UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
( x ) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2000
OR
( ) 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 0-9311
Central Capital Venture Corporation
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(Exact name of registrant as specified in its charter)
Nevada 87-0269260
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number
310 Village Park, 2660 Townsgate Road, Westlake Village , CA 91361
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(Address of principal executive offices) (Zip Code)
(805) 494-4766
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report) 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 reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (x) No ( )
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court. Yes (X) No ( )
As of December 31, 2000, there were 2,707,985 shares of common stock ($.001 par
value) issued and outstanding.
Total sequentially numbered pages in this document: 12
1
Part I. Financial Information Page
Condensed Statements of Loss and Deficit
Condensed Balance Sheet
Condensed Statement of Cash Flows
Capital stock
Item 2. Management's Discussion and Analysis
of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative
Disclosure about Market Risk
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Central Capital Venture Corporation
(formerly Digital Technologies Media Group, Inc.)
Condensed Statements of Loss and Deficit
(Unaudited)
Three Months Three Months Fiscal Year
ended ended ended
December 31,2000 December 31,1999 June 30,2000
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Revenues
Sales $ 2,800 $ - $ -
Rentals - - -
Other 118 - -
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2,918 - -
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Expenses
Advertising and promotion - - -
Depreciation - - 221
Lease payments and service - 750 250
Professional fees 23,900 29,658 42,702
Rent 4,250 1,500 2,400
Repairs 200 - 1,516
Salaries and benefits - 21,000 1,861
Stationary and office 711 - 3,767
Telephone 1,823 289 146
Travel - 2,091 4,300
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30,884 55,288 57,163
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Net loss $ (27,996) $ (55,288) $ (57,163)
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Loss per share, basic
and diluted (Note 1) $ (0.01) $ (0.021)
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Weighted average shares,
basic and diluted 2,707,985 2,685,224
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See accompanying notes to the condensed financial statements.
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Central Capital Venture Corporation
(formerly Digital Technologies Media Group, Inc.)
Condensed Balance Sheet
(Unaudited)
December 31, June 30,
2000 2000
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Assets
Investments $ 1,509,928 $ 1,509,928
Fixed assets, net of accumulated
depreciation of $332 (June 30, 2000 - $221) 1,900 1,882
September 30, 2000 - $111 $1,990)
Deposits 2,030 2,030
Accounts Receivables 1,342
Cash and cash equivalents 4,879 25,821
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$ 1,520,079 $ 1,539,772
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Liabilities
Payables and accruals $ 32,622 $ 25,776
Convertible preferred shares 1,309,928 1,309,928
Stockholders' Equity
Capital stock (Note 2) 26,850 26,850
Paid-in capital 240,109 234,381
Deficit (89,430) (57,163)
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1,520,079 1,539,772
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$ 1,520,079 $ 1,539,772
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See accompanying notes to the condensed financial statements.
3
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Central Capital Venture Corporation
(formerly Digital Technologies Media Group, Inc.)
Condensed Statement of Cash Flows
(Unaudited)
Three Months Three Months Fiscal Year
ended ended ended
December 31, December 31, June 30,
2000 1999 2000
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Cash flows from operating activities
Net loss $ (27,966) $ (55,288) $ (57,163)
Adjustments to reconcile net loss
from operations to net cash used
in operating activities
Depreciation - - 221
Increase (decrease) in:
Deposits (1,341) - (1,861)
Payables and accruals (27,718) (29,566) 2991
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Net cash used in operating (1,589) (29,207) (55,812)
activities --------- ------------ -----------
Cash flows from investing activities
Purchase of fixed assets - - (1,571)
Purchase of investments 5,728 29,207 (200,000)
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Net cash used in financing 5,728 29,207 (201,571)
activities --------- ------------ -----------
Net decrease in cash
and cash equivalents (7,318) (3,586) (257,383)
Cash and cash equivalents
Beginning of period 12,198 432 283,204
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End of period $ 4,879 $ 74 $ 25,821
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Supplemental schedule of non-cash
financing and investing activities:
Issuance of new capital stock $ 5,728 - $ 1,588,558
Cancellation of indebtedness - - 1,079,855
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See accompanying notes to the condensed financial statements.
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Central Capital Venture Corporation
(formerly Digital Technologies Media Group, Inc.)
