Prepared by MERRILL CORPORATION
QuickLinks -- Click here to rapidly navigate through this document

APPENDIX 2



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of January 2002

PEACE ARCH ENTERTAINMENT GROUP INC.
(Translation of Registrant's name into English)

#500, 56 East 2nd Avenue, Vancouver, B.C., Canada, V5T 1B1
(Address of principal executive office)

[Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20F or Form 40-F.

Form 20-F /x/    Form 40-F / /

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes / /    No /x/

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
82-                            )]




[PEACE ARCH LOGO]

January 29, 2002
FOR IMMEDIATE RELEASE


PEACE ARCH ENTERTAINMENT ANNOUNCES
FIRST QUARTER OPERATING RESULTS

COMPANY HIGHLIGHTS 56% REDUCTION
IN SUBORDINATED DEBT SINCE AUGUST 31, 2001

        VANCOUVER, British Columbia—PEACE ARCH ENTERTAINMENT GROUP INC. (AMEX: "PAE"; TSE: "PAE.A", "PAE.B"), today announced operating results for the first quarter of FY2002.

For the three months ended November 30, 2001, the Company's revenue totaled $4.0 million, compared with $19.3 million in the first quarter of FY2001. During the quarter, the Company was in production with two television series and began pre-production on a third television series, which is scheduled for delivery during the next two quarters. Gross margin improved to 20.5% in the most recent quarter, compared with 6.2% in the corresponding period of the previous year. The increase in margin was primarily due to a change in the mix of programming delivered during the quarter ended November 30, 2001.

The Company reported a net loss of $0.6 million, or ($0.16) per diluted share, for the three months ended November 30, 2001, compared with a net loss of $0.4 million, or ($0.09) per diluted share, in the first quarter of FY2001. Diluted earnings per share were calculated on 3,887,844 weighted average shares outstanding in the most recent quarter, versus 3,823,000 weighted average shares in the same quarter of the prior year.

Selling, general and administrative (SG&A) expenses, before a provision for accounts receivable of $182,000, decreased by 15% to $686,000 in the most recent quarter, compared with $808,000 in the prior-year period, reflecting the Company's initiative to reduce overhead costs. SG&A expenses (before the abovementioned provision for accounts receivable) were approximately 50% lower in the first quarter of FY2002 than in the quarter ended August 31, 2001.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended November 30, 2001 totaled $45,000, compared with $0.4 million for the comparable quarter of last year.

"During the first quarter of Fiscal 2002, Peace Arch repaid $2.2 million in subordinated debt, and we have reduced such debt by another $2.2 million since the end of the quarter," stated Garth Albright, Chief Financial Officer of Peace Arch Entertainment Group. "Through such transactions, we have lowered the amount of subordinated debt outstanding by 56% during the past five months, from $7.9 million to $3.5 million. As stated in earlier news releases, Peace Arch intends to eliminate high-cost bridge financing from its balance sheet as expeditiously as possible, and recent debt repayments go a long way towards the accomplishment of this goal. In addition, during the first quarter the Company converted a current liability of $6.6 million into a long-term obligation, thereby increasing working capital by $5.9 million."

"Revenue for the quarter reflected the delivery of eight episodes of programming," continued Garth Albright. "Although a reduced level of deliveries caused revenue to decline, we achieved significant operating cost reductions without reducing sales and development activities. While we expect programming deliveries to increase in our second quarter, changes in product mix will cause revenue to fall below that of the current quarter and the prior-year period. Revenues during the third and fourth quarters are expected to increase due to higher programming deliveries and expanded library sales."

-2-



Juliet Jones, President and Chief Executive Officer of Peace Arch Entertainment Group noted, "In addition to four episodes of our successful and highly acclaimed new comedy series, Sausage Factory, we delivered four episodes of our prime time documentary series, Animal Miracles with Alan Thicke, and commenced pre-production of our new character-based documentary series, Whistler Stories, which is being filmed in and around the ski resort in Whistler, British Columbia. We have seen a growing interest in, and demand for, documentary and reality-based television series, and although such series do not generate the larger initial revenue streams derived from dramatic programming, they add significant long-term value to our proprietary programming library. In the dramatic programming arena," continued Ms. Jones, "we continue to believe that Peace Arch is well-positioned to benefit from a desire among producers, distributors and broadcasters to access original content in a cost-effective manner."

