<PAGE>
===============================================================================
U.S. 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.......................June 30, 1999
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 000-25067
PRIVATE MEDIA GROUP, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 87-0365673
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
Carrettera de Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona, Spain
(Address of principal executive offices)
34-93-590-7070
--------------
Issuer's telephone number
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at August 13, 1999
----- ------------------------------
Common Stock, par value $.001 8,631,289
Transitional Small Business Disclosure Format: Yes No X
--- ---
================================================================================
<PAGE>
PART I.
Item 1. Financial Statements
PRIVATE MEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
(Unaudited)
------------------ ---------------------------------
1998 1999 1999
------------------ --------------- -------------
SEK SEK USD
(in thousands)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents..................................... 4,165 3,010 356
Trade accounts receivable..................................... 55,650 56,519 6,681
Related party receivable...................................... 5,178 5,944 703
Inventories - net (Note 2).................................... 30,888 34,159 4,038
Prepaid expenses and other current assets..................... 9,096 23,929 2,829
------------------ --------------- -------------
TOTAL CURRENT ASSETS.......................................... 104,978 123,560 14,605
Library of photographs and videos - net....................... 79,564 82,315 9,730
Property, plant and equipment - net........................... 9,546 11,568 1,367
Other assets.................................................. 16,391 17,881 2,114
------------------ --------------- -------------
TOTAL ASSETS.................................................. 210,479 235,324 27,816
================== =============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings......................................... 1,802 720 85
Accounts payable trade........................................ 20,389 22,947 2,712
Income taxes payable.......................................... 1,011 236 28
Deferred tax liability........................................ 630 630 74
Accrued other liabilities..................................... 8,741 7,205 852
------------------ --------------- -------------
TOTAL CURRENT LIABILITIES..................................... 32,573 31,738 3,752
Long-term borrowings.......................................... 394 125 15
SHAREHOLDERS' EQUITY
$4.00 Series A Convertible Preferred Stock.................... - - -
10,000,000 shares authorized, 7,000,000
shares issued and outstanding
Common Stock, $.001 par value, 50,000,000..................... 7,997 8,002 946
shares authorized 8,131,669 and 8,631,289
issued and outstanding at December 31, 1998
and June 30, 1999, respectively
Additional paid-in capital.................................... 2,344 22,016 2,602
Stock dividends to be distributed............................. 5,642 2,959 350
Retained earnings............................................. 161,177 170,251 20,124
Accumulated other comprehensive income........................ 353 233 28
------------------ --------------- -------------
TOTAL SHAREHOLDERS' EQUITY.................................... 177,512 203,461 24,050
------------------ --------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................... 210,479 235,324 27,816
================== =============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
-1-
<PAGE>
PRIVATE MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three-months ended Six-months ended
June 30, June 30,
(unaudited) (unaudited)
------------------------ ---------------------------------------
1998 1999 1998 1999 1999
------ ------ ------ ------ ------
SEK SEK SEK SEK USD
(in thousands)
<S> <C> <C> <C> <C> <C>
Net sales....................................... 58,592 37,681 99,186 83,387 9,857
Cost of sales................................... 28,823 22,326 46,680 42,838 5,064
------ ------ ------ ------ -----
Gross profit.................................... 29,769 15,355 52,506 40,549 4,793
Selling, general and administrative expenses.... 11,583 16,038 23,977 28,463 3,365
------ ------ ------ ------ -----
Operating profit................................ 18,186 -683 28,529 12,086 1,428
Interest expense................................ 135 139 259 275 32
Interest income................................. 71 113 124 221 26
------ ------ ------ ------ -----
Income before income tax........................ 18,123 -709 28,394 12,033 1,422
Income taxes.................................... -33 - 210 - -
------ ------ ------ ------ -----
Net income...................................... 18,155 -709 28,183 12,033 1,422
------ ------ ------ ------ -----
Other comprehensive income:
Foreign currency adjustments.................... 306 71 111 (120) (14)
------ ------ ------ ------ -----
Comprehensive income............................ 18,461 -638 28,294 11,913 1,408
====== ====== ====== ====== =====
Net income per share:
Basic........................................... 2.25 (0.08) 3.49 1.46 0.17
====== ====== ====== ====== =====
Diluted......................................... 1.16 (0.05) 1.80 0.77 0.09
====== ====== ====== ====== =====
</TABLE>
See accompanying notes to consolidated statements.
