FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998
[ ] 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:
UNITED NATIONAL FILM CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
Colorado 84-1092589
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6363 Christie Avenue
Emeryville, CA 94608
(Address of Principal Executive Offices)
(510) 653-7020
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of March 31, 1998 was 5,461,983 shares.
UNITED NATIONAL FILM CORPORATION
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1998 1
(unaudited)
Consolidated Statements of Operations (unaudited) for the
period ended March 31, 1998 2
Consolidated Statements of Cash Flows (unaudited) for the
period ended March 31, 1998 3
Notes to the financial statements 4-5
Item 2. Management's discussion and analysis of financial
condition and results of operations 5
PART II - OTHER INFORMATION 5
Item 1 Legal Proceedings 5
Item 2 Changes in Securities 5-6
Item 3 Defaults Upon Senior Securities 6
Item 4 Submission of Matters to a Vote of Security Holders 6
Item 5 Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signature 6
UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
March 31, 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 1,785
Notes receivable 45,000
Film costs and program rights 600,000
TOTAL CURRENT ASSETS 646,785
ORGANIZATIONAL COST 2,000
$ 648,785
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,000
Deferred income 50,000
TOTAL CURRENT LIABILITIES 52,000
LONG TERM DEBT 300,000
SHAREHOLDERS' EQUITY:
Common stock - $0.001 par, 30,000,000 shares authorized,
5,461,983 shares issued and outstanding 5,462
Additional paid in capital 294,538
Retained earnings (3,215)
$ 648,785
See notes to financial statements
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UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
INCOME STATEMENT
QUARTER ENDED MARCH 31, 1998
SALES $ 0
COST OF GOODS SOLD 0
GROSS PROFIT 0
EXPENSES:
Legal 210
Advertising 1,000
Stock fees 1,895
Miscellaneous expense 110
3,215
OPERATING INCOME (LOSS) (3,215)
INTEREST EXPENSE 0
NET LOSS (3,215)
See notes to financial statements
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UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTER ENDED MARCH 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (3,215)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation and amortization 0
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivables 0
Decrease (increase) in inventories 0
Decrease (increase) in other assets 0
Increase (decrease) in accounts payable 0
Increase (decrease) in accrued expenses 0
Total adjustments: 0
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,215)
CASH FLOWS FROM INVESTING ACTIVITIES:
Long-term debt 0
Loans receivable 0
NET CASH USED IN INVESTING ACTIVITIES 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in common stock 0
Additions to equity capital 0
NET CASH PROVIDED BY FINANCING ACTIVITIES 0
NET INCREASE (DECREASE) IN CASH (3,215)
CASH AT BEGINNING OF PERIOD 5,000
CASH AT END OF PERIOD $ 1,785
See notes to financial statements
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UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS DESCRIPTION
United National Film Corp. ("the Company") is a Colorado corporation. The
Company is engaged in the acquisition and development of properties for, and
the production of, television series, television specials, made-for-home
television motion pictures and feature length motion pictures for domestic
and international distribution.
In February 1998, pursuant to a stock purchase and exchange agreement, the
Company acquired all of the capital stock of Titus Production, Inc. in
exchange for capital stock of the Company.
Prior to this, the Company had no operations. The acquisition of Titus
Production, Inc. Is being accounted for as a reverse acquisition under the
purchase method of accounting. Accordingly, the merger of the two companies
is recorded as a recapitalization of Titus, with Titus treated as the
continuing entity.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
B. Film Costs and Program Rights - Film costs and program rights ("project
cost") which include acquisition and development costs such as story rights,
scenario and scripts, direct production costs including salaries and costs of
talent, production overhead and post-production costs are deferred and
amortized by the "individual-film-forecast-computation method" as required by
Statement of Financial Standards No. 53.
C. Fair Value of Financial Instruments - The carrying amounts reported in the
balance sheet for cash, accounts and notes payable and accrued expenses
approximate fair value based on the short term maturity of these instruments.
