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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
/X/ Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1999
/ / Transition Report under Section 13 or 15(d) of the Exchange Act
For the Transition Period from ________ to ___________
Commission File Number: 0-24971
MGPX Ventures, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 95-4067606
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17337 Ventura Boulevard, Suite 224
Encino, California 91316
Issuer's Telephone Number: (818) 981-7074
(Address and telephone number of principal executive offices)
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 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
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The Registrant has 1,509,865 shares of Common stock, par value $.04 per
share, issued and outstanding as of May 11, 1999.
Traditional Small Business Disclosure Format (check one) Yes No X
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INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets (unaudited) 4
Statements of Operations (unaudited) 5
Statements of Cash Flows (unaudited) 6
Notes to Financial Statements (unaudited) 7 - 9
Item 2. Management's Discussion and Analysis or Plan
of Operation 10 - 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote
of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 13
Signatures 14
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
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MGPX VENTURES, INC.
BALANCE SHEETS
JUNE 30, 1998 AND MARCH 31, 1999 (UNAUDITED)
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<CAPTION>
ASSETS
June 30, March 31,
1998 1999
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(unaudited)
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CURRENT ASSETS
Cash and cash equivalents $ 559,102 $ 495,759
Prepaid insurance 16,005 10,670
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TOTAL CURRENT ASSETS $ 575,107 $ 506,429
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 900 $ -
Preferred stock dividends payable 45,339 68,010
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Total current liabilities 46,239 68,010
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SHAREHOLDERS' EQUITY
Convertible Preferred stock, Series B, $0.04 par value
$30 per share liquidation preference and certain voting rights
125,000 shares authorized
16,792 shares issued and outstanding 672 672
Common stock, $0.04 par value
12,375,000 shares authorized
1,509,865 shares issued and outstanding 60,395 60,395
Additional paid-in capital 2,168,399 2,168,399
Accumulated deficit (1,700,598) (1,791,047)
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Total shareholders' equity 528,868 438,419
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 575,107 $ 506,429
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MGPX VENTURES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
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<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------- ---------------------------------
1999 1998 1999 1998
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(unaudited) (unaudited) (unaudited) (unaudited)
GENERAL AND ADMINISTRATIVE
EXPENSES $ 40,469 $ - $ 86,286 $ -
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LOSS FROM OPERATIONS (40,469) - (86,286) -
OTHER INCOME
Interest income 5,315 - 18,508 -
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NET LOSS FROM CONTINUING
OPERATIONS (35,154) - (67,778) -
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DISCONTINUED OPERATIONS
Loss from operations, net of
provision for income taxes of
$0 (unaudited), $509,568
(unaudited), $0 (unaudited), and
$515,058 (unaudited) - - - (497,044)
Gain (loss) on disposition of operations,
net of provision for income taxes of
$0 (unaudited) - (65,000) - 207,572
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Net loss from discontinued
operations - (65,000) - (289,472)
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NET LOSS $ (35,154) $ (65,000) $ (67,778) $ (289,472)
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BASIC LOSS PER SHARE
From continuing operations $ (0.02) $ - $ (0.04) $ -
From discontinued operations - (0.03) - (0.15)
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TOTAL BASIC LOSS PER SHARE $ (0.02) $ (0.03) $ (0.04) $ (0.15)
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WEIGHTED-AVERAGE SHARES
OUTSTANDING 1,509,865 1,872,241 1,509,865 1,872,241
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MGPX VENTURES, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
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Nine Months Ended
March 31,
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1999 1998
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(unaudited) (unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (67,778) $ -
Increase (decrease) in
Accounts payable (900) -
Prepaids 5,335 -
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Net cash used in continuing operating activities (63,343) -
Net cash used in discontinued operating activities - (46,670)
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Net cash used in operating activities (63,343) (46,670)
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CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in discontinued investing activities - (39,976)
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Net cash used in investing activities - (39,976)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by discontinued financing activities - 82,612
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Net cash provided by financing activities - 82,612
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Net decrease in cash and cash equivalents (63,343) (4,034)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 559,102 4,034
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 495,759 $ -
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MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND MARCH 31, 1999 (UNAUDITED)
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NOTE 1 - ORGANIZATION AND BUSINESS
Maple Enterprises, Inc. ("Maple") was incorporated under the laws of the State
of Nevada on August 7, 1986. On July 8, 1988, Maple acquired approximately 99%
of the outstanding shares of Warner Technologies, Inc. ("Warner"), a privately
held California corporation, in exchange for shares of common stock and stock
options. On September 18, 1988, Warner merged into Maple, and the name of the
surviving company was changed to Warner Technologies, Inc. Warner provided
energy efficiency products and services in three principal areas: 1) turnkey
lighting retrofits, 2) building automation and control systems, and 3) strategic
energy planning services. These products and services were delivered to
commercial, industrial, and institutional buildings through contracts with
building owners and managers, as well as directly to utilities for their
customers' benefit. Warner was headquartered in Los Angeles and maintained
regional offices in Boston and San Diego.
Effective December 31, 1997, Warner sold substantially all of its operations to
its President and Executive Vice President. On March 31, 1998, Warner was
renamed MGPX Ventures, Inc. (the "Company"), and the President and Executive
Vice President resigned from their positions with the Company.
The Company is currently operating as a "shell" corporation, has minimal
operations, and is headquartered in Encino, California. The Company is in the
process of identifying potential merger and acquisition candidates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles for interim financial information and
with Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all normal, recurring
adjustments considered necessary for a fair presentation have been included. The
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Form 10-SB registration
statement, as amended, for the year ended June 30, 1998. The results of
operations for the three months and nine months ended March 31,
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MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND MARCH 31, 1999 (UNAUDITED)
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1999 are not necessarily indicative of the results that may be expected for
the year ended June 30, 1999.
