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 March 31, 2000 Commission File No. 133-16736
eContent, Inc. (formerly Media Vision Productions, Inc.
(formerly Gulfstar, Industries, 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 |X| No |_|
The number of shares outstanding of each of the registrant's classes of common
stock as of March 31, 2000 is 12,999,709 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.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
INDEX
-----
PAGE
PART I FINANCIAL INFORMATION
Consolidated Balance Sheet - March 31, 2000 1
Consolidated Statements of Operations - Three
Months Ended March 31, 2000 2
Consolidated Statements of Operations - Six
Months Ended March 31, 2000 3
Consolidated Statement of Cash Flows - Six Months
Ended March 31, 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 13
Security Holders
Item 5. Other Information 13
Item 6. Exhibits on Reports on Form 8-K 13
Signature Page 14
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(Unaudited)
Assets
Current Assets
Cash $ 15,708
-----------
Total Current Assets 15,708
-----------
Advance on production rights 375,000
-----------
Property and equipment, net of $5,551 accumulated
depreciation 16,633
-----------
Other Assets
Organization costs, net of accumulated amortization
of $22,620 67,861
Deposits 14,200
Deferred offering costs 4,975
Deposit on acquisition 4,150,000
-----------
Total Other Assets 4,237,026
-----------
Total Assets 4,644,377
===========
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable and accrued expenses 459,042
Accrued settlement 182,600
Due to officers' 39,235
Due to stockholder 15,000
-----------
Total Current Liabilities 695,877
Stockholders' Deficit
Common stock, par value $.08 per share; authorized
50,000,000 shares, 12,999,709 issued and outstanding 1,039,977
Convertible preferred stock, authorized 1,000,000
shares, par value $10.00; no shares issued
and outstanding --
Additional paid in capital 9,548,519
Deficit accumulated during development stage (6,457,396)
Treasury stock, 200,000 shares at settlement value (182,600)
-----------
Total Stockholders' Deficit 3,948,500
-----------
Total Liabilities and Stockholders' Deficit $ 4,644,377
===========
See notes to the consolidated financial statements. 1
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
STATEMENT OF OPERATIONS
(Unaudited)
From
April 1,
1998
For the (Date of
Three Months Ended Inception)
March 31, to
--------------------------- March 31,
1999 2000 2000
------------ ------------ ------------
Total Revenues $ -- $ -- $ --
------------ ------------ ------------
Costs and Expenses
Research and development 38,888 12,294 60,705
Syndication and production costs 38,500 -- 452,250
General and administrative 215,552 758,599 1,886,235
Depreciation and amortization 4,433 3,415 25,953
Stock based compensation -- 595,937 3,999,917
------------ ------------ ------------
Total Costs and Expenses 297,373 1,370,245 6,425,060
------------ ------------ ------------
Net Loss From Operations (297,373) (1,37,245) (6,425,060)
------------ ------------ ------------
Other Income (Expense)
Settlement expense -- -- (14,556)
Interest expense -- -- (17,780)
------------ ------------ ------------
Total Other Expense -- -- (32,336)
------------ ------------ ------------
Net Loss $ (297,373) $ (1,370,245) $ (6,457,396)
============ ============ ============
Loss per common share, basic
and diluted $ (.057) $ (.117)
============ ============
Weighted average common shares
outstanding, basic and diluted 5,203,878 11,680,403
============ ============
See notes to the consolidated financial statements 2
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
STATEMENT OF OPERATIONS
(Unaudited)
From
April 1,
1998
(Date of
For the Inception)
Six Months Ended to
March 31, March 31,
1999 2000 2000
------------ ------------ ------------
Total Revenues $ -- $ -- $ --
------------ ------------ ------------
Costs and Expenses
Research and development 38,888 16,818 60,705
Syndication and production 83,500 368,750 452,250
General and administrative 438,460 1,018,257 1,886,235
Depreciation and amortization 6,695 9,048 25,953
Stock based compensation -- 956,250 3,994,917
------------ ------------ ------------
Total Costs and Expenses 567,543 2,369,123 6,425,060
------------ ------------ ------------
Net Loss From Operations (567,543) (2,369,123) (6,425,060)
------------ ------------ ------------
Other Income (Expense):
Settlement expense -- (4,000) (14,556)
Interest expense -- (280) (17,780)
------------ ------------ ------------
Total Other Expense -- (4,280) (32,336)
------------ ------------ ------------
Net Loss $ (567,543) $ (2,373,403) $ (6,457,396)
------------ ------------ ------------
Loss per common share, basis
and diluted $ (.109) $ (.216)
------------ ------------
Weighted average common shares
outstanding, basic and diluted 5,199,712 11,003,801
------------ ------------
See notes to the consolidated financial statements. 3
<PAGE>
eCONTENT, INC.
