Item 1. Business History
Description of Business Industry Profile
Item 2.
Item 2. Products
Item 3.
Item 3. Legal Proceedings:
There are no legal proceedings pending or threatened against the Company. The Company has commenced legal proceedings against the former vice-president and Secretary to cancel certain stock certificates issued to them based on the alleged misrepresentation made to the company be each of them which formed the basis of the company's initial dealing with them. There has been no counterclaim filed against the Company in the aforementioned lawsuit.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders:
No matters have been submitted to the vote of the security holders and there are no matters pending which will require the vote of the Security Holders.
Item 5.
Item 5. Market Price for Registrant's Common Equity and Related Stockholder Matters:
The Company has 6,866,983 shares outstanding as of June 30, 2000 of which approximately 64% is held by insiders. During the last quarter of calendar year 1999, the Company's common stock resumed trading on the NASDAQ electronic bulletin board under the symbol UTNF. Holders of common stock are entitled to receive such dividend as may be declared by the Registrant's Board of Directors. No dividends have been paid with respect to the Registrant's common stock and no dividend is anticipated to be paid in the foreseeable future.
The following is the report of the market trading on the Company's shares as available;
High Low
05-18-00 through 06-30-00 $ .75 $ .25
Historical reporting of the stock prices and trades is not available prior to May 18, 2000, the date on which multiple market makers for the Company's stock became available.
Item 6.
Item 6. Selected Financial Data:
The following table sets forth certain selected financial data with respect to the Company and is qualified in its entirety by reference to the financial statements filed herewith:
STATEMENT OF OPERATIONS
For the period ending June 30,
Revenues - 7,432 Net Loss (263,285) ( 67,665) Net Loss per Share (0.04) (0.01) Weighted Average Shares Used in Computation 6,526,983 5,849,900
BALANCE SHEET DATA Year Ended June 30,
2000 1999 Total Assets 65,227 65,413 Current Liabilities 60,400 55,000 Long Term Debt 8,000 1,500 Stockholders Equity (2,873) 8,913
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Result of Operation:
It has been the goal of the company to produce high quality, low budget motion pictures. The management of the Company is in negotiation with Transamerica Holding Company to complete the financial arrangement for an animation project "Snappy Sings". There is no assurance an agreement can be reached and a satisfactory conclusion can be obtained. The Company controls a number of screenplays and will continue to finance the individual projects through private offerings, partnership or joint ventures, or the pre-selling of the project to the overseas market. The Company has not assigned any book value to these projects. The management teams has over 70 years of experience in the motion picture business, (see management)
The Company plans to continue its project in the educational animation market and to finance this series by private placements or with a joint venture, partnership. In addition to the animation series, the Company plans to continue producing two features films per year and ramp up to four in the future. The Company plans to take steps to prepare itself to serve the Internet market when feasible and avail itself of all the technological opportunities. The Company success will be subject to its ability to raise the necessary capital.
The Company plans to research and create motion picture products for the anticipated Internet movie market. Low cost movies products with on time scheduling will be the focus and hallmark of the Company. The Company will seek not only quality scripts and talent but also explore new technology to suit the developing Internet needs of the consumer. Results of Operation:
The following is a discussion of the results of operations from the date of inception through June 30, 1999. The company is not providing any comparisons of its results of operation because the Company is still in the development stages, and such comparison would not be meaningful.
Net Sales:
Although the Company commenced operations on February 28, 1989, there has been no significant income generating activity to date. The Company records income at the time the monies are received from the distributor of the film. Revenues from being the 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 projects costs incurred by the Company to date bear to the total anticipated costs advanced under such contracts, and are deferred and not recognized as revenue until obligations under such contracts are performed. To date the Company has not produced any projects that would generate income. The source of funds for the Company through June 30, 1999 has been from the Acquisition of Titus Production, Inc., contract production work in the amount of $50,000, which Deno Paoli has sourced for the Company, and from loans from Officers of the Company.