-2-
<PAGE>
PRIVATE MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six-months ended
June 30,
(unaudited)
-------------------------------------------
1998 1999 1999
------ ------ ------
SEK SEK USD
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................................... 28,183 12,033 1,422
Adjustment to reconcile net income to net cash
flows from operating activities:
Depreciation................................................ 1,830 1,578 187
Amortization of photographs and videos...................... 14,245 11,342 1,341
Effects of changes in operating assets and liabilities:
Trade accounts receivable................................... (18,839) (869) (103)
Related party receivable.................................... - (766) (91)
Inventories................................................. (5,025) (3,270) (387)
Prepaid expenses and other current assets................... (6,608) (14,833) (1,753)
Accounts payable trade...................................... 4,137 2,559 302
Income taxes payable........................................ (30) (775) (92)
Accrued other liabilities................................... 7,135 (1,536) (182)
------- ------- ------
Net cash provided by operating activities...................... 25,028 5,462 646
Cash flows from investing activities:
Investment in library of photographs and videos................ 19,909 14,093 1,666
Capital expenditures........................................... 3,004 3,599 425
Investments in other assets.................................... 1,796 1,490 176
Cash acquired in reverse acquisition........................... (595) 0 0
------- ------- ------
Net cash used in investing activities.......................... 24,114 19,183 2,267
Cash flow from financing activities:
Conversion of warrants......................................... - 14,035 1,659
Repayments on long-term loan................................... (329) (269) (32)
Repayments on short-term borrowings............................ (1,604) (1,082) (128)
------- ------- ------
Net cash (used in) provided by financing activities............ (1,933) 12,684 1,499
Foreign currency translation adjustment........................ 111 (120) (14)
------- ------- ------
Net (decrease) increase in cash and cash equivalents........... (908) (1,156) (137)
Cash and cash equivalents at beginning of the period........... 3,698 4,165 492
------- ------- ------
Cash and cash equivalents at end of the period................. 2,790 3,010 356
======= ======= ======
Cash paid for interest......................................... 259 190 22
======= ======= ======
Cash paid for taxes............................................ 166 171 20
======= ======= ======
</TABLE>
See accompanying notes to consolidated statements.
-3-
<PAGE>
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP") for interim financial information. Accordingly they do
not include all of the information and footnotes required by U.S. GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of financial position and results of operations have been included.
Operating results for the six months period ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on form
10-KSB for the year ended December 31, 1998.
The accompanying financial statements have been presented in Swedish Kronor
("SEK") which is the principal currency in which Private Media Group, Inc.
generate their cash flows.
Solely for the convenience of the reader, the accompanying consolidated
financial statements as of June 30, 1999 and for the six months then ended have
been translated into United States dollars ("USD") at the rate of SEK 8.46 per
USD 1.00 the exchange rate of the Swedish Riksbank on June 30, 1999. The
translations should not be construed as a representation that the amounts shown
could have been, our could be, converted into US dollars at that or any other
rate.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
------------------- ------------------
1998 1999
------------------- ------------------
SEK SEK
(in thousands)
<S> <C> <C>
Magazines.................... 17,826 19,062
Video cassettes.............. 10,558 12,406
Other........................ 2,505 2,691
------------------- ------------------
30,888 34,159
=================== ==================
</TABLE>
-4-
<PAGE>
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
3. Earnings per share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three-months ended Six-months ended
June 30, June 30,
---------------------------------- ----------------------------------
1998 1999 1998 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Numerator:
Net income (SEK in thousands)................. 18,155 (709) 28,183 12,033
=============== =============== =============== ===============
Denominator:
Denominator for basic earnings per share - 8,081,669 8,381,479 8,081,669 8,256,574
Weighted average shares.......................
