<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarter ended June 30, 2000 Commission File No. 133-16736
eContent, Inc. (formerly Media Vision Productions, Inc.
(Exact name of registrant as specified in its charter)
Delaware 23-2442288
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number
105 S. Narcissus Ave. #701, West Palm Beach, FL 33401
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (561) 835 - 0094
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 shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Transitional Small Business Disclosure Format:
Yes | | No |X|
The number of shares outstanding of each of the registrant's classes of common
stock as of June 30, 2000 is 15,984,900 shares all of one class of $.08 par
value common stock and no shares of convertible preferred stock with a $10.00
par value.
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
INDEX
<TABLE>
<CAPTION>
PAGE
PART I FINANCIAL INFORMATION
<S> <C> <C>
Consolidated Balance Sheet - June 30, 2000 1
Consolidated Statements of Operations - Three
Months Ended June 30, 2000 2
Consolidated Statements of Operations - Nine
Months Ended June 30, 2000 3
Consolidated Statement of Cash Flows - Nine Months
Ended June 30, 2000 4
Notes to the Consolidated Financial Statements 5-8
Management's Discussion and Analysis of financial
conditions and results of operations 9-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits on Reports on Form 8-K 13
Signature Page 14
</TABLE>
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Assets
Current Assets
<S> <C>
Cash and equivalents $ 225,056
Note Receivable - Affiliate 100,000
----------
Total Current Assets 325,056
Advance on production rights to unconsolidated
subsidiary 375,000
----------
Property and equipment, net of accumulated
depreciation of $6,660 15,524
----------
Other Assets
Organization costs, net of accumulated amortization
of $27,144 63,337
Deposits 17,140
Investment in unconsolidated subsidiary,
equity method 5,065,220
----------
Total Other Assets 5,145,697
----------
Total Assets 5,861,277
==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 145,210
Note Payable officers' 21,635
Note Payable stockholder 15,000
Note Payable unconsolidated subsidiary 100,000
----------
Total Current Liabilities 281,845
Stockholders' Equity
Common stock, par value $.08 per share; authorized
50,000,000 shares, 15,984,900 issued and outstanding 1,278,792
Convertible preferred stock, authorized 1,000,000
shares, par value $10.00; no shares issued
and outstanding -
Additional paid in capital 11,676,740
Deficit accumulated during development stage (7,376,100)
----------
Total Stockholders' Equity 5,579,432
----------
Total Liabilities and Stockholders' Equity $ 5,861,277
==========
</TABLE>
See notes to the consolidated financial statements.
1
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
From
April 1,
1998
(Date of
For the Inception)
Three Months Ended to
June 30, June 30,
1999 2000 2000
-------- --------- ---------
<S> <C> <C> <C>
Total Revenues $ - $ - $ -
-------- --------- ---------
Costs and Expenses
Development, production and distribution 18,299 483,053 1,246,046
General and administrative 132,315 327,187 2,099,634
Depreciation and amortization 4,434 4,524 30,477
Stock based compensation and
Stock Grants - 68,750 3,932,417
--------- -------- ---------
Total Costs and Expenses 155,048 883,514 7,308,574
--------- --------- ---------
Net Loss From Operations (155,048) (883,514) (7,308,574)
--------- --------- ---------
Other Income (Expense)
Settlement expense - - (14,556)
Interest expense - (410) (18,190)
Loss on unconsolidated subsidiary - (34,780) (34,780)
--------- --------- ---------
Total Other Expense - (35,190) (67,526)
--------- --------- ---------
Net Loss $ (155,048) $ (918,704) $(7,376,100)
=========== =========== =========
Loss per common share, basic
and diluted $ (.029) $ (.070)
=========== ===========
Weighted average common shares
outstanding, basic and diluted 5,485,545 13,061,929
=========== ============
</TABLE>
See notes to the consolidated financial statements.