Cost of Revenues: There were no production expenditures for the company during this reporting period.
Marketing and Sales Expenses: There were no marketing and sales expenses during this reporting period.
Non-cash imputed compensation expense:
The Company issued 21,500 shares of Series B Convertible Preferred Stock for cash paid in the amount of $21,500 and issued 680,000 shares of common stock pursuant to several consulting agreements and 30,000 shares of common stock to the Directors for services rendered.
General Administrative Expenses:
General and administrative expenses not otherwise attributable to product development and marketing expenses consist primarily of compensation, fees for professional services, and other general corporate purposes. General and administrative expenses incurred by the Company through June 30, 2000 were $32,885. The Company expects general and administrative expenses to significantly increase in future periods as a result of, among other things, increased hiring and expansion of facilities.
Interest Income: There was interest income in the amount of $400 through June 30, 2000.
Liquidity and Capital Resources:
The Company's principal sources of liquidity were cash and cash equivalents from its accounts. There were no Capital Expenditures for the period ending June 30, 2000. The Company anticipates a substantial increase in its capital expenditures in 2000-2001 fiscal period due to commencement of production on its first animation project and its first film project. The Company is actively engaged in financing activities to raise the necessary capital to begin production. The Company's ability to grow will depend in part on the Company's ability to expand its market penetration into the overseas market. In connection herewith, the Company may need to raise additional capital in the foreseeable future from public or private equity or debt sources in order to avail itself of unanticipated opportunities. If additional funds are raised through issuance of equity securities, the percentage ownership of the Company's then existing shareholders will be reduced. Moreover, shareholders may experience additional and significant dilution, and such equity securities may have rights, references or privileges senior to those of the Company's Common Stock. There can be no assurances that additional financing will be available on terms acceptable to the Company. The company may be unable to implement its business, sales or marketing plan, respond to competitive forces or take advantage of perceived business opportunities, which inability could have a material adverse effect on the Company's business, prospects, financial conditions and results of operations.
Item 8
Item 8 - Financial Statements Auditor's Report and financial statements
UNITED NATIONAL FILM CORPORATION
AND SUBSIDIARY
(A Development Stage Enterprise)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page #
Report of Independent Certified Public Accountants
Consolidated Financial Statements Balance Sheets as of June 30, 2000
Statements of Operations for the year ended June 30, 2000
Statements of Changes in Stockholders' Equity for the years ended June 30, 2000
Statements of Cash Flows for the year ended June 30, 2000
Notes to Consolidated Financial Statements -11
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors United National Film Corporation
We have audited the accompanying consolidated balance sheet of United National Film Corporation and Subsidiary as of June 30, 2000 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years ended June 30, 2000 and 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 audits.
We conducted our audit 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, evidence 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 United National Film Corporation and Subsidiary as of June 30, 2000 and the results of its operations, changes in stockholders' equity and cash flows for the years ended June 30, 2000 and 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred losses of $263,285 for the year ended June 30, 2000. Additionally, the Company had a working capital deficiency of $59,373 at June 30, 2000. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with respect to these matters are also described in Note 2 to the financial statements. The accompanying financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
/S/Feldman Sherb & Co., P. C. FELDMAN SHERB & CO., P.C. Certified Public Accountants
New York, New York September 26, 2000
