Document/Exhibit Description Pages Size
1: 10QSB Quarterly Report -- Small Business 25± 94K
2: EX-3 Articles of Incorporation/Organization or By-Laws 2± 10K
3: EX-3 Articles of Incorporation/Organization or By-Laws 2± 10K
4: EX-3 Articles of Incorporation/Organization or By-Laws 1 7K
5: EX-3 Articles of Incorporation/Organization or By-Laws 1 7K
6: EX-10 Material Contract 1 8K
7: EX-99 Miscellaneous Exhibit 2± 10K
8: EX-99 Miscellaneous Exhibit 1 8K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 000-26037
VISUAL BIBLE INTERNATIONAL, INC.
--------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-1030068
(State or Other Jurisdiction (IRS Employer Identification
of Incorporation) Number)
1235 Bay Street, Suite 300, Toronto, Ontario M5R 3K4 Canada
-------------------------------------------------------------
(Address of Principal Executive Offices)
(416) 921-9950
--------------
(Issuer's Telephone Number, Including Area Code)
------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of
November 16, 2004, there were 73,792,518 shares of the Registrant's
$.001 par value common stock outstanding.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
TABLE OF CONTENTS
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
(a). Consolidated Balance Sheets as of September 30, 2004 and
December 31, 2003
(b). Consolidated Statements of Operations for the three month
periods ended September 30, 2004 and 2003 and for the nine
month periods ended September 30, 2004 and 2003
(c). Consolidated Statements of Cash Flows for the nine month
periods ended September 30, 2004 and 2003
(d). Notes to Financial Statements
Item 2. Management's Discussion and Analysis.
Item 3. Controls and Procedures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
Item 1. Financial Statements.
(a) Consolidated Balance Sheets as of September 30, 2004 and
December 31, 2003
VISUAL BIBLE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
[Download Table]
September December 31,
30, 2004 2003
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $83,625 $2,204,949
Cash in escrow 291,976 -
Accounts receivable, net 480,831 36,039
Inventories 250,593 265,358
Canadian film tax credits receivable
1,200,000 1,200,000
Prepaids and other current assets 289,763 392,717
---------- ----------
Total Current Assets 2,596,788 4,099,063
Film Cost, Production in Process
Film costs Gospel of John, net of
accumulated amortization of
$2,333,847 and $574,058 at
September 30, 2004 and December 31,
2003, respectively 9,090,864 10,850,653
Pre-production costs Gospel of Mark 185,000 185,000
Property and equipment, net 181,552 206,661
---------- ----------
Total Assets $12,054,205 $15,341,377
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Current portion of notes payable $250,000 $325,000
Bank film production loan payable 1,998,036 2,494,848
Other film production loans 884,986 1,026,585
Accounts payable and accrued
expenses 6,466,907 6,781,491
Accrued interest payable 1,783,184 1,102,046
Deferred revenue - 708,293
Accrued royalties payable 405,261 -
Due to related parties 681,882 681,882
---------- ----------
Total Current Liabilities 12,470,255 13,116,145
---------- ----------
Long-term debt:
Accounts payable long-term 616,642 -
Debentures Payable
Series A 6,533,646 6,533,646
Series B 8,500,000 8,500,000
---------- ----------
Total Debentures Payable 15,033,646 15,033,646
---------- ----------
Total Liabilities 28,120,543 28,149,791
---------- ----------
Commitments and Contingencies:
Stockholders' Equity (Deficit):
Preferred stock 200,000,000
authorized, par value $.001,
2,000,000 designated Class B,
1,556,728 issued and outstanding at
September 30, 2004 and December 31,
2003, respectively 1,557 1,557
Common stock, 300,000,000
authorized $.001 par value,
80,921,739 and 60,695,938 issued
and outstanding at September 30,
2004 and December 31, 2003, 80,922 60,696
respectively
Additional paid-in capital 42,563,949 36,393,525
Unamortized finance costs on
debentures payable (354,167) (1,249,364)
Receivables from stockholders (427,060) (427,060)
Retained earnings (deficit) (57,931,539) (47,587,768)
---------- ----------
Total Stockholders' Equity
(Deficit) (16,066,338) (12,808,414)
---------- ----------
Total Liabilities and
Stockholders' Equity (Deficit) $12,054,205 $15,341,377
========== ==========
____________________
The accompanying notes are an integral part of these consolidated
financial statements.