2
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
From
April 1,
1998
(Date of
For the Inception)
Three Months Ended to
June 30, June 30,
1999 2000 2000
-------- --------- ---------
<S> <C> <C> <C>
Total Revenues $ - $ - $ -
-------- --------- ---------
Costs and Expenses
Development, production and distribution 140,687 1,105,359 1,246,046
General and administrative 570,775 879,643 2,099,634
Depreciation and amortization 11,129 13,572 30,477
Stock based compensation and
stock grants - 1,254,063 3,932,417
--------- --------- ---------
Total Costs and Expenses 722,591 3,252,637 7,308,574
--------- --------- ---------
Net Loss From Operations (722,591) (3,252,637) (7,308,574)
--------- --------- ---------
Other Income (Expense)
Settlement expense - (4,000) (14,556)
Interest expense - (690) (18,190)
Loss from unconsolidated subsidiary - (34,780) (34,780)
--------- --------- ---------
Total Other Expense - (39,470) (67,526)
--------- --------- ---------
Net Loss $ (722,591) $(3,292,107) $(7,376,100)
========= ========= =========
Loss per common share, basic
and diluted $ (.137) $ (.278)
========= =========
Weighted average common shares
outstanding, basic and diluted 5,279,711 11,841,931
========= ==========
</TABLE>
See notes to the consolidated financial statements.
3
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From
April 1,
1998
(Date of
For the Inception)
Three Months Ended to
June 30, June 30,
1999 2000 2000
-------- --------- ---------
Operating Activities:
<S> <C> <C> <C>
Cash Flows From Operating Activities: $(722,591) $(3,292,107) $(7,376,100)
Net Loss
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 11,129 13,572 30,477
Interest expense - - 17,500
Loan fees - - 25,000
Loss from Unconsolidated Subsidiary - 34,780 34,780
Non-cash Warrant, Stock based
compensation and expenses paid by
stock - 2,538,175 5,581,842
Changes in assets and liabilities:
Accounts payable and accrued
expenses 56,812 69,170 148,535
Deposits (4,200) (12,940) (17,140)
------- ------- --------
Net Cash Used In Operating
Activities (658,850) (649,350) (1,555,106)
------- ------- -----------
Cash Flows From Investing Activities:
Purchase of fixed assets (22,184) - (22,184)
Payment of reorganization expenses (86,131) - (90,481)
Advance to potential affiliate (53,892) - -
Advance on production rights (325,000) - (375,000)
Cash Investment in Unconsolidated
Subsidiary - (1,050,000) (1,050,000)
--------- ----------- -----------
Net Cash Used In Investing
Activities 487,207) (1,050,000) (1,537,665)
--------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from the issuance of
common stock 1,289,985 1,514,175 2,604,192
Proceeds of loans and advances - 100,000 398,713
Advances from officers' - 309,681 348,635
Advance from stockholder 15,000
Repayment of advances on expenses (48,713) - (48,713)
--------- -------- ---------
Net Cash Provided By
Financing Activities 1,241,272 1,923,856 3,317,827
--------- --------- ---------
Net increase (decrease) in cash and
cash equivalent 95,215 224,506 225,056
Cash and cash equivalents, beginning
of period 32 550 -0-
--------- --------- --------
Cash and cash equivalents, end of
period $ 95,247 $ 225,056 $ 225,056
========= ========= =========
</TABLE>
See notes to the consolidated financial statements.
4
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
NOTES TO FINANCIAL STATEMENT
JUNE 30, 2000
(Unaudited)
A. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form l0-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended June 30, 2000
are not necessarily indicative of the results that may be expected for the year
ended September 30, 2000.
The Company accounts for net loss per common share in accordance with the
provisions of Statements of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share" ("EPS"). SFAS No. 128 reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Common equivalent shares
have been excluded from the computation of diluted EPS since their effect is
antidilutive. Prior earnings per share were restated to reflect the 1 for 25
split pursuant to the plan of re-organization, and the 4,000,000 shares issued
in the merger accounted for as a reorganization were treated as outstanding
effective from the date of inception.
For further information, refer to the financial statements and footnotes thereto
included in the Registrant Company's annual report on form 10-KSB for the year
ended September 30, 1999.
