CREATIVE PROGRAMMING & TECHNOLOGY VENTURES INC, 10KSB, 1996-12-16

CREATIVE PROGRAMMING & TECHNOLOGY VENTURES INC
10KSB, 1996-12-16
GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES)

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-19817

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
--------------------------------------------------
(Name of small business issuer in its charter)

Colorado 84-1236669
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

7900 East Union Avenue, Suite 1100, Denver, CO 80237
----------------------------------------------------
(Address of Principal Executive Offices)

Telephone number, including area code: (303) 694-5324

Securities registered under Section 12(b) of the Act: None.

Securities registered under Section 12(g) of the Act:

Common Stock
------------
(Title of Class)

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /

<PAGE>

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in his form and no disclosure will be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB: [ ]

State issuer's revenues for its most recent fiscal year: $60,650 Fiscal year
ended August 31, 1996.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock ($.4062), as of August 31, 1996: $895,000.

Shares of common stock outstanding as of September 1, 1996: 3,210,089.

There are no documents incorporated by reference into this Form 10-KSB.

<PAGE>
PART I

ITEM 1. BUSINESS
--------

(a) Business Development

Creative Programming and Technology Ventures, Inc. (referred to herein as
the "Company" and "CPTV") was formed under Colorado law in July 1993 for the
purpose of producing and distributing innovative advertising, interactive
digital entertainment. In August 1993, the Company acquired Celluloid Studios,
Inc., a Denver, Colorado based advertising company producing animated and mixed
media television commercials. The Company completed a public offering of
2,300,000 shares of its common stock in November 1993, resulting in net proceeds
to the Company of approximately $7,700,000.

CPTV's original goal was to use the creative and technical foundation of
Celluloid Studios to provide an entree into the interactive CD-ROM consumer
products market. As described in the Company's Form 10-KSB for the year ended
August 31, 1995, the Company sold its interest in Celluloid Studios effective
May 31, 1995. Following the divestiture of its interest in Celluloid Studios the
Company narrowed its scope to building games for third party publishers through
its Alexandria subsidiary and to joint venturing the production of its own
original consumer game products and intellectual property through Off World
Entertainment, Inc. d/b/a OddWorld Inhabitants, Inc. (referred to herein as
"OddWorld").

The Company successfully transitioned its business into the interactive
entertainment business by acquiring Alexandria, Inc. (a California Company) and
subsequently made a major equity investment and project financing to co-publish
its first interactive game through an ownership interest in Off World
Entertainment, Inc., which is described more fully below. However, due to
increased competition, industry consolidation, escalating product costs, and
marketing risk associated with the Company's OddWorld investment, the Company's
Board of Directors made a strategic decision to exit the interactive
entertainment business sector by divesting its OddWorld interest for a gain and
substantially downsizing its Alexandria operations.

The Company's executive offices are located at 7900 East Union Avenue,
Suite 1100, Denver, Colorado 80237, and its telephone number is (303) 694-5324.

Certain capitalized terms and acronyms used herein are defined below in the
"Glossary," commencing at page 4.

<PAGE>

Glossary
- --------

This report uses numerous terms common to the interactive entertainment
sector of the computer hardware and software industry. The following sets forth
definitions of the terms used herein:

Bit - In computer terminology, the smallest possible piece of information
which operates in binary (i.e., it is either "on" or "off").

CD-ROM - Compact Disk Read Only Memory. A CD which plays on a home music CD
player is a form of CD-ROM. It can only be read (i.e., played) and not written,
it cannot save new music files to the disk. CD-ROM also refers to a type of disk
and its disk drive which can be attached to an ordinary home computer. It
carries software and data imprinted on the disk. CD-ROMs are digital storage
media, like a floppy disk, or a hard drive, but with extremely high data
capacity due to the use of optical techniques. Thus thousands of times more
information can be stored on a CD-ROM for retrieval at the computer console.
CD-ROMs may contain visual images (pictures), sound, and/or text.