(b) Consolidated Statements of Operations for the three month
periods ended September 30, 2004 and 2003 and for the nine months
periods ended September 30, 2004 and 2003
VISUAL BIBLE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
[Download Table]
For the For the
Three Three Months
Months Ended
Ended September
September 30, 2003
30, 2004
Sales:
Product sales - IBS distributor $- $13,180
Product sales - Gospel of John 393,556 -
---------- ----------
Total Sales 393,556 13,180
Cost of Goods Sold (includes
$1,759,789 and $89,972 amortization
of film costs for the nine and three
months ended September 30, 2004 and
$0 for the nine and three months
ended September 30, 2003,
respectively) 200,947 3,425
---------- ----------
Gross Profit 192,609 9,755
---------- ----------
Costs and Expenses:
General and administrative 431,129 749,226
Advertising and marketing expenses 254,621 -
Royalty expense 39,347 -
Costs relating to stock issued as
additional imputed interest expense
and for general and administrative
expenses - -
Provision for doubtful accounts - -
Interest and finance costs expense 1,004,197 800,258
--------- ---------
1,729,294 1,549,484
--------- ---------
Gain (Loss) on currency transaction (154,575) 118,330
Gains on Settlement of Liabilities - 112,850
--------- ----------
Net Income(Loss) before Income Taxes (1,691,260) (1,308,549)
Provision (Credit) for Income Taxes - -
---------- ----------
Net (Loss) (1,691,260) (1,380,549)
========== ==========
(Loss) per Share:
Basic and diluted (loss) per common
share: $(0.02) $(0.03)
========== ==========
Basic and diluted weighted average
of common shares outstanding 80,921,739 51,353,862
========== ==========
[Download Table]
For the For the Nine
Nine Months Months Ended
Ended September
September 30, 2003
30, 2004
Sales:
Product sales - IBS distributor $91,177 $62,711
Product sales - Gospel of John 7,110,894 -
---------- ----------
Total Sales 7,202,071 62,711
Cost of Goods Sold (includes
$1,759,789 and $89,972 amortization
of film costs for the nine and three
months ended September 30, 2004 and
$0 for the nine and three months
ended September 30, 2003,
respectively) 3,144,822 22,512
---------- ----------
Gross Profit 4,057,249 40,199
---------- ----------
Costs and Expenses:
General and administrative 3,055,283 3,305,213
Advertising and marketing expenses 3,350,732 -
Royalty expense 528,295 -
Costs relating to stock issued as
additional imputed interest expense
and for general and administrative
expenses 155,262 -
Provision for doubtful accounts 300,000 -
Interest and finance costs expense 6,856,873 1,389,803
--------- ---------
14,246,445 4,695,016
--------- ---------
Gain (Loss) on currency translation (154,575) 123,614
Gains on Settlement of Liabilities - 112,850
---------- ----------
Net Income (Loss) before Income Taxes
(10,343,771) (4,418,353)
---------- ----------
Provision (Credit) for Income Taxes - -
---------- ----------
Net (Loss) (10,343,771) (4,418,353)
========== ==========
(Loss) per Share:
Basic and diluted (loss) per common
share: $(0.15) $(0.09)
========== ==========
Basic and diluted weighted average
of common shares outstanding 70,952,522 46,788,711
========== ==========
___________________
The accompanying notes are an integral part of these consolidated
financial statements.
(c) Consolidated Statements of Cash Flows for the nine month
periods ended September 30, 2004 and 2003
VISUAL BIBLE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
[Download Table]
For the Nine For the Nine
Months Ended Months Ended
September 30, September
2004 30, 2003
---------- ----------
Cash Flows from Operating
Activities:
Net (loss) $(10,343,771) $(4,418,353)
Adjustments to reconcile net
(loss) to net cash used in
operating activities:
Depreciation and amortization 31,607 164,133
Gains on settlements (112,850)
Amortization of finance costs on
debentures payable 895,197 534,963
Amortization of film costs 1,759,789 -
Provision for doubtful accounts 300,000 -
Issuance of common stock for
finance costs 4,197,009 -
Change in operating assets and
liabilities:
Accounts receivable (744,792) 64,327
Inventories (14,765) 22,445
GST Receivables - (11,693)
Film costs, Production Costs - (11,640,921)
Film costs, Marketing Costs (1,498,909)
Prepaid expenses and other current
assets 102,954 (67,450)
Accounts payable and accrued
liabilities 1,279,059 1,509,638
Deferred revenues (708,293) (118,375)
Accrued interest payable 681,138 755,217
Accrued royalties payable 405,264 -
Accounts payable long term 616,642 -
Foreign currency translation - (3,650)
---------- ----------
Net (used in) provided by
operating activities (1,513,437) (14,821,478)
---------- ----------
Cash Flows from Investing
Activities:
Cash in escrow (291,976) 166,817
Acquisition of property and
equipment (6,500) (22,860)
---------- ----------
Net cash (used in) provided by
investing activities (298,476) 143,957
---------- ----------
Cash Flows from Financing
Activities:
Proceeds from issuance of common
stock 400,000 -
Proceeds from debentures payable - 14,283,646
Proceeds from film production
financing - 3,135,606
Proceeds from related party loans - 525,000
(Repayments) of film production
loans (634,411) -
(Repayment) of notes payable (75,000) -
---------- ----------
Net cash provided by financing
activities (309,411) 17,944,252
---------- ----------
Net Increase in cash (2,121,324) 3,266,731
Cash and cash equivalents,
beginning of period 2,204,949 946,462
---------- ----------
Cash and cash equivalents, end of
period $83,625 $4,213,193
========== ==========
Supplemental Disclosure of Cash
Flow Information:
Interest paid during the period $1,691,524 $21,522
========== ==========
Income taxes paid during the period $ - $ -
========== ==========
Supplemental Disclosure of Noncash
Investing and Financing Activities:
Common stock issued on conversion
and settlement of debt and
accounts payable $ 1,593,641 $-
========== ==========
Common stock issued in connection
with debentures debt refinance $4,197,009 $-
========== ==========
____________________
The accompanying notes are an integral part of these consolidated
financial statements.
