UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1997 OR [ ] 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 _________________________________________________________ NEW SKY COMMUNICATIONS, INC. ---------------------------- (Exact name of registrant as specified in its charter) NEW YORK 16-1229730 -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 720 REYNOLDS ARCADE, 16 EAST MAIN STREET, ROCHESTER, NEW YORK 14614 (Address of principal executive offices) (716) 454-5490 (Registrant's telephone number, including area code) --------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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___________ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _________ No___________ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 190,736,923 as of November 1, 1997. PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements Item 2. Management's Discussion and Provide the information required Analysis of Financial Condition by Rule 10-01 of Regulation S-X and Results of Operations. (17CFR Part 210). Furnish the information required by Item 303 of Regulation S-K(ss.229.303 of this chapter). INDEX ----- PART I - FINANCIAL INFORMATION PAGE(S) - ------------------------------ ------- Statement of Income (Loss) 3 Nine months ending 9/30/97& 9/30/96 Consolidated Balance Sheet As of 9/30/97 & 12/31/96 4 & 5 Statement of Cash Flows Nine months ended 9/30/97 & 9/30/96 6 Management's Discussion of Statement of Income and Financial Condition 7 & 8 PART II - OTHER INFORMATION & SIGNATURES 8 & 9 - ---------------------------------------- Page 2
<TABLE> <CAPTION> NEW SKY COMMUNICATIONS, INC. STATEMENT OF INCOME (LOSS) (UNAUDITED) FOR NINE MONTHS ENDED FOR THREE MONTHS ENDED --------------------- ---------------------- SEPTEMBER 30 SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 1997 1996 1997 1996 ---- ---- ---- ---- <S> <C> <C> <C> <C> Gross Film Receipts $ 25,946 $ 8,729 $ 20,000 $ 0 Less Amortized Film Costs $ 0 $ 0 $ 0 $ 0 -------- -------- -------- ------- Net Film Receipts $ 25,946 $ 8,729 $ 20,000 $ 0 -------- -------- -------- ------- General and Administrative Expenses $ 45,695 $ 20,589 $ 32,195 $ 7,500 -------- -------- -------- ------- Income (Loss) Before Other Income and Related Expenses $(19,749) $(11,860) $(12,195) $(7,500) -------- -------- -------- ------- Other Income (Loss) $ 0 $(55,556) $ 0 $ 0 -------- -------- -------- ------- Income (Loss) $(19,749) $(67,416) $(12,195) $(7,500) ======== ======== ======== ======= Net Per Common Share NIL NIL NIL NIL ======== ======== ======== ======= </TABLE> Page 3
<TABLE> <CAPTION> NEW SKY COMMUNICATIONS, INC. ---------------------------- BALANCE SHEET (As of September 30, 1997 and December 31, 1996) ASSETS ------ SEPTEMBER 30, 1997 DECEMBER 31, 1996 (UNAUDITED) (AUDITED) ----------- --------- Current Assets: <S> <C> <C> Cash and Cash Items $ 886 $ 1,150 Accounts Receivable: Trade Accounts 0 0 Current Amortizable Portion of Film Inventory 0 0 ---------- ---------- Total Current Assets $ 886 $ 1,150 ---------- ---------- Property and Equipment: Property and Equipment 0 0 Film Inventory 1,677,143 1,506,865 ---------- ---------- Total Property and Equipment 1,677,143 1,506,865 Less: Accumulated Depreciation 0 0 ---------- ---------- Net Property and Equipment 1,677,143 1,506,865 ---------- ---------- Other Assets 400 400 ---------- ---------- TOTAL ASSETS $1,678,429 $1,508,415 ========== ========== </TABLE> Page 4
<TABLE> <CAPTION> NEW SKY COMMUNICATIONS, INC. ---------------------------- BALANCE SHEET (As of September 30, 1997 and December 31, 1996) LIABILITIES AND STOCKHOLDERS' EQUITY SEPTEMBER 30, 1997 DECEMBER 31, 1996 (UNAUDITED) (AUDITED) ----------- --------- Current Liabilities: <S> <C> <C> Accounts Payable $ 99,054 $ 104,291 Leases 2,068 2,068 Accrued Expenses 37,016 37,016 ----------- ----------- Total Current Liabilities $ 138,138 $ 143,375 ----------- ----------- Stockholders' Equity: Common Stock $.0001 Par Value 200,000,000 Shares Authorized 190,736,923 Shares Issued and Outstanding (190,736,923 Shares On September 30, 1997) $ 19,074 $ 14,274 Additional Paid-In Capital 5,932,328 5,742,128 ----------- ----------- Total Paid-In Capital 5,951,402 5,756,402 Accumulated Deficit (4,411,111) (4,391,362) ----------- ----------- Total Stockholders' Equity 1,540,291 1,365,040 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,678,429 $ 1,508,415 =========== =========== </TABLE> Page 5