A DEVELOPMENT STAGE COMPANY
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
April 1, 1998
(Date of
For the Inception)
Six Months Ended to
March 31, March 31
1999 2000 1999
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities:
Cash Flows From Operating Activities:
Net Loss $ (567,543) (2,373,403) (6,457,396)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 6,695 9,048 25,953
Interest expense -- -- 17,500
Loan fees -- -- 25,000
Non-cash Warrant, Stock based
compensation and expenses paid by stock -- 1,685,313 4,728,980
Changes in assets and liabilities:
Accounts payable and accrued
expenses 50,971 379,677 459,042
Deferred offering costs -- (4,975) (4,975)
Deposits (3,500) (10,000) (14,200)
----------- ----------- -----------
Net Cash Used In Operating
Activities (513,377) (313,980) (1,219,736)
----------- ----------- -----------
Cash Flows From Investing Activities:
Purchase of fixed assets (21,714) -- (22,184)
Payment of reorganization expenses (86,131) -- (90,481)
Advance to potential affiliate (53,892) -- --
Advance on production rights -- -- (375,000)
----------- ----------- -----------
Net Cash Used In Investing
Activities (161,737) -- (487,665)
----------- ----------- -----------
Cash Flows From Financing Activities:
Proceeds from the issuance of
common stock 823,907 -- 1,090,017
Proceeds of loans and advances -- -- 298,713
Advances from officers' -- 329,138 368,092
Advance from stockholder -- 15,000
Repayment of advances on expenses (48,713) -- (48,713)
----------- ----------- -----------
Net Cash Provided By
Financing Activities 775,194 329,138 1,723,105
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalent 110,080 15,158 15,708
Cash and cash equivalents, beginning
of period -- 550 --
=========== =========== ===========
Cash and cash equivalents, end of
period $ 100,080 $ 15,708 $ 15,708
=========== =========== ===========
</TABLE>
See notes to the consolidated financial statements. 4
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
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 six month period ended March 31, 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. The 1998 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 l0-KSB for the year
ended September 30, 1999.
SUPPLEMENTAL INFORMATION
For the Six Months
Ended
March 31,
1999 2000
---- ----
Interest Paid $ 0 $ 0
==== ====
Income Taxes Paid $ 0 $ 0
==== ====
B. REORGANIZATION AND SUBSEQUENT RECAPITALIZATION
In July 1997, the Company 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 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.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
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 December 31, 1999 includes the
accounts of the Company and its wholly owned subsidiary, Media Vision
Properties, Inc., which commenced operations on April 1, 1998.
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. RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations as incurred.
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.
In connection with the predecessor's acquisition and operation of its former
operating subsidiary PTS, the Company had terminated and commenced an action
against the former president of the PTS subsidiary. In turn, the former
president had commenced an action for wrongful termination against the Company.
These actions were dismissed in the bankruptcy proceedings and the former
president has appealed this decision. The Company has placed 200,000 shares in
escrow and recorded the shares as treasury stock pending the acceptance or lack
thereof of the offer. The offer value was based upon 58,833 shares reserved at
the time of the plan of reorganization at $.105 and 141,167 shares valued at
$1.25, the market price on the date the shares were put in escrow. The Company
will record a charge to additional paid in capital if the offer is accepted.
6
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
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 July 31, 1999, the Company entered into an agreement to acquire up to 100% of
the issued and outstanding shares of Iclas, Inc., a privately held New Jersey
corporation, subject to due diligence, for 1,000,000 shares of the Company's
stock and a working capital infusion of $500,000. The parties have extended this
agreement to January 31, 2000.
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:
Calendar Year Amount
------------- --------
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
On December 12, 1999 the Company agreed to acquire up to 100% of the issued and
outstanding shares of Media Productions International, Inc., ("MPI") a privately
held New York Corporation which primarily operates as a television production
company. The terms provide the Company will pay $1,150,000 by January 31, 2000,
$2,800,000 by June 1, 2000 and the issuance of 1,135,000 shares of the Company's
common stock. Additionally, the Company is to provide up to $550,000 working
capital and agreed to enter into an employment agreement with MPI's president.
