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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 December 31, 1998
/ / 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 phone 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 No X
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The Registrant has 1,509,865 shares of Common stock, par value $.04 per
share issued and outstanding as of December 31, 1998.
Traditional Small Business Disclosure Format (check one) Yes No X
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1
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INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I FINANCIAL INFORMATION
Page
Item 1. Financial Statements 3
Balance Sheet (unaudited) 4
Statements of Operations (unaudited) 5
Statements of Cash Flows (unaudited) 6
Item 2. Management's Discussion and Analysis of Plan
of Operation 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote
of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
3
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MGPX VENTURES, INC.
BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1998 (UNAUDITED)
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<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1998 1998
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(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 559,102 $ 528,246
Prepaid insurance 16,005 13,337
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TOTAL CURRENT ASSETS $ 575,107 $ 541,583
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 900 $ -
Preferred stock dividends payable 45,339 60,452
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Total current liabilities 46,239 60,452
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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 12,168,399 2,168,399
Accumulated deficit (1,700,598) (1,748,335)
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Total shareholders' equity 528,868 481,131
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 575,107 $ 541,583
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</TABLE>
4
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MGPX VENTURES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS DECEMBER 31, 1998 AND 1997 (UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- -----------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
GENERAL AND ADMINISTRATIVE
EXPENSES $ 26,524 $ - $ 45,818 $ -
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (26,524) - (45,818) -
OTHER INCOME
Interest income 6,129 - 13,194 -
---------- ---------- ---------- ----------
NET LOSS FROM CONTINUING
OPERATIONS (20,395) - (32,624) -
---------- ---------- ---------- ----------
DISCONTINUED OPERATIONS
Loss from operations, net of
provision for income taxes of
$0 (unaudited), $509,568
(unaudited), $0 (unaudited), and
$515,058 (unaudited) - (504,944) - (497,044)
Gain on disposition of operations, net
of provision for income taxes of
$0 (unaudited) - 207,572 - 207,572
---------- ---------- ---------- ----------
Net loss from discontinued
operations - (297,372) - (289,472)
---------- ---------- ---------- ----------
NET LOSS $ (20,395) $ (297,372) $ (32,624) $ (289,472)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
BASIC LOSS PER SHARE
From continuing operations $ (0.01) $ - $ (0.02) $ -
From discontinued operations - (0.16) - (0.15)
---------- ---------- ---------- ----------
TOTAL BASIC LOSS PER SHARE $ (0.01) $ (0.16) $ (0.02) $ (0.15)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED-AVERAGE SHARES
OUTSTANDING 1,509,865 1,872,241 1,509,865 1,872,241
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
5
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MGPX VENTURES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (32,624) $ -
Increase (decrease) in
Accounts payable (900) -
Prepaids 2,668 -
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Net cash used in continuing operating activities (30,856) -
Net cash used in discontinued operating activities - (46,670)
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Net cash used in operating activities (30,856) (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 (30,856) (4,034)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 559,102 4,034
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 528,246 $ -
--------- ---------
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</TABLE>
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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 Board of Directors is reviewing 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 December 31, 1998 compared to those for the quarter ended
December 31, 1997. A comparison of the results of operations for the quarter
ended December 31, 1998 are not directly comparable to results for the
quarter ended December 31, 1997 because of the sale of substantially all of
the Company's net operating assets effective December 31, 1997.
FISCAL 1998 COMPARED TO FISCAL 1997
CONTINUING OPERATIONS. During the quarter ended December 31, 1998, when the
Company was operating as a shell corporation, it incurred general and
administrative expenses of $26,524. These expenses were mainly comprised of
a consulting fee of $14,510 paid to the Company's President and Chief
Executive Officer, and approximately $11,000 paid for legal and accounting
services. Income for the same period totaled $6,129, 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. As
a condition of the transaction, management agreed to the cancellation of its
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
7
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shares. As a result, the Company's operations for the quarter ended December
31, 1997 are reported as discontinued operations. The results from
discontinued operations for the quarter ended December 31, 1997 included
total revenues of approximately $1,296,000 and pre-tax net income from
operations of approximately $4,625.
Management anticipates that while the Company operates as a shell
corporation, it will incur expenses of approximately $7,500 per month.
Net loss per share for the quarter ended December 31, 1998 was $.01, as
compared to $0.00 per share for the quarter ended December 31, 1997.
LIQUIDITY
Working capital at December 31, 1998 was $528,246, 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.
8
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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 December 31, 1998, no matters were
submitted to the Company's security holders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
9
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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: February 12, 1998 /s/ Buddy Young
--------------------------------
Buddy Young, President and Chief
Executive Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED DECEMBER 31, 1998 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> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 528,246
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 541,583
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 541,583
<CURRENT-LIABILITIES> 60,452
<BONDS> 0
0
672
<COMMON> 60,395
<OTHER-SE> 420,064
<TOTAL-LIABILITY-AND-EQUITY> 541,583
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (26,524)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,129
<INCOME-PRETAX> (20,395)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,395)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,395)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