Notes to the Condensed Financial Statements
(Expressed in United States Dollars)
December 31, 2000
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2. Capital stock Three Months Fiscal Year
ended ended
December 31, June 30,
2000 2000
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Authorized:
25,000,000 Common shares
1,000,000 Preferred shares
Issued:
2,707,985,common shares $ 26,850 $ 26,850
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Central Capital Venture Corporation
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(formerly Digital Technologies Media Group, Inc.)
Notes to the Condensed Financial Statements
(Expressed in United States Dollars)
December 31, 2000
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1. General
SIGNIFICANT ACCOUNTING POLICIESINTERIM FINANCIAL STATEMENTS - The interim
financial statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to quarterly
reports on Form 10-Q. The unaudited financial statements reflect, in the opinion
of management, all adjustments which are of a normal recurring nature necessary
for a fair presentation of the information presented herein. Interim results are
not necessarily indicative of results to be expected for a full fiscal year.
VALUATION OF INVESTMENTS - Investments in Preferred Stock are carried at fair
value with the net change in unrealized appreciation or depreciation included in
the determination of net assets. Cost is used to approximate fair value of these
investments until significant developments affecting an investment provide a
basis for valuing such investment at a number other than cost.
The fair value of investments for which no market exists and for which our
Evaluation Committee has determined that the original cost of the investment is
no longer an appropriate valuation will be determined on the basis of procedures
established in good faith by our Board of Directors. Valuations will be based
upon such factors as the financial and/or operating results of the most recent
fiscal period, the performance of the company relative to planned
budgets/forecasts, the issuer's financial condition and the markets in which it
does business, the prices of any recent transactions or offerings regarding such
securities or any proxy securities, any available analysis, media, or other
reports or information regarding the issuer, or the markets or industry in which
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it operates, the nature of any restrictions on disposition of the securities and
other analytical data. In the case of unsuccessful operations, the valuation may
be based upon anticipated liquidation proceeds.
Because of the inherent uncertainty of the valuation of portfolio securities,
which do not have readily ascertainable market values, the Company's estimate of
fair value may significantly differ from the fair market value that would have
been used had a ready market existed for the securities. Appraised values do not
reflect brokers' fees or other normal selling costs which might become payable
on disposition of such investments (See "Evaluating Committee" in Bylaw of
Central Capital Venture Corporation, 8-K May 8, 2000 by reference).
Investments in companies whose securities are publicly traded are valued at
their quoted market price, less a discount to reflect the estimated effects of
restrictions on the sale of such securities ("Valuation Discount"), if
applicable.
Short-term investments having maturities of 60 days or less are stated at
amortized cost, which approximates fair value. Other fixed income securities are
stated at fair value. Fair value of these securities is determined at the most
recent bid or yield equivalent from dealers that make markets in such
securities.
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME - Investment transactions
are accounted for on the trade date (the date the order to buy or sell is
executed). The cost of securities sold is determined on a first-in, first-out
basis, unless otherwise specified. Dividend income on investment securities is
recorded on the ex-dividend date. Interest income, which includes accretion of
discount and amortization of premium, if applicable, is recorded on the accrual
basis.
CASH FLOWS - For the purpose of the Statement of Cash Flows, the Company
considers all money market and all highly liquid temporary cash investments
purchased with an original maturity of three months or less to be cash
equivalents.
RESTRICTED SECURITIES - Most, if not all securities, in which the Company
acquires as venture capital investments will be restricted securities within the
meaning of the Securities Act of 1933, as amended, and will not be permitted to
be resold without compliance of the Securities and Exchange Act. Thus, the
Company will not be permitted to resell portfolio securities unless a
registration statement has been declared effective, or unless the Company is
able to rely on an available exemption from such registration requirements. In
most cases, the Company will endeavor to obtain from its Investment Companies
registration rights pursuant to which the Company will be able to demand that an
Investment Company register the securities owned by the Company at the expense
of the Investment Company. Even if the Investment Companies bear this expense,
however, the registration of the securities owned by the Company is likely to be
a time consuming process, and the Company always bears the risk, because of
these delays, that it will be unable to resell such securities, or that it will
not be able to obtain an attractive price for the securities, Additionally, the
Company may never be able to distribute the securities of certain Investment
Companies to stockholders in certain states because the Investment Companies may
not qualify for registration in those states, pursuant to each individual state
blue sky laws.
