UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 14 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19817
Creative Programming and Technology Ventures, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 84-1236669
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
(303) 694-5324
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 3,102,379 common shares as of
July 7, 1997.
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
INDEX
PART I, ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET AS OF
MAY 31, 1997 (UNAUDITED) 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THREE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996 (UNAUDITED) 3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996 (UNAUDITED) 4
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR NINE MONTHS ENDED MAY 31, 1997 (UNAUDITED) 5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
NINE MONTHS ENDED MAY 31, 1997 AND
MAY 31, 1996 (UNAUDITED) 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 8
PART I, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS 10
PART II. OTHER INFORMATION
ITEMS 1 THROUGH 6
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
MAY 31, 1997
ASSETS
Current assets:
Cash and cash equivalents $2,642,028
Investments 2,574,082
Prepaid expenses 27,361
Note receivable under sale of discontinued
operations 50,837
----------
Total current assets 5,294,308
----------
Property and equipment, net 7,643
----------
Other assets:
Restricted cash 700,000
Restricted interest receivable 22,197
Organization costs and other 8,141
----------
730,338
----------
Total assets $6,032,289
==========
See notes to consolidated financial statements 1
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED) (CONTINUED)
MAY 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 76,103
Accrued income taxes 34,000
-----------
Total current liabilities 110,103
-----------
Shareholders' equity:
Preferred stock, par value $0.01;
authorized 10,000,000 shares, issued and
outstanding 1,000,000 shares (aggregate
liquidation preference $10,000) 10,000
Common stock, par value $0.01; authorized
50,000,000 shares, issued and outstanding
3,110,379 shares 31,104
Capital in excess of par 8,113,194
Deficit (2,232,112)
-----------
Total shareholders' equity 5,922,186
-----------
Total liabilities and shareholders' equity $ 6,032,289
===========
See notes to consolidated financial statements. 2
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
1997 1996
----------- -----------
Cost of sales $ $ 572,477
----------- -----------
(572,477)
Selling, general and administrative
expenses 458,097 650,558
Impairment loss 73,732
----------- -----------
Operating loss (458,097) (1,296,767)
Other credits (charges):
Investment income 88,779 17,621
Interest expense (5,314)
----------- -----------
Loss before income tax benefit (369,318) (1,284,460)
Income tax benefit 7,000
----------- -----------
Net loss $ (362,318) $(1,284,460)
=========== ===========
Net loss per common share $ (0.12) $ (0.40)
=========== ===========
Weighted average number
of common shares 3,114,031 3,210,079
=========== ===========
See notes to consolidated financial statements. 3
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
1997 1996
----------- -----------
Revenues $ $ 80,560
Cost of sales 893,628
----------- -----------
(813,068)
Selling, general and administrative
expenses 849,468 1,939,475
Impairment loss 73,732
----------- -----------
Operating loss (849,468) (2,826,275)
Other credits (charges):
Investment income 229,746 101,489
Interest expense (18,647) (18,033)
----------- -----------
Loss before gain on sale of subsidiary
and income taxes (638,369) (2,742,819)
Gain on sale of subsidiary (Note 2) 4,508,280
----------- -----------
Income (loss) before income taxes 3,869,911 (2,742,819)
Income taxes (34,000)
----------- -----------
Net income (loss) $ 3,835,911 $(2,742,819)
=========== ===========
Net income (loss) per common share $ 1.21 $ (0.83)
=========== ===========
Weighted average number
of common shares 3,162,644 3,307,896
=========== ===========
See notes to consolidated financial statements. 4
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
NINE MONTHS ENDED MAY 31, 1997
Preferred stock Common stock Capital
Shares Amount Shares Amount excess of par Deficit Total
------ ------ ------ ------ ------------- ----------- ------
Balances,
September 1, 1996 1,000,000 $ 10,000 3,210,079 $ 32,101 $ 8,222,937 $(6,068,023) $ 2,197,015
Repurchase and
retirement of common
stock (Note 3) (99,700) (997) (109,743) (110,740)
Net income 3,835,911 3,835,911
---------- -------- --------- -------- ----------- ----------- -----------
Balances,
May 31, 1997 1,000,000 $ 10,000 3,110,379 $ 31,104 $ 8,113,194 $(2,232,112) $ 5,922,186
========== ======== ========= ======== =========== =========== ===========
See notes to consolidated financial statements. 5
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
1997 1996
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 3,835,911 $(2,742,819)
----------- -----------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 3,804 260,586
Gain on sale of subsidiary (4,508,278)
Loss on investments 36,065
Write-off of project costs 632,170
Impairment loss 73,732
(Increase) decrease in assets:
Accounts receivable 29,944
Interest receivable (22,197)
Work-in-progress 24,440
Prepaid expenses (770) (40,010)
Other assets 13,828 4,232
Increase (decrease) in liabilities:
Accounts payable (58,142) (152,183)
