ITEM 1. BUSINESS.
(a) General development of business.
Nova International Films, Inc. (the "Company" or the "Registrant") was incorporated in the State of Delaware on November 27, 1984. The Company was principally engaged in the business of developing, financing and producing motion pictures (sometimes herein "film(s)") for distribution.
On January 2, 1986, the Company completed an initial public offering and raised gross proceeds of $1 million.
During fiscal 1990, the Company was able to complete and release two films it placed into production in fiscal 1989. These films were entitled "Triumph of the Spirit" and "Firebirds". Additionally, in January 1990, the Company acquired from Epic Productions, Inc. ("Epic") all of the issued and outstanding capital stock of Byzantine Fire, Inc. which at the time owned the rights to the completed film property "Why Me?". This film was also released during fiscal year 1990. Other than the foregoing, the Company has not been involved in the release of any other films.
The Company also had previously entered into an agreement in principle with Epic, whereby the Company had the option, should Epic produce, to co- produce a motion picture entitled "Carlito's Way" (the "Carlito's Way Rights").
The Company also had the contractual right (the "Van Damme Rights") to engage Jean Claude Van Damme as the lead actor in a motion picture subject to meeting certain terms and conditions set forth in an agreement between the parties.
These two film rights, together with the three films described above, represented as of March 1993 all of the Company's interests in various film properties.
Pursuant to an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic, the Company on May 12, 1993 (the "Closing") sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc., a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation; (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?", (iii) the Carlito's Way Rights and (iv) the Van Damme Rights. See Part III, Item 13.
As a result of the foregoing, the Company has no current business operations and has begun and will continue to seek another business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful.
In addition, as a result of other transactions described in Part III, Item 13(a), the Company has eliminated its bank indebtedness.
(b) Financial information about industry segments.
The Company, which has no current business operations, was engaged solely in the film industry. There are no separate industry segments in connection with the business of the Company. For financial information, reference is made to the financial statements included elsewhere herein.
(c) Narrative description of business.
The Company was principally engaged in the business of developing, financing and producing motion pictures for distribution.
The Company was involved in various phases of exploration, acquisition, and development of properties with the primary intention of producing theatrical motion pictures. From this development process, the Company was able to complete and release during fiscal 1990 the two films it placed into production in fiscal 1989. These films were entitled "Triumph of the Spirit" and "Firebirds". Additionally, as more fully described in Part I, Item 1(a), the Company acquired in January 1990 all of the issued and outstanding capital stock of Byzantine which at the time owned the rights to the completed film property "Why Me?". This film was also released during fiscal year 1990. See Part I, Item 1(a), however, for information on the sale of all of the Company's film properties. As a result, the Company has no current business operations.
MOTION PICTURE INDUSTRY OVERVIEW
The procedures and practices described in the following generalized discussion are intended only to provide a background against which the previous business of the Company may be evaluated. There can be no assurance that the procedures and practices described in the following generalized discussion has applied (or will ever apply) in any particular instances to the business of the Company.
PRODUCTION
The process by which an idea or a story becomes a finished motion picture includes several distinct steps, which are described in chronological sequence below. The "producer" is primarily responsible for the execution and implementation of this process.
First, a producer acquires the rights to an existing literary property, e.g., a novel, play or short story, or the producer commissions the preparation of a story outline based on an original concept or idea. Next, the producer, with his own funds or funds obtained from others, finances the first draft of a screenplay based on the literary material and also finances any additions, revisions or redrafts that may be required. After a screenplay has been prepared, the producer options or otherwise assembles the director, principal actors and other key creative personnel, and prepares a budget. This phase of making a film is known as "development".
Once the project is fully developed, and if not already arranged, the producer must provide or locate financing. The number and combination of financing sources and vehicles is limited only by the imagination.
Once the financing has been arranged or committed, the project is ready for "pre-production". During the following approximately three months, locations are secured, casting is completed and the shooting schedule is planned. Next, the principal photography, or the actual "shooting" of the motion picture is commenced. Principal photography is usually ten to twelve weeks in duration.
During the "post-production" phase, the film is edited, music and special effects are added, and the sound-track and film are synchronized to produce the master negative from which the prints for the theater projection are made. The post-production phase may take from four to eight months.
