President of the Company in order to allow the Company to meet
certain working capital needs.
At the current time, the Company's sole means to pay for its
overhead operations is its existing cash in the total amount of $1,063
as of October 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. Management has indicated that it will
cover all operating costs for the foreseeable future.
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 have been required to undertake major projects to
address the year 2000 issue.
Year 2000 issues are not currently material to the Company's
business, operations or financial condition in view of the Company's
current lack of business operations. However, year 2000 issues may
become material to 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 and adopt a plan and a budget for
addressing such issues, if necessary.
Item 7. Financial Statements.
See the Financial Statements annexed to this report.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Set forth below are the present directors and executive officers
of the Company. Note that there are no other persons who have been
nominated or chosen to become directors nor are there any other persons
who have been chosen to become executive officers. There are no
arrangements or understandings between any of the directors, officers
and other persons pursuant to which such person was selected as a
director or an officer. Directors are elected to serve until the next
annual meeting of stockholders and until their successors have been
elected and have qualified. Officers serve at the discretion of the
Board of Directors.
Present Position Has Served As
Name Age and Offices Director Since
William Rifkin 79 Chairman of the Board, December 1984
Secretary and Director
Martin Rifkin 38 President, Treasurer April 1985
and Director
WILLIAM RIFKIN has been Chairman of the Board and a Director of
the Company since December 1984. Since October 1994, he has also been
Secretary of the Company. From March 1990 to October 1994, he was also
the Company's President. From 1985 through 1991, Mr. Rifkin was a
Director of Memory Sciences Corporation, a public company involved
in the computer industry, and was its Treasurer from April 1987 to
January 1990. Since 1984, he has also been President and a director
of Profit Merchandising Corp., a public company engaged in the
distribution of weatherstripping products. Mr. Rifkin is the father of
Martin Rifkin.
MARTIN RIFKIN has been President and Treasurer of the Company
since October 1994 and a Director since April 1985. In addition, from
April 1985 to October 1994, he was Vice President of the Company. Since
December 1985, Mr. Rifkin has been a Director of Nutrition Now,
Inc., a public company which manufactures and markets nutritional
supplements and since November 1987, he has been its Secretary
and Treasurer and since February 1992, its President. Also, from
August 1988 to February 1992, he was its Vice President. In addition,
Mr. Rifkin has been Treasurer and Director of Profit Merchandising
Corp. (see biography of William Rifkin above) since September 1983
and Vice President since June 1985. Since February 1994, Mr. Rifkin has
been a Director of Cyberia Holdings, Inc., formerly known as NW Venture
Corp. Also, from February 1994 to January 1997, he was its President,
Secretary and Treasurer. Martin Rifkin is the son of William Rifkin.
Item 10. Executive Compensation.
For the fiscal year ended October 31, 1999, none of the Company's
executive officers received compensation from the Company.
Since inception, no director has received any compensation for his
services as such. However, in the past, directors have been and will
continue to be reimbursed for reasonable expenses incurred on the
Company's behalf.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of January 31,
2000, by (i) each person who is known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock; (ii) each of the
Company's directors; and (iii) directors and officers of the Company as
a group:
Number Percent
of Shares of
Name and Address Owned Class
William Rifkin 53,050,000(1) 54.9%
6350 N.E. Campus Drive
Vancouver, WA
Martin Rifkin 25,450,000(2) 26.4%
6350 N.E. Campus Drive
Vancouver, WA
All Officers and 78,500,000(1)(2) 81.3%
Directors as a Group
(consisting of 2 persons)
(1) Includes 2,000,000 shares owned of record by the wife of William
Rifkin, which shares may be deemed to be beneficially owned by
him.
(2) Includes 850,000 shares owned of record by the wife of Martin
Rifkin, which shares may be deemed to be beneficially owned by
him, and 150,000 shares held by Martin Rifkin as custodian for his
daughter under the Uniform Gifts to Minors Act.
Item 12. Certain Relationships and Related Transactions.