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ACCOUNTING ESTIMATES - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statement. Actual results could differ
from those estimates.
The unaudited condensed financial statements have been prepared on the same
basis as the audited financial statements and, in the opinion of management,
reflect all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation for each of the periods presented. The results of
operations for interim periods are not necessarily indicative of results to be
achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying financial statements and related footnotes
have been condensed and do not contain certain information that will be included
in the Company's annual financial statements and footnotes thereto. For further
information, refer to the financial statements and related footnotes for the
fiscal year ended June 30, 2000 included in the Company's Amended Annual Report
on Form 10-KASB.
Income taxes
Income taxes for the interim periods were computed using the effective tax rate
estimated to be applicable for the full fiscal year, which is subject to ongoing
review and evaluation by management.
Loss per share
The Company reports loss per share in accordance with the provisions of SFAS No.
128, Earnings Per Share. SFAS No. 128 requires presentation of basic and diluted
earnings per share in conjunction with the disclosure of the methodology used in
computing such earnings per share. Basic loss per share excludes dilution and is
computed by dividing income available to common shares by the weighted average
common shares outstanding during the period. Diluted loss per share takes into
account the potential dilution that could occur if securities or other contracts
to issue common stock were exercised and converted into common stock.
2. PORTFOLIO INVESTMENTS
During the period ended December 31, 2000, the Company invested $1,509,928
utilizing the cost method in two companies and made no follow-on investments.
The individual equity and equity-linked security holdings of the Company at
December 31, 2000 were comprised of the following investments:
1. DataNet Information Systems, Inc.; 1,000,000 Common Shares valued at
$1,409,928.00 (based on book value at January 19, 2000 plus cash
contributions) See Exhibit Item 5 attached as too viabilibty of DataNet
Information Systems, Inc. Investment, and any related follow-on
investment.
2. Digi Commerce Corporation 4,000,000 Common Shares, valued at $100,000
(based on cash contribution)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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This report contains certain statements of a forward-looking nature relating
to future events or the future financial performance of the Company and its
investment portfolio companies. Words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimate," "might," or "continue"
or the negative or other variations thereof or comparable terminology are
intended to identify forward-looking statements. Forward-looking statements are
included in this report pursuant to the "Safe Harbor" provision of the Private
Securities Litigation Reform Act of 1995. Such statements are only predictions
and the actual events or results may differ materially from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those relating
to investment capital demand, pricing, market acceptance, the effect of economic
conditions, litigation and the effect of regulatory proceedings, competitive
forces, the results of financing and investing efforts, the ability to complete
transactions and other risks identified below or in the Company's filings with
the Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. The following analysis of the financial
condition and results of operation of the Company should be read in conjunction
with the Financial Statements, the Notes thereto and the other financial
information included elsewhere in this report.
GENERAL INVESTMENT CLIMATE
The overall investment climate was generally volatile in the second quarter.
Because of the continued volatility in the public markets, a number of
attractive companies chose to seek further rounds of venture capital Companying
rather than risk an initial public offering (IPO). Furthermore, given the
correction in publicly traded technology stock prices, the valuations of many
companies seeking additional financing were reasonable compared to March highs.
Uncertainty continues to affect publicly traded technology stocks, but we
believe that this uncertainty does not warrant the amount of negative press that
this sector has received from time to time. In our view, many companies that
received Companying in 1999 did not have solid business models or survivability
strategies, and in many cases were brought to market prematurely. We believe
that this trend has now run its course. We do not believe, however, that the
pace of growth in new technologies and markets is decelerating. To the contrary,
we believe that it is accelerating and that new markets are being created,
leading to exciting investment opportunities. Looking forward, we also
anticipate an improvement in the IPO market. In our opinion, issues are now
being priced more attractively to encourage investors to revisit technology.
RESULTS OF OPERATIONS
The Company began operations upon the emergence from a Chapter 11 Proceeding on
May 8, 2000. Its principal investment objective is the realization of long-term
capital appreciation from investing primarily in equity and equity-linked debt
securities of private companies. Pending the completion of equity and
equity-linked debt security investments that meet the Company's investment
objective, available Company's are invested in short-term securities Bank
guaranteed Money Market accounts. Due to the Company's limited operating
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history, the Company's financial performance at December 31, 2000 is primarily
composed of interest on temporary investments, and minimal management fee
accrual.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2000, the Company had $200,000 of its net assets invested in
portfolio securities of two companies. Current balance sheet resources are not
believed to be sufficient to finance future commitments.