(d) Notes to Financial Statements
VISUAL BIBLE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2004
1. THE COMPANY
Visual Bible International, Inc. ("Visual Bible International",
"VBII" or "the Company") is a global faith-based media company which
has secured the exclusive visual and digital rights to popular
versions of the Bible. The Company has produced and successfully
released the word-for-word books of Matthew and Acts and a
production of a word-for-word film adaptation of The Gospel of John
was released during September 2003.
Visual Bible's mission is to use all forms of media to inspire the
lives of present and future generations by carrying God's Word
regardless of their religious affiliation, culture or geographic
location. The Company intends to acquire additional intellectual
property rights, producing new products and intends to build its
sales and distribution networks to position itself as the
pre-eminent creator and distributor of the word-for-word productions
of the Bible.
As reported in the audit report on the financial statements of the
Company for the fiscal year ended December 31, 2003, dated May 22,
2004 and included within the Company's Form 10-KSB filing for 2003
the financial statements have been prepared assuming that the
Company will continue as a going concern for which there exist
substantial doubt.
As discussed within the Form 10-KSB and the incorporated financial
statements the Company during the first quarter of 2004 entered into
a number of agreements and concluding on April 1, 2004 collectively
the "Forbearance Documents" with its significant debt holders,
creditors and vendors many of whom are also major stockholders and
included a member of the Company's Board of Directors at that time.
Since May of 2004 the Company has been operating under these
agreements that basically provide for an agent, the "Disbursement
Agent" to distribute the film revenues in a prescribed manner. At
June and September 30, 2004 this cash has been reported as Escrowed
Cash.
The terms of the agreements provide that the Company will share in
portion of certain revenues received which may or may not be
sufficient to cover the Company's current operating and
administrative expenses or costs to market the film.
Should the Company be unable to attract new capital, restructure
their existing agreements or to reach a major distribution agreement
or agreements there remains substantial doubt about the Company's
continued existence.
.. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying financial statements consolidate the accounts of
Visual Bible International and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated in consolidation. Certain amounts from prior years have
been reclassified to conform to the current year presentation.
The accompanying unaudited consolidated financial statements have
been prepared pursuant to rules and regulations of the Securities
and Exchange Commission and, therefore, do not include all
information and footnote disclosures normally included in audited
financial statements. However, in the opinion of management, all
adjustments that are of a normal and recurring nature necessary to
present fairly the results of operations, financial position and
cash flows have been made. It is suggested that these statements be
read in conjunction with the financial statements included in the
Company's Annual Report on Form 10-KSB, dated May 22, 2004 for the
year ended December 31, 2003.
The statements of operations for the nine months ended September 30,
2004 and 2003 are not necessarily indicative of results for the full
year.
Earnings (Loss) per Share
The Company computes earnings or loss per share in accordance with
the Financial Accounting Standards Board Statement No. 128 "Earnings
Per Share" (SFAS 128) which replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share
excludes the dilutive effects of options, warrants and convertible
securities and thus is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding. Diluted earnings per share is similar to the previous
fully diluted earnings per share. Diluted earnings per share
reflects the potential dilution that could occur if securities or
other agreements to issue common stock were exercised or converted
into common stock. Diluted earnings per share is computed based
upon the weighted average number of common shares and dilutive
common equivalent shares outstanding.