NEW SKY COMMUNICATIONS, INC. Statement of Cash Flows Nine Months Ended September 30, 1997 and September 30, 1996 NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 ------------------ ------------------ Operating Activities: Net Income (Loss) $(19,749) $(67,416) Adjustments to reconcile Net Income and Net Cash: Depreciation and Amortization 0 0 (Increase) Decrease in Accounts Receivable 0 0 (Increase) Decrease in Prepaid Expenses 0 0 Increase (Decrease) in Accounts Payable and Accrued Expenses 24,485 8,010 Amortization of Film Costs 0 5,000 -------- -------- Net Cash Provided (Used) $ 4,736 $(54,406) -------- -------- Investing Activities: Mortgage Writedown $ 0 $ 55,556 Additional Film Inventory $ (5,000) $ 0 -------- -------- Net Cash Provided (Used) $ (5,000) $ 55,556 -------- -------- Financing Activities: Net Cash Provided (Used) $ 0 $ 0 -------- -------- Increase (Decrease) in Cash And Cash Equivalents $ (264) $ 1,150 Cash and Cash Equivalents at Beginning of Period 1,150 0 -------- -------- Cash and Cash Equivalents at End of Period $ 886 $ 1,150 ======== ======== Page 6
STATEMENT OF MANAGEMENT ----------------------- In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 1997 and the results of operations and cash flows for the nine months then ended. 1(A) During the quarter, the Company received $20,000.00 as its producer's fee from the production budget of the feature film "SYRACUSE MUSE", which has been tentatively re-titled "FREAK TALKS ABOUT SEX". Principal photography of the film,"FREAK TALKS ABOUT SEX", was completed on August 17, 1997 and has thereafter been in post-production to the current date. The film has been submitted to the Sundance Film Festival for consideration to be included therein. The Company is awaiting the results of that submission. The Company, along with its co-producer, Syracuse Productions, L.L.C., has interviewed several candidates to act as producer's representative to assist the producers in procuring distribution of the film. The Company issued 4,000,000 shares of its common stock to Starr Securities, Inc. pursuant to an Agreement dated July 31, 1997 whereby Starr will render investment banking services to the Company over a period of two years. The stock has been registered with the S.E.C. on Form S-8 dated August 20,1997. A copy of the Agreement is annexed hereto as an exhibit. The Company continues to carry its investments in feature films as an asset of the Company under Film Inventory, amortizing these costs when funds are received on the various film investments and at other times management believes a write-down of the unamortized costs is appropriate. The Company has title to and/or interests in the following feature film properties in development: "THE GIANT" "THE GODMOTHER", "SOMEWHERE IS CALLING", "CHEAP TRICKS" and "ARRIVEDERCI, VENICE". The Company has released two feature films: "FEAR NO EVIL" and "LADY IN WHITE". The Company is also an investor in a feature film entitled "GRAVE SECRETS", produced by Planet Productions, Inc. The Company has not filed Federal or New York State tax returns for the years 1992, 1993 and 1994 and has not paid any tax due for those years nor for 1995 or 1996 because of lack of funds for the preparation of the returns and the payment of tax. The Company believes no Federal tax would be due due to the Company's continuing losses. However, the Company believes it owes New York State tax based upon capital and has been accruing estimated amounts for such tax since 1992. Page 7
1(B) Financial Condition - 1. Working capital is inadequate. (Current Ratio is nil) 2. The Company has no outstanding debt other than current payables and accrued expenses. PART II ------- Other Information and Signatures NEW SKY COMMUNICATIONS, INC. ---------------------------- Item 1. Legal Proceedings - None. Item 2. Change in Security - None. Item 3. Defaults upon Senior Securities - None. Item 4. Submission of matters to a vote of securities holders - None. Item 5. Other information - None. Page 8
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. NEW SKY COMMUNICATIONS, INC. Date: NOVEMBER 14, 1997 /s/ Carl R. Reynolds ----------------------------- Carl R. Reynolds President / Treasurer/ Chief Financial Officer Page 9