On January 13, 2000 the Company agreed to assign certain licenses and
sublicenses, to Littlefield, Adams & Company in addition to assist them in
certain marketing efforts. The Company also agreed to, on a best efforts basis,
assist Littlefield, Adam., & Company "FUNW", a publicly traded company, in the
raising of equity capital. In consideration for the above the Company will
receive 42% of the fully diluted outstanding shares of "FUNW".
7
<PAGE>
eCONTENT, Inc.
(FORMERLY MEDIA VISION PRODUCTIONS, INC.)
(FORMERLY GULFSTAR INDUSTRIES, INC.)
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.
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
SIX MONTHS ENDED MARCH 31, 2000 VS. SIX MONTHS ENDED MARCH 31, 1999
The Company has not yet recorded any revenue. The Company recorded a net loss of
$2,369,403 for the six months ended March 31, 2000 as compared to a loss in the
prior period ended March 31, 1999 of $ 567,543. This represents a loss per
common share of $(.216) for the six months ended March 31, 2000 as compared to a
loss per common share of $(.109) for the period ended March 31, 1999. Research
and development expenses were $16,818 for the six months ended March 31, 2000
compared to $38,888 in the period ending March 31, 1999, and syndication and
production costs were $368,750 in the current period vs. $83,500 for the prior
period. General and administrative expenses were $1,018,257 in fiscal 2000 vs.
$438,460 for the same period in fiscal 1999. Additionally, the Company recorded
non-cash charges of $1,325,000 for stock options and stock grants, which
represents $956,250 in stock awards to employees and consultants during the
quarter ended March 31, 2000, and $368,750 for the value of options awarded the
to the production company in which the Company has entered into an agreement to
acquire, "MPI" , and its president, issued in the quarter ended December, 1999.
PLAN OF OPERATIONS
The Company has a five-year contract to produce network quality programming for
syndication to 351 Public Television Stations nationwide. The Company will
develop Internet Communities related to each show, offering exciting
information, chat lines, auctions, buyers clubs and other exclusive WEB
Membership Benefits. In connection with our strategic alliance with Media
Productions International, Inc. ("MPI"), a privately owned New York corporation,
Bob Marty has become the company's executive Director of Productions. Bob Marty
has produced 25 highly acclaimed Public Television specials in the past seven
years. The 101,000,000 loyal weekly viewers of Public Television have a proven
appetite for televised concerts, antique/collectible auctions, self-improvement
programs and children's entertainment.
On January 31, 2000 the Company agreed to acquire 42% of Littlefield, Adams &
Company "FUNW", a publicly held Company on the OTC Bulletin Board, in exchange
for the assignment of certain licenses, sublicenses and marketing efforts. The
Company also agreed on a best-efforts basis to assist Littlefield & Adams in
obtaining $1,000,000 of equity capital.
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 is in the process of evaluating the computer systems they now have
in use and does not anticipate a major undertaking to be compliant.
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 material year 2000 issues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit at March 31, 2000 was $680,169.
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 had planned to raise between $1,875,000 and $3,000,000 through the
issuance of the Company's common stock during the quarter ending March 31, 2000
and an additional $5,000,000 to $10,000,000 during the quarter ending June 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 l933.Due to current market conditions thes have been delayed to the June and
September quarters, respectively. Based upon the success of the private
offerings, the Company expects to utilize a minimum of approximately $1,150,000
cash and 1,135,000 shares of common stock to close the scheduled merger and
acquisition of Media Productions International, Inc. ("MPI") in the quarter
ending March 31, 2000 and $2,800,000 to complete the "MPI" transaction in the
quarter ending June 30, 2000.
Should the Company not complete the merger and acquisition of MPI, the strategic
alliance and production schedules will continue.
The Company will utilize a minimum of $500,000 cash and up to 1,000,000 shares
of common stock should it close the proposed acquisition of ICLAS, Inc.
The Company intends upon ;first acquiring MPI and will evaluate the potential
closing of ICLAS, Inc. depending upon the Company's working capital.
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.
10
<PAGE>
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.
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 of negotiating the acquisition of MPI Productions
International, Inc. ("MPI") with MPI's president and sole shareholder, Bob
Marty. 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
11
<PAGE>
acquire MPI or close any other integral transactions may harm our business.
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 in treasury 200,000 shares in escrow
valued at $182,600.
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: May 12, 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 May 12, 2000
-------------------------------
John P. Sgarlat, Chairman, CEO
By: /s/ William H. Campbell May 12, 2000
-------------------------------
William H. Campbell, CFO
By: /s/ Gary A. Goodell May 12, 2000
-------------------------------
Gary A. Goodell, COO
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
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