Peace Arch Entertainment Group Inc., one of Canada's foremost entertainment companies, creates, develops, produces and distributes proprietary television programming for worldwide markets. Peace Arch is headquartered in Vancouver, British Columbia.

A conference call to discuss the Company's operating results is scheduled for 4:15 P.M. Eastern Standard Time on Tuesday, January 29, 2002. The dial in number for the conference call is 800-388-8975 (international callers 973-694-2225). An audio playback of this call will be posted on Peace Arch's website (www.peacearch.com). A replay of the call will also be available through 5:00 p.m. EST, February 5, 2002, by dialing 800-428-6051 or 973-709-2089 for international callers and entering Access Code 227281.

The call will be hosted by Peace Arch Entertainment Group Inc.'s, President and CEO, Juliet Jones and its Chief Financial Officer, Garth Albright.

(Note: The financial statistics included in this release are represented in Canadian dollars and are reported in accordance with Generally Accepted Accounting Principles in Canada. On November 30, 2001 the Bank of Canada noon spot rate was US $1.5718 for each $1.00 Canadian).

For additional information, please contact:

 
   
Garth Albright, CFO
Carole Appleby, Media Relations
Peace Arch Entertainment Group Inc.
Tel: (604) 681-9308
  R.J. Falkner & Company,
Investor Relations Counsel
Tel: (800) 377-9893
Email: info@rjfalkner.com

(Financial Highlights to Follow)

-3-



PEACE ARCH ENTERTAINMENT GROUP INC.

CONSOLIDATED BALANCE SHEETS
As at November 30, 2000 and 2001 and August 31, 2001

(Expressed in thousands of Canadian dollars)

 
 
  November,
2000

  August 31,
2001

  November,
2001

 
 
  (unaudited)
(restated)

  (audited)
(restated)

  (unaudited)


 
ASSETS                    

Cash and cash equivalents

 

$

140

 

$

3,977

 

$

2,384

 
Accounts receivable     7,556     4,474     2,122  
Tax credits receivable     14,264     23,729     18,589  
Productions in progress     26,844     3,039     576  
Prepaid expenses and deposits     1,029     459     390  
Investment in television programming     4,102     3,667     3,965  
Property and equipment     7,364     7,277     5,000  
Deferred costs     1,085     410     591  
Goodwill and trademarks     2,837     238     231  
   
 
 
 
    $ 65,221   $ 47,270   $ 33,848  
   
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY                    

Bank indebtedness

 

$

12,802

 

$

18,447

 

$

13,164

 
Accounts payable and accrued liabilities     11,199     12,876     4,223  
Deferred revenue     14,534     3,191     664  
Deferred gain     174          
Future income taxes             42  
Debt     11,241     11,215     14,702  
   
 
 
 
      49,950     45,729     32,795  
   
 
 
 
Shareholders' equity:                    
Share capital     31,674     31,870     31,870  
  Authorized:                    
    100,000,000 Class A Multiple Voting Shares                    
      Issued—1,091,875 (Nov 30, 2000—1,360,067)                    
    100,000,000 Class B Subordinate Voting Shares                    
      Issued—2,795,969 (Nov 30, 2000—2,462,677)                    
    25,000,000 Preference Shares, issuable in series                    
      Issued—nil                    

Other paid-up capital

 

 

467

 

 

467

 

 

606

 
Deficit     (16,870 )   (30,796 )   (31,423 )
   
 
 
 
      15,271     1,541     1,053  
   
 
 
 
    $ 65,221   $ 47,270   $ 33,848  
   
 
 
 

The accompanying notes are an integral part of the consolidated financial statements

-4-



PEACE ARCH ENTERTAINMENT GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended November 30, 2000 and 2001

(Expressed in thousands of Canadian dollars except per share information)

 
 
  2000
  2001
 
 
  (unaudited)
(restated)

  (unaudited)


 
Revenue   $ 19,264   $ 4,019  

Expenses:

 

 

 

 

 

 