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For the Nine Months
Ended
March 31,
1999 2000
------ ------
<S> <C> <C>
Interest Paid $ 0 $ 690
====== ======
Income Taxes Paid $ 0 $ 0
====== ======
</TABLE>
B. REORGANIZATION AND SUBSEQUENT RECAPITALIZATION
In July 1997, the Company's predecessor (Gulfstar Industries, Inc.) filed a
petition under Chapter 11 of the Bankruptcy laws. The Company's petition was
confirmed by the Bankruptcy Court on September 2, 1998 and became effective on
January 4, 1999. The Plan of Reorganization, which was design and executed by
current managment and confirmation, of the same included the acceptance of the
agreement and merger plan between eContent Inc. (formerly Media Vision
Productions, Inc.) (the Company) and Media Vision Properties, Inc., whereby
holders of existing voting shares immediately before the confirmation retain
less that 50% of the voting shares of the surviving entity and the post petition
liabilities allowed and claims exceed the carrying value of assets. On January
4, 1999, pursuant to the plan of reorganization and plan of merger the Company
changed its name to Media Vision Productions, Inc. On October 1, 1999, the
Company changed its name to eContent, Inc.
5
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
NOTES TO FINANCIAL STATEMENT
JUNE 30, 2000
(Unaudited)
C. RESTATEMENT AND RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION
For accounting purposes the acquisition has been treated as an acquisition of
eContent, Inc. (formerly Media Vision Productions, Inc.) by Media Vision
Properties, Inc. and therefore a recapitalization of Media Vision Properties,
Inc. The historical financial statements prior to January 4, 1999 are those of
Media Vision Properties, which was incorporated on June 17, 1997 but did not
issue stock, have assets, or commence operations until April 1, 1998.
Additionally, proforma information is not presented since the transaction is
treated as a recapitalization.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated balance sheet as of June 30, 2000 includes the
accounts of the Company and its wholly owned subsidiaries, Media Vision
Properties, Inc., which commenced operations on April 1, 1998, and Fitness
Licensing Corporation which was formed April 1, 1999 and commenced operations in
the quarter ended June 30, 2000. The Company's MPI subsidiary is not
consolidated. The Company included its proportionate share of the loss from this
unconsolidated subsidiary, or $34,780, in the quarter ended June 30, 2000, the
quarter the Company acquired 35% of the 100% planned interest. (See note G)
All significant intercompany accounts and transactions have been eliminated. Due
to the recapitalization, historical stockholders' equity of the acquirer (Media
Vision Properties, Inc.) prior to the merger is retroactively restated for the
equivalent number of shares received in the merger after giving effect to any
difference in par value of the issuer's and acquirer's stock with an offset to
paid-in-capital. Retained deficit of the acquirer has been carried forward after
the acquisition.
Certain reclassifications have been made to the 1999 financial statements to
conform with the 2000 financial statement presentation.
D. DEVELOPMENT, PRODUCTION AND DISTRIBUTION
Development, production and distribution expenses include costs for market
research, pre-production expenses and other costs associated with the content
development and license arrangements not specifically deferred as recoverable
from contractual royalties.
E. COMMITMENTS AND CONTINGENCIES
The Company's predecessor's subsidiaries were involved in various litigation in
connection with their prior operations which were eliminated by the
reorganization under bankruptcy.
6
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
NOTES TO FINANCIAL STATEMENT
JUNE 30, 2000
(Unaudited)
E. COMMITMENTS AND CONTINGENCIES (CONTINUED)
On September 24, 1999 the Company entered into employment agreements with its
president and two executive officers. The general terms of the agreements
provide for the three officers to receive annual salaries totaling $515,000 for
fiscal 2000, $566,500 for fiscal 2001 and $623,150 for fiscal 2002.
Additionally, the agreements provide for stock options and grants of shares.
