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n the reported fiscal year, PLC recognized net cancellation of indebtedness revenue of $4,459,000 reflecting its continued efforts to reduce indebtedness and increase net shareholder equity. As reported in prior fiscal years, such cancellation of indebtedness income reflects adjustments to debtors' claims on future film revenues and in management's view represents continuing revenue and profits from core operations.
Peter Hoffman, Chief Executive Officer of Seven Arts, stated, "We are pleased our listing predecessor achieved net income of $1,462,000 and basic and diluted earnings per share of $0.77 in the last fiscal year. We are particularly pleased with the increases in our net shareholders' equity from $2,200,000 as of June 30, 2010 to $7,958,000 as of June 30, 2011. This increase does not reflect the further, substantial reduction of debt and increase in net stockholders equity since the end of the fiscal year, as set forth in our letter to stockholders to be released this week.
"The independent film industry has experienced many challenges in the last fiscal year, which led to changes in our expected revenue model. Seven Arts reduced production during the fiscal year ended June 30, 2011 as it completed new sources of financing. We currently believe that Seven Arts is poised for success in the current fiscal year and beyond.
"PLC successfully completed the transfer of NASDAQ listing to the Company effective August 31, 2011. The Company is now a fully reporting United States issuer and will in the future report its results of operation under United States Generally Accepted Accounting Principles ("US GAAP"). Application of US GAAP to our listing predecessor's reported results of operation will not result in any material changes to PLC's reported results of operation under International Financial Reporting Standards. We expect Seven Arts' first quarterly report will be for the fiscal quarter ended September 30, 2011."
Selected Financial Data
(in $ 000's, except per share data)
Summary Profit and Loss Data Fiscal
Year
Ended
June 30,
2011 Fiscal
Year
Ended
June 30,
2010 Fiscal
Year
Ended
June 30,
2009
Total Revenue $ 3,328 $ 6,417 $ 10,222
Cost of Sales $ (3,448 ) $ (2,399 ) $ (4,633 )
Gross Profit $ (120 ) $ 4,018 $ 5,569
Operating expenses $ (2,120 ) $ (2,939 ) $ (4,125 )
Income before interest and taxes $ (2,240 ) $ 1,080 $ 1,444
Other Income $ 4,459 $ 150 $ 5,602
Net interest (expense) $ (758 ) $ (1,706 ) $ (2,308 )
Income/(Loss) Before Taxes $ 1,461 $ (476 ) $ 4,737
Provision for Taxes $ 0 $ 0 $ 0
Net Income/(Loss) $ 1,461 $ (476 ) $ 4,737
Weighted Average Common Shares used in Earnings/(loss) per share calculation
Basic (in 000's) 1,889 1,403 6,051
Diluted (in 000's) 1,889 1,403 8,147
Earnings /(loss) Per Share - Basic $ 0.77 $ (0.35 ) $ 0.78
Earnings/ (loss) Per Share - Diluted $ 0.77 $ (0.35 ) $ 0.58
Balance Sheet Data June 30,
2011 June 30,
2010 June 30,
2009
Total Assets $ 27,946 $ 28,625 $ 27,387
Total Loans Payable $ 12,646 $ 18,301 $ 17,828
Shareholders' Equity $ 7,958 $ 2,200 $ 1,717
Recent Developments
In the upcoming fiscal year, we believe several recent developments will have a favorable impact on the Company, and I would like to share the details with you.
First, the financial results for the year ended June 30, 2011, separately announced on October 31, 2011, reflect earnings per share in excess of the market price of our common stock for several months up to October 31, 2011. Future periods will include the expected revenues from the United States theatrical release of our film "Pool Boys" and three other unreleased completed films we currently expect to release in this fiscal year, "Nine Miles Down," "Drunkboat" and "Radio Free Albemuth."
Future periods will also include accruals resulting from the judgment we obtained in February of this year reclaiming ownership of copyright interests in five important films produced by our predecessors, including "The Believer" and three Paramount-released films: "Rules of Engagement," "An American Rhapsody" and "Who is Cletis Tout." This court victory should result in substantial economic recoveries that may exceed our current market capitalization.
Second, we continue our development of "Neuromancer" and "The Winter Queen," both larger budget films on which we expect to start production later this fiscal year. Both, if produced, should generate "pre-sales" or guaranteed revenues well in excess of the gross revenue reported for PLC's fiscal years ended June 30, 2010 and June 30, 2011.
Third, we have announced that we are arranging financing for up to six lower budget motion pictures to be produced in Louisiana, including "Schism," to be directed by Adam Gierasch, with whom the Company has had two successful releases. The Company also expects to complete and commence operations by January 2012 of its production and post-production center located in New Orleans, Louisiana, which is expected to be an additional source of revenue for the Company.