DISTRIBUTION
Arrangements for the distribution of a motion picture vary greatly. Typically, a motion picture will be released to theaters in the United States and Canada for exhibition first - the "domestic" theatrical market; usually, thereafter, the film is distributed abroad - the "foreign" market. Following domestic and foreign exhibition of a film, the motion picture is distributed further by release of video cassettes, by exhibition on pay television (principally cable and subscription TV), by release to non-theatrical markets (including airlines, ships and schools) and then by exhibition on network and/or syndicated television. Depending upon the actual film product, it is sometimes necessary to alter the foregoing steps in distributing a film.
The revenues available from these markets, the time of the receipt of revenues and the relative importance of the various markets have changed dramatically in recent years with the growth of pay television and home video and the increased demand for projects created by and for these markets.
The profits of an enterprise involved in the motion picture industry are greatly dependent upon public taste, which is both unpredictable and susceptible to change without warning or explanation. As a result, it is impossible to predict accurately the success or failure of a motion picture. The success of a project may also be significantly affected by the popularity of other motion pictures then being distributed.
Moreover, significant problems are often encountered during the production of a motion picture which cannot be reliably ascertained in advance and which are beyond the control of the entities involved. Such problems may include cost overruns, labor problems, delays or inabilities to obtain supplies, props or costumes, equipment breakdowns, injury, illness or death to cast members or the director and weather delays. Accordingly, no assurances can be made that a project will ever be completed, or if completed, that it can be done so in a timely manner. As a result, enterprises involved in the motion picture industry may, therefore, experience delays in generating revenues, if any. In addition, even if a project is completed, any problem encountered during the production of a motion picture may add to the costs of the project which could significantly affect a project's chances of achieving financial success.
EMPLOYEES
Other than its two officers, the Company currently has no employees.
COMPETITION
Competition in the motion picture industry is intense. Many companies compete to obtain the literary properties, creative personnel, talent, production personnel and financing which are essential to the motion picture industry. Many of such companies are organizations of substantially larger size and capacity, with far greater financial and personal resources and longer operating history and may, therefore, be better able to acquire properties, personnel and financing.
In connection with its search for another business opportunity, the Company will remain an insignificant participant among firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company's limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors.
(d) Financial information about foreign and domestic operations and export sales.
See the financial statements included elsewhere herein.
ITEM 2.

ITEM 2. PROPERTIES.
The Company maintains its offices on a rent-free month-to-month basis in office space provided by one of its officers. The office is located at 501 S.E. Columbia Shores Boulevard, Suite 350, Vancouver, Washington 98661.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
At the present time, there is no material litigation pending or, to management's knowledge, threatened against the Company.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) The Company's Common Stock is traded in the over-the-counter market and is listed on the OTC Bulletin Board and quoted in the "pink sheets" promulgated by the National Quotation Bureau, Incorporated. To date, there has been only sporadic trading of the Company's Common Stock. The high and low bid quotations for the Company's Common Stock tabulated below represent prices between dealers and do not include retail markups, markdowns, commissions or other adjustments and may not represent actual transactions.
BID PRICES
HIGH LOW PERIOD
Fiscal Year Ended October 31, 1995:
Nov. 1, 1994 to Jan. 31, 1995 $.01 $.0025 Feb. 1, 1995 to April 30, 1995 $.02 $.0025 May 1, 1995 to July 31, 1995 $.01 $.0001 Aug. 1, 1995 to Oct. 31, 1995 $.01 $.0001
Fiscal Year Ended October 31, 1996:
Nov. 1, 1995 to Jan. 31, 1996 $.01 $.0025 Feb. 1, 1996 to April 30, 1996 $.02 $.0025 May 1, 1996 to July 31, 1996 $.01 $.0001 Aug. 1, 1996 to Oct. 31, 1996 $.01 $.0001
(b) As of January 31, 1997, there were approximately 625 record holders of the Company's Common Stock.
(c) No dividends have been declared or paid on the Company's Common Stock since inception. The Company presently intends to retain earnings, if ever achieved, for use in its business and, therefore, there is no assurance when, or if ever, dividends may be paid.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data presented below is derived from the Company's financial statements and should be read in conjunction with such statements and related notes included elsewhere herein.