During the fiscal year ended October 31, 1999, Martin Rifkin made
a short term loan to the Company in order to allow the Company to meet
certain working capital needs. As of October 31, 1999, the principal
balance owing was in the amount of $2,624. Such loan is without
interest and is payable on demand.
Item 13. Exhibits, List and Reports on Form 8-K.
(a) Exhibits.
3.1 Certificate of Incorporation of Registrant with filing
receipt(1)
3.2 Certificate of Amendment of Certificate of Incorporation with
filing receipt (filed November 17, 1989)(2)
3.3 By-Laws of Registrant(1)
4.1 Specimen of Common Stock Certificate of Registrant(1)
4.2 Promissory Note in the principal amount of $7,171,933(3)
4.3 Promissory Note in the principal amount of $3,000,000(3)
10.1 Loan Agreement and Security Assignment (for the film "Triumph
of the Spirit")(4)
99.1 Acquisition Agreement dated as of March 3, 1993 by and
between Nova International Films, Inc. and Epic Productions,
Inc.(3)
99.2 Amendment to Loan Agreement and Security Assignment dated as
of May 12, 1993 by and between Credit Lyonnais Bank
Nederland, N.V., Nova International Films, Inc. and Epic
Productions, Inc.(3)
99.3 Amendment to Loan Agreement dated as of May 12, 1993 by and
between Epic Productions, Inc. and Nova International Films,
Inc.(3)
99.4 Assignment Agreement/Contribution to Capital dated October
29, 1993(5)
99.5 Letter Agreement dated November 30, 1995 (re: Nonrecourse
Obligations)(6)
(1) Incorporated herein by reference from Registrant's Registration
Statement on Form S-18, effective November 12, 1985.
(2) Incorporated herein by reference from Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1989.
(3) Incorporated herein by reference from Registrant's Current Report
on Form 8-K (dated: May 12, 1993).
(4) Incorporated herein by reference from Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1990.
(5) Incorporated herein by reference from Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1993.
(6) Incorporated herein by reference from Registrant's Annual Report
on Form 10-K for the fiscal year ended October 31, 1995.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the last quarter
of the period covered by this report:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NOVA INTERNATIONAL FILMS, INC.
(Registrant)
By: /s/Martin Rifkin
Martin Rifkin, President
Dated: February 8, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant, and in the capacities and on the dates
indicated:
Signature Title Date
/s/William Rifkin Chairman of the Board, 2/8/00
William Rifkin Secretary and Director
(Principal Executive Officer,
Principal Financial Officer
and Principal Accounting
Officer)
/s/Martin Rifkin President, Treasurer, 2/8/00
Martin Rifkin and Director
GLASSER & HAIMS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
99 WEST HAWTHORNE AVENUE
VALLEY STREAM, N.Y. 11580
ALVIN M. GLASSER, C.P.A. (516) 568-2700
IRWIN M. HAIMS, C.P.A. TELECOPIER
(516) 568-2911
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS
NOVA INTERNATIONAL FILMS, INC.
We have audited the accompanying balance sheets of Nova International Films,
Inc. as of October 31, 1999 and the related statements of operations,
stockholder's equity, and cash flows for the period November 1, 1997
through October 31, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evi-
dence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nova International Films, Inc.
as of October 31, 1999 and the results of its operations and cash flows for the
period indicated above in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has no revenues and business operations
which raise substantial doubts about its ability to continue as a going
concern, Management's plans in regard to these matters are also described in
Note 5. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
GLASSER & HAIMS, P.C.
Valley Stream, New York
February 1, 2000
NOVA INTERNATIONAL FILMS, INC.
