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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
February 28, 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 February 28, 2002 that it had completed
the sale of the stock of its commercial production subsidiaries, Curious
Pictures Corporation ("Curious") and DCODE, Inc. ("DCODE") to a group led by the
existing management of Curious (the "Curious Management Group"). The Curious
Management Group paid approximately $5,100,000, consisting of cash of
$2,000,000, a promissory note for $500,000, extinguishment of the an existing
put right held by the existing management of Curious with a value of
approximately $1,200,000, and extinguishment of approximately $1,400,000 of
inter-company indebtedness. The promissory note is secured by a lien on the
assets of Curious subordinated to a bank working capital line of up to $500,000.
The subordinated creditors, consisting of the Registrant, a private financing
source and the Curious Mangement Group, also entered into an intercreditor
agreement.
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 un-audited 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 un-audited pro forma financial information sets forth
the impact of the sale of the stock of the Registrant's
commercial production subsidiaries, Curious and DCODE, to the
Curious Management Group. The total value of the transaction is
approximately $5,100,000 in proceeds to the Company, consisting
of cash of $2,000,000, a promissory note for $500,000,
extinguishment of the an existing put right held by the existing
management of Curious with a value of approximately $1,200,000
and extinguishment of approximately $1,400,000 of inter-company
indebtedness. The promissory note is due with principle payments
of $250,000 at each of its first and second anniversary dates,
and is also subject to earlier prepayment based on a net income
formula. The Company will use the sale proceeds for working
capital. The sale transaction was consummated on February 28,
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 un-audited pro forma financial
information is to show what the significant effects on the
historical financial statements might have been had the sale of
Curious 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 un-audited 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
Curious Curious
iNTELEFILM Pictures Corp & Pictures Corp &
Corporation DCODE, Inc. DCODE, Inc.
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Nine months ended September 30, 2001:
Revenues $31,695,953 $(13,759,533)(1) $ 17,936,420
Operating expenses 39,783,004 (14,083,956)(1) 25,699,048
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Income (loss) from operations (8,087,051) (324,423) (7,762,628)
Other income (expense) 50,358 (2,122) 52,480
Minority interest 160,000 -- 160,000
Interest income (expense) - net (468,559) (109,928)(2) (358,631)
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Net income (loss) $(8,345,252) $ (436,473) $ (7,908,779)
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Basic and diluted net loss per share $ (1.24) $ (1.18)
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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 Curious Pictures
Corporation & DCODE, Inc.
(2) To eliminate interest expense totaling $93,885 associated with a line of
credit utilized in the operations of Curious Pictures; to add miscellaneous
interest income of $2,707; and to add $18,750 of interest income related to
note receivable.
Pro forma
adjustments for Pro forma after
sale of the sale of the
stock of stock of
Curious Curious
iNTELEFILM Pictures Corp & Pictures Corp &
Corporation DCODE, Inc. DCODE, Inc.
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Year Ended December 31, 2000
Revenues $ 66,997,559 (21,915,297)(1) $ 45,082,262
Operating expenses 77,831,077 (21,608,778)(1) 56,222,299
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Income (loss) from operations
(10,833,518) 306,519 (11,140,037)
Other income (expense) (259,724) (47,935)(1) (211,789)
Interest income (expense) - net 148,751 (67,172)(2) 215,923
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Net income (loss) (10,944,491) $ 191,412 $(11,135,903)
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Basic and diluted net loss per share $ (1.70) $ (1.73)
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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 and other expenses of Curious
Pictures Corp & DCODE Inc..
(2) To eliminate interest expense totaling $42,172 associated with a line of
credit utilized in the operations of Curious Pictures Corp and to increase
interest income by $25,000 related to $500,000 note receivable
BALANCE SHEET:
Pro forma
adjustments for Pro forma after
sale of the sale of the
stock of stock of
Curious Curious
iNTELEFILM Pictures Corp & Pictures Corp &
Corporation DCODE, Inc. DCODE, Inc.
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September 30, 2001
Current assets 7,569,016 (1,022,361)(1)(2)(3) 6,546,655
Property and equipment - net 2,606,902 (1,873,297)(1) 733,605
Intangible assets - net 5,197,508 (3,979,059)(1) 1,218,449
Note receivable -- 500,000 (3) 500,000
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Total assets 15,373,426 (6,374,717) 8,998,709
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Current liabilities 11,837,294 (2,505,256)(2)(3) 9,332,038
Long-term debt 420,223 -- 420,223
Minority interest 1,322,484 (802,435)(2) 520,049
Shareholders' equity 1,793,425 (3,067,026) (1,273,601)
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Total liabilities and shareholders'
equity 15,373,426 (6,374,717) 8,998,709
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(1) To eliminate the assets of Curious Pictures Corp and DCODE Inc.
(2) To eliminate the liabilities of Curious 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 Curious
Management Group, which were cancelled pursuant to the sale transaction.
(3) To reflect receipt of the sale proceeds of $2,000,000 in cash and a note
receivable of $500,000 net of an accrual for estimated disposition costs
and reserves of $322,500.
(c) Exhibits
10.1 Merger Agreement, dated as of February 28, 2002 among Curious
Holdings LLC, the purchaser, Curious Pictures Corporation and
DCODE, Inc, the targets, and iNTELEFILM Corporation and Harmony
Holdings, Inc., the sellers
10.2 Subordination and Intercreditor dated as of February 28, 2002 by
and among CM Opportunity Fund, LLC, iNTELEFILM Corporation,
Curious Holdings LLC, and Susan Holden, Stephen Oakes, Richard
Winkler and David Starr, the management team.
10.3 Promissory Note made Curious Holdings, LLC for the benefit of the
iNTELEFILM Corporation dated February 28, 2002.
99.1 Press Release dated February 28, 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: February 28, 2002 iNTELEFILM Corporation
/s/ Mark A Cohn
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Mark A. Cohn
ITS: Chief Executive Officer
EXHIBIT INDEX
10.1 Merger Agreement, dated as of February 28, 2002 among Curious
Holdings LLC, the purchaser, Curious Pictures Corporation and
DCODE, Inc, the targets, and iNTELEFILM Corporation and Harmony
Holdings, Inc., the sellers
10.2 Subordination and Intercreditor dated as of February 28, 2002 by
and among CM Opportunity Fund, LLC, iNTELEFILM Corporation,
Curious Holdings LLC, and Susan Holden, Stephen Oakes, Richard
Winkler and David Starr, the management team.
10.3 Promissory Note made Curious Holdings, LLC for the benefit of the
iNTELEFILM Corporation dated February 28, 2002.
99.1 Press Release dated February 28, 2002