Other current liabilities (56,767) (30,117)
Accrued income taxes 34,000
----------- -----------
Total adjustments (4,594,522) (838,859)
----------- -----------
Net cash used in operating activities: (758,611) (1,903,960)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of subsidiary,
net of $700,000 cash held in escrow 5,907,447
Capital expenditures (230,439)
Purchase of treasury bills ( (2,574,886)
Proceeds from sales of treasury bills 1,449,560
Proceeds from maturity of treasury bills 35,000 900,000
Proceeds from maturity of certificates of deposits 281,000 131,000
Payments received on note receivable 60,370 53,575
Project costs (925,951)
----------- -----------
Net cash provided by investing activities 3,708,931 1,377,745
----------- -----------
(Continued) 6
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
1997 1996
------------ -----------
Cash flows from financing activities:
Payment of notes payable (511,527) (110,416)
Principal payments of capital lease
obligations (5,210) (28,692)
Purchase and retirement of common stock (110,741) (134,853)
----------- -----------
Net cash used in financing activities (627,478) (273,961)
----------- -----------
Net increase (decrease) in cash 2,322,842 (800,176)
Cash and cash equivalents, beginning 319,186 1,302,292
----------- -----------
Cash and cash equivalents, ending $ 2,642,028 $ 502,116
=========== ===========
Supplemental disclosure of cash flows information:
Cash paid for interest $ 25,213 $ 18,033
=========== ===========
Supplemental schedule of non-cash investing and financing activities:
In December 1995, the Company acquired $32,322 in fixed assets through
capital lease obligations.
See notes to consolidated financial statements. 7
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
1. The interim financial statements:
These interim financial statements have been prepared by Creative Programming
and Technology Ventures, Inc. ("CPTV", the "Company") and, in the opinion
of management, reflect all material adjustments which are necessary to a
fair statement of results for the interim period presented. Certain
information and footnote disclosures made in the Company's Form 10-KSB
have been condensed or omitted for the interim statements. Certain costs
are estimated for the full year and allocated to interim periods based on
activity associated with the interim period. Accordingly, such costs are
subject to year-end adjustment. It is the Company's opinion that, when
the interim statements are read in conjunction with the Company's
financial statements for the year ended August 31, 1996 included in Form
10-KSB, the disclosures are adequate to make the information presented a
fair presentation of the Company's financial condition. The results of
operations for the nine months ended May 31, 1997 are not necessarily
indicative of the results to be expected for the full year.
2. Sale of the Company's interest in ODDWORLD and certain assets of Alexandria:
On September 13, 1996, the Company sold its entire interest in ODDWORLD to an
unrelated third party for $7,000,000 less unpaid expenses incurred as of
August 16, 1996. In addition, Alexandria conveyed all of its assignable
assets to ODDWORLD which have been included in the sale.
Shareholder approval of this transaction occurred on November 15, 1996. From
August 16, 1996, through the date of shareholder approval, the purchaser
made advances to ODDWORLD of $225,210. These advances were made for the
purpose of providing working capital and to fund the operations of
ODDWORLD subsequent to August 16, 1996. As a result of the approval of
this transaction and pursuant to the provisions of the purchase
agreement, the purchaser became responsible for all liabilities of
ODDWORLD incurred subsequent to August 16, 1996 including the $225,210 of
advances, thus, the consolidated financial statements of the Company do
not include expenses or liabilities incurred by ODDWORLD subsequent to
August 16, 1996.
8
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
NINE MONTHS ENDED MAY 31, 1997
AND MAY 31, 1996
2. Sale of the Company's interest in ODDWORLD and certain assets of Alexandria
(continued):
The purchase agreement requires that 10% of the purchase price ($700,000) be
retained in a hold back escrow account, until September 1998, to provide
the purchaser with potential recourse against the Company for any valid
future claims arising regarding any of the representations and warranties
made to the purchaser by the Company. As stipulated in the agreement, the
purchaser may make no claim unless the total of all damages suffered
exceeds $100,000, but all potential future claims will be capped at
$2,000,000.
The Company received $6,128,088 of cash (the purchase price of $7,000,000 net
of unpaid expenses of $171,912 and net of the $700,000 held in escrow of
ODDWORLD as of August 16, 1996) in exchange for the Company's interest in
ODDWORLD and the assets of Alexandria conveyed to ODDWORLD. In addition,
$220,641 of transaction expenses were incurred and these have been netted
against the $6,128,088 to give net cash received on the sale of
$5,907,447. At September 13, 1996, the Company's interest consisted of
accounts receivable of $2,734, property and equipment of $701,075 project
costs of $1,827,680, other assets of $61,616, notes payable to financial
institutions of $225,822, capital lease obligations of $19,958, accounts
payable of $186,790, and accrued salaries and other expenses of $61,365.