On October 5, 1999, the Company entered into a licensing agreement with an
individual and Spartan Sporting Goods and Fashions, Inc. ("Spartan") a privately
held New York Corporation for the exclusive master license of certain logos,
trademarks and copyrights. The agreement provides that the Company pay 30% of
all royalty income received from the producers under this agreement to the
Licensor, or "Spartan". Additionally, the agreement provides for a minimum
annual non-refundable license fee for up to nine years as follows:
<TABLE>
<CAPTION>
CALENDAR YEAR AMOUNT
<S> <C>
2000 $25,000
2001 $25,000
2002 $25,000
2003 $30,000
2004 $36,000
2005 $43,200
2006 $51,850
2007 $62,200
2008 $74,650
</TABLE>
In May 2000 the Company entered into a conditional joint venture agreement with
Littlefield, Adams & Company "FUNW", a publicly traded company, to which the
Company has agreed to assign certain licensing rights and services in exchange
for approximately 39% of the outstanding common shares of FUNW. The transaction
requires the approval of a majority of the FUNW shareholders, a working capital
surplus in FUNW and representation acceptable to eContent on the FUNW Board of
Directors.
7
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
NOTES TO THE FINANCIAL STATEMENT
JUNE 30, 2000
(Unaudited)
F. INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
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 and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using currently enacted tax rates. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in results of operations in the period that includes the enactment
date. Because of the uncertainty regarding the Company's future profitability,
the future tax benefits of its losses has been fully reserved for. Therefore, no
benefit for the net operating loss has been recorded in the accompanying
consolidated financial statements.
G. INVESTMENTS IN SUBSIDIARY, EQUITY METHOD, AND ACQUISITION
Effective May 31, 2000, the Company executed an agreement to acquire 100%
interest in Media Productions International, Inc., "MPI", a diversified
television production company engaged in development, production and syndication
of high profile programming for major networks worldwide.
"MPI" is a privately held New York Corporation.
The Company issued 1,350,000 shares of the Company's common stock and $1,050,000
of cash prior to June 30, 2000 and $100,000 prior to July 31, 2000 for 35% of
"MPI". As of June 30, 2000, the Company has accounted for this investment using
the equity method. The Company has agreed to acquire an additional 6% with a
$250,000 payment prior to August 31, 2000, an additional 6% with a payment of
$250,000 prior to November 1, 2000 and 53%, with a payment of $2,300,000 for a
total of 100% prior to April 1, 2001. Upon completion of the acquisition of
greater than 50%, the Company will treat the acquisition for accounting purposes
as a purchase pursuant to APB16.
Loss from unconsolidated entity during the three months ended June 30, 2000,
represent the Company's proportionate interest in the subsidiary's loss, or
$(34,780).
H. EQUITY TRANSACTIONS
During the quarter ended June 30, 2000 the Company issued 2,231,768 shares of
its common stock to accredited investors in private placements generating gross
proceeds of $1,539,150 which net of offering costs of $24,975, generated net
proceeds to the Company of 1,514,175. In connection with the private placements
the Company issued warrants to purchase 2,231,768 shares of its common stock at
$1.50. Also during the quarter, the Company granted 478,424 shares to officers
in lieu of accrued compensation and 275,000 shares to consultants for services.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying financial statements as
well as information relating to the plans of the Company's current management.
RESULTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2000 VS. NINE MONTHS ENDED JUNE 30, 2000
eContent is a holding company in the development stage. The Company has not yet
recorded any revenue. The Company recorded a loss of $3,292,107 for the nine
months ended June 30, 2000 as compared to a loss in the prior period ended June
30, 1999 of $722,591. This represents a loss per common share of $(.278) for the
nine months ended June 30, 2000 as compared to a loss per common share of
$(.137) for the period ended June 30, 1999. Development, production and
distribution expenses were $1,105,359 for the nine months ended June 30, 2000
compared to $140,687 in the period ending June 30, 1999. General and
administrative expenses were $879,643 in fiscal 2000 vs. $570,775 for the same
period in fiscal 1999. The largest components of the June 2000 loss were
non-cash charges of $2,036,313 for stock options and stock grants, which
represents $1,254,063 in stock grants to employees and consultants, in addition
to $413,500 for stock grants to consultants and $368,750 for the value of
options awarded to the president of the production company in which the Company
has consummated the agreement to acquire, "MPI", included in development,
production and distribution expenses during the nine months ended June 30, 2000.