Computer Graphics - Visual displays of scenes, characters or abstractions
created entirely by computer. Often used in the term computer graphics imagery,
abbreviated CGI.

Digital - Technology wherein data (alphanumeric, pictures, and sound) are
converted into a set of on and off messages (see "bit" above) which makes the
data manipulable using a computer.

Edutainment - Educational entertainment programming.

Game console - See video game system, herein below.

Hardware - Computers; devices including electronic circuitry which responds
to software instructions as well as all attachments used to input data or
commands and to output manipulated data.

Interactive - Whether on television or on a computer, interactive refers to
the ability of the user to control what they see and to engage in two-way
communication.

Mixed Media - Combinations of any two or more of the following: motion
picture photography, still photography, videography, computer generated imagery,
special effects, and animation.

Multimedia - A term referring to any mix of differing media or
technologies, i.e., a multimedia presentation may consist of music, graphics and
text. These presentations may involve several pieces of hardware, i.e.,
computer, videotape, MIDI (digital music) setup, or any of a dozen other
presentation tools.

<PAGE>

Multimedia PC (MPC) - A personal computer (especially an IBM-compatible PC)
capable of employing software, especially that which is recorded on a CD-ROM,
incorporating extensive use of high-resolution graphics images (photographic
quality pictures), audio-CD quality stereo sound, and full-motion video, with
high speed access.

Next generation video games - Video game system hardware designed to
operate at 32- and 64-bit (defined herein below) speeds. Next generation systems
include Atari Jaguar, 3DO, Sega Saturn, Nintendo Ultra-64, and Sony
PS-X/Playstation.

Port (vb.) - to adapt or re-program interactive entertainment software
created for one proprietary video game system (VGS) platform so that it will
operate on a different platform.

Random Access Memory (RAM) - RAM is a type of memory or storage built into
many types of computer-based equipment, including VG8 systems and computers. RAM
allows the software to "load" itself for faster access by the "brain" of the
aforesaid equipment.

Resolution - Each image is measured by the number of dots per inch, many
laser printers use approximately 300 dpi, the number of lines of information per
page, and, in computer generated graphics, the number of picture element
(pixels) of information per frame. The resolution achieved for high resolution
film is 3,000 by 4,000 pixels.

Software - The coded instructions supplied to a computer which control the
manner in which the various hardware components process information.

Three-dimensional computer graphics - Scenes, characters or other computer
graphics (defined herein above) having the appearance of not only width and
height (as in the classic hand-drawn cartoon animations) but also depth, as in a
motion picture.

32-bit and 64-bit - An engineering term referring to the speed at which a
video game system can process instructions from the user through the software.
The generation of video game systems which is currently widely in use operates
at 16-bits, including Sega Genesis and Super Nintendo Entertainment System.

VGS platform - 1) A specific, video game system (defined below) with a
proprietary standard for software to operate therewith; 2) the proprietary
software standard of a specific make and model of video game system.

<PAGE>

Video game system - Computer hardware, sometimes called game consoles,
specifically designed for the purpose of playing video games, including control
devices (e.g. "joy sticks" and other kinds of controllers) and adapters designed
to enable use of different software formats.

(b) Business of the Issuer

General - Historical
- --------------------

The Company has been offering creative services for the entertainment
industry since August 1993, when it acquired Celluloid Studios, Inc. (which
subsidiary was sold effective May 31, 1995, as described below). After the
completion of its initial public offering, CPTV set out to diversify into the
development of interactive entertainment consumer products by wholly acquiring
Alexandria, Inc. which developed games for third party publishers. In late 1994,
the Company began to finance a second subsidiary Off World Entertainment, Inc.
(d/b/a OddWorld Inhabitants, Inc. ("Oddworld") to develop 32-bit game systems
for advanced game platforms which, at that time, had negligible market
penetration. After the installed base of newly introduced advanced game
consoles, such as Sony PSX, and Windows 95(SDK) began to penetrate the market,
the Company focussed its effort on the creation of an originally produced game
property through OddWorld.