FISCAL YEAR ENDED OCTOBER 31: 1996 1995 1994
Net Revenues (Negative) $ - $ - $ - Operating (Loss) (8,864) (17,329) (16,075) Net (Loss) (8,477) (16,512) (247,111) Net (Loss) per Share .0458 (.0002) (.0034) Total Assets 15,187 24,400 42,002 Long Term Debt - 3,375,119 3,375,119
FISCAL YEAR ENDED OCTOBER 31: 1993 1992
Net Revenues (Negative) $ (12,547) $ 214,070 Operating (Loss) (660,390) (147,477) Net (Loss) (1,259,975) (767,879) Net (Loss) per Share (.0171) (.0104) Total Assets 56,277 3,443,411 Long Term Debt 3,148,814 8,852,277
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company had no revenues for the fiscal years ended October 31, 1995 and 1996. During the fiscal year ended October 31, 1996, the Company had a net income of $3,366,642 compared to a net loss of $(16,512) for the year ended October 31, 1995. The net income for the year ended October 31, 1996 is principally due to the foregiveness of debt of $3,375,119 resulting from Epic assuming as of November 30, 1995 the remaining $3 million Nonrecourse Obligations. As a result of the foregoing, the Company has eliminated its bank indebtedness.
LIQUIDITY AND CAPITAL RESOURCES
At the current time, the Company's sole means to pay for its overhead operations is its existing cash reserves in the total amount of $14,797 as of October 31, 1996. Accordingly, the Company has significantly reduced its overhead. In connection therewith, the Company does not pay any officer salaries and rent. Its costs primarily include only those costs necessary to retain its corporate charter, file necessary tax returns and report to the Securities and Exchange Commission, and certain expenses in seeking business opportunities.
In addition, as a result of the closing of the Acquisition Agreement (see Notes to the Financial Statements included elsewhere herein), the Company has no current business operations and has begun and will continue to seek another business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Part IV, Item 14 for the Company's financial statements.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
Item 10.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Identification of Directors.
Set forth below are the present directors of the Company. There are no other persons who have been nominated or chosen to become directors nor are there any arrangements or understandings between any of the directors and other persons pursuant to which he was selected as a director. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified.
PRESENT POSITIONS NAME AGE AND OFFICES DIRECTOR SINCE
William Rifkin 76 Chairman of the Board, December 1984 Secretary and Director
Martin Rifkin 35 President, Treasurer April 1985 and Director
(b) Identification of Executive Officers.
Set forth below are the present executive officers of the Company. Note that there are no other persons who have been chosen to become executive officers nor are there any arrangements or understandings between any of the executive officers and other persons pursuant to which he was selected as an officer. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.
NAME AGE OFFICES
William Rifkin 76 Chairman of the Board, Secretary and Director
Martin Rifkin 35 President, Treasurer and Director
(c) Identification of Certain Significant Employees.
None
(d) Family Relationships.
Martin Rifkin, President, Treasurer and a Director of the Company, is the son of William Rifkin, Chairman of the Board, Secretary and a Director of the Company.
(e) Business Experience.
Set forth below are brief accounts of the business experience during the past five years of each director and executive officer of the Company.
WILLIAM RIFKIN has been Chairman of the Board and a Director of the Company since December 1984. Since October 1994, he has also been Secretary of the Company. From March 1990 to October 1994, he was also the Company's President. From 1985 through 1991, Mr. Rifkin was a Director of Memory Sciences Corporation, a public company involved in the computer industry, and was its Treasurer from April 1987 to January 1990. Since 1984, he has also been President and a director of Profit Merchandising Corp., a public company engaged in the distribution of weatherstripping products. Mr. Rifkin is the father of Martin Rifkin.
MARTIN RIFKIN has been President and Treasurer of the Company since October 1994 and a Director since April 1985. In addition, from April 1985 to October 1994, he was Vice President of the Company. Since December 1985, Mr. Rifkin has been a Director of Nutrition Now Incorporated, a public company which manufactures and markets nutritional supplements and since November 1987, he has been its Secretary and Treasurer and since February 1992, its President. Also, from August 1988 to February 1992, he was its Vice President. In addition, Mr. Rifkin has been Treasurer and Director of Profit Merchandising Corp. (see biography of William Rifkin above) since September 1983 and Vice President since June 1985. Since February 1994, Mr. Rifkin has been a Director of NW Venture Corp., now known as Cyberia Holdings, Inc. Also, from February 1994 to January 1997, he was its President, Secretary and Treasurer. Martin Rifkin is the son of William Rifkin.
(f) Involvement in Certain Legal Proceedings.
None
(g) Promoters and Control Persons.
None
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
(a) Cash Compensation.
For the fiscal year ended October 31, 1996, none of the Company's executive officers received compensation from the Company.
(b) Compensation Pursuant to Plans.