UNITED NATIONAL FILM CORPORATION
AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEET
JUNE 30,2000
ASSETS
CURRENT ASSETS: Cash
$ 1,027
FILM COSTS AND PRODUCTION RIGHTS 64,500
65,527
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accrued Expenses $ 10,400 Note payable
50,000 TOTAL CURRENT LIABILITIES 60,400
LOAN FROM SHAREHOLDER
8,000
STOCKHOLDERS' EQUITY: Preferred stock - $.01 par, 3,000,000 shares authorized, 121,500 shares issued and outstanding 1,215
Common stock - $.001 par, 30,000,000 shares Authorized, 6,866,983 shares issued and outstanding 6,867
Paid in capital
455,918
Accumulated deficit
(466,873)
TOTAL STOCKHOLDERS' EQUITY (2,873)
$ 65,527
UNITED NATIONAL FILM CORPORATION
AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE> <CAPTION>
For the Year ending June 30 <S>
<C> <C>
REVENUE $ - 7,432
COST OF REVENUES - 6,000
GROSS PROFIT - 1,432
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 32,885 11,097 NON-CASH IMPUTED COMPENSATION EXPENSE 230,000 58,000
262,885 69,097
INTEREST EXPENSE (400) -
NET LOSS (263,285) (67,665)
BASIC LOSS PER SHARE (0.04) (0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING 6,526,983 5,849,900
</TABLE>
UNITED NATIONAL FILM CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDING JUNE 30, 1999 AND 2000 <TABLE> <CAPTION>
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total <S> <C> <C> <C> <C> <C> <C> <C>
Balance June 30, 1998 100000 $1000 5461983 $5462 $133538 $(135923) 4077
Stock issued for Services 0 0 580000 580 57420 0
Stock issued pursuant Ro agreement to acquire Screenplay 0 0 145000 145
Net loss 0 0 0 0 0 ( 67665) ( 67665)
Balance, June 30,1999 100000 $1000 6186983 $6187 $205313 $(203588) $ 8912
Sale of Series B Preferred Stock 21500 215 0 0 21500
Stock issued for Services 0 0 680000 680
Net Loss 0 0 0 0 0 (263285) (263285)
Balance, June 30, 2000 121500 $1215 6866983 6867 455918 (466873) (2873)
</TABLE>
UNITED NATIONAL FILM CORPORATION
AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS <TABLE> <CAPTION>
FOR THE YEAR ENDING JUNE 30
<s>
<c> <c> CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (263,285) ( 67,665)
Adjustments to reconcile net loss to net cash Provided by operating activities: Non-cash imputed compensation expense 230,000 58,000
Changes in operating assets and liabilities: Increase (decrease) in accounts payable 5,400 4,682
Total adjustments 235,400 62,682
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (27,885) (4,983) 4,395
CASH FLOWS FROM FINANCING ACTIVITIES Increase in loan from shareholder 6,500 Proceeds from issuance of Preferred Stock 21,500 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 28,000 1,500
NET INCREASE (DECREASE) IN CASH 115 (3,483)
CASH AT BEGINNING OF PERIOD 912 4,395
CASH AT END OF PERIOD $ 1,027
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
During the period ended June 30, 2000 and 1999, the Company issued 680,000 and 580,000 shares of common stock, respectively, with a total value of $230,000 and $58,000, respectively, in exchange for consulting fees.
See notes to consolidated financial statements
UNITED NATIONAL FILM CORP. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS DESCRIPTION
United National Film Corp. and Subsidiary ("Company") is a Colorado corporation. The Company through its subsidiary Titus Production, Inc. ("Titus") 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, a Nevada Corporation formed on January 6, 1998 in exchange for 4,000,000 shares of common and 100,000 shares of preferred stock of the Company.
Prior to this, the Company had no operations. The acquisition of Titus is being accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of Titus obtained control of the consolidated entity. Accordingly, the merger of the two companies is recorded as a recapitalization of Titus, with Titus treated as the continuing entity. The historical financial statements presented are those of Titus.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred losses of $263,285 for the year ended June 30, 2000. Additionally, the Company had a working capital deficiency of $59,373 at June 30, 2000. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company is still developing its projects and has not completed any projects to generate income. The sources of funds generated this fiscal period have come from the issuance of preferred stock and from loans from officer. Management is actively pursuing new debt and/or equity financing, however, any results of their plans and actions cannot be assured.