PLAN OF OPERATIONS
eContent is a vertically integrated eCommerce marketing company based in West
Palm Beach, Florida. The Company is engaged in the production and syndication of
television programming and Internet content, and the development of related
merchandising opportunities. eContent has a five-year contract to produce
concerts, entertainment specials and motivational lecture series for
distribution to the 346 Public Television Stations, with 101,000,000 weekly
viewers nationwide. Programs are produced by Media Productions International
Inc. (MPI).Founded in 1986 by award winning producer Bob Marty, MPI has produced
shows worldwide for PBS, CBS, BBC, A&E and the Discovery Health Channel. MPI is
a diversified television production company that develops, produces and
syndicates programming to major networks worldwide. MPI programs have been
viewed by an estimated 150 million people.
In May 2000 the Company entered into a conditional joint venture agreement with
Littlefield, Adams & Company "FUNW", a publicly traded company, in which the
Company has agreed to assign certain licensing rights and services in exchange
for approximately 39% of the outstanding common shares of FUNW. The transaction
requires the approval of a majority of the FUNW shareholders, a working capital
surplus in FUNW and representation acceptable to eContent on the FUNW Board of
Directors.
9
<PAGE>
YEAR 2000 ISSUES
Many computer systems and software programs, including several used by the
Company may require modification and conversion to allow date code fields to
accept dates beginning with the year 2000. Major system failures or erroneous
calculations can result if computer system failures are not year 2000 compliant.
The Company did not experience any difficulties at the recent turn of the
calendar year
All costs associated with year 2000 compliance that have been incurred by the
Company have been expensed and have not been capitalized. The overall cost to
the Company of modifications and conversion for year 2000 compliance was not
material. The company believes it has no outstanding material year 2000 issues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 2000 was $43,211.
Since the reorganization, the Company has funded its operations from the
issuance of common stock and loans. The accountant's report on the fiscal
September 30, 1999 financial statements includes a going concern qualification
based on the Company's lack of capital and losses since inception.
The Company raised $1,514,175 through the issuance of the Company's common stock
during the quarter ending June 30, 2000 and plans to raise an additional
$2,500,000 to $10,000,000 during the quarter ending September 30, 2000 in
private placement transactions with accredited investors that are intended to be
exempt from registration pursuant to 506 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933. Based upon
the success of the private offerings, the Company expects to have sufficient
working capital for the near term, defined as one year. However, to complete the
current business model, the Company plans to raise significant additional funds
through the public or private offering of our common stock or otherwise.
INFLATION
The rate of inflation has had little impact on the Company's results of
operations and is not expected to have a significant impact on continuing
operations.
FORWARD LOOKING AND OTHER STATEMENTS
We have made statements in this document that are forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read these statements that contain these words carefully because they: (1)
discuss our future expectations; (2) contain projections of our future results
of operations or on our fiscal conditions, or (3) state other "forward-looking"
information.
We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or which we do not fully control. Important factors that could cause
actual results to differ materially from these expressed or implied by our
forward-looking statement, include, but are not limited to those risks,
uncertainties and other factors discussed in this document.
10
<PAGE>
RISK FACTORS WHICH MAY AFFECT OUR BUSINESS
WE MAY NEED ADDITIONAL CAPITAL TO CONTINUE OUR BUSINESS IF WE DO NOT GENERATE
ENOUGH REVENUE
We require substantial working capital to fund our business and may need more in
the future. We will likely experience negative cash flow from operations for the
foreseeable future. If we need to raise additional funds through the issuance of
equity, equity-related or debt securities, your rights may be subordinate to
other investors and your stock ownership percentage may be diluted. We cannot be
certain that additional financing will be available to us.
OUR MANAGEMENT'S EXPERIENCE IN THE E-COMMERCE INDUSTRY IS LIMITED AND WE MAY
FAIL TO HIRE, RETAIN AND INTEGRATE KEY PERSONNEL
Our success depends on the expertise of our key technical, sales and senior
management personnel. The Company's senior management has limited experience
operating and managing online stores engaged in the sale of various merchandise.