3. LITIGATION
As previously discussed in Form 10-KSB for the year ended December
31, 2003, legal proceedings were instituted against the Company by
Thomas Nelson Publishing on December 30, 2003 in the Chancery Court
of Davidson County, Tennessee. However during August, 2004 the
Company and Thomas Nelson reached a settlement agreement over their
dispute and as a result the company has reclassified the entire
amount previously recorded as unearned revenue to reflect the
settlement as long-term debt payable in eight semi-annual
installments commencing in February, 2006.
4. STOCKHOLDERS' EQUITY (DEFICIT)
During February and March, 2004, the Company issued 621,049 shares
of the Company's common stock valued at $0.25 to certain parties in
connection with post production financing and loan guarantees.
During the second quarter of 2004 the Company issued 15,033,645
shares to its debenture holders in connection with the refinance of
the debenture's debt valued at $0.25 per share.
In addition the Company has issued 1,471,107 shares in settlement of
certain accounts payables and debts also amounting to $1,471,107.
In addition the Company issued 800,000 shares to the American Bible
Society in settlement of royalties owed to them amounting to $122,534.
Also during May and June, 2004 the Company concluded a private
placement of 800,000 shares at $0.50 per share and received $400,000.
Item 2. Management's Discussion and Analysis.
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial
statements and the notes to the financial statements included
elsewhere in this report. The discussion may contain "forward
looking" statements or statements which arguably imply or suggest
certain things about our future. Statements, which express that we
"believe", "anticipate", "expect", or "plan to", as well as, other
statements which are not historical fact, are forward looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on assumptions that
we believe are reasonable, but a number of factors could cause our
actual results to differ materially from those expressed or implied
by these statements. We do not intend to update these forward
looking statements.
Overview
We are a global, faith-based media company that has secured the
exclusive visual and digital rights to popular versions of the
Bible. We have produced and released in the fall of 2003 the
word-for-word film adaptation of The Gospel of John. Our primary
strengths are our intellectual property rights to the visual
representation of popular versions of the Bible, our creative
constituents and our sales and distribution networks. The Bible
remains the largest selling book of all-time and Bible sales are
driven by Bible translations. From the American Bible Society we
have secured the exclusive worldwide rights to develop, produce and
market film adaptations on a word-for-word basis in the English
language from the American Bible Society's Good News Translation
Bible and Contemporary English Version, including both Books of the
Old and New Testaments. We also could have access, as negotiated,
to non-English translations of the Bible from the United Bible
Societies and their affiliates. The Good News Translation Bible
represents a significant portion of US Bible sales and has sold
approximately 140 million Bibles worldwide. The Latin American
Spanish translation of The Gospel of John has been licensed to us.
The US Latino population is in excess of 40 million.
Although, based upon our exclusive license we believe that others
are unable to recreate our video products exactly in the versions we
utilize, we recognize that others presently do and may in the future
create products and services that are directly competitive with our
products. There are a myriad of products and services offered by
numerous individuals, for profit companies and non profit companies
and organizations targeted toward our customers and potential
customers. However, due to our exclusive license agreement, we
believe that for so long as this agreement remains in effect any
potential customer specifically seeking video recreations of the
versions of the Bible produced by us under our license agreement
would be required to purchase our product.
We intend to utilize our intellectual property rights as the basis
to build a global distribution system for faith-based, audio visual
products. Past distribution of such products has been primarily
focused on the traditional Christian marketplace. We believe the
opportunity continues to exist to take our products into the
mainstream domestic marketplace and simultaneously into the much
larger global marketplace where, we believe, the potential for sales
is very significant.
Results of operations for the three months ended September 30, 2004
and September 30, 2003
Sales for the three month period ended September 30, 2004 totalled
$393,556 compared to $13,180 reported in the corresponding 2003
period. The increase in sales was attributable to the retail, rental
and direct response marketing initiatives associated with the
word-for-word film adaptation of The Gospel of John. The film was
completed in early September 2003 and direct response marketing
commenced in October 2003.
Cost of goods sold increased in the three months ended September 30,
2004 to $200,947 from $3,425 in the 2003 corresponding period. The
increase was due to the marketing of The Gospel of John.
General and administrative expenses of $431,129 for the three month
period ended September 30, 2004 decreased 42.5% from the $749,226
amount incurred in the corresponding 2003 three month period. The
current quarter expenses include professional fees of approximately
$103,150. The expenses in the current period were primarily in
support of the Company's new production, The Gospel of John.
Professional fees were incurred in the amount of approximately
$618,733 for the three months ended September 30, 2003.
Interest and finance costs for the quarter ended September 30, 2004
were in the amount of $1,004,197 and were mainly associated with the
Company's debenture issues. This compares to $800,258 for the three
months ended September 30, 2003. The Company had outstanding
$6,533,646 of Series "A" debentures during the third quarter 2004
and comparable 2003 period. The Company issued $8,500,000 of Series
"B" debentures at the end of August, 2003. Accordingly, during the
quarter ended September 30, 2003 there were interest charges for one
month relating to the Series "B" debentures.
