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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 15, 2002
Date of Report (Date of earliest event reported)
INTELEFILM CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 0-21534 41-1663712
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
6385 Old Shady Oak Road, Suite 290, Eden Prairie, Minnesota 55344
(Address of principal executive offices)
(952) 925-8840
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Registrant announced on January 16, 2002 that it had
completed the sale of the stock of its commercial production subsidiary,
Chelsea Pictures, Inc. to the Chelsea Pictures management group
comprised of Steve Wax, Lisa Mehling and Alison Amon (collectively the
"Chelsea Management Group"). The Chelsea Management Group paid $785,000
in proceeds to the Registrant, consisting of cash at closing of $250,000
and a promissory note for $585,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma condensed financial statements
are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of September
30, 2001 Pro Forma Condensed Consolidated Statements of Income:
Year Ended December 31, 2000
Nine Months Ended September 30, 2001
This unaudited pro forma financial information sets forth
the impact of the sale of the stock of the Registrant's
commercial production subsidiary, Chelsea Pictures, Inc., to the
Chelsea Management Group. The Chelsea Management Group paid
$785,000 in proceeds to the Registrant, consisting of cash at
closing of $250,000 and a promissory note of $585,000. The note
is payable in variable installments over a three year term and
bears interest at a variable rate. The note is secured by the
acquired Chelsea Pictures, Inc. stock, and 200,000 shares of
iNTELEFILM common stock held by the Chelsea Management Group. The
note limits personal recourse against the Chelsea Management
Group to $150,000. The Company will use the sale proceeds for
working capital. The sale transaction was consummated on January
15, 2002 and will be effective January 1, 2002.
The pro forma adjustments are based upon information
currently available and on certain assumptions, described within
the footnotes to the pro forma financial statements, that
management of the Company believes are necessary and reasonable
for a fair presentation of the pro forma financial information.
The pro forma financial information and accompanying notes should
be read in conjunction with the historical consolidated financial
statements of the Company for the fiscal year ended December 31,
2000 and for the interim period ended September 30, 2001.
The objective of the unaudited pro forma financial
information is to show what the significant effects on the
historical financial statements might have been had the sale of
Chelsea Pictures, Inc. occurred, for balance sheet purposes, on
September 30, 2001, and, for statement of operations purposes, on
January 1, 2000. However, the pro forma balance sheets are not
necessarily indicative of the effects of the Company's financial
position that would have been attained had the transaction
occurred earlier. The unaudited pro forma statements of
operations and balance sheets do not purport to present the
Company's consolidated results of operations and financial
position as they might have been, or as they may be in the
future, had the transaction occurred on the assumed date.
STATEMENTS OF OPERATIONS:
Pro forma
adjustments for Pro forma after
sale of the sale of the
stock of stock of
iNTELEFILM Chelsea Chelsea
Corporation Pictures, Inc. Pictures, Inc.
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Nine months ended September 30, 2001:
Revenues $31,695,953 $ (17,129,165)(1) $ 14,566,788
Operating expenses 39,783,004 (17,682,540)(1) 22,100,464
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Income (loss) from operations (8,087,051) 553,375 (7,533,676)
Other income (expense) 50,358 -- 50,358
Minority interest 160,000 -- 160,000
Interest income (expense) - net (468,559) 127,846 (2) (340,713)
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Net income (loss) $(8,345,252) $ 681,221 $ (7,664,031)
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Basic and diluted net loss per share $ (1.24) $ (1.14)
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Weighted average number of shares
outstanding 6,712,000 6,712,000
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(1) To eliminate the revenue and operating expenses of Chelsea Pictures, Inc.
(2) To eliminate interest expense totaling $105,210 associated with a line of
credit utilized in the operations of Chelsea Pictures, Inc. and to add
interest income of $22,636 associated with the acquisition note receivable.
Pro forma
adjustments for Pro forma after
sale of the sale of the
stock of stock of
iNTELEFILM Chelsea Chelsea
Corporation Pictures, Inc. Pictures, Inc.
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Year Ended December 31, 2000
Revenues $ 66,997,559 $ (22,960,137)(1) $ 44,037,422
Operating expenses 77,831,077 (22,636,981)(1) 55,194,096
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Income (loss) from operations (10,833,518) (323,156) (11,156,674)
Other income (expense) (259,724) 8,744 (250,980)
Interest income (expense) - net 148,751 74,108 (2) 222,859
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Net income (loss) $(10,944,491) $ (240,304) $(11,184,795)
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Basic and diluted net loss per share $ (1.70) $ (1.74)
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Weighted average number of shares
outstanding 6,437,000 6,437,000
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(1) To eliminate the revenue and operating expenses of Chelsea Pictures, Inc.
(2) To eliminate interest expense totaling $45,113 associated with a line of
credit utilized in the operations of Chelsea Pictures, Inc. and to add
interest income of $28,995 associated with the acquisition note receivable.
BALANCE SHEET:
Pro forma
adjustments for Pro forma after
sale of the sale of the
stock of stock of
iNTELEFILM Chelsea Chelsea
Corporation Pictures, Inc. Pictures, Inc.
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September 30, 2001
Current assets 7,569,016 (2,350,764)(1)(2) 5,218,252
Property and equipment - net 2,606,902 (136,429)(1) 2,470,473
Intangible assets - net 5,197,508 (1,035,116)(1) 4,162,392
Note receivable -- 585,000 (3) 585,000
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Total assets
15,373,426 (2,937,309) 12,436,117
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Current liabilities 11,837,294 (2,304,680)(2)(3) 9,532,614
Long-term debt 420,223 -- 420,223
Minority interest 1,322,484 (20,049)(2) 1,302,435
Shareholders' equity 1,793,425 (612,580) 1,180,845
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Total liabilities and shareholders'
equity 15,373,426 (2,937,309) 12,436,117
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(1) To eliminate the assets of Chelsea Pictures, Inc.
(2) To eliminate the liabilities of Chelsea Pictures, Inc. which were assumed
by virtue of the purchase of the common stock and to eliminate the minority
interest associated with stock options earned by the Chelsea Management
Group which were cancelled pursuant to the sale transaction.
(3) To reflect receipt of the sale proceeds of $250,000 in cash and a note
receivable of $585,000 net of an accrual for estimated disposition costs of
$127,500.
(c) Exhibits
10.1 Stock Purchase Agreement by and between the Company, and Alison Amon,
Lisa Mehling and Steve Wax dated January 15, 2002
10.2 Stock Pledge Agreement by and between the Company, and Alison Amon,
Lisa Mehling and Steve Wax dated January 15, 2002
10.3 Promissory Note made by Alison Amon, Lisa Mehling and Steve Wax for
the benefit of the Company dated January 1, 2002
99.1 Press Release dated January 16, 2002
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 30, 2002 iNTELEFILM Corporation
/s/ Mark A Cohn
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Mark A. Cohn
ITS: Chief Executive Officer
EXHIBIT INDEX
10.1 Stock Purchase Agreement by and between the Company, and Alison Amon,
Lisa Mehling and Steve Wax dated January 15, 2002
10.2 Stock Pledge Agreement by and between the , and Alison Amon, Lisa Mehling
and Steve Wax dated January 15, 2002
10.3 Promissory Note made by Alison Amon, Lisa Mehling and Steve Wax for the
benefit of the Company dated January 1, 2002
99.1 Press Release dated January 16, 2002