None
(c) Other Compensation.
None
(d) Compensation of Directors.
Since inception, no director has received any compensation for his services as such. However, in the past, directors have been and will continue to be reimbursed for reasonable expenses incurred on the Company's behalf.
(e) Termination of Employment and Change of Control Arrangements.
None
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth, as of January 31, 1997, certain information as to those persons known to the Company to be beneficial owners of more than five (5%) percent of the common stock of the Company:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT NATURE OF OF NAME AND ADDRESS OWNERSHIP AMOUNT CLASS
William Rifkin Record and 53,050,000(1) 72.1% 501 S.E. Columbia Beneficial Shores Blvd. Vancouver, WA
Martin Rifkin Record and 5,450,000(2) 7.4% 501 S.E. Columbia Beneficial Shores Blvd. Vancouver, WA
(1) Includes 2,000,000 shares owned of record by the wife of William Rifkin, which shares may be deemed to be beneficially owned by him.
(2) Includes 850,000 shares owned of record by the wife of Martin Rifkin, which shares may be deemed to be beneficially owned by him, and 150,000 shares held by Martin Rifkin as custodian for his daughter under the Uniform Gifts to Minors Act.
(b) Security Ownership of Management.
The following table sets forth, as of January 31, 1997 certain information concerning the number of shares of Common Stock of the Company owned by all of the directors of the Company and by all of the directors and officers as a group:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT NATURE OF OF NAME AND ADDRESS OWNERSHIP AMOUNT CLASS
William Rifkin Record and 53,050,000(1) 72.1% 501 S.E. Columbia Beneficial Shores Blvd. Vancouver, WA
Martin Rifkin Record and 5,450,000(2) 7.4% 501 S.E. Columbia Beneficial Shores Blvd. Vancouver, WA
All Officers and Record and 58,500,000(1)(2) 79.5% Directors as a Group Beneficial (consisting of 2 persons)
(1) Includes 2,000,000 shares owned of record by the wife of William Rifkin, which shares may be deemed to be beneficially owned by him.
(2) Includes 850,000 shares owned of record by the wife of Martin Rifkin, which shares may be deemed to be beneficially owned by him, and 150,000 shares held by Martin Rifkin as custodian for his daughter under the Uniform Gifts to Minors Act.
(c) Changes in Control.
See Part III, Item 13(a) for information on the transfer of 40,000,000 shares of Common Stock by Epic to William Rifkin.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with Management and Others.
Prior to December 27, 1995, Epic Productions, Inc. ("Epic") owned 40,000,000 shares of Common Stock of the Company which represented approximately 54% of the outstanding shares of the Company's Common Stock. On December 27, 1995, Epic sold all of such shares to William Rifkin. As a result, Epic is no longer a stockholder of the Company.
Pursuant to an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic, the Company on May 12, 1993 (the "Closing") sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc., a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation (collectively, the "Subsidiary Corporations"); (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?" (sometimes collectively herein the "Completed Films"), (iii) the Carlito's Way Rights (as defined in Part I, Item 1(a)) and (iv) the Van Damme Rights (as defined in Part I, Item 1(a)).
In connection with the financing of the film "Triumph of the Spirit", the Company was unable to pay to Credit Lyonnais Bank Nederland N.V. (the "Bank") the note payable (the "Bank Loan") incurred to finance such film at its original maturity date of March 31, 1991. As of April 30, 1993, such indebtedness totalled $9,188,864. The Company was able to negotiate an extension of the maturity date of this note until September 30, 1991, but since then the Company has been in default of its obligation.
Pursuant to the Acquisition Agreement, at Closing, (a) the Company sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of the Subsidiary Corporations, (ii) the Completed Films, (iii) the Carlito's Way Rights and (iv) the Van Damme Rights, and in exchange therefor, (b) Epic assumed all debts and liabilities of the Company with respect to the assets acquired, paid the Company the sum of $50,000, acquired a substantial portion of the Bank Loan from the Bank as described below and modified the loan arrangements thereunder plus other indebtedness due Epic from the Company.
At Closing, Epic acquired all but $3 million of the indebtedness under the Bank Loan from the Bank and modified the payment terms of the Bank Loan assigned to it and other indebtedness of the Company to Epic (which other indebtedness was $983,069 as of April 30, 1993). All of such indebtedness acquired by Epic is hereinafter referred to as the "Primary Obligations". The terms of such modification were as follows: (i) principal shall be due and payable 18 years from Closing, and (ii) interest shall be 6% per annum payable within 45 days following the close of each fiscal year of the Company, payable in arrears commencing October 31, 1993, not to exceed 20% of the net profits of the Company during the applicable year.