Results of operations for the nine months ended September 30, 2004
and September 30, 2003
Sales for the nine month period ended September 30, 2004 were
$7,202,071 an increase of $7,139,360 from $62,711 in the same 2003
period. The increase in sales was attributable to the retail,
rental and direct response marketing initiatives associated with the
film adaptation of The Gospel of John. Sales of DVD/video units of
the production commenced in October, 2003.
Cost of goods sold increased in the nine months ended September 30,
2004 to $3,144,822 from $22,512 in the 2003 corresponding period.
The increase was due to the marketing of The Gospel of John.
General and administrative expenses of $3,055,283 for the nine
months ended September 30, 2004 decreased $249,930 or 7.6% from the
$3,305,213 incurred in the corresponding 2003 nine month period.
The current nine month period included $1,295,240 of professional
fees. In the 2003 nine month period professional fees were
approximately $1,337,460. During the 2003 nine month period,
expenses related to the film production and start of marketing for
The Gospel of John.
For the nine months ended September 30, 2004, interest and finance
costs were $6,856,873 compared to $1,389,803 for the 2003 nine month
period. The current nine month period included $3,758,411 relating
to the issuance of 15,033,645 shares to the Company's
debentureholders valued at $0.25 per share. The Company had
outstanding $6,533,646 of Series "A" debentures during the 2004 and
comparable 2003 nine month period. The Company issued $8,500,000 of
Series "B" debentures at the end of August, 2003. Accordingly,
during the nine months ended September 30, 2003, there were interest
charges relating to the Series "B" debentures for one month.
Liquidity & Capital Resources
At September 30, 2004, we had approximately $83,625 in cash and cash
equivalents, exclusive of a cash escrow amount of $291,976 and a
working capital deficit of $9,873,467. The primary source of
liquidity to meet our obligations during the three months ended
September 30, 2004 was provided from funds made available relating
to the sales of DVD/video units of The Gospel of John.
For fiscal year 2004, we anticipate cash needs of approximately
$6,250,000, consisting of approximately $750,000 for marketing of
The Gospel of John, approximately $2,000,000 relating to operations,
approximately $3,500,000 earmarked for reduction of liabilities,
exclusive of payments of interest and principal relating to the
debentures, which was subject to a Forbearance Agreement until July
31, 2004. We expect these cash needs to be funded by our collection
of accounts receivable principally arising from sales of DVD/video
units of The Gospel of John, additional sales of DVD/video units and
other sources of capital. Without the collection of such accounts
receivables, additional sales and other sources of capital, our
revenue from operations will not be sufficient to sustain our
current working capital obligations and requirements.
Item 3. Controls and Procedures.
a.) Our principal executive officer and our principal financial
officer have on a date which is within ninety days of the date that
we have filed this quarterly report (the "Evaluation Date"),
evaluated the effectiveness of our disclosure controls and
procedures and have concluded that no significant deficiencies or
material weaknesses exist.
b.) There have been no significant changes in our internal controls
or in any other factors that could significantly affect these
controls subsequent to the Evaluation Date.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
As previously discussed in Form 10-KSB for the year ended
December 31, 2003, legal proceedings were instituted against us by
Thomas Nelson Publishing on December 30, 2003 in the Chancery Court
of Davidson County, Tennessee (the "Nelson Litigation"). On August
31, 2004, we and Thomas Nelson reached a settlement agreement (the
"Nelson Settlement Agreement") as to the Nelson Litigation requiring
us to pay $616,642 (the "Nelson Settlement Amount") to Thomas
Nelson. Under the Nelson Settlement Agreement, we are required to
pay $50,000 of the Nelson Settlement Amount to Thomas Nelson one (1)
year after the date of the Nelson Settlement Agreement with the
remainder of the Nelson Settlement Amount being paid in seven equal
semi annual installments thereafter, the first of which being due 18
months after the date of the Nelson Settlement Agreement.
The claim asserted by Steven Small, our former chairman,
against us was settled in accordance with Minutes of Settlement
dated September 7, 2004. A dispute, however, exists as to certain
of the terms of settlement, and we commenced an application in the
Ontario Superior Court of Justice on October 21, 2004 to declare and
enforce the terms of the settlement. The hearing is scheduled to
take place on January 21, 2005.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a).