 
  Amortization of television programming and Production costs     17,218     3,057  
  Other costs of production and sales     844     139  
  Other amortization     245     157  
  Selling, general and administrative     808     868  
  Interest     554     449  
   
 
 
      19,669     4,670  
   
 
 
Loss from operations before undernoted     (405 )   (651 )

Gain on sale of asset

 

 

58

 

 

90

 
   
 
 
Loss before income taxes     (347 )   (561 )
Income taxes     7     66  
   
 
 
Loss for the period     (354 )   (627 )
   
 
 
Basic net loss per common share   $ (0.09 ) $ (0.16 )
   
 
 
Fully diluted loss per common share   $ (0.09 ) $ (0.16 )
   
 
 
Weighted average number of shares outstanding during the period (000's):              
    Basic     3,823     3,888  
    Fully Diluted     3,823     3,888  


CONSOLIDATED STATEMENTS OF DEFICIT
For the Three Months Ended November 30, 2000 and 2001

(Expressed in thousands of Canadian dollars)

 
 
  2000
  2001
 
 
  (unaudited)
(restated)

  (unaudited)


 
Deficit, beginning of period, as previously reported   $ (5,780 ) $ (30,796 )
Adjustment to reflect change in accounting for film costs     (10,736 )    
   
 
 
Deficit, beginning of period, as restated     (16,516 )   (30,796 )
Net earnings (loss) for the period     (354 )   (627 )
   
 
 
Deficit, end of period   $ (16,870 ) $ (31,423 )
   
 
 

The accompanying notes are an integral part of the consolidated financial statements

-5-



PEACE ARCH ENTERTAINMENT GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended November 30, 2000 and 2001

(Expressed in thousands of Canadian dollars)

 
 
  2000
  2001
 
 
  (unaudited)
(restated)

  (unaudited)


 
Operating activities:              
  Net loss   $ (354 ) $ (627 )
  Items not involving cash:              
    Amortization of television programming     17,219     104  
    Other amortization     245     157  
    Interest on debt discount         19  
    Future income taxes         42  
    Gain on sale of assets     (58 )   (90 )
    Other     55      
  Investment in television programming     (18,761 )   (402 )
  Changes in non-cash working capital     (9,433 )   5,470  
   
 
 
      (11,087 )   4,673  
   
 
 
Investing activities:              
  Increase in deferred costs     (132 )   (264 )
  Increase in goodwill and trademarks          
  Proceeds on sale of assets, net         2,313  
  Property and equipment acquired     (40 )   (13 )
   
 
 
      (172 )   2,036  
   
 
 
Financing activities:              
  Increase (decrease) in bank indebtedness     7,005     (5,283 )
  Repayment of debt     (65 )   (3,019 )
   
 
 
      6,940     (8,302 )
   
 
 
Decrease in cash and cash equivalents     (4,319 )   (1,593 )
Cash and cash equivalents, beginning of period     4,459     3,977  
   
 
 
Cash and cash equivalents, end of period   $ 140   $ 2,384  
   
 
 
Supplementary information:              
  Interest paid   $ 400   $ 841  
  Income taxes paid          
Non-cash transactions:              
  Conversion of an accounts payable to debt         6,626  

The accompanying notes are an integral part of the consolidated financial statements

-6-



PEACE ARCH ENTERTAINMENT GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended November 30, 2000 and 2001
(unaudited)

        (Dollar amounts in tables expressed in thousands of Canadian dollars)

1.    Operations

2.    Future Operations

3.    Significant Accounting Policies

        (a)  Basis of Presentation

-7-


        (b)  Change in Accounting Policy

        (c)  Comparative Figures

4.    Segmented Information

2000

  Production
Services

  Proprietary
Programming

  Other
  Total
Revenue   $ 920   $ 18,306   $ 38   $ 19,264
Gross profits     76     1,089     37     1,202
Total assets     1,571     63,540     110     65,221
   
 
 
 

2001

 

 

 

 

 

 

 

 

 

 

 

 
Revenue   $ 3,218   $ 660   $ 141   $ 4,019
Gross profits     126     556     141     823
Total assets     5,173     27,110     1,565     33,848
   
 
 
 

Gross profits are comprised of revenue less amortization of television programming, production costs, and other costs of production and sales.