BALANCE SHEETS
OCTOBER 31, 1999
ASSETS
Cash $1,063
Total assets $ 1,063
LIABILITIESANDSTOCKHOLDERS'EQUITY(DEFICIT)
LIABILITIES:
Accounts payable and accrued expenses $ 800
Short term loan 2,624
Total liabilities $ 3,424
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
Additional paid-in capital 8,197,260
Accumulated deficit (8,200,357)
Total stockholders' (deficit) (2,361)
Total liabilities and stockholders' (deficit) $1,063
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF OPERATIONS
For the Year For the Year
Nov. 1, 1998 Nov. 1, 1997
Through Through
Oct. 31, 1999 Oct. 31, 1998
REVENUES $ - $-
COST AND EXPENSES:
Selling, general
and administration expenses $4,434 $4,254
OPERATING LOSS $(4,434) $(4,254)
OTHER INCOME
Interest income $1 $-
LOSS BEFORE PROVISION
FOR INCOME TAXES $ (4,433) $(4,254)
PROVISION FOR INCOME TAXES - -
NET (LOSS) (4,433) $ (4,254)
Net (loss) per share $ (.00006) $(.00006)
Average no. of
share outstanding 73,583,000 73,583,000
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED OCTOBER 31, 1998 AND 1999
Common Stock
$.00001 Par Value Additonal
No. of Paid-in
Shares Amount Capital
Balance at October 31, 1997 73,583,000 $ 736 $ 8,197,260
Net Income
from 11/1/97 thru 10/31/98
Balance at October 31, 1998 73,583,000 $ 736 $ 8,197,260
Net Income
from 11/1/98 thru 10/31/99
Balance at October 31, 1999 73,583,000 $ 736 $ 8,197,260
NOVA INTERNATIONAL FILMS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (continued)
YEARS ENDED OCTOBER 31, 1998 AND 1999
Accumulated
Deficit Total
Balance at October 31, 1997 $ (8,191,670) $ 6,326
Net Income
from 11/1/97 thru 10/31/98 (4,254) (4,254)
Balance at October 31, 1998 $ (8,195,924) $ 2,072
Net Income
from 11/1/98 thru 10/31/99 (4,433) (4,433)
Balance at October 31, 1999 $ (8,200,357) $ (2,361)
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Year For the Year
Nov. 1, 1998 Nov. 1, 1997
Through Through
Oct.31,1999 Oct.31,1998
Cash flows from
operating activities:
Net loss $(4,433) $(4,254)
Adjustments to
reconcile net loss to
net cash provided
by operating activities:
Net changes in
assets and liabilities:
Accounts payable $(1,000) $(1,000)
Total adjustments $(1,000) $(1,000)
Net cash (used)
by operating activities $(5,433) $(5,254)
Cash flows from
investing activities:
Short term loan $2,624 $-
Net cash provided
by investing activities $2,624 $-
Net (decrease) in cash $ (2,809) $ (5,254)
Cash at beginning of period 3,872 9,126
Cash at end of period $1,063 $3,872
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
October 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. IssuanceofCommonStock
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 #4 "Debt" and modified the loan arrangements
thereafter plus other indebtedness due Epic from the Company.
2) 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.
b. Per Share Amounts
Per share amounts are based on the weighted average number of shares
outstanding during the period.
NOVA INTERNATIONAL FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
3) Short term loan
During the fiscal year ended October 31, 1999, an officer of the Company made
a short term loan to the Company in order to allow the Company to meet
certain working capital needs. Such loan is without interest and payable on
demand.
4) 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, 1995, Nova assigned to Epic and Epic assumed the remaining
$3 million Nonrecourse Obligations plus interest thereon.
5) 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 $1,062.
Accordingly, the Company has significantly reduced its overhead.
The Company has no current business operations and has begun and will
continue to seek another business opportunity. At this time 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. Management has indicated
that it will cover all operating costs for the foreseeable future.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM NOVA INTERNATIONAL FILMS, INC.'S ANNUAL REPORT FOR THE
FISCAL YEAR ENDED OCTOBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 1,063
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,063
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,063
<CURRENT-LIABILITIES> 3,424
<BONDS> 0
<COMMON> 736
0
0
<OTHER-SE> 8,197,260
<TOTAL-LIABILITY-AND-EQUITY> 1,063
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,433)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,433)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,433)
<EPS-BASIC> .000
<EPS-DILUTED> .000
</TABLE>