As previously reported, we expect (i) to issue an aggregate of
1,471,107 shares of our common stock to Lang Michener, LLP, Edward
H. Gilbert, P.A., Goodmans, LLP, Deluxe Laboratories and JBM
Entertainment (those creditors identified in section 7.1(n)(ii) of
the Second Forbearance Agreement)as required by section 7.1(n)(i)(A)
of the Second Forbearance Agreement; and (ii) to issue 1,500,000
shares of our common stock to JBM in connection with the termination
of the JBM Agreement (as same is described hereinafter). There will
be no commissions or discounts associated with the issuance of our
common stock described above.
We expect to claim exemption from the registration provisions
of the Act with respect to issuance of our shares pursuant to
Section 4(2) thereof inasmuch as no public offering will be
involved. In connection with the issuance of the shares of our
common stock, the purchasers thereof will have made an informed
investment decision based upon negotiation with us and will have
been provided with access to material information regarding us. We
believe that the purchasers thereof will have had knowledge and
experience in financial matters such that the purchasers will be
capable of evaluating the merits and risks of acquisition of our
common stock. All of the shares of our common stock to be issued
pursuant to the foregoing will bear an appropriate legend
restricting the transfer of same, except in accordance with the
Securities Act.
As previously reported, we concluded an offering of 800,000
shares of our common stock to approximately 10 accredited investors
at an offering price of $.50 per share (the "Current Offering"). We
have not yet issued the shares to the purchasers thereof, but we
expect to do so in the near future. There are no commissions or
discounts associated with the Current Offering. We will claim
exemption from the registration provisions of the Act with respect
to the common stock issued as part of the Current Offering pursuant
to Section 4(2) thereof inasmuch as no public offering was involved.
In connection with the issuance of the common stock, the purchasers
thereof made an informed investment decision based upon negotiation
with us and were provided with access to material information
regarding us. We believe that each such purchaser had knowledge and
experience in financial matters such that such purchaser was capable
of evaluating the merits and risks of acquisition of the common
stock. All certificates representing the common stock issued as
part of the Current Offering will bear an appropriate legend
restricting the transfer of such shares, except in accordance with
the Securities Act.
Item 3. Defaults upon Senior Securities.
We previously described certain Forbearance Documents between
us and the holders of our A Unit Debentures and our B Unit
Debentures. As of the date hereof, the Forbearance Documents have
expired and we are in arrears of our obligations under the A Unit
Debentures and our B Unit Debentures by an amount of approximately
$400,000. We have not received a current notice of default from the
holders of the A Unit Debentures or the B Unit Debentures as a
result of the foregoing, and we can provide no assurance that such a
notice of default will not be forthcoming. We are continuing our
efforts to bring our obligations under the A Unit Debentures and the
B Unit Debentures current and we anticipate that we will be able to
do so in the near future. However, we can provide no assurance that
we will be successful in such efforts.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
On November 15, 2004, we concluded a distribution agreement
(the "Current Distribution Agreement") with Buena Vista Home
Entertainment, Inc. ("BVHE") for our current film, The Gospel of
John, and for our anticipated next film, The Gospel of Mark,
currently scheduled to commence production in the spring of 2005.
No assurance is provided, however, that we will have the ability to
undertake production of The Gospel of Mark or any additional motion
pictures.
The Current Distribution Agreement requires us to satisfy
certain delivery requirements. The Current Distribution Agreement
further provides that in consideration of the payment of advances to
us at the time of delivery of each of the The Gospel of John and The
Gospel of Mark to BVHE, BVHE is be granted certain exclusive
distribution rights for VHS/DVD and other formats of each The Gospel
of John and The Gospel of Mark for the territories of Canada and the
United States for a term of ten years from the date of delivery, as
applicable, of The Gospel of John and The Gospel of Mark .
Likewise, the Current Distribution Agreement provides that each of
us and BVHE exercise non-exclusive direct response marketing rights
for the films and that we retain exclusive "ministry rights", which
includes sales of our films to non-profit Christian organizations,
such as churches and television ministries. Under the Current
Distribution Agreement, we are entitled to all net revenues
generated after the deduction by BVHE of distribution fees,
distribution costs and advances to us. We and BVHE have agreed that
the specific terms and conditions of the Current Distribution
Agreement are confidential.
In connection with the efforts of Mr. Jake Eberts, our new
chairman of our Board of Directors (as described below) in
concluding the Current Distribution Agreement, Mr. Eberts will
receive 3,000,000 shares of our common stock and five percent (5%)of
the net amounts retained by us from retail sales of The Gospel of
John and The Gospel of Mark made under the Current Distribution
Agreement.
On November 12, 2004, Jake Eberts was appointed to our Board of
Directors as the chairman. Mr. Eberts is 63 years of age and his
address is in care of Blackbird Films Ltd., 14 - 17 Market Place,
Great Titchfield Street, London, W1W 8AJ, United Kingdom. Mr.