-8-



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.

    Peace Arch Entertainment Group Inc.
                            (Registrant)



 

 

 

 
Date: January 29, 2002   By:   /s/  JULIET JONES      
                            (Signature)*
Juliet Jones, President and CEO

*Print the name and title under the signature of the signing officer.
       


GENERAL INSTRUCTIONS

A.    Rule as to Use of Form 6-K,

This form shall be used by foreign private issuers which are required to furnish reports pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934.

B.    Information and Document required to be Furnished,

Subject to General Instruction D herein, an issuer furnishing a report on this form shall furnish whatever information, not required to be furnished on Form 40-F or previously furnished, such issuer (I) makes or is required to make public pursuant to the law of the jurisdiction of its domicile or in which it is incorporated or organized, or (ii) files or is required to file with a stock exchange on which its securities are traded and which was made public by that exchange, or (iii) distributes or is required to distribute to its security holders.

The information required to be furnished pursuant to (I), (ii) or (iii) above is that which is material with respect to the issuer and its subsidiaries concerning: changes in business; changes in management or control; acquisitions or dispositions of assets; bankruptcy or receivership; changes in registrant's certifying accountants; the financial condition and results of operations; material legal proceedings; changes in securities or in the security for registered securities; defaults upon senior securities; material increases or decreases in the amount outstanding of securities or indebtedness; the results of the submission of matters to a vote of security holders; transactions with directors, officers or principal security holders; the granting of options or payment of other compensation to directors or officers; and any other information which the registrant deems of material importance to security holders.

This report is required to be furnished promptly after the material contained in the report is made public as described above. The information and documents furnished in this report shall not be deemed to be "filed" for the purpose of Section 18 of the Act or otherwise subject to the liabilities of that section.

If a report furnished on this form incorporates by reference any information not previously filed with the Commission, such information must be attached as an exhibit and furnished with the form.

C.    Preparation and Filing of Report

This report shall consist of a cover page, the document or report furnished by the issuer, and a signature page. Eight complete copies of each report on this form shall be deposited with the Commission. At least one complete copy shall be filed with each United States stock exchange on

-9-


which any security of the registrant is listed and registered under Section 12(b) of the Act. At least one of the copies deposited with the Commission and one filed with each such exchange shall be manually signed. Unsigned copies shall be conformed.

D.    Translations of Papers and Documents into English

Reference is made to Rule 12b-12(d) [17 CFR 240.12b-12(d)]. Information required to be furnished pursuant to General Instruction B in the form of press releases and all communications or materials distributed directly to security holders of each class of securities to which any reporting obligation under Section 13(a) or 15(d) of the Act relates shall be in the English language. English versions or adequate summaries in the English language of such materials may be furnished in lieu of original English translations.

Notwithstanding General Instruction B, no other documents or reports, including prospectuses or offering circulars relating to entirely foreign offerings, need be furnished unless the issuer otherwise has prepared or caused to be prepared English translations, English versions or summaries in English thereof. If no such English translations, versions or summary have been prepared, it will be sufficient to provide a brief description in English of any such documents or reports. In no event are copies of original language documents or reports required to be furnished.

-10-





QuickLinks

PEACE ARCH ENTERTAINMENT ANNOUNCES FIRST QUARTER OPERATING RESULTS COMPANY HIGHLIGHTS 56% REDUCTION IN SUBORDINATED DEBT SINCE AUGUST 31, 2001
PEACE ARCH ENTERTAINMENT GROUP INC. CONSOLIDATED BALANCE SHEETS As at November 30, 2000 and 2001 and August 31, 2001
PEACE ARCH ENTERTAINMENT GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended November 30, 2000 and 2001
CONSOLIDATED STATEMENTS OF DEFICIT For the Three Months Ended November 30, 2000 and 2001
PEACE ARCH ENTERTAINMENT GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended November 30, 2000 and 2001
PEACE ARCH ENTERTAINMENT GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Three Months Ended November 30, 2000 and 2001 (unaudited)
SIGNATURES
GENERAL INSTRUCTIONS