As was publicly reported in September 1994, CPTV embarked on a speculative
strategy in the interactive entertainment business when CPTV co-founded
OddWorld. The decision to launch OddWorld was part of a plan to diversify CPTV
from the lower margin "work for hire" services then being performed by CPTV's
Alexandria, Inc., subsidiary into the production of proprietary games designed
for advanced (32-bit and beyond) platforms. Under the "work for hire" model,
Alexandria built products around intellectual property owned by major third
party entertainment publishers in exchange for certain development fees and a
royalty from retail sales after development costs had been recouped.

The investment in OddWorld was intended to be an alternative strategy for
CPTV centered around creating its own products and the underlying intellectual
property. However, significant cost escalations and time delays in OddWorld's
operations required CPTV to commit the majority of its resources to mature its
investment therein. This investment eliminated some of the diversification that
CPTV originally had sought. CPTV also borrowed an additional $500,000 from
affiliates to protect its investment in OddWorld and suplement its working
capital needs and this resulted in total expenditures by CPTV of approximately
$3.7 million. The game, known as "SoulStorm(TM)," the first product of the
proposed "StoryDwelling Adventure" series, is still in development and will not
be completed until 1997. Several leading publishers reviewed SoulStorm(TM) and
expressed a significant degree of interest in it. In order to ensure the

<PAGE>

completion and marketing of SoulStorm(TM), to look in and provide CPTV with a
substantial return on its investment, and to allow it to divert its resources
into other areas, CPTV agreed to sell its entire interest in OddWorld to GT
Interactive Software Corp. ("GT"), a NASDAQ-listed, leading global publisher of
interactive entertainment, edutainment, and value-priced software.

The Company's Subsidiaries
- --------------------------

CPTV has primarily operated through its subsidiaries since its acquisition
of Celluloid Studios in August 1993. The Company may or may not continue to
operate in this manner after the divestiture of its OddWorld investment. The
following describes the historic areas of participation for the Company's
subsidiaries.

Alexandria. In November 1994, CPTV completed the acquisition of the entire
outstanding capital stock of Alexandria, Inc.

Alexandria was formed on July 2, 1992 as a California corporation, and is
located in San Luis Obispo, California. As Visions Unlimited, a California
general partnership, Alexandria was previously involved in the creation of
interactive entertainment software for use on the most popular home video game
systems including Sega Genesis, Super Nintendo, Sega CD, and 3DO CD-ROM
platforms.

Alexandria had historically provided contract services for game production
with TekMagic, Inc., who later assigned their interest in Sylvester and Tweety
in Cagey Capers to Time Warner Interactive, U.S. Gold, Inc. (for a game based on
the Atlanta 1996 Summer Olympic Games), InterPlay Productions, Inc. and Virgin
Interactive Entertainment, Inc., who later divested the Warner licensed game
"Demolition Man" to Acclaim Entertainment.

OddWorld. On September 27, 1994, CPTV, through KG Squared, Inc. ("KG
Squared"), committed to invest $2,252,646 for the purpose of seeding OddWorld's
start-up and creation of an original series of interactive games through
OddWorld Inhabitants, a privately-held Delaware corporation ("OddWorld").

In return for CPTV's investment, it received 49% of the outstanding voting
common stock of OddWorld and 100% of the outstanding non-voting Class A
preferred stock. The other two individual founders of OddWorld retained 51% of
the voting common stock of OddWorld. Non-voting common stock amounting to 10% of
the equity of OddWorld had been reserved for issuance to non-management
employees and officers of OddWorld, of which 3% had been issued. Non-voting
common stock amounting to another 10% of equity was additionally owned by CPTV
through Alexandria.

<PAGE>

OddWorld was formed in 1994 as a Delaware corporation and is located in San
Luis Obispo, California. CPTV made the investment in OddWorld because it felt
there were very few well qualified computer graphic imagery (CGI) producers and
real-time 3D animators of OddWorld's caliber and it wanted to create its own
intellectual property rather than continue to produce games for outside
companies which were more dependent on third-party content. OddWorld's overall
production experience and its high end 3-D computer graphics history, coupled
with its personnel's knowledge of film, choreography, and environmental design,
provide a powerful new element to the process of video game production.

