FORM 10-Q
AMENDMENT NO. 1
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. Restated Financial Statements
Consolidated Balance Sheet as of March 31, 1998
(unaudited) F-1
Consolidated Statements of Operations (unaudited)
for the period January 6,1998 to March 31, 1998 F-2
Consolidated Statements of Cash Flows (unaudited)
for the period ended March 31, 1998 F-3
Notes to the financial statements F-4, F-5
Signatures 2
UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
March 31, 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 1,785
Notes receivable 45,000
TOTAL CURRENT ASSETS 46,785
ORGANIZATIONAL COST 2,000
$ 48,785
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,000
Deferred income 50,000
TOTAL CURRENT LIABILITIES 52,000
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 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
Additional paid in capital 133,538
Retained earnings (143,215)
(3,215)
$ 48,785
See notes to consolidated financial statements
F-1
UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 6, 1998 (INCEPTION) TO MARCH 31, 1998
REVENUES $ 0
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,215
NON-CASH IMPUTED COMPENSATION EXPENSE 140,000
143,215
NET LOSS $ (143,215)
BASIC LOSS PER SHARE $ ( 0.03)
WEIGHTED AVERAGE SHARES OUTSTANDING 4,979,529
See notes to consolidated financial statements
F-2
UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 6, 1998 (INCEPTION) TO MARCH 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (143,215)
Adjustments to reconcile net loss to net cash
used in operations:
Non-cash imputed compensation 140,000
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 3,215)
NET INCREASE (DECREASE) IN CASH ( 3,215)
CASH AT BEGINNING OF PERIOD 5,000
CASH AT END OF PERIOD $ 1,785
See notes to consolidated financial statements
F-3
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
F-4
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 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 and principle is due and payable in January 1999.
4. STOCKHOLDER' EQUITY
The Company had authorized 800,000,000 shares of no par value common stock.
The Company had 466,928,742 shares of common stock issued and outstanding as
of June 30, 1997. On February 10, 1998, the Company entered into a Stock
Purchase and Exchange Agreement with Titus under which the Company acquired
Titus and the previous shareholders of Titus obtained control of the Company.
The Agreement provided for the recapitalization of the Company through the
following transactions:
a) reverse split the common stock of the Company at the ratio of 1000:1;
b) issuance of 4,000,000 shares (post split) of the Company to the
shareholders of Titus;
c) issuance 50,000 shares of non-voting convertible preferred stock
(convertible into common voting stock at the ratio of 20:1) to the
shareholders of Titus;
d) acquisition of 1,000,000 shares of Titus Productions, Inc. (being all
of the issued and outstanding shares of Titus);
e) issuance of 1,000,000 shares of common voting stock pursuant to
several consulting agreements with such shares being registered in accordance
with the Securities and Exchange Act of 1933 on Form S-8.
The Company also issued 400,000 shares to various other consultants.
Accordingly, as a result of the reverse split, the acquisition of Titus and
issuance of common stock to the consultants, total issued and outstanding
common shares were 5,461,983 at March 31, 1998.
Contemporaneously with the exchange transactions, the Company acquired and
canceled 404,950 shares of Company common stock held by two shareholders.
On February 10, 1998, the Company designated the 100,000 shares of issued
preferred stock, par value $.01, as "Series A Convertible Voting Preferred
Stock" (the "Series A Preferred Stock"). The Series A Preferred Stock has
no dividend rights. The holders have the right to convert each share of
Series A Preferred Stock into 20 shares of common stock. Accordingly, each
share of Series A Preferred Stock is entitled to 20 votes.
F-5
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: March 1, 1999
2
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE PERIOD JANUARY 6, 1998 (INCEPTION) TO
MARCH 31, 1998 OF UNITED NATIONAL FILM CORPORATION, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-06-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,785
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,785
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,785
<CURRENT-LIABILITIES> 52,000
<BONDS> 0
0
1,000
<COMMON> 5,462
<OTHER-SE> 133,538
<TOTAL-LIABILITY-AND-EQUITY> 48,785
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 143,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (143,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143,215)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
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