LOSS PER SHARE
For the year ended June 30, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic loss per
share is computed by dividing the net loss available to common shareholders by
the weighted-average number of common shares outstanding. Diluted loss per share
is computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Diluted loss per share is not presented because
common stock equivalents are anti-dilutive.
INCOME TAXES
The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is required when it is less likely than not that the Company will be
able to realize all or a portion of its deferred tax assets.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
SFAS No. 130, "Reporting Comprehensive Income," is effective for financial
statements with fiscal years beginning after December 15, 1997. Earlier
application is permitted. SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. The Company does not expect adoption of
SFAS No. 130 will have a material impact, if any, on its financial position or
results of operations.
8
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MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND MARCH 31, 1999 (UNAUDITED)
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SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," is effective for fiscal years beginning after December 15, 1997.
SFAS No. 131 requires a company to report certain information about its
operating segments, including factors used to identify the reportable segments
and types of products and services from which each reportable segment derives
its revenues. The Company does not anticipate any material change in the manner
that it reports its segment information under this new pronouncement.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
As a "shell" company, the Company currently has no revenues from operations. The
Company's business plan is to identify and complete an acquisition, merger or
other transaction that will enhance shareholder value. The Company's management
is continuing to review potential business opportunities, without limiting the
scope of its review to only one or a few types of businesses or industries.
Currently, the Company has no plans, agreements, arrangements or understandings,
written or oral, with respect to any acquisition, merger or similar transaction.
No assurances can be given as to the Company's ability to identify and complete
a transaction by any given date or as to the nature of the business or
profitability of the Company if a transaction is completed. A proposed
transaction could be subject to significant regulatory, business, financing and
other contingencies and might require shareholder and other approvals.
RESULTS OF OPERATIONS
The following is a limited discussion of the results of operations for the
quarter ended March 31, 1999 compared to those for the quarter ended March 31,
1998. The results of operations for the nine months ended March 31, 1999 are not
directly comparable to results for the nine months ended March 31, 1998 because
of the sale of substantially all of the Company's net operating assets effective
December 31, 1997.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
CONTINUING OPERATIONS. During the quarter ended March 31, 1999, the Company
incurred general and administrative expenses of $40,469. These expenses were
comprised mainly of a consulting fee of $16,000 paid to an independent
consultant to search for potential merger and acquisition candidates, a
consulting fee of $6,000 paid to the Company's President and Chief Executive
Officer, and approximately $13,000 paid for legal and accounting services.
Income for the same period totaled $5,315, and was derived mainly from interest
earned on the Company's cash and cash equivalents.
DISCONTINUED OPERATIONS. Effective December 31, 1997, the Company sold
substantially all of its net assets used in operations to management for
$650,000. Net proceeds were approximately $585,000 after closing costs, which
were incurred during the three months ended March 31, 1998. As a condition of
the transaction, management agreed to the cancellation of their
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stock options and the sale of their common shares to the Company for $1,000,
representing more than a 25% reduction in beneficial control of common
shares. As a result, the Company's operations for the nine months ended March
31, 1998 are reported as discontinued operations. The results from
discontinued operations for the nine months ended March 31, 1998 included
total revenues of approximately $1,296,000 and pre-tax net income from
operations of approximately $18,014.
Management anticipates that while the Company operates as a shell corporation,
it will incur expenses of approximately $10,000 per month.
Net loss per share for the quarter ended March 31, 1999 was $.02, as compared to
$.03 per share for the quarter ended March 31, 1998.
LIQUIDITY
Working capital at March 31, 1999 was $438,419, comprised of cash and cash
equivalents, which management believes is sufficient to cover current operations
for at least the next twelve months.
Depending on the success of the Company's efforts to locate a potential
candidate for merger or acquisition, management believes that the Company's
present working capital may need to be supplemented to support the operations of
the merged or acquired company over the next 12 months. Additional working
capital may be sought through additional debt or equity private placements,
additional notes payable to banks or related parties (officers, directors or
shareholders), or from industry-available funding sources at market rates of
interest, or a combination of these. The ability to raise necessary financing
will depend on many factors, including the nature and prospects of any business
to be acquired and the economic and market conditions prevailing at the time
financing is sought. No assurances can be given that any necessary financing can
be obtained on terms favorable to the Company, or at all.
11
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended March 31, 1999, no matters were submitted to
the Company's security holders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith or are incorporated herein by
reference:
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Exhibit
No. Document Description
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(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of incorporation of the Company, as amended to
date(1)
3.2 By-laws of the Company(1)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
4.1 Facsimile of Common Stock certificate of the Company(1)
4.2 Facsimile of Series B Preferred Stock certificate of the
Company(1)
4.3 Certificate of Determination of Series B Preferred Stock of
the Company(1)
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(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule(2)
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(1) Included as an exhibit to the Company's Form 10-SB registration
statement filed on October 16, 1998, and incorporated herein by
reference.
(2) Filed herewith.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ended
March 31, 1999.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MGPX VENTURES, INC.
(Registrant)
Dated: May 11, 1999 /s/ Buddy Young
---------------------------------------------
Buddy Young, President and Chief Executive
Officer (Principal Executive and Financial
Officer)
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 495,759
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 506,429
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 506,429
<CURRENT-LIABILITIES> 68,010
<BONDS> 0
0
672
<COMMON> 60,395
<OTHER-SE> 377,352
<TOTAL-LIABILITY-AND-EQUITY> 506,429
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (40,469)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,315
<INCOME-PRETAX> (35,154)
<INCOME-TAX> 0
<INCOME-CONTINUING> (35,154)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,154)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