When CPTV acquired its interest in OddWorld, the parties had agreed on a
budget of approximately $2.3 million for development of SoulStorm(TM), the major
asset of OddWorld. At that time, the founding principles anticipated that
SoulStorm(TM) would be marketable in late 1996. Significant delays occurred, and
development of SoulStorm(TM) has cost approximately $3.7 million and was
expected to cost an additional $1 million or more, and the release date slipped
to late 1997.

Through September 13, 1996, CPTV and its affiliates had been called upon to
provide 100% of the financing for the development of SoulStorm(TM). CPTV
completed its purchase of the Series A Preferred Stock in or about February
1996, and continued to loan additional funds to OddWorld necessary for OddWorld
to continue the development of SoulStorm(TM). In May and June 1996, OddWorld was
in need of additional working capital. Even though CPTV had no obligation to
advance additional working capital at that time, no other source of financing
was available to OddWorld and CPTV felt it was imperative to protect its
investment in OddWorld. In July 1996, OddWorld entered into a Loan and Security
Agreement whereby it acknowledged that CPTV had loaned $769,000 in addition to
the Series A Preferred investment, and in which CPTV agreed to advance an
additional $500,000 by September 1, 1996. On August 30, 1996, CPTV advanced
$64,300 (which amount was in excess of the required $500,000). In addition, CPTV
has provided OddWorld with a guarantee allowing OddWorld to purchase
approximately $275,000 worth of equipment and CPTV, through its Alexandria,
Inc., subsidiary, has leased OddWorld extensive additional equipment.
Consequently, CPTV believes that it provided OddWorld with approximately $3.7
million in financing, an amount which has been insufficient to complete the
development of SoulStorm(TM) after a two year period because of unanticipated
time delays and significant budget overruns.

In the Loan and Security Agreement, OddWorld granted CPTV a security
interest in all of OddWorld's tangible and intangible assets to collateralize
the repayment obligation for both the $769,000 and the $500,000 loans. In
addition, the loans are convertible into OddWorld Class A common stock at the
rate of $230 per share. The Loan and Security Agreement required interest at 12%
per annum, and repayment on demand at any time on or after the earlier of
September 1, 1996 or such time as a third party acquires CPTV's entire interest
in OddWorld. At the time that OddWorld and KG entered into the Loan and Security

<PAGE>

Agreement, OddWorld and KG were engaged in negotiations with GT relating to the
GT Transactions. CPTV has agreed not to exercise its conversion right pending
the closing of the GT Transactions. The repayment obligation under the Loan and
Security Agreement were deferred, pending CPTV shareholder approval and the
release from escrow of the documents and funds necessary to complete the GT
Transactions, as described below.

On September 13, 1996, the parties executed agreements for the completion
of a related series of transactions whereby CPTV would sell its entire debt and
equity interest in OddWorld to GT, and GT would make certain financial
commitments to OddWorld (the "GT Transactions"). The transactions contemplated
by these agreements (the "GT Agreements") involve OddWorld, Ms. McKenna and Mr.
Lanning, CPTV and KG:

In a complex series of transactions, CPTV agreed to sell its interest in
OddWorld by exchanging its Class A and B Common Stock and Series A
Preferred Stock for a newly-created voting Series B Preferred Stock of
OddWorld, and then to sell to GT all of this Series B Preferred Stock and
assign all "Affiliate Indebtedness" to GT for $7 million less accrued,
unpaid expenses as of August 16, 1996 (approximately $175,000). "Affiliate
Indebtedness" includes all amounts owing under the Loan and Security
Agreement, including the $769,000 and the $500,000 loans described above,"
amounts owed to Alexandria for rental and other payments, and other amounts
owing by OddWorld to CPTV, Alexandria, or any other affiliate of CPTV,
including the $64,300 advance made on August 30, 1996. In addition,
Alexandria conveyed all of its assignable assets (including software,
hardware, fixtures, and contract rights associated therewith) to OddWorld.