D. Cash Equivalents - The Company considers all highly liquid temporary cash
investments, with an original maturity of three months or less when purchased,
to be cash equivalents.
E. Revenue Recognition - The Company derived revenues primarily from providing
production services to third parties and exploiting projects originally
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developed by the Company in which it retains an ownership interest. Revenues
from being a provider of contract production services are recognized using the
percentage of completion method, recognizing revenue relative to the
proportionate progress on such contracts as measured by the ratio which
project costs incurred by the Company to date bear to the total anticipated
costs of each project. Amounts advanced under such contracts are deferred and
not recognized as revenue until obligations under such contracts are performed.
3. RELATED PARTY TRANSACTIONS
The Company had certain transactions in the ordinary course of business with
directors and employees. Television and motion pictures scripts valued at
$600,000 were sold to or contributed to the Company by the officers and
directors in exchange for notes payable of $300,000 and 4,000,000 shares of
common stock. The films have valued at the transferor's historical cost.
Additionally, the Company entered into a $50,000 production contract with
a limited partnership whose general partner is an officer and director of the
Company. In exchange, the Company received a note receivable of $45,000 bearing
interest at 8%, all interest principle is due and payable in January 1999.
4. NOTES PAYABLE
The Company has two notes payable bearing interest at 8%, payable in January
2000. No payment of principal or interest are due until maturity.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company is a development stage enterprise with only $3,215 in general and
administrative expenses incurred during the period. Funding for the Company
will take place in June and production activities will also initiate at that
time.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities.
On February 10, 1998, the Company entered into a Stock Purchase and Exchange
Agreement with Titus Productions, Inc. ("Titus") et al. which provided for the
recapitalization of the Company through the adoption of a resolution to:
a) reverse split the common stock of the Company at the ratio of 1000:1;
b) issue 2,000,000 shares (post split) of the Company to Mr. Deno Paoli and
issue 2,000,000 shares (post split) of the Company to Mr. Ted
Mortarotti and Ms. Jody Mortara in equal proportions;
c) issue 50,000 shares of non-voting convertible preferred stock
(convertible into common voting stock at the ratio of 20:1) to Mr. Deno
Paoli and issue 50,000 shares of non-voting convertible preferred stock
(convertible into common voting stock at the ratio of 20:1) to Mr. Ted
Mortarotti and Ms. Jody Mortara in equal proportions;
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d) acquire 1,000,000 shares of Titus Productions, Inc. (being all of the
issued and outstanding shares of Titus);
e) acquire all of the common voting shares of the Company owned by Mr.
Conrad Sprenger and Mr. Richard L. Bare and cancel such shares at no cost
to the Company; and
f) issue and register 1,000,000 shares of common voting stock to Donald R.
Yu et alia pursuant to the provisions of a Consulting Agreement and in
accordance with the Securities and Exchange Act of 1933 on Form S-8.
Pursuant to the Agreement, the Company acquired all of the capital stock of
Titus and the common voting shares of Mr. Conrad Sprenger and Mr. Richard L.
Bare in exchange for the distribution of the shares to Mr. Deno Paoli and Ms.
Jody Mortara. At the time of the exchange, Mr. Deno Paoli owned approximately
36.6% of the issued and outstanding shares of the Company. Mr. Ted Mortarotti
and Ms. Jody Mortara each owned approximately 18.3% of the issued and
outstanding shares of the Company.
Following the completion of all of the foregoing transactions, the number of
shares outstanding of the issuer's Common Stock was 5,461,883.
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
None.
(b) Reports on Form 8-K.
The company filed a Current Report on Form 8-K dated February 10, 1998 to
report the transactions set out in Item 2. The Company filed an amendment to
the 8-K dated February 10, 1998 on April 1, 1998. The amendment contained
financial information not available at the time of the filing of the 8-K
dated February 10, 1998.
SIGNATURES
Pursuant to the requirements 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.
UNITED NATIONAL FILM CORP.
By: /s/ Deno Paoli
President
Date: May 21, 1998
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