Net cash provided by operating activities was $2,780 for the three months ended
December 31, 2000.
Net investment income and net realized gains from the sales of portfolio
investments are intended to be distributed at least annually. Management
believes that its cash reserves and the ability to sell its investments in
publicly traded securities are not adequate at this time to provide payment for
any expenses and contingencies of the Company.
The Company Management reserves the right to retain net long-term capital gains
in excess of net short-term capital losses for reinvestment or to pay
contingencies and expenses. Such retained amounts, if any, will be taxable to
the Company as long-term capital gains and shareholders will be able to claim
their proportionate share of the federal income taxes paid by the Company on
such gains as a credit against their own federal income tax liabilities.
Shareholders will also be entitled to increase the adjusted tax basis of their
Company shares by the difference between their undistributed capital gains and
their tax credit.
INVESTMENT INCOME AND EXPENSES
Net Loss after all expenses amounted to $(27,966) for the three months ended
December 31, 2000 and $(57,163) for the fiscal year ended June 30 2000.
REALIZED GAINS AND LOSSES ON SALES OF PORTFOLIO SECURITIES
The Company realized no net capital gains or losses from the sale of securities
during the three months ended December, 2000.
UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES
The Company had no net unrealized appreciation for the three months ended
December 31, 2000.
DIVIDENDS
No dividends were declared for the four months ended December 31, 2000.
PORTFOLIO INVESTMENTS
At December 31, 2000 the cost of equity and equity-linked security investments
made by the Company to date was $1,509,928 and their aggregate market value was
unchanged. However, any such pending transaction could have an impact on the
valuation of an investment, which may be adjusted prior to the transaction being
publicly announced or completed.
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SUBSEQUENT EVENTS
Prior to October 18, 2000 the Registrant and Bernie Budney, a Director and a
Director of DataNet Information Systems, Inc. ("DataNet"), engaged in a
disagreement over several matters relating to the Registrant's wholly owned
Investee Company DataNet. On October 13, 2000 Mr. Budney resigned from his
position as Director and Executive Vice President of the Registrant.
A hand written stipulation has been signed by both Mr. Bernie Budney and Mr.
Leonard Ludwig on January 5, 2001, (as set forth below by Exhibit)although the
stipulation has not yet lead to an executed General Release. Since October
DataNet has not paid it's management fee nor has made the Registrant aware of
its financial condition. To date there have not been any law suits filed by
either party in the negotiations.
The Registrants Investee Company Digi Commerce Corporation, has opened its first
I Cafe in Telluride Colorado on February 13 2001. Since the Registrant has been
unsuccessful in raising any additional investment funds for either its Investee
Companies, three shareholders of the Registrant invested capital consisting of
personal guarantees and cash contributions so as to open the I Cafe.
The Registrant has entered into two separate letters of Intent to acquire (1)
CareDecision.Net, Inc. for 300,000 Common Shares of Stock and a 95,000
Convertible Series B Preferred, and (2) PayMD.com for 300,000 Common Shares of
Stock and 175,000 Convertible Series B Preferred Shares. The letters of Intent
to acquire is conditional on among other things an amicable settlement with
DataNet Information Systems, Inc. as described above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is subject to financial market risks, including changes in
marketable equity security prices. The Company does not use derivative financial
instruments to mitigate any of these risks. The return on the Company's
investments is generally not affected by foreign currency fluctuations.
Concentrations of market and credit risk exist with respect to debt and equity
investments in portfolio companies, which are subject to significant, risk usual
to companies in various stages of start-up. Generally, there is no ready market
for the Company's investments, as they are closely held, generally not publicly
traded or, in circumstances where an investment is publicly traded, the Company
may be subject to certain trading restrictions for a specified period of time.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
(a) Exhibits
EXHIBIT INDEX
Exhibit 10 Item 5 Other Events
Hand Written Stipulation Agreement of Leonard Ludwig and
Bernie Budney
Exhibit 27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Central Capital Venture Corporation
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(Registrant)
Date: Dec 16, 2000 /s/ Rex E Crim
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Rex E. Crim, President
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