FORM 10-Q
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 September 30, 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 September 30, 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 September 30, 1998 1
(unaudited)
Consolidated Statements of Operations (unaudited) for the
period ended September 30, 1998 2
Consolidated Statements of Cash Flows (unaudited) for the
period ended September 30, 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 6
Item 1 Legal Proceedings 6
Item 2 Changes in Securities 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)
CONSOLIDATED BALANCE SHEET
September 30, 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 1,823
Film costs and program rights 0
TOTAL CURRENT ASSETS 1,823
$ 1,823
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 318
Deferred income 0
TOTAL CURRENT LIABILITIES 0
LONG TERM DEBT 0
SHAREHOLDERS' EQUITY:
Preferred stock - $.01 par, 3,000,000 shares authorized,
100,000 shares issued and outstanding 1,000
Common stock - $0.001 par, 30,000,000 shares authorized,
5,461,983 shares issued and outstanding 5,462
Paid in capital 133,538
Retained earnings (138,495)
TOTAL STOCKHOLDERS' EQUITY 1,505
$ 1,823
See notes to financial statements
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UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended September 30, 1998
REVENUE $ 4,900
COST OF REVENUES 7,000
GROSS PROFIT (2,100)
EXPENSES:
General and Administrative 472
Non-cash imputed compensation expense 0
472
NET LOSS (2,572)
BASIC LOSS PER SHARE ( 000)
WEIGHTED AVERAGE SHARES OUTSTANDING 5,461,983
See notes to financial statements
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UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (2,572)
Changes in operating assets and liabilities:
Decrease (increase) in accounts 0
Total adjustments: 0
NET INCREASE (DECREASE) IN CASH (2,572)
CASH AT BEGINNING OF PERIOD 4,395
CASH AT END OF PERIOD $ 1,823
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 developed by the Company in which it retains an ownership
interest. Revenues from being a provider of contract production services
are recognized
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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. Four 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 $600,000. The notes payable were
expunged and the value of the scripts written down to zero as of June 30,
1998. In exchange for the expungement of the notes, the Company entered into
a license agreement with Mr. Paoli relating to two of the films acquired from
Mr. Paoli. Thee two scripts remain in the library of the Company under
license from Mr. Paoli for $1.00. The company has agreed to pay Mr. Paoli a
license fee when the scripts are made into feature films.
4. NOTES PAYABLE
The Company's two notes bearing interest at 8%, due and payable in January
2000 have been expunged in exchanged for the return of two scripts to Ms.
Jody Mortara and a license agreement with Mr. Deno Paoli. As of the date of
this filing, there are no notes payable by the Company.
5. GENERAL
Reference is made to the financial statements included in the Company's
Annual Report (Form 10-K) filed with the Securities and Exchange Commission
for the year ended June 30, 1998.
The Company began its operation in February 1998. The financial statements
for the period ended September 30, 1998 are unaudited but include
all adjustments which, in the opinion of management, are necessary for a
fair presentation of the results of operations for the period then ended.
All such adjustments are of a normal recurring nature. The results of
the Company's operations for any interim period are not necessarily
indicative of the results of the Company's operations for a full fiscal year.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company is a development stage enterprise with only $7,442 in general and
administrative expenses incurred during the period. Funding for the Company
is expected to take place in 1999. Production activities will initiate upon
the Company's receipt of such funding.
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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
None.
(b) Reports on Form 8-K.
None.
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: November 14, 1998
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