GT also agreed to provide additional financing to enable OddWorld to
complete SoulStorm(TM), and OddWorld entered into new employment agreement
with its management.

The GT Transactions were closed on September 13, 1996. However, because the
GT Transactions required approval of the shareholders of CPTV, all agreements
and funds were placed in escrow pending CPTV shareholder approval. Shareholder
approval was obtained on November 15, 1996.

In accordance with the GT Agreements, the escrow agent for the GT
Transactions (Republic National Bank of New York) is retaining 10% of the
purchase price ($700,000 plus interest earned on the deposit) in escrow for an
additional two years. The purpose of this holdback escrow is to provide GT with
potential recourse against any valid future claims should any of the
representations and warranties made to it by CPTV or KG in the Purchase
Agreement lead to any valid claims against CPTV's interest. Under the agreement,
GT may make no claim unless the total of all claims results in damages to GT
exceeding $100,000. Thereafter, GT may claim all damages suffered as a result of
breaches of representations and warranties in excess of $100,000, but all
potential future claims and liabilities will be capped at $2,000,000 of the

<PAGE>

original $7,000,000 purchase price (such cap including the $700,000 holdback).
In the agreements with GT, CPTV made numerous representations and warranties,
including a representation that the intellectual property included in
SoulStorm(TM) is owned by OddWorld. Based on its knowledge, CPTV believes that
the representations and warranties were true and correct in all material
respects when made. CPTV does not anticipate that any substantial claims will
arise therefrom. It must be recognized, however, that no assurances can be given
in this regard, and that if any claim does arise and is found to be valid, CPTV
could incur total liabilities of up to $2,000,000 (including defense costs) over
the next two years.

Celluloid Studios. In August 1993, the Company acquired Celluloid Studios,
Inc., a Colorado corporation ("Celluloid Studios") which has produced over 100
commercials utilizing live action, animation, and combinations of live action
and computer generated effects. Effective May 31, 1995, the Company sold its
interest in Celluloid Studios to Visitor, Inc. As consideration for the sale,
Celluloid repaid in full a $100,000 working capital loan outstanding from CPTV.
In addition, the purchaser paid CPTV $100,000 cash and issued CPTV a 30 month,
12% promissory note in the amount of $220,000. All required payments have been
made by Celluloid Studios on time as of this filing and the outstanding balance
for this Note is now $111,206 with a maturity of December 19, 1997. The note is
secured by substantially all of the assets of Celluloid.

CPTV had purchased Celluloid in 1993 with the intent of adapting its
animation capacity to the production of interactive content for PCs and advanced
video game systems. Subsequent to the Celluloid purchase, CPTV acquired
Alexandria, Inc. ("Alexandria"), an already established game production company,
and invested in OddWorld. The Alexandria and OddWorld acquisitions allowed CPTV
to focus its energies on building its software development holdings and
producing leading edge games on next generation platforms and advanced
multi-media PCs. Consequently, CPTV concluded that Celluloid's emphasis on
animated commercials was no longer consistent with CPTV's core plan to build
interactive entertainment for the consumer marketplace.

As a result of the sale, CPTV has treated Celluloid as a discontinued
operation during the fiscal year ended August 31, 1995.

Current Business of CPTV
- ------------------------

Currently CPTV has two subsidiaries, KGSI and Alexandria. Neither of these
subsidiaries is currently engaged in any significant operations. As a result of
shareholder approval of the GT Transactions, CPTV no longer has any direct or
indirect interest in OddWorld, SoulStorm(TM), or certain of the Alexandria
assets which were conveyed to OddWorld as a part of the GT Transactions. In
November 1996, CPTV received approximately $6,167,000 as a result of the
completion of the GT Transactions. (CPTV received an additional $14,000 accrued
interest in December 1996.) The remaining $700,000 is being retained in the

<PAGE>

holdback escrow which is being reasted as restricted cash on CPTV's balance
sheet. In September 1998 the funds in the holdback escrow will be released to
CPTV unless a valid claim is authorized therein and this reduces the holdback
provision.