3. 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 stated at the lower of cost or market and 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. Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated.
e. Revenue Recognition:
The Company's business is to derive 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 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. Revenue from licensing company-owned projects is recognized when the film is delivered and available for showing, costs are determinable, the fee is known and collectibility is reasonably assured. f. Income Taxes:
Deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.
g. Net Loss Per Common Share:
In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share", which established new standards for computation of earnings per share. SFAS 128 requires the presentation on the face of the income statement of "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share is computed by dividing the net income (loss) available to common shareholders by the weighted average number of outstanding common shares. The calculation of diluted earnings per share is similar to basic earning per share except the denominator includes dilutive common stock equivalents such as stock options and convertible debentures. Common stock options and the common shares underlying the convertible preferred stock are not included as their effect would be anti-dilutive.
h. Impairment of Long-Lived Assets:
The Company has adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"). SFAS 121 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The adoption of SFAS 121 did not impact the financial statements of the Company.
i. Accounting for Stock Options:
The Company adopted Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock Based Compensation". SFAS 123 encourages the use of a fair-value-based method of accounting for stock-based awards under which the fair value of stock options is determined on the date of the grant and expensed over the vesting period. Under SFAS 123, companies may, however, measure compensation costs for those plans using the method prescribed by Accounting Principles Board Opinion No. 25 ("APB No. 25"), Accounting for Stock Issued to Employees." Companies that apply APB No. 25 are required to include pro forma disclosures of net earnings and earnings per share as if the fair-value-based method of accounting had been applied. The Company elected to account for such plans under the provisions of APB No. 25
4. STOCKHOLDERS' 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 at June 30, 1997. On February 5, 1998 the Company consummated 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 1:1000;
b. issuance of 4,000,000 shares (post split) of common stock of the Company to the shareholders of Titus.
c. issuance of 100,000 shares of non-voting convertible preferred stock (convertible into common voting stock at the ratio of 20:1) to the shareholders of Titus.
d. the issuance of 1,000,000 shares of common 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 June 30, 1998.
Contemporaneously with the exchange transaction, the Company acquired and canceled 404,950 shares of Company common stock held by two shareholders.
On February 10, 1998, the Company's shareholders approved an amendment to the Company's certificate of incorporation to increase the authorized number of common shares from 800,000 to 30 million and preferred shares to 3 million. The par value is $.001 per share for common stock and $.01 per share for preferred stock.
On February 10, 1998, the Company designated the 100,000 shares of issued preferred stock, par value $.01, "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.
In September 1998, the Company entered into an agreement to purchase the distribution rights to a screenplay titled, "Molly and Lawless John" from an unrelated third party for 40,000 shares of the Company's common stock, valued at $.10 per share, and $50,000.
In November 1998, the Company's Board of Directors approved the issuance of 580,000 shares of common stock, which included 30,000 shares to the Company's three directors, to various consultants for services rendered during the year. These shares have been valued at $.10 per share and have been accounted for as non-cash compensation expense.
In March 1999, the Company entered into an agreement to purchase a screenplay titled "Special Intent" (originally titled "Winner Take All") from Winner Take All Ltd. ("WTA"), a California Partnership, in exchange for 105,000 shares of the Company's common stock. These shares have been valued at $.10 per share and have been used in computing the basis for the acquisition. The CEO of the Company is also a general partner of WTA.
In June 1999, the Board authorized the issuance of 200,000 shares of Series B Preferred Stock ("Series B") at the aggregate subscription price of $1 per share pursuant to an offer and sale of such Series B in a Regulation D offering of the United States Securities Act of 1933. Holders of the Series B are entitled to receive a 6% annual dividend payable quarterly in arrears. The Series B is convertible at any time after issuance at 50% of the average closing bid price of the common stock or $2.00 per share, whichever is lower when the common shares of the Company has traded above $4.00 per share for ten (10) consecutive trading days. In addition, 10% of the series B carry warrants to purchase additional shares at the same terms.
In September, October and November 1999 the Company issued 21,500 shares of Series B with 2,150 warrants.