Fourth, as we announced, we have signed definitive agreements for and expect to close shortly our acquisition of Big Jake Music, which will result in expanding our digital distribution strategy into all types of recorded media. Our prior release on this issue may not have been clear on this question. We have signed the definitive agreements (and closed on the agreements) but not completed the issuance of preferred stock required by those definitive agreements which we expect will occur shortly. We have already arranged for the release of soundtrack albums for our prior release "Night of the Demons." Our first recording artist contracts and releases will be announced shortly after the closing of this acquisition. In response to stockholders' inquiries, I want to let you know that the stockholders of Big Jake Music did not receive freely tradable common stock, but rather convertible preferred stock for the acquisition of their company. The stock cannot be sold for at least one year, and the number of common shares to be issued is subject to downward adjustments based on the financial performance of Big Jake Music and the realization for Seven Arts' benefit of the pre-paid advertising credits that Big Jake Music holds. The conversion price of the preferred stock into common stock will be based on a premium to the Company's per share equity, not on the current market price.
Fifth, on October 5, 2011 we arranged a mutually acceptable settlement of our dispute with Fletcher Asset Management arising out of an investment agreement purportedly terminated by Fletcher, as we announced on June 7, 2011 in a press release. In the settlement, the Company waived all claims against Fletcher, and BRG Investments, Inc. (an affiliate of Fletcher) acquired 250,000 shares of our common stock at a price of $1.00 per share. BRG received a warrant to buy an additional 100,000 common shares at $1.00. Further, BRG has the right to buy an additional 250,000 shares of our common stock within six months based on a volume weighted average price, but no less than $1.00 or more than $1.50. If BRG buys these shares, it will receive an additional warrant to buy an additional 100,000 shares of our common stock on the same terms as the warrant we have issued.
Sixth, the Company's listing predecessor, PLC, will shortly be placed in administration or liquidation under English law as part of an operational transfer to a US domestic issuer. Certain indebtedness of PLC remained with PLC and will be subject to administration or payment in these administration proceedings. PLC will own 2,000,000 shares of common stock of the Company which are not included in the shares outstanding discussed above. Those shares, plus additional unregistered common shares of the Company owned by my holding company, Seven Arts Pictures Inc., may, upon completion of these proceedings, be distributed to PLC's non-US creditors. Management believes that these administration or liquidation proceedings should not have any material effect on the Company's operations. I will be devoting such time as the administrator or liquidator of PLC may request to assist in the winding-up or administration of PLC's affairs, which we believe will be in the interest of the continuing stockholders of the Company.
PLC expects to file its final Annual Report on Form 20-F with the SEC on or about its due date of December 31, 2011. For that filing, PLC has elected to report its results of operations and financial statements for the fiscal years ended June 30, 2010 and June 20, 2011 under US generally accepted accounting principles and has asked our current auditor to audit both years for this purpose.
I also would like to address the recent substantial decline in the Company's stock price. As of the market close on June 1, 2011, SAPX stock was trading at approximately $3.00 per share. Since then, we have witnessed a sharp decline from that level. Like you, I have been deeply concerned over this unwarranted shift in our stock valuation.
Management does not believe that this decrease in stock price is related to any specific adverse event regarding the Company, nor do we believe that it is representative of the Company's operations or financial condition, both of which have improved during this time. We have received reports from stockholders and others of "manipulation" or short-selling of our common stock in violation of applicable securities rules and regulations. We have contacted the relevant regulatory authorities on this matter.
Retirement of Debt and Strengthening of Balance Sheet
As set forth in PLC's previously filed Form 6-K and subsequently, the Company and PLC have issued approximately 10,000,000 ordinary or common shares since June 1, 2011 to retire debt and increase our stockholder equity. As of October 31, 2011, we had approximately 12,550,000 shares outstanding. As discussed below, certain indebtedness of PLC was not assumed by the Company and will remain an obligation of PLC, which will be administered and liquidated in accordance with English law.
As a result of the foregoing, as of October 31, 2011, but taking into account committed reductions in debt and the elimination on the Company's balance sheet of PLC's retained indebtedness, our indebtedness has been reduced in total by approximately $10,000,000 from the approximate $17,500,000 that was reported by PLC as of December 31, 2010. As a result, our stockholder equity or book value has increased from the approximate $3,500,000 that was reported by PLC as of December 31, 2010 to approximately $18,000,000 as of October 31, 2011, taking into account committed reductions in indebtedness and proposed elimination of PLC indebtedness. Our per-share equity is in excess of $1.30 as of today, which also reflects PLC's earnings for the fiscal year ended June 30, 2011.
Shorts will end up getting burned here. Most likely sooner than later.
The debt is being addressed, which by the way is only 12 mil. Company has and.is continuing to make moves to bring back value to the shareholder whether you acknowledge it or not.
Thanx for your opinion. SAPX going back over a buck!!!!!!!! Jump on board now. Too much in the works here. DMX, Bone Thugs N Harmony far from washed up rappers.
See you over a buck my friend. Ive got 54k shares at an average of .36 right now. This stock will do fine next week.