Eberts graduated from McGill University with a bachelors degree in
1962 and from Harvard Business School with a masters degree in
business administration in 1966. Mr. Eberts founded Goldcrest Films
and Allied Filmmakers and his film production career includes the
films Chariots of Fire, Gandhi, The Killing Fields, Driving Miss
Daisy, Dances with Wolves, A River Runs Through It, and recently,
Open Range and Two Brothers. Currently, Mr. Eberts is producing or
executive-producing several additional films. Mr. Eberts serves on
the Board of the Sundance Institute and the Sundance Channel, is the
Chairman of the National Geographic Feature Films and is the
co-founder and CEO of MPI International, a provider of high speed,
two-way video transmission capabilities to telecom and cable
companies, hotels, hospitals and schools.
In addition to his appointment as Chairman, Mr. Eberts has
agreed to serve as an executive producer of the next three motion
pictures expected to be produced by us, beginning with The Gospel of
Mark. In that regard, Mr. Eberts will receive first position credit
as executive producer of our next three motion pictures provided
that (i) at least eight weeks prior to the date scheduled for
principal photography for such film we will have entered into a
distribution agreement therefor upon terms no less favorable than
those included as part of the Current Distribution Agreement; (ii)
our agreement is binding only as to such films if principal
photography has commenced prior to December 31, 2008; and (iii) the
final budgeted cost for any such film has been first approved by us.
Mr. Eberts will receive compensation of $200,000 for his services
as executive producer for each such film.
On November 15, 2004, we appointed Luc Perron as our Vice
President and Chief Financial Officer. Mr. Perron formerly worked
as Vice-President-Finance for Oshawa Power and Utilities
Corporation, Vice-President, Finance and Administration for software
developer Syntell Inc., and Audit Manager at Ernst & Young. Mr.
Perron succeeds Maurice Colson who was, prior to the appointment of
Mr. Perron, serving as our interim Chief Financial Officer. Mr.
Perron will receive annual compensation in the amount of
CDN$150,000, along with certain other perquisites and options to
acquire 250,000 shares of our common stock under our First Stock
Incentive Plan (the "Incentive Plan") at such time as the Incentive
Plan has been adopted by us. We have not yet adopted the Incentive
Plan and we are uncertain when or if we will do so.
We have issued a press release regarding the appointments of
Mr. Eberts and Mr. Perron and that press release is attached as an
Exhibit hereto.
Our consulting agreement (the "Consulting Agreement") with
1080409 Ontario Limited ("108 Ontario"), a corporation controlled by
Garth H. Drabinsky ("GHD")will expire on December 31, 2004,
according to its terms and will not be renewed by us. However, in
order to assure consistency during our anticipated management
transition as a result of the foregoing appointments and other
anticipated management changes, by letter dated November 10, 2004
(the "Transitional Consulting Services Letter"), we requested that
108 Ontario provide us with consulting services pursuant to the
directions provided by us from time to time (the "Transitional
Consulting Services"). We anticipate that during the time that 108
provides us with Transitional Consulting Services, 108 will contract
with 1485352 Ontario Limited ("148 Ontario"), a corporation
controlled by Bonnie Gottlieb, for certain Transitional Consulting
Services to be provided to 108 Ontario by Myron Gottlieb
("Gottlieb"). A copy of the Transitional Consulting Services Letter
has been attached as an Exhibit hereto.
We intend to pursue additional equity financing which will be
required by us in order to undertake production and marketing costs
for The Gospel of Mark, however we can provide no assurance that we
will be successful in so obtaining such financing or, if successful,
the terms thereof.
We have issued a press release regarding the Current
Distribution Agreement and that press release is attached as an
Exhibit hereto.
Item 6. Exhibits, Lists and Reports on Form 8-K:
(a) Exhibits.
The following is a list of exhibits filed as part of this
quarterly report on Form 10-QSB. Where so indicated by footnote,
exhibits which were previously filed are incorporated by reference.
For exhibits incorporated by reference, the location of the exhibit
in the previous filing is indicated in parentheses.
[Download Table]
EXHIBIT DESCRIPTION
NO.