In September 1999, the Company's Board of Directors approved the issuance of 500,000 shares of common stock, which included 400,000 shares to Company directors and to various consultants for services rendered during the year. These shares have been valued at $.10 per share and have been accounted for as non-cash compensation expense.
In November 1999, the Company's Board of Directors approved the issuance of 180,000 shares of common stock, which included 30,000 shares to Company directors, and various consultants for services rendered during the year. These shares have been valued at $1 per share and have been accounted for as non-cash compensation expense.
In September, October and November 1999, the Company issued 21,500 shares of 6% series B convertible preferred stock at $1.00, for $21,500.
5. STOCK OPTION PLAN
In February 1998, the Company adopted an incentive stock option plan pursuant to which qualified and non-qualified stock options up to an aggregate of 1,000,000 shares of common stock will be made available to selected employees, consultants, officers and directors. Options may be either incentive stock options or non-qualified stock options, except that only employees may be granted incentive stock options. Options vest at the discretion of the Board of Directors. The maximum term of an option is ten years. The 1998 Stock Option Plan will terminate in February 2008, though options granted prior to termination may expire after that date. In Fiscal 2000, there were no grants or vesting of stock options. In Fiscal 1999, had compensation cost for the Stock Option Plan been determined based on the fair value at the grant dates for awards under the Stock Option Plan, the Company's net loss and net loss per share would have increased to the pro forma amounts indicated below:
Fiscal 1999
As Pro
Reported Forma Net loss $(67,665) $(71,665) Basic and diluted net loss per share $ (0.01) $ (0.01)
The fair value of each option grant is estimated on the date of grant using the Black Scholles option-pricing method with the following weighted average assumptions used for grants in 1999: dividend yield 0%, expected volatility 50.0%, risk-free interest rate 5.70%, expected life in years 5.
The weighted average fair value of stock options granted during the year ended June 30, 1999 was $0.04.
A summary of the status of the Stock Option Plans at June 30, 2000 and 1999 and the changes during the years then ended is presented below:
Weighted Average Weighted Average
Shares Exercise Shares Exercise
Underlying Price Underlying Price
Options Options Outstanding at beginning of year 500,000 $ 0.17 - $ -
Granted - - 500,000 0.17
Exercised - - - -
Outstanding at end of year 500,000 0.17 500,000 0.17
Exercisable at end of year 500,000 $ 0.17 500,000 $ 0.17
6. FILM COSTS AND PROGRAM RIGHTS
Components of film costs and program rights consist of the following:
June 30, 2000
Screenplays $ 64,500
The above film costs and program rights pertain to the screenplays "Molly and Lawless" and "Specific Intent" (formerly "Winner Takes All"). "Molly and Lawless" is expected to be redistributed. Management plans to attend the International Cinema and Television Market held in Milan, Italy in late October and early November to arrange the releasing and marketing of "Molly and Lawless" in the overseas market. "Specific Intent" is in the pre-production stage.
7. NOTE PAYABLE
Pursuant to the acquisition of the screenplay titled, "Molly and Lawless John", a non-interest bearing was issued for $50,000, originally due on January 15, 1999, has been renewed for two years.
8. LOAN FROM SHAREHOLDER
Interest bearing loans made to the Company from the Chief Executive Officer amounted to $8,000 at June 30, 2000, at an annual interest rate of 10%.
9. INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Adoption of this statement did not have a material effect of the Company's financial statements. SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. SFAS 109 additionally required the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.
Years ended June 30,
Statutory federal income tax (benefit) $ (89,000) $ (22,000) Effect of permanent difference 78,000 20,000 (Benefit) not recognized 11,000 2,000 Tax provision $ - $ -
The Company has no deferred tax assets or liabilities as of June 30, 2000.