Ive never said there was no dilution. Dilution happens in any stock. But it is not rampant as you are proclaiming. Rampant dilution causes a stocks PPS to rapidly decline. You say deep financial doo-doo. Far from it. Just a baseless assertion by you. Assets outweigh debt. Earnings increasing. Sure B movies may not be hits, but they are offbeat cult films which attract a different group of movie watchers. Just wrote an English paper on Cult films. They are bigger than one might think. DMX, Bone Thugs N Harmony now a part of SAPX assets. This company is heading in the right direction. Might as well stop fighting it.
Dilution is far from rampant.
O/S is only 22 million. Whoa! What a huge Share count. Yes, they issued shares to reduce debt. i dont see a big problem with that. Im happy with my position here.
I dont think there is much dilution seeing the company needs the PPS back over $1.00. If im not mistaken, u scream dilution on every stock
Sapx acquired ummg assets including dmx. David Michery, the founder and ceo of ummg, will now be.the CEO of sapx's music division.
PR coming Monday? Was that mentioned in the interview today? I didnt get 2 listen.
ATM has just opened. Gap from this morning filling. No biggie. Up from there.
SAPX will be just fine. Newly acquired assets, several good films in the works, etc will propel SAPX back in to being deserving of a NASDAQ listing. By the way, I can list a number of stocks on the Nasdaq and NYSE that probably shouldnt be there, but they are so we must move on.
I guess I look at it from a different perspective than you. Earnings are up from the same time period as last year. Assets outweigh debt. Debt has been reduced by 7 million. More things coming this year than last. Im no genius but when Im seeing earnings increasing and debt decreasing it is a no brainer. Still forecasting sunny skies and a move up in PPS.
Every company out there has a creditor. No worries on that front either.
SAPX has posted profit. And they reduced debt. And we will forecast all we want. I call for sunny skies and a nice rise in PPS.
It is hard to be patient in this market, but SAPX will pay off huge, IMO. DMX, Bone Thugs N Harmony, Winter Queen, Neuromancer, etc. Just DMX and Bone alone make this worth more than $2. The time is near. I hope the next time i flip it is for more than a buck a share.
Grabbed some more at .325. Looks primed to go now.
Volume before price right.
LOL, 70 million in cash and assets, cancer vaccines in the pipeline, most of which are already in late stage clinical trials. BK no where in sight. They wont be delisted anytime soon either. They have at least 6 months from the time Nasdaq sends them a letter about their PPS to get the PPS back up. Good luck with your theory though.
(PS--Id start thinking about covering that short position if I were you.)
NITE needs to move his ass out of the way. He moves, we move
There is dilution in every stock. No big deal.
Take into acct all that bpax has in the pipeline with their cancer vaccines already in late stage clinical trials soon to be ready to go for FDA approval and we see $2 again no problem. Ive spent the last couple hrs researching bpax in depth and I really dont see too many negatives here. to each their own, but there is a shit ton of cash to be made here. Loading up on all dips. I put $10k in today and looking to add more. SHOW ME THE MONEY BPAX!!!!!!!!!!!!!!
Seeking Alpha has no clue, but hey neither do I
U shouldnt be in gutters. They are rusty and can give u tetanus if you get cut. On the other hand, Beautiful day of consolidation for BPAX.
Nice day of consolidation today. im in at .702 and will add more if she pulls back a little tomorrow.
Too funny. People dont just throw $40k away for "window shopping" nice try though. 99.99% of the people on this board know where this stock is going. See you at $2 or higher.
SAPX will not be going to the OTC anytime soon. I dont see the CEO buying 100k shares at .40 if he knew he couldnt get the PPS over a dollar in the required amount of time. Shorts had better start covering now, because when this train does get going, there will be no stopping it. Happy Trading.
Unbelievable how undervalued this stock is. Once the big prs start rolling out on completed acquisitions, films being casted, and the dmx business coming to fruition, its gonna be hard to stop this train. Could possibly be the biggest runner on the NASDAQ this year.
Lionsgate rumor? Im not aware of any rumor regarding them. I know sapx and lionsgate were mentioned in an analysis report saying both would benefit from joint ventures and mergers, but it wasnt them merging together. If it were that would be absolutely huge.
Sapx is buying the assets of that music label from what I understand. And the founder of that music company will then head the music division over here.
Absolutely I agree. Its just not quite there yet. Still waiting on that catalyst.
LOL, I trade it how I see it for now. I know the potential here, but Im not gonna stop making a few hundo every day when I can while it is in a range.
Almost time to reload the boat!!!!!!!!
I dont see any dilution occurring. What I do see, is people buying in high .20's and flipping in low .30's. Called scalping. Im guilty of it as well. Simple, you buy 10000 shares at .28 and sell them at .31. Quick $300 profit. This will continue happening until we get some good volume, which will come soon enough.
I havent been around much because Ive been on vacation. Plus not much going on right now. Im sure the board will pick back up soon enough.
"If necessary" is the key word there. I dont believe it will be necessary as Seven Arts has a ton of ammo in their arsenal to bring the PPS above a dollar and much more.