On October 29, 1993, the Company and Epic entered into an agreement whereby Epic assigned and contributed to the capital of the Company the indebtedness described above as the Primary Obligations of the Company to Epic of $7,171,933 plus accrued and unpaid interest of $201,600.
As indicated above, $3 million of indebtedness under the Bank Loan was not acquired by Epic. In connection therewith, the Bank, Epic and the Company entered into an agreement at Closing which provided that such portion of the Bank Loan (the "Nonrecourse Obligations") be nonrecourse to the Company and payable interest and then principal only from operating receipts from "Triumph of the Spirit"which was acquired by Epic pursuant to the Acquisition Agreement.
As of November 30, 1995, the Company assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon.
Each of the Company and Epic have agreed to indemnify the other in respect of any claims, demands and losses (collectively, "Losses") that may be asserted against, imposed upon and incurred by the other resulting from the breach of any representations, warranties and obligations of the other as contained in the Acquisition Agreement. In addition, Epic has agreed to indemnify the Company for any Losses that arise out of or in any way are connected to or result from the assets being acquired by Epic or any of the Subsidiary Corporations, including without limitation, any claims arising under or with respect to the business, operations and assets of each of the Subsidiary Corporations. Excluded from the foregoing indemnity shall be Losses attributable to fraud or willful misconduct. Also, the Company has agreed to defend and hold Epic harmless against and in respect of any and all liabilities and costs attributable to the litigation which is being assumed by Epic described in the Acquisition Agreement, but only to the extent such liabilities and costs are covered by applicable insurance.
(b) Certain Business Relationships.
See Item 13(a) above.
(c) Indebtedness of Management.
None
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) (1) and (2) Financial Statements and Financial Statement Schedules
The financial statements and schedules hereinafter listed are annexed hereto and filed as part of this annual report: PAGE
Introductory Comment 17 Balance Sheets 18 Statements of Operations 19 Statements of Stockholders' Equity (Deficit) 20 Statements of Cash Flows 22 Notes to Financial Statements 23
(3) EXHIBITS
3.1 Certificate of Incorporation of Registrant with filing receipt(1) 3.2 Certificate of Amendment of Certificate of Incorporation with filing receipt (filed November 17, 1989)(1) 3.3 By-Laws of Registrant(1) 4.1 Specimen of Common Stock Certificate of Registrant(1) 4.2 Promissory Note in the principal amount of $7,171,933(1) 4.3 Promissory Note in the principal amount of $3,000,000(1) 10.1 Loan Agreement and Security Assignment (for the film "Triumph of the Spirit")(1) 99.1 Acquisition Agreement dated as of March 3, 1993 by and between Nova International Films, Inc. and Epic Productions, Inc.(1) 99.2 Amendment to Loan Agreement and Security Assignment dated as of May 12, 1993 by and between Credit Lyonnais Bank Nederland, N.V., Nova International Films, Inc. and Epic Productions, Inc.(1) 99.3 Amendment to Loan Agreement dated as of May 12, 1993 by and between Epic Productions, Inc. and Nova International Films, Inc.(1) 99.4 Assignment Agreement/Contribution to Capital dated October 29, 1993(1) 99.5 Letter Agreement dated November 30, 1995 (re: Nonrecourse Obligations)(1)
(1) Previously filed and incorporated herein by reference.
(b) Reports on Form 8-K
Listed below are reports on Form 8-K filed during the last quarter of the period covered by this report:
None
(c) Exhibits
See Item 14(a)(3) above.
(d) See list of financial statements and schedules under Item 14(a)(1) and (2) above.
NOVA INTERNATIONAL FILMS, INC.
OCTOBER 31, 1996
The financial information for the fiscal year ended October 31, 1996 is unaudited. However, in the opinion of management the accompanying Balance Sheet of Nova International Films, Inc. as of October 31, 1996 and 1995, and the related Statements of Operations, Cash Flows and Stockholders' Equity (Deficit) for the periods ended October 31, 1996, 1995, and 1994, present fairly, in all material respects, the financial position of Nova International Films, Inc. as of October 31, 1996 and 1995, and the results of operations, cash flows and its stockholders' equity (deficit) for the periods ended October 31, 1996, 1995, and 1994, 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 in each of the last three fiscal years which have severely depleted its working capital and have raised doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations". The financial statements do not include adjustments that might result from the outcome of this uncertainty.