10. JOINT VENTURE AGREEMENT
In June 1999, a joint venture agreement was entered into with a company known as "Animation and Effects" to produce a series entitled "Snappy Sings". The joint venture owns all the rights to "Snappy Sings", including all copyrights. Ten per cent (10%) of future revenues go to Animation and Effects and ninety per cent (90%) of future revenues to the Company until the sum received by the Company equals the amount advanced by the Company. Thereafter revenues to be shared are forty percent (40%) to Animation and Effects and sixty percent (60%) to the Company. "Snappy Sings," the first tape in the series has not been completed due to delays in obtaining financing. The joint venture agreement with "Animation and Effects" has expired and the Company is currently in negotiation for the extension of the agreement dated June 9, 1999. The development and completion of educational series for children is still the goal of the Company.
11. ACQUISITION OF "BILLION DOLLAR SURE THING" PRODUCTION RIGHTS
On May 24, 2000, an agreement was entered into granting the Company the exclusive rights and option to acquire the motion picture and television rights in the novel written by Paul E. Erdman entitled "The Billion Dollar Sure Thing" The terms of the agreement provided that Paul E. Erdman will be paid 2.5% of the final approved budget of the motion picture base on the book if produced, but not less that $250,000 and not more than $1,000,000. In addition, Mr. Erdman will be entitled to receive the sum equal to $2.5% of the net profit derived by the Company from the picture. The Company is in contact with European production and investment groups for financing of this project. There is no assurance that financing for this picture will be secured by the Company.
Item 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART II.
Directors and Executive Officers:
The company has obtained a team of seasoned executives in the entertainment industry. The management team is comprised of Mr. Deno Paoli, as Chairman and Chief Executive Officer. Mr. Paoli has over 30 years of experience in the film industry as a producer and director and has held senior executive management positions. Mr. Paoli served as producer of the film "Code Name Zebra" by Pacific West Cinema Group; served as President of Vagabond Productions, Inc. which produced such films as "Santee" with Glenn Ford, and served as producer and director with World Production. Mr. Paoli served as President of Variety International Pictures, Inc. where he was responsible for all company business including film production and distribution.
Mr. Arthur Stashower will serve as President and Chief Operating Officer of the Company. Mr. Stashower is an attorney who has spent his entire career of over 40 years practicing in the entertainment industry. He served as an executive in the television industry as well as with United Artists Corporation. He has also been an executive in a talent agency. In his law practice Mr. Stashower has represented individuals and companies involved in all aspects of the entertainment industry, including actors, directors, writers, producers, production companies, foreign sales agencies and others. He has been production counsel for numerous motion pictures, movies of the week and mini series. Mr. Stashower is a graduate of the University of Michigan and received both his undergraduate and law degrees there, graduating from the prestigious University of Michigan Law School as a member of the Order of the Coif and in the top 5% of his class.
The third member of the management team is Mr. Peter D. Finch who is Vice President and Chief Financial Officer. Mr. Finch will be responsible for all financial aspects of the Company. He will work closely with the Company auditors of Feldman Sherb Horowitz & Co., P.C. of New York. Mr. Finch attended UCLA majoring in Math Physics and San Diego State University where he received a degree in Accounting. Mr. Finch served in the U.S. Army as a Captain with services in Southeast Asia working on Classified Warfare Missions. Returning to civilian life he worked as a manager in the audit department of Arthur Young & Company and supervised audits of Fortune 1000 companies. Since 1978 he has worked in private practice providing business, tax and computer advice to various corporations.
Item 11 - Executive Compensation
During the fiscal reporting year applicable hereto, the Company has not paid any salary to its officers. Each of the officers were issued 10,000 shares of common stock in lieu of salary during the reporting period. Directors do not receive compensation for their services as Directors but may be reimbursed for their expenses in attending Directors meetings.
Item 12 - Security Ownership of Management
The following table sets forth, as of the date of this report, the stock ownership of each officer and director individually and all directors and officers of the Registrant as a group.