In addition, OddWorld assumed all liabilities with respect to third party
leases of equipment and loans collateralized by equipment which have been
guaranteed by CPTV. This resulted in the return of approximately $335,000 to
CPTV in addition to the purchase price.

Initially, KG and CPTV will use the proceeds to pay all existing debts,
professional fees, and expenses (estimated to be approximately $900,000 at
August 31, 1996, including the $500,000 loan plus interest payable to Messrs.
Kim and Gary Magness and Gary Vickers for the loan made in July 1996 to provide
financing to OddWorld). CPTV continued to incur expenses in connection with its
operations, and legal and accounting costs relating to the GT Transactions in
amounts which will be determined in connection with CPTV's quarterly report on
Form 10-QSB for the quarter ended November 30, 1996.

As a result of the completion of the GT Transactions, CPTV will have a
substantial amount of liquid capital which it will invest in certificates of
deposit, short-term obligations of the United States government, or other
suitable short-term investments. The CPTV Board of Directors will consider
various alternatives for CPTV, including (without limitation) seeking and
considering other business opportunities that may be presented to CPTV or making
a partial or full distribution of the net cash proceeds to the shareholders or,
possibly, a liquidation. CPTV may also consider a corporate stock repurchase if,
in the opinion of the Board of Directors, circumstances so warrant. The Board of
Directors believes that CPTV may be an attractive merger or acquisition target
for successful businesses that may be in need of additional working capital or a
public shareholder base. Such a transaction will possibly give the shareholders
of CPTV an interest in a related or new line of business and the opportunity to
grow with the business combination. If after a reasonable period of time the
Board of Directors has not identified any business combinations that it believes
its shareholders will support, the Board will consider the alternatives of
paying cash dividends to shareholders, or recommending to the shareholders a
full liquidation of the Company. Any dividend or liquidation would have tax
consequences on shareholders which the Board would have to consider at the time.
Furthermore, the Company would have to ensure that it retained sufficient funds
for an extended period of time (up to two years and $2,000,000 or more) to
ensure that CPTV had provisions for any and all potential and contingent
liabilities with respect to representations and warranties, and other issues.
Consequently if any payment to shareholders (whether by way of dividend or
liquidation) is to occur, it would likely entail at least two different payout
stages. The Board has made no determination with respect to the foregoing and
initially has set out and directed management to actively look for suitable
business combinations.

Although it believes that it has developed a specialized knowledge of the
interactive entertainment industry, CPTV does not propose to restrict its search
for investment opportunities to any particular industry. CPTV anticipates that

<PAGE>

the selection of a business opportunity will be a complex process and will
involve a number of risks since emerging growth business opportunities are
inherently more volatile than mature businesses. As a result of rapid
technological advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking the available
capital which CPTV will have or the benefits of a publicly traded corporation,
or both.

CPTV anticipates that business opportunities will be brought to its
attention from various sources, including its officers and directors,
professional advisors such as attorneys and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals.

To a large extent, a decision to participate in a specific business
opportunity will be made upon management's analysis of the quality of the other
firm's management and personnel, or the ability of CPTV's management to assume
management of the target firm; the anticipated acceptability of new products or
marketing concepts; the merit of technological changes; and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, the historical
operations of a specific firm may not necessarily be indicative of future
potential due to proposed remedial measures such as to shift marketing
approaches, expand operations, change product emphasis, change or substantially
augment management or make other changes. CPTV may be dependent upon the owners
of a business opportunity to identify problems. If CPTV participates in a
business opportunity with a newly organized firm or with a firm which is
entering a new phase of growth, CPTV will incur further risk since management of
the target company in many instances will not have proved its abilities or
effectiveness. It can be expected that a market for such firm's products or
services may not be established, and the profitability of the firm will be
unproven and unpredictable.