Effect of dilutive securities:
Preferred stock............................ 7,000,000 7,000,000 7,000,000 7,000,000
Common stock warrants...................... 561,661 340,531 561,661 314,799
Stock dividends to be distributed.......... - 16,213 - 16,213
--------------- --------------- --------------- ---------------
Denominator for diluted earnings per share - 15,643,330 15,738,223 15,643,330 15,587,586
weighted average shares and assumed
conversions...................................
=============== =============== =============== ===============
Earnings per share (SEK)
Basic......................................... 2.25 (0.08) 3.49 1.46
=============== =============== =============== ===============
Diluted....................................... 1.16 (0.05) 1.80 0.77
=============== =============== =============== ===============
</TABLE>
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Report contains forward-looking statements that involve risk and
uncertainties. The Company's actual results could differ materially from those
anticipated in such forward looking statements as a result of certain factors,
including those set forth elsewhere in this Report.
The Company's principal currency is Swedish Kronor ("SEK"). Solely for
the convenience of the reader, the accompanying financial information has been
translated into United States dollars ("USD") at the rate of SEK 8.46 per USD
1.00, the exchange rate of the Swedish Riksbank on June 30, 1999. The
translations should not be construed as a representation that the amounts shown
could have been, or could be, converted into U.S. dollars at that or any other
rate.
Results of Operations
Three months ended June 30, 1999 compared to the three months ended June
30, 1998
Net sales. The Company reported net sales of SEK 37.7 million for the three
months ended June 30, 1999 which, compared to net sales of SEK 58.6 million for
the three months ended June 30, 1998, represents a decrease of SEK 20.9 million,
or 35.7%. The decrease was primarily attributable to decreased volume in
magazine sales as a result of a non-recurring increase in returns of magazines.
Magazine sales for fiscal 1999 is expected to exceed that of 1998 due to
increased distribution and points of sales. Internet sales increased 145% to SEK
2.7 million compared to the three months ended June 30, 1998. Video and CD-Rom
sales for the period remained approximately the same as for the corresponding
period of last year. Revenues from Internet operations and TV-Shop activities
are expected to increase during the remainder of fiscal 1999 as new sites come
online and home shopping expands geographically. In the opinion of the
management, the decline in sales for the three months ended June 30, 1999
compared to the three months ended June 30, 1998 is not indicative of the sales
that may be expected for the year ended December 31, 1999. Sales for the year
ended December 31, 1999 is expected to exceed the sales for the year ended
December 31, 1998.
Cost of Sales. The Company reported cost of sales of SEK 22.3 million for the
three months ended June 30, 1999 which, compared to cost of sales of SEK 28.8
million for the three months ended June 30, 1998, represents a decrease of SEK
6.5 million, or 22.5%. The gross profit for the three months ended June 30, 1999
was SEK 15.4 million, or 40.7% of net sales which, compared to gross profit for
the three months ended June 30, 1998 of SEK 29.8 million, or 50.8% of net sales,
represents a decrease of 10.1% in gross profit in relation to net sales. The
decrease is the result of decreased sales for the period.
Selling, general and administrative expenses. The Company reported selling,
general and administrative expenses of SEK 16.0 million for the three months
ended June 30, 1999 which, compared to selling, general and administrative
expenses of SEK 11.6 million for the three months ended June 30, 1998,
represents an increase of SEK 4.5 million or 38.5%. The increase is the result
of increased expenses associated with Internet activities which are expected to
continue in 1999.
Interest expense. The Company reported interest expense of SEK 0.14 million
for the three months ended June 30, 1999 which, compared to interest expense of
SEK 0.14 million for the three months ended June 30, 1998, represents no change.
7
<PAGE>
Income taxes. The Company reported income tax expenses of SEK 0.0 million as
compared to an income tax expense of SEK 0.0 million for the three months ended
June 30, 1998.
Net income. The Company reported a net loss of SEK 0.7 million as compared to
net income of SEK 18.2 million for the three months ended June 30, 1998. The
decrease in net income in 1999 of SEK 18.9 million was primarily attributable to
the decrease in sales and increased selling, general and administrative expenses
related to Internet activities.