NOVA INTERNATIONAL FILMS, INC. BALANCE SHEETS (Unaudited)
October 31, October 31, 1996 1995
ASSETS
Cash $ 14,797 $ 23,619 Furniture and equipment at cost, less accumulated depreciation 390 781
Total assets $ 15,187 $ 24,400
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Accounts payable and accrued expenses $ 5,200 $ 5,936 Debt - 3,375,119
Total liabilities $ 5,200 $ 3,381,055
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock, $.00001 par value; 100,000,000 shares authorized, 73,583,000 shares issued and outstanding, respectively. $ 736 $ 736 Additional paid-in capital 8,197,260 8,197,260 Accumulated deficit (8,188,009) (11,554,651)
Total stockholders' equity (deficit) $ 9,987 $ (3,356,655)
Total liabilities and stockholders' equity (deficit) $ 15,187 $ 24,400
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF OPERATIONS (Unaudited)
For the Year For the Year For the Year Nov. 1, 1995 Nov. 1, 1994 Nov. 1, 1993 Through Through Through Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
REVENUES $ - $ - $ - COST AND EXPENSES: Selling, general and admin. 8,473 15,075 11,105 Depreciation and amortization 391 2,254 4,970 8,864 17,329 16,075
OPERATING LOSS (8,864) (17,329) (16,075)
OTHER INCOME Interest income 387 817 273 387 (16,512) 273 OTHER EXPENSES Interest expense - - 231,309 - - 231,309
LOSS BEFORE PROVISION FOR INCOME TAXES (8,477) (16,512) (247,111) PROVISION FOR INCOME TAXES - - -
NET LOSS BEFORE EXTRAORDINARY INCOME (8,477) $ (16,512) $(247,111)
EXTRAORDINARY INCOME: Forgiveness of Debt 3,375,119 - - Net Income (Loss) 3,366,642 $ (16,512) $(247,111)
Net Income (Loss) per Share $ .0458 $ (0.0002) $ (0.0034)
Average no. of share outstanding 73,583,000 73,583,000 73,583,000
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) YEARS ENDED OCTOBER 31, 1992, 1993, 1994, 1995 AND 1996
Common Stock $00001 Par Value No. Additional of Paid-in Shares Amount Capital
Balance at October 31, 1992 73,583,000 $ 736 $ 1,805,727
Effect of Acquisition with Epic (982,000) Epic's assignment and contribution of debt to capital 7,373,533
Net Loss from 11/1/92 thru 10/31/93 Balance at October 31, 1993 73,583,000 736 8,197,260
Net Loss from 11/1/93 thru 10/31/94 Balance at October 31, 1994 73,583,000 736 8,197,260
Net Loss From 11/1/94 thru 10/31/95 73,583,000 $ 736 $ 8,197,260
Net Income from 11/1/95 thru 10/31/96 73,583,000 $ 736 $ 8,197,260
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) YEARS ENDED OCTOBER 31, 1992, 1993, 1994 AND 1995
Accumulated Deficit Total
Balance at October 31, 1992 $ (10,031,053) $ (8,224,590)
Effect of Acquisition with Epic (982,000) Epic's assignment and contribution of debt to capital 7,373,533
Net Loss from 11/1/92 thru 10/31/93 (1,259,975) (1,259,975) Balance at October 31, 1993 (11,291,028) (3,093,032)
Net Loss from 11/1/93 thru 10/31/94 (247,111) (247,111) Balance at October 31, 1994 (11,538,139) (3,340,143)
Net Loss From 11/1/94 thru 10/31/95 (16,512) (16,512)
$ (11,554,651) $ (3,356,655)
Net Income from 11/1/95 thru 10/31/96 3,366,642 3,366,642
$ (8,188,009) $ 9,987
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (Unaudited)
For the Year For the Year For the Year Nov. 1, 1995 Nov. 1, 1994 Nov. 1, 1993 Through Through Through Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
Cash income from operating activities: Net loss $ (8,477) $ (16,512) $(247,111) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 391 2,254 4,970 Net changes in assets and liabilities: Accounts payable (736) (1,090) 1,531 Total adjustments (345) 1,164 6,501 Net cash provided (used)by operating activities (8,822) (15,348) (240,610) Cash flows from financing activities: Net proceeds from debt financing - - 231,305 Net cash provided (used) by financ. activities - - 231,305
Net (decrease) increase in cash (8,822) (15,348) (9,305) Cash at beginning of period 23,619 38,967 48,272 Cash at end of period $ 14,797 $ 23,619 $ 38,967
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS October 31, 1996
1) Nature of Business and Organization
Nova International Films, Inc. (the Company) was incorporated on November 27, 1984 in the State of Delaware. The Company was formed for the purpose of financing and producing motion pictures for distribution in the theatrical, home video and pay and free television markets throughout the world.
