FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2001

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: ___________

UNITED NATIONAL FILM CORPORATION

(Exact name of Small Business Issuer as specified in its charter)

Colorado                           84-1092589
(State or other jurisdiction of       (I.R.S. Employer Identification No.)

                                            incorporation or organization)

6363 Christie Avenue
 Emeryville, CA 94608
 (Address of Principal Executive Offices)

 (510) 653-7020
 (Issuer's telephone number)

Check whether the issuer:   (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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

The number of shares outstanding of the issuer's Common Stock, $.001 par value, as of September 30, 2001 was 7,496,983 shares.

UNITED NATIONAL FILM CORPORATION
INDEX

                                                                                                                                                 Page Number
PART I - FINANCIAL INFORMATION
Item 1.   Financial Statements
          Consolidated Balance Sheet as of September 30, 2001                                                                 2
          (unaudited)
          Consolidated Statements of Operations (unaudited) for the
          period ended September 30, 2001                                                                                               3
          Consolidated Statements of Cash Flows (unaudited) for the
          period ended September 30, 2001                                                                                               4
          Notes to the financial statements                                                                                               5-6

Item 2.   Management's discussion and analysis of financial condition and results of operations                 6

PART II - OTHER INFORMATION                                                                                                   6
Item 1    Legal Proceedings                                                                                                                    6
Item 2    Changes in Securities                                                                                                                6
Item 3    Defaults Upon Senior Securities                                                                                                6
Item 4    Submission of Matters to a Vote of Security Holders                                                                 7
Item 5    Other Information                                                                                                                     7
Item 6.   Exhibits and Reports on Form 8-K                                                                                           7

Signature                                                                                                                                                7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

PART 1       FINANCIAL INFORMATION

The condensed consolidated interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are
adequate to make the information disclosed not misleading.  It is suggested that the condensed consolidated interim financial statements be read in conjunction with the consolidated financial statement and the notes thereto included in the Company Annual Report on Form 10-K for the year ended June 30, 2001. The accompanying consolidated interim financial
statements have been prepared, in all material respects, in conformity with the standards of accounting measurements set forth in Accounting Principles Board Opinion No. 28 and reflect, in the opinion of management, all adjustments, which are of a normal recurring nature, necessary to summarize fairly the financial position and results of operations for such periods. The results of operations for such interim periods are not necessarily indicative of the results to be expected for a full year.
 
 
 
 

                     UNITED NATIONAL FILM CORP.
                  (A DEVELOPMENT STAGE ENTERPRISE)
                     CONSOLIDATED BALANCE SHEET

                           (UNAUDITED)

                                                 September 30, September 30,
                                                    2001         2000
                               ASSETS
CURRENT ASSETS:
     Cash                                  $          40           135
     TOTAL CURRENT ASSETS                  $          40           135
FILM COSTS AND PRODUCTION RIGHTS                       0        64,500
Total                                                 40        64,670

                 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
      Accounts Payable and Accrued Expenses       30,886        10,400
      Note payable                                50,000        50,000
      TOTAL CURRENT LIABILITIES                   80,886        60,400

LOAN FROM SHAREHOLDER                             15,308        13,500
PAYMENT OF EXPENSES BY SHAREHOLDER                     0             0
STOCKHOLDERS' EQUITY:
      Preferred stock - $.01 par,
      3,000,000 shares
      authorized, 100,000 Series A shares
      issued and outstanding (in 2000
      only) and 21,500 Series B issued
      and outstanding                                215          1,215
      Common stock - $.001 par,
      30,000,000 shares
      Authorized, 7,496,983 shares
      issued and outstanding                        7,496         6,867
      Paid in capital                             469,318       455,918
      Accumulated deficit                        (573,183)     (472,830)
TOTAL STOCKHOLDERS' EQUITY                        (96,154)      ( 8,830)

 Total                                      $           40        64,670
 
 
 

                   See notes to financial statements

                                                                                     2
 
 
 
 
 
 
 

                          UNITED NATIONAL FILM CORP.
                       (A DEVELOPMENT STAGE ENTERPRISE)
                       CONSOLIDATED STATEMENT OF OPERATIONS

                               Three Months ended        Three Months ended
                                 September 30,2001       September 30, 2000
REVENUE                          $               0          $        0
COST OF REVENUES                                 0                   0
GROSS PROFIT                                     0                   0
EXPENSES:
    General and Administrative                  508              5,891

NET LOSS                                        508              5,891
BASIC LOSS PER SHARE                              0              ..0008
WEIGHTED AVERAGE SHARES OUTSTANDING       7,156,983            6,866,983
 
 
 
 
 

                      See notes to financial statements
 
 

                                                                                           3
 
 
 
 
 
 

                          UNITED NATIONAL FILM CORP.
                       (A DEVELOPMENT STAGE ENTERPRISE)
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                               Three months ended September 30,
                                                    2001              2000
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income (Loss)                            $(  508)                0