Mr. Deno Paoli 2,010,000 29.27% Arthur Stashower 60,000 Peter Finch 20,000 As a Group 4,000,000 73.2%
Item 13. Related Transactions, Changes in Securities. None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) Exhibits None
(b) Financial Statement Schedules Exhibit 27.1, Financial Data Schedule is attached.
(c) 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: September 28, 2000
EXHIBIT 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 2000 OF UNITED NATIONAL FILM CORPORATION, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. </LEGEND> <MULTIPLIER> 1
<S> <C> <PERIOD-TYPE> 12-MOS <FISCAL-YEAR-END> JUN-30-2000 <PERIOD-START> JUL-01-1999 <PERIOD-END> JUN-30-2000 <CASH>
1,027 <SECURITIES>
<RECEIVABLES> <ALLOWANCES>
<INVENTORY>
<CURRENT-ASSETS> 1,027 <PP&E>
<DEPRECIATION> <TOTAL-ASSETS> 65,527 <CURRENT-LIABILITIES> 60,400 <BONDS>
<PREFERRED-MANDATORY> <PREFERRED> 1,215 <COMMON> 6,867 <OTHER-SE> (10,955) <TOTAL-LIABILITY-AND-EQUITY> 65,527 <SALES>
<TOTAL-REVENUES> <CGS>
<TOTAL-COSTS> <OTHER-EXPENSES> 262,885 <LOSS-PROVISION> <INTEREST-EXPENSE> <INCOME-PRETAX> (263,285) <INCOME-TAX>
<INCOME-CONTINUING> (263,285) <DISCONTINUED> <EXTRAORDINARY> <CHANGES>
<NET-INCOME> (263,285) <EPS-PRIMARY> (.04) <EPS-DILUTED> (.04)
Item 11 - Executive Compensation
During the fiscal reporting year applicable hereto, the Company has not paid any salary to its officers. Each of the officers were issued 10,000 shares of common stock in lieu of salary during the reporting period. Directors do not receive compensation for their services as Directors but may be reimbursed for their expenses in attending Directors meetings.
Item 12
Item 12 - Security Ownership of Management
The following table sets forth, as of the date of this report, the stock ownership of each officer and director individually and all directors and officers of the Registrant as a group.
Mr. Deno Paoli 2,010,000 29.27% Arthur Stashower 60,000 Peter Finch 20,000 As a Group 4,000,000 73.2%
Item 13.
Item 13. Related Transactions, Changes in Securities. None.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) Exhibits None
(b) Financial Statement Schedules Exhibit 27.1, Financial Data Schedule is attached.
(c) 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: September 28, 2000
EXHIBIT 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 2000 OF UNITED NATIONAL FILM CORPORATION, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. </LEGEND> <MULTIPLIER> 1
<S> <C> <PERIOD-TYPE> 12-MOS <FISCAL-YEAR-END> JUN-30-2000 <PERIOD-START> JUL-01-1999 <PERIOD-END> JUN-30-2000 <CASH>
1,027 <SECURITIES>
<RECEIVABLES> <ALLOWANCES>
<INVENTORY>
<CURRENT-ASSETS> 1,027 <PP&E>
<DEPRECIATION> <TOTAL-ASSETS> 65,527 <CURRENT-LIABILITIES> 60,400 <BONDS>
<PREFERRED-MANDATORY> <PREFERRED> 1,215 <COMMON> 6,867 <OTHER-SE> (10,955) <TOTAL-LIABILITY-AND-EQUITY> 65,527 <SALES>
<TOTAL-REVENUES> <CGS>
<TOTAL-COSTS> <OTHER-EXPENSES> 262,885 <LOSS-PROVISION> <INTEREST-EXPENSE> <INCOME-PRETAX> (263,285) <INCOME-TAX>
<INCOME-CONTINUING> (263,285) <DISCONTINUED> <EXTRAORDINARY> <CHANGES>
<NET-INCOME> (263,285) <EPS-PRIMARY> (.04) <EPS-DILUTED> (.04)