Six months ended June 30, 1999 compared to the six months ended June 30,
1998
Net sales. The Company reported net sales of SEK 83.4 million for the six
months ended June 30, 1999 which, compared to net sales of SEK 99.2 million for
the six months ended June 30, 1998, represents a decrease of SEK 15.8 million,
or 15.9%. The decrease was primarily attributable to decreased volume in
magazine sales as a result of a non-recurring increase in returns of magazines.
Magazine sales for fiscal 1999 is expected to exceed that of 1998 due to
increased distribution and points of sales. Internet sales increased 140% to SEK
5.1 million compared to the six months ended June 30, 1998. Video and CD-Rom
sales for the period remained approximately the same as for the corresponding
period of last year. Revenues from Internet operations and TV-Shop activities
are expected to increase during the remainder of fiscal 1999 as new sites come
online and home shopping expands geographically. In the opinion of the
management, the decline in sales for the six months ended June 30, 1999 compared
to the six months ended June 30, 1998 is not indicative of the sales that may be
expected for the year ended December 31, 1999. Sales for the year ended December
31, 1999 is expected to exceed the sales for the year ended December 31, 1998.
Cost of Sales. The Company reported cost of sales of SEK 42.8 million for the
six months ended June 30, 1999 which, compared to cost of sales of SEK 46.7
million for the six months ended June 30, 1998, represents a decrease of SEK
3.8 million, or 8.2%. The gross profit for the six months ended June 30, 1999
was SEK 40.5 million, or 48.6% of net sales which, compared to gross profit for
the six months ended June 30, 1998 of SEK 52.5 million, or 52.9% of net sales,
represents a decrease of 4.3% in gross profit in relation to net sales. The
decrease is the result of product mix.
Selling, general and administrative expenses. The Company reported selling,
general and administrative expenses of SEK 28.5 million for the six months ended
June 30, 1999 which, compared to selling, general and administrative expenses of
SEK 24.0 million for the six months ended June 30, 1998, represents an increase
of SEK 4.5 million, or 18.7%. The increase is the result of increased expenses
associated with Internet activities which are expected to continue in 1999.
Interest expense. The Company reported interest expense of SEK 0.3 million
for the six months ended June 30, 1999 which, compared to interest expense of
SEK 0.3 million for the six months ended June 30, 1998, represents no change.
Income taxes. The Company reported income tax expenses of SEK 0.0 million as
compared to an income tax expense of SEK 0.21 million for the six months ended
June 30, 1998.
Net income. The Company reported net income of SEK 12.0 million as compared
to SEK 28.2 million for the six months ended June 30, 1998. The decrease in net
income in 1999 of SEK 16.2 million was primarily attributable to the decrease in
sales and increased selling, general and administrative expenses related to
Internet activities.
8
<PAGE>
Liquidity & Capital Resources
The Company reported a working capital surplus of SEK 91.8 million at June
30, 1999, an increase of SEK 19.4 million compared to the year ended December
31, 1998. The increase is principally attributable to increased inventories and
prepaid expenses and other current assets.
Net cash provided by operating activities was SEK 5.5 million for the six
months ended June 30, 1999 was primarily the result of net income and
adjustments to reconcile net income to net cash flows from operating activities.
The net income of SEK 12.0 million and the adjustments to reconcile net income
to net cash flows from operating activities, representing amortization of
photographs and videos of SEK 11.3 million, depreciation of SEK 1.6 million,
provided a total of SEK 25.0 million. The total of SEK 25.0 million was then
primarily reduced by the increases in trade accounts receivable, inventories,
related party receivable, prepaid expenses and other current assets, income
taxes payable and accrued other liabilities totaling SEK 22.0 million, offset by
SEK 2.6 million from accounts payable trade. Net cash provided by operating
activities was SEK 25.0 million for the six months ended June 30, 1998. The
decrease in cash provided by operating activities in 1999 compared to 1998 is
principally the result of changes in operating assets and liabilities in 1999.