2.1 Stock Exchange Agreement (2)
3.1 Articles of Incorporation of American Uranium, Inc. (1)
3.2 Bylaws of American Uranium, Inc.(1)
3.3 Articles of Incorporation of American Uranium
Reincorporation, Inc. (2)
3.4 Bylaws of American Uranium Reincorporation, Inc. (2)
3.5 Amended and Restated Articles of Incorporation of
Visual Bible International, Inc. (3)
3.6 Bylaws of Visual International, Inc. (3)
3.7 Amended and Restated Articles of Incorporation (1 for 2
combination) of Visual Bible International, Inc. dated
April 3, 2001 (4)
3.8 Amended and Restated Articles of Incorporation (1 for 3
combination)of Visual Bible International, Inc. dated
September 10, 2001 (5)
3.9 Amended and Restated Articles of Incorporation (1 for
10 combination) of Visual Bible International, Inc.
dated February 19, 2002 (6)
3.1 Amendment to the Articles of Incorporation (Series A
Preferred designation) of Visual Bible International,
Inc., dated March 28, 2002 (8)
3.11 Amendment to the Articles of Incorporation
(capitalization increase) of Visual Bible
International, Inc., dated April 15, 2002 (7)
3.12 Amendment to the Articles of Incorporation (Series B
Preferred designation) of Visual Bible International,
Inc., dated December 17, 2002 (8)
4.1 Form of A Unit Debenture dated December 24, 2002 (8)
4.2 Form of A Unit Warrant dated December 24, 2002 (8)
4.3 Form of A Unit Registration Rights Agreement (8)
4.4 Form of A Unit Investor Rights Agreement (8)
4.5 Addenda to A Unit Debentures (First Addendum, Second
Addendum, Third Addendum and Fourth Addendum)(8)
4.6 Addendum to A Unit Debentures (Fifth Addendum)(10)
4.7 Form of B Unit Debenture(10)
4.8 Form of B Unit Warrant Agreement(10)
4.9 Form of B Unit Registration Rights Agreement(10)
4.1 Conditions Precedent Agreement(10)
9.1 Shareholder Voting Agreement (3)
9.2 Form of Irrevocable Proxy (3)
10.1 Agreement with Stewart House Publishing, Inc. (4)
10.2 Agreement with Thomas Nelson, Inc. (4)
10.3 Agreement with Columbia House, Inc. (4)
10.4 The JBM Management Agreement and Amendments (8)
10.5 The Velveteen Consulting Agreement (8)
10.6 The 148 Ontario Consulting Agreement (8)
10.7 Agreement to Provide Guaranty (8)
10.8 The Fulfillment Services Agreement (11)
10.9 The Forbearance Agreement (11)
10.11 The Second Forbearance Agreement (11)
10.12 The Deluxe Inventory Security Agreement (11)
10.13 The Priorities Agreement (11)
10.14 The Security Agreement (11)
10.15 The Second Priorities Agreement (11)
10.16 The Disbursement Agreement (11)
10.17 The Rescission Agreement (11)
10.18 The 108 Ontario Consulting Agreement (11)
10.19 The Transitional Consulting Services Letter (12)
21.1 List of Subsidiaries (11)
31.1 Certification of Chief Financial Officer under Rule
13a-14(a)/15d-14(a)(12)
31.2 Certification of Chief Executive Officer under Rule
13a-14a/15d-14(a)(12)
32.1 Certification of Chief Financial Officer under Section
1350(12)
32.2 Certification of Chief Executive Officer under Section
1350(12)
99.1 Letter from Harold Kramer (11)
99.2 Press Release dated November 17, 2004 (12)
99.3 Press Release dated November 24, 2004 (12)
____________________
(1) Previously filed with Form 10 of the Company dated May 19, 1999
and incorporated herein by reference.
(2) Previously filed with Schedule 14-A of the Company on June 2,
2000 and incorporated herein by reference.
(3) Previously filed with Form 8-K on August 16, 2000 and
incorporated herein by reference.
(4) Previously filed with Form 10-KSB of the Company filed on May
23, 2001 and incorporated herein by reference.
(5) Previously filed with Form 10-QSB of the Company filed on
November 11, 2001 and incorporated herein by reference.
(6) Previously filed with Form 8-K on March 26, 2002 and
incorporated herein by reference.
(7) Previously filed with Schedule 14-C of the Company filed on
March 25, 2002 and incorporated herein by reference.
(8) Previously filed with Form 10-KSB of the Company filed on May
16, 2003 and incorporated herein by reference.
(9) Previously filed with Form 10-QSB of the Company filed on May
23, 2003 and incorporated herein by reference.
(10) Previously filed with Form 10-QSB of the Company for the
quarter ended September 30, 2003 and incorporated herein by reference.
(11) Previously filed with Form 10-KSB of the Company for the fiscal
year ended December 31, 2003 and incorporated herein by reference.
(12) Filed electronically herewith.
(b) Reports on Form 8-K.
Not applicable
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VISUAL BIBLE INTERNATIONAL, INC.
Date: 11/24/04 By: /s/ Maurice Colson
-----------------------------
Maurice Colson, President and
principal executive officer
Date: 11/24/04 By: /s/ Luc Perron
-----------------------------
Luc Perron, principal financial officer
Dates Referenced Herein and Documents Incorporated by Reference
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