CPTV's Board of Directors has the authority to effect certain business
combinations without submitting the proposal to the shareholders for their
consideration. In some instances, however, the proposed participation in a
business opportunity or alternatively the full liquidation of the Company may be
submitted to the shareholders for their consideration, either voluntarily by the
Board of Directors to seek the shareholders' advice and consent, or because of a
requirement of state law to do so. Any shareholder vote will be solicited in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission and state law.

The Board of Directors and management of CPTV believe that the shareholders
of CPTV have historically not been able to realize the full value of their
holdings as the price of the CPTV common stock as reflected on the NASDAQ-Small
Cap market has consistently carried a market capitalization reflecting a steep
discount to CPTV's book value per share. Given the current depressed price of
CPTV common stock management of CPTV may at some time recommend that the Board
of Directors consider distributing a portion of the proceeds from the GT
Transactions to shareholders as a dividend or alternatively fully liquidating
the company while providing for contingent liabilities. If made, any such
distribution or liquidation may have tax consequences to the CPTV shareholders
receiving the dividend or return of capital. CPTV may also consider a corporate
stock repurchase if, in the opinion of the Board of Directors, circumstances so
warrant.

<PAGE>

(1) Principal products or services and their markets

As a result of the completion of the GT Transactions, the Company no longer
develops any products or provides any significant services. Therefore this item
is not applicable.

(2) Distribution methods of the products or services

As a result of the completion of the GT Transactions, this item is no
longer applicable.

(3) Status of any publicly announced new product or service

See Item 1b, above.

(4) Competitive business conditions

Competition in the interactive entertainment industry has been very high,
with a number of very large companies with significantly greater financial
resources than CPTV developing games and other forms of interactive
entertainment. Nintendo and Sega dominate the market for electronic game
platforms, but there are numerous independent publishing and development
companies who produce games under license to Nintendo or Sega. Sony is also
trying to aggressively enter into the business with the introduction of its new
Playstation game console. Electronic Arts, GT Interactive, Acclaim, Sierra
On-Line, Interplay Activision, Broderbund and a handful of others are some of
the dominant independent producers of video game software for the PC and game
consoles. There have also been many new announcements regarding well-financed
Silicon Valley based companies that are attempting to pursue similar businesses
to that of the Company.

As a result of the completion of the GT Transactions, however, CPTV is no
longer engaged in the development of interactive entertainment. The divestiture
of the OddWorld interest leaves CPTV with predominantly a cash balance sheet
with no substantive operation's reported on its income statement. As noted
above, while management believes that it has developed a specialized knowledge
of the interactive entertainment industry, CPTV does not propose to restrict its
search for investment opportunities to any particular industry. CPTV anticipates
that the selection of a business opportunity will be a complex process and will
involve a number of risks since emerging growth business risk. As a result of
rapid technological advances being made in some industries and shortages of
available capital, management believes that there are numerous firms seeking
either the available capital which CPTV will have or the benefits of a publicly
traded corporation, or both.

<PAGE>

(5) Sources and availability of raw materials and equipment

Not applicable.

(6) Dependence on one or a few major customers

Although Alexandria had historically been highly dependent on five major
publishers, who provided 100% of its revenue, these publishers did not
contribute significantly to CPTV's consolidated revenues during the 1996 fiscal
year. As a result of the completion of the GT Transactions, however, on a pro
forma basis CPTV does not have any significant amount of consolidated revenues
from operations.

(7) Patents, trademarks, licenses, franchise, concessions, royalty agreements,
or labor contracts, including duration

The Company has divested all rights it had to intellectual property, tools,
trademarks and patents in the GT Transactions. As a result, neither CPTV nor its
subsidiaries own any patents, registered trademarks or hold any material
licenses at this time.

(8) Need for government approval

Not applicable.

(9) Effect of existing or probable government regulation

Not applicable.

(10) Research and development expenditures

CPTV has made no expenditures for research and development activities
during the past two years except certain game development cost, and it has not
participated in any customer-sponsored research and development activities
during that period. From time to time during periods of idle development
capacity Alexandria has historically invested in internal proprietary tools and
technology.