Net cash used in investing activities for the six months ended June 30, 1999
was SEK 19.2 million. The investing activities were principally investment in
library of photographs and videos of SEK 14.1 million which was carried out in
order to maintain the 1999 release schedule. In addition to investment in
library of photographs and videos, SEK 3.6 million was invested in capital
expenditures and SEK 1.5 million in other assets. The decrease over the
comparable six-month 1998 period was principally due to decreased investments in
library of photographs and videos as a result of that fewer productions needed
to be purchased in order to maintain inventory levels and reduced production
costs during the period compared to 1998. The quantity of the Company's video
and magazine releases for 1999 is approximately the same as in 1998.
Net cash provided by financing activities for the six months ended June 30,
1999 was SEK 12.7 million represented by conversion of warrants at SEK 14.0
million offset by repayments on short-term borrowings of SEK 1.1 million and
repayments on long-term loan of SEK 0.3 million. The increase over the
comparable six-month 1998 period was primarily due to cash received from
conversion of warrants.
The Company has historically relied on positive cash flows from operations to
finance working capital needs and investing activities. The Company expects to
have adequate working capital for the next twelve months. During this period the
Company intends to rely on positive cash flows from operations to finance
working capital needs and necessary investing activities. The Company's long-
term expansion plans will require additional sources of funding. The Company
plans to meet these funding requirements through a combination of increases in
short-term credit lines, additional long-term borrowings and/or equity
financing.
9
<PAGE>
Year 2000
The Company relies heavily on computers in its internal and external
financial reporting systems. In addition, computers are used extensively
throughout the Company to perform critical operating activities including the
processing of payroll, accounts receivable and accounts payable and to perform
critical analyses. The Company also makes use of computers for efficient
communication with employees and customers, including extensive use of e-mail
systems and the Internet, and is expected to expand its use of such technology
in the future. Finally, embedded technology such as micro-controllers are
commonly found in equipment used throughout the Company's operations. The
complete failure of these systems could have a material negative impact on the
operations of the Company. In addition, many of the Company's major suppliers
and customers rely heavily on similar computer systems, and failures in such
systems could disrupt their operations.
The Company is substantially complete in assessing and addressing Year 2000
issues in its major computer systems. Most of the Company's major systems are
Year 2000 compliant or have been updated in the normal course of business with
applications that are Year 2000 compliant.
In addition to substantially addressing Year 2000 issues in its own
critical computer systems, the Company is in the process of contacting its major
customers and vendors to assess their progress in addressing their Year 2000
issues. The Company expects to have responses from these customers and vendors
by the second quarter of 1999. The Company believes that in making these
contacts it can minimize the risks associated with Year 2000 failures of such
vendors and customers. The Company can give no assurance that the systems of
other companies on which the Company's systems rely will be converted or
otherwise addressed on time, or that a failure to convert by another company
would not have a material adverse effect on the Company.
While the Company has and will continue to make efforts to address Year
2000 issues, the Company could experience disruptions in its operations as a
result of failures in its own systems and those of its major vendors or
customers.
To date, the total amount spent on Year 2000 issues has been less than
$5,000 and has not been material to the Company's operations or financial
condition. Based on current assessments, the Company expects to incur less than
$5,000 in additional expenditures to address Year 2000 issues. However, these
estimates are subject to revision based on future assessments and responses from
vendors and customers.
Estimates of the costs or consequences of incomplete or untimely resolution
of Year 2000 issues would be speculative. The Company will continue to assess
and address Year 2000 issues and expects to fund such efforts through operating
cash flows and, if necessary, external sources of financing.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On June 7, 1999 the Swedish tax authority, Skattemyndigheten i Stockholm (the
"Tax Authority"), instituted a proceeding against Milcap Media Limited, a
subsidiary of the Company, in the Administrative Court in Stockholm to seize
assets as security in the event that the Tax Authority issues an assessment for
corporate income tax against Milcap Media Limited. Although no tax assessment
has yet been issued, the Tax Authority is of the opinion that Milcap Media
Limited has a permanent establishment in Sweden and therefore owes corporate
income tax in Sweden for the tax years 1995, 1996, 1997 and 1998. For purposes
of the seizure proceeding the Tax Authority has based the amount of the seizure
request on an arbitrary amount in the amount of SEK 17,737,882, which is not
based upon the actual financial results of Milcap Media Limited. As a
consequence thereof the Tax Authority filed and obtained an order from the
Administrative Court in Stockholm, without prior notice to Milcap Media Limited,
to seize assets up to SEK 17,700,000 of Milcap Media Limited. On July 9, 1999,
Milcap Media Limited filed an appeal with the Administrative Court of Appeal in
Stockholm to dismiss the order. On August 6, 1999 the Administrative Court of
Appeal in Stockholm ruled in favor of the Tax Authority. Currently Milcap Media
Limited is preparing an appeal with the Swedish Supreme Administrative Court.