The sale results in a gain of $4,508,278. The Company used $500,000 of
the sale proceeds to repay notes payable, shareholders.
3. Repurchase and retirement of common stock:
During the nine months ended May 31, 1997, the Company repurchased 99,700
shares of its common stock in the open market for $110,740. These shares
were subsequently canceled.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
On September 13, 1996, Creative Programming and Technology Ventures, Inc.
("CPTV" or the " Company") sold its entire interest in its Off World
Entertainment, Inc. (d.b.a. OddWorld Inhabitants) subsidiary to GT Interactive
Software Corporation (the "GT Transaction"). This transaction culminated on
November 15, 1996 with the proceeds of this sale (outside of $700,000 in
restricted cash in escrow) being available to CPTV on November 18, 1996. The
Company has to date invested the proceeds in short-term government backed
instruments. Subsequent to the closing of the GT Transaction, CPTV has focused
its efforts towards investigating new business opportunities. The Company is now
in the mature stages of due diligence on a couple of prospective transactions.
CPTV currently believes that such a transaction, if brought to fruition, would
result in the shareholders of CPTV having an interest in a new line of business.
To date, CPTV has been evaluating the purchase of the Arapahoe Basin Ski
area and other resort and recreational development opportunities throughout
Colorado and the Greater Rocky Mountain region. Arapahoe Basin is being divested
from Vail Resorts, Inc., by order of a Department of Justice Consent Decree as a
condition to Vail's approval on the purchase of Keystone and Breckenridge Ski
areas from Ralcorp Inc., (of St. Louis). As CPTV's prospective investments
become more mature, management will provide additional disclosure as to the
specific nature of the proposed target investments. CPTV has continued to
adjourn its annual shareholder meeting pending the maturity of the aforesaid
efforts.
As previously disclosed, CPTV opposed a recent action brought by the NASD
staff to delist CPTV from the NASDAQ Small Capital quotation system. CPTV
temporarily addressed the concerns of the NASD Hearing Panel with respect to its
continued listing on the NASDAQ and has been given an extension until mid August
to solidify its efforts on the proposed acquisition of a target company or the
NASDAQ panel will hold another hearing to delist its securities based on its
broad discretionary authority. CPTV is working diligently and prudently to
fulfill this obligation, but as disclosed to the NASD panel, there are no
assurances it will be successful in concluding its acquisition of Arapahoe Basin
Ski area or its other opportunities by that date.
Financial Condition, Capital Resources and Results of Operations
After payment of corporate overhead, ongoing and accrued expenses
associated with the GT Transaction, and costs related to due diligence on
potential future business opportunities, CPTV reported current working capital
of approximately $5,200,000 and shareholders equity of approximately $6,000,000.
10
The diminishment of capital resources also reflects the continued efforts on
behalf of CPTV to repurchase its own common stock which it believes is a good
investment due to the fact that its shares reflect a price well below book
value.
CPTV reported operating results for the third quarter ended May 31, 1997
recognizing a net loss of $362,318 or $.12 per share as compared to a net loss
of $1,284,460 or $.40 per share for the third quarter May 1996. For the nine
months ended May 31, 1997, due to the non-recurring receipts associated with the
GT divestiture, the Company reported net income of $3,835,911 or $1.21 per share
as compared to a loss of $2,742,819 or $0.83 for the same period ended in 1996.
The third quarter loss reflects ongoing operating expenses, administrative,
legal and reporting costs as compared to the 1996 operating loss at which period
the Company had significantly greater operating expense associated with the cost
of developing opportunities in its OddWorld and Alexandria subsidiaries. In
addition, there was a one-time payment made to Directors and Officers for their
inordinate involvement in bringing the GT Transaction to a successful
culmination and the resultant current year profit. These payments, based closely
upon the recommendation of an independent expert in compensation to the
multimedia industry, represent fees to Directors on a per meeting basis, as
previously reported, payment for certain services rendered, and management
compensation.
The management of CPTV believes that in the future, interest income will
partially offset any additional corporate overhead during the ensuing period in
which it pursues potential business opportunities. CPTV currently is estimating
that it will earn approximately $3,600,000 to $3,700,000 or approximately $1.14
to $1.17, respectively, per share for its fiscal year ending August 31, 1997
barring any expenditures associated with a new acquisition or any other
extraordinary events.
11
SIGNATURE PAGE
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.
Creative Programming and Technology Ventures, Inc.
By: /S/ GARY R. VICKERS
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Date: July 15, 1997
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12