a. Issuance of Common Stock
On January 2, 1986, the Company completed a public offering, whereby ten million (10,000,000) units were sold at $.10 per unit, each unit consisting of one (1) share of Common Stock, $.00001 par value, and one (1) Redeemable Common Stock Purchase Warrant. These warrants have now lapsed.
b. Disposition of Assets
On May 12, 1993 (the "Closing"), the stockholders of the Company approved an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic Productions, Inc. ("Epic"), pursuant to which the Company sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc. a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation (collectively, the "Subsidiary Corporations"); (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?", (sometimes collectively herein the "Completed Films"); and (iii) the Company's rights related to the film project "Carlito's Way" and Jean Claude Van Damme. In exchange therefor, Epic assumed all debts and liabilities of the Company with respect to the assets acquired, paid the Company the sum of $50,000, acquired the Bank Loan from the Bank as described in Note #5 "Debt" and modified the loan arrangements thereafter plus other indebtedness due Epic from the Company.
2) General
The financial statements for the years ended October 31, 1996 and October 31, 1995 are unaudited. However, it is management's opinion that all adjustments necessary for fair presentation of these financial statements have been made and are included herein.
3) Summary of Significant Accounting Policies
a. Financial Statement Presentation
In accordance with the provisions of Statement of Financial Accounting Standards No. 53, the Company has elected to present an unclassified balance sheet.
NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS October 31, 1996
b. Depreciation and Amortization
Furniture and equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of the related assets, which is typically five years.
c. Per Share Amounts
Per share amounts are based on the weighted average number of shares outstanding during the period.
4) Furniture and Equipment
The following is a summary of Furniture and Equipment at cost, less accumulated depreciation: October 31, October 31, 1996 1995
Office/Computer Equipment $38,153 $38,153 Telephone Equipment 10,934 10,934 Furniture & Equipment at cost 49,087 49,087 Accumulated Depreciation 48,697 48,306 $ 390 $ 781
5) Debt
In connection with the financing of the film "Triumph of the Spirit", the Company was unable to pay Credit Lyonnais Bank Nederland N.V. (the "Bank") the note payable (the "Bank Loan") incurred to finance such film at its original maturity date of March 31, 1991. The Company was able to negotiate an extension of the maturity date of this note until September 30, 1991, but thereupon the Company became in default of its obligation.
Upon the Closing of the Acquisition Agreement, Epic acquired the Bank Loan from the Bank and modified the payment terms of the Bank Loan assigned to it and other indebtedness of the Company to Epic. In October 1993, Epic assigned and contributed to the capital of the Company all of such indebtedness of the Company to Epic plus accrued and unpaid interest. In addition, at the Closing, $3 million of indebtedness (plus interest thereon) under the Bank Loan was not acquired by Epic, pursuant to which the Bank, Epic and the Company agreed that such portion of the Bank Loan (The "Nonrecourse Obligations") be payable interest and then principal only from operating receipts from "Triumph of the Spirit" which was acquired by Epic pursuant to the Acquisition Agreement.
NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS October 31, 1996
As of November 30, 1996, Nova assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon. As such no interest was accrued for Fiscal Years Ended October 31, 1996 and October 31, 1995.
7) Liquidity and Capital Resources
At the current time, the Company's sole means to pay for its overhead operations is its existing cash reserves in the total amount of $14,797 as of October 31, 1996. Accordingly, the Company has significantly reduced its overhead.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NOVA INTERNATIONAL FILMS, INC.
By:/S/MARTIN RIFKIN Martin Rifkin, President
Date: FEBRUARY 7, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/WILLIAM RIFKIN Chairman of the Board, 2/07/97 William Rifkin Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
/S/MARTIN RIFKIN President, Treasurer 2/07/97 Martin Rifkin and Director
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual report covering the Registrant's last fiscal year or proxy material has been sent to security holders of the Registrant.