It should be pointed out, that Milcap Media Limited has so far not received
an official decision or similar information from the Tax Authority with a
statement that the Tax Authority will assess Milcap Media Limited for the tax
years mentioned above, i.e. there is currently no tax liability in Sweden. If
the Tax Authority makes such an assessment and levy Swedish corporate income tax
on Milcap Media Limited, Milcap Media Limited will contest such assessment and
if necessary appeal such assessment in the Administrative Court in Stockholm.
Thus, the current proceedings in the Administrative Courts concerning seizure of
assets is a separate case from a case where the Tax Authority may levy corporate
income tax for the above mentioned tax years.
Milcap Media Limited believes that the opinion of the Tax Authority is
without legal basis as Milcap Media Limited conducts no operations in Sweden and
has no permanent establishment in Sweden. Accordingly, the Company believes that
the opinion of the Tax Authority is without merit, and in any event if the Tax
Authority would prevail in the Supreme Administrative Court regarding seizure of
assets, that such outcome will not have a material impact upon the Company.
10
<PAGE>
PRIVATE MEDIA GROUP, INC.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Item 2. Changes in Securities
During May 1999 the Company issued Warrants to purchase 35,000 shares of
its Common Stock to a single accredited investor in consideration of providing
services to the Company. The Warrants are exercisable at $19.00 per share until
May 2004
Item 4. Submission of Matters to a Vote by Securityholders.
The Company's 1999 Annual Meeting of Shareholders was held on June 21,
1999. At the Annual Meeting each of the Company's nominees was elected to serve
as a director of the Company until the next Annual Meeting of Shareholders. The
election results are as follows:
<TABLE>
<CAPTION>
Name For Against Abstain
---- --- ------- -------
<S> <C> <C> <C>
Berth H. Milton 6,889,702 0 0
Alfredo M. Villa 6,889,702 0 0
Bo Rodebrant 6,889,702 0 0
Robert L. Tremont 6,889,702 0 0
</TABLE>
The shareholders also approved a proposal to adopt the Company's 1999
Employee Stock Option Plan, which proposal was set forth in the Company's Proxy
Statement filed with the Securities and Exchange Commission. The Plan approval
results are as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
1999 Stock Option Plan 6,889,266 316 120
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
EX-27 - Financial Data Schedule
b. Reports on Form 8-K:
None.
11
<PAGE>
PRIVATE MEDIA GROUP, INC.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
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.
PRIVATE MEDIA GROUP, INC.
(Registrant)
Date: August 16, 1999 /s/ Johan Gillborg
---------------------------------------------
Johan Gillborg
Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<PAGE>
PRIVATE MEDIA GROUP, INC.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
INDEX TO EXHIBITS
EX-27 Financial Data Schedule
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> SWEDISH KRONOR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> .11820
<CASH> 3,010
<SECURITIES> 0
<RECEIVABLES> 62,463
<ALLOWANCES> 0
<INVENTORY> 34,159
<CURRENT-ASSETS> 123,560
<PP&E> 11,568
<DEPRECIATION> 0
<TOTAL-ASSETS> 235,324
<CURRENT-LIABILITIES> 31,738
<BONDS> 0
0
0
<COMMON> 8,002
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 235,324
<SALES> 37,681
<TOTAL-REVENUES> 37,681
<CGS> 22,326
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> (709)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (709)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.05)
</TABLE>