     Changes in operating assets and liabilities:
         Decrease (increase) in accounts                0                0
                     Total adjustments:               413              892
           NET INCREASE (DECREASE) IN CASH            (95)           ( 892)
CASH AT BEGINNING OF PERIOD                           135            1,027
CASH AT END OF PERIOD                               $  40              135
 
 
 
 
 
 
 

                    See notes to financial statements
 

                                                                                    4
 
 



UNITED NATIONAL FILM CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

1. ORGANIZATION AND BUSINESS DESCRIPTION
United National Film Corp. ("the Company") is a Colorado corporation. The Company is engaged in the acquisition and development of properties for, and the production of, television series, television specials, made-for-home television motion pictures and feature length motion pictures for domestic and international distribution.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

b. Film Costs and Program Rights:
Film costs and program rights (project cost) which include acquisition and development costs such as story rights, scenario and scripts, direct production costs including salaries and costs of talent, production overhead and post-production costs are stated at the lower of cost or market and are deferred and amortized by the individual-film-forecast-computation method as required by Statement of Financial Standards No. 53.

c. Fair Value of Financial Instruments:
The carrying amounts reported in the balance sheet for cash, accounts and notes payable and accrued expenses approximate fair value based on the short term maturity of these instruments.

d. Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated.

e. Revenue Recognition:
The business of the Company is to derive revenues primarily from providing production services to third parties and exploiting projects originally developed by the Company in which it retains an ownership interest. Revenues from being a provider of contract production services are recognized using the percentage of completion method, recognizing revenue relative to the proportionate progress on such contracts as measured by the ratio which project costs incurred by the Company to date bear to the total anticipated costs of each project. Amounts advanced under such contracts are deferred and not recognized as revenue until obligations under such contracts are performed.  Revenue from licensing company-owned projects is recognized when the film is delivered and available for showing, costs are determinable, the fee is known and collectibility is reasonably assured.

f. Net Loss Per Common Share:
In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings Per Share, which established new standards for computation of earnings per share. SFAS 128 requires the presentation on the face of the income statement of basic earnings per share and diluted earnings per share.
Basic earnings per share is computed by dividing the net income (loss) available to common shareholders by the weighted average number of outstanding common shares. The calculation of diluted earnings per share is similar to basic earning per share except the denominator includes dilutive common stock equivalents such as stock options and convertible debentures. Common stock options and the common shares underlying the convertible preferred stock are not included as their effect would be anti-dilutive.

3. RELATED PARTY TRANSACTIONS
None.

4. NOTES PAYABLE
Pursuant to the acquisition of the screenplay titled, "Molly and Lawless John", a note was issued for $50,000 which was due on January 15, 1999. The payment date on this note has been indefinitely extended by the holder of the note.

5. LOANS DUE TO SHAREHOLDER
A director of the company loaned the Company an additional $ 450 during this reporting period to pay overhead expenses.

6.  STOCK ISSUED.
On September 12, 2001 the Company issued a total of 530,000 shares of common stock that included 10,000 shares to each of the Company directors and 500,000 shares to Art Stashower in lieu of legal fees relating to the on-going settlement negotiations with former officers and directors.

7. GENERAL
Reference is made to the financial statements included in the Company's Annual Report (Form 10-K) filed with the Securities and Exchange Commission for the year ended June 30, 2001. The Company began its operation in February 1998.  The financial statements for the period ended December 31, 1999 are unaudited but include all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations for the period then ended. All such adjustments are of a normal recurring nature.  The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for a full fiscal year.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Company is a development stage enterprise with no expenses incurred during the period.  The Company is engaged in active negotiations with a potential funding source from Ireland for one or more of its screenplays.  In addition, the Company is continuing to seek funding for the distribution of its children's animation film, "Snappy Sings", an educational short. The Company is exploring the licensing of film rights to Internet broadcasting companies and has discussed through third parties the suitability of several films in the Western genre to which the Company has access. The company has been approached by more than one suitor company, each of whch is requesting an ownership take-over of the company.  A preliminary terms sheet has been issued by one suitor company. However, no terms sheet has been agreed upon or signed by the company.  Active negotiations continue with the suitor companies and any definitive agreement will be subject to shareholder approval.

PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company has initiated legal proceedings to cancel certain common stock certificates.  The basis of the lawsuit is the failure of the recipients of the stock certificates to deliver consideration for the shares. Settlement negotiations relating to the lawsuit are in progress.  The company is hopeful that the lawsuit will be settled during the next fiscal year.

Item 2.  Changes in Securities.
On September 12, 2001 the Company issued a total of 530,000 shares of common stock that included 10,000 shares to each of the Company directors and 500,000 shares to Art Stashower in lieu of legal fees relating to the on-going settlement negotiations with former officers and directors.

Item 3.  Defaults Upon Senior Securities.
None

Item 4.  Submission of Matters to a vote of Security Holders.
None.

Item 5.  Other Information.
None.

Item 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits
none

(b)  Reports on Form 8-K.
None.

SIGNATURES
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, thereunto duly authorized.

UNITED NATIONAL FILM CORP.
By: /s/     Deno Paoli
Chief Executive Officer
Date:   February 4, 2003