(11) Costs and effects of compliance with environmental laws Not applicable.

<PAGE>

(12) Number of total employees and number of full time employees.

As of November 2, 1996, CPTV and its consolidated companies employed 2
full-time and 2 part-time personnel. There are currently no employees of
Alexandria. As a result of the completion of the GT Transactions effective
September 13, 1996, these employees are not consolidated with CPTV.

ITEM 2. DESCRIPTION OF PROPERTY
- ------- -----------------------

Neither CPTV nor any of its subsidiaries own any interests in real
property. CPTV and each of its subsidiaries have historically leased office
space from unaffiliated parties at rates which are determined by the local
markets.

ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------

The Company is a not a party to any material threatened or pending claims
as of the date of this report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------

None.

<PAGE>

PART II

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------- ------------------------------------------------------------------

(a) Market Information.

The Company's Common Stock is publicly traded in the over-the-counter
market and, since November 12, 1993, has been quoted on the National Association
of Securities Dealers, Inc.'s Automated Quotation System ("NASDAQ") Small Cap
Market under the symbol "CPTV." The range of high and low bid quotations for the
Company's Common Stock as provided by NASDAQ since it began trading is provided
below. These over-the-counter market quotations reflect inter-dealer prices
without retail markup, markdown or commissions and may not necessarily represent
actual transactions.

Bid Price
---------
For the Quarter Ended Low High
--------------------- --- ----

1994
November 30 $1.875 $2.56

1995
February 28 $1.50 $2.1975
May 31 $1.125 $2.625
August 31 $1.50 $2.625
November 30 $1.875 $2.00

1996
February 20 $0.531 $1.125
May 31 $0.375 $0.75
August 31 $0.188 $0.50
August 31 to date $0.375 $1.3125

(b) Holders.

(b)(1) The number of record holders of the Company's Common Stock on
December 30, 1996 was 73. This does not include an indeterminate number of
shareholders whose shares are held by brokers in street name.

(b)(2) Not applicable.

<PAGE>

Dividends are payable on Common Stock when, as, and if declared by the
Board of Directors out of funds legally available to pay dividends, subject to
any preferences which may be given to holders of preferred stock. The Company
has paid no cash dividends to date, however, the Board may consider the payment
of dividends or consider options to fully liquidate in the future. The Board's
policy on these issues will be in part driven by whether the public market for
its stock continues to trade at significant discounts to its cash value or book
value per share and whether a dividend would serve to generate full value for
CPTV's shareholders. The Company's ability to pay dividends to holders of its
common stock is not subject to any contractual limitations.

The Series A Preferred Stock is entitled to dividends on the same basis as
paid to the holders of common stock, whether or not the Series A Preferred Stock
has previously been converted into common stock. (See Item 12, "Certain
Relationships and Related Party Transactions," below.)

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
- --------------------------------------------------------------------------------

Introduction/General Discussion

For the past two years, CPTV has fully concentrated on and committed its
financial resources to the development of advanced platform (32 bit and beyond)
interactive entertainment (game) products. CPTV initiated its efforts in this
industry sector by acquiring Alexandria, Inc., in 1994. At the time that CPTV
acquired Alexandria, the market for 16 bit game consoles and related software,
namely for Nintendo and Sega brands, had fully matured and industry analysts
were projecting a vast and immediate replacement of the 30 million plus 16 bit
game console systems installed in the home by the new and improved 32 bit game
systems which promised much more advanced graphics and game play mechanics.

Citing these trends, CPTV anticipated a fast growing and emerging market
opportunity for companies that could produce new and unique software for these
advanced game platforms. The market formation and adoption of these new
platforms was, however, much slower to develop than the Company had predicted.
The 16-bit industry dramatically dropped prices and Nintendo and Sega introduced
new applications and titles to maintain market share for older systems.

These efforts delayed the timely formation of a meaningful 32 bit game
console installed base and depressed the industry, making it more difficult for
new entrant companies such as CPTV, who were relying on the revenue curve