We depend heavily on the continuing service of our management and on their
ability to quickly develop an expertise in the e-commerce aspect of our
business. Loss of the services of John Sgarlat, our chairman and chief executive
officer, William Campbell, our chief financial officer, Gary Goodell, our chief
operating officer, or other key employees would hurt our business.
Our success depends on our ability to continue to attract, retain and motivate
skilled employees who can effectively manage an online business. Competition for
qualified e-commerce employees is intense. We may be unable to retain our
present key employees or to attract, assimilate or retain other qualified
employees in the future. We may experience difficulty in hiring and retaining
skilled employees with appropriate qualifications. Our business will be harmed
if we fail to attract and retain key employees.
WE MAY NOT CLOSE PENDING TRANSACTIONS WHICH ARE INTEGRAL TO OUR SUCCESS.
We are in the process acquiring MPI Productions International, Inc. ("MPI"), and
presently we own 35% of MPI common stock. MPI is a full-service video production
and post-production company for broadcast television, corporate and industrial
clients, and the home video market. We are in the process of seeking and
negotiating other agreements, including acquisition, production and syndication
agreements, which are integral to our success. We cannot guarantee that the
Company will acquire MPI or close any other pending transactions which are
integral to our success. A failure to acquire MPI or close any other integral
transactions may harm our business.
11
<PAGE>
OUR OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
Our revenues and operating results may vary significantly from quarter to
quarter due to a number or ability to produce quality programming of factors.
Many of these factors are outside our control and include:
- our ability to produce quality programming;
- timing of production and broadcasting of our programs;
- fluctuations in consumer purchasing patterns and advertising
spending;
- changes in the growth rate of Internet usage and online user
traffic levels;
- actions of our competitors;
- the timing and amount of costs relating to the expansion of
our operations and acquisitions of technology or businesses;
and
- general economic and market conditions.
Because we have a limited operating history , our future revenues are difficult
to forecast. A shortfall in revenues will damage our business and would likely
affect the market price of our common stock. Our limited operating history and
the new and rapidly evolving Internet market make it difficult to ascertain the
effects of seasonality on our business. If seasonal and cyclical patterns emerge
in Internet purchasing, our results of operations from quarter to quarter may
vary greatly and may cause our business to suffer.
WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE AS WE FACE INTENSE COMPETITION FROM
INTERNET-BASED AND RETAIL-BASED BUSINESSES.
We cannot assure you that we will be able to compete successfully or that
competitive pressures will not damage our business. Our competition includes:
- television production companies;
- traditional retailers;
- Web sites maintained by online retailers of similar
merchandise;
and
- Internet portals and online service providers that feature
shopping services, such as America Online, Yahoo!, Excite and
Lycos.
We believe that our ability to compete depends on many factors, including:
- The quality of our programming;
- The market acceptance of our programming, products, Web sites
and online services; and
- the success of our sales and marketing efforts.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
eContent, Inc.'s predecessor had commenced an action against its former
president of its MBT subsidiary. On May 16, 1996 we terminated the
President of the former PTS subsidiary. The former president of the PTS
subsidiary has commenced an action for wrongful termination and the
Company has defended its position and has commenced a countersuit
alleging misrepresentation in connection with the acquisition of PTS.
The Company filed for reorganization under Chapter 11 of the bankruptcy
laws, which has been approved by the court and which has been deemed
effective on January 4, 1999. The above claims against the Company have
been dismissed as a result of the reorganization. The former president
of the PTS subsidiary has appealed this decision and the Company's
counsel has advised them it is unlikely he will prevail on any or all
of his claims, however the company has reserved 58,333 shares of common
stock.
Item 2. Changes In Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant, caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
eContent Inc.
(Formerly Media Vision Productions, Inc.)
Dated: August 11, 2000
by: /s/ John P. Sgarlat
-------------------------------
John P. Sgarlat, Chairman, CEO
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
By: /s/ JOHN P. SGARLAT August 11, 2000
----------------------------
John P. Sgarlat, Chairman, CEO
By: /s/ WILLIAM H. CAMPBELL August 11, 2000
----------------------------
William H. Campbell, CFO
By: /s/ GARY A. GOODELL August 11, 2000
----------------------------
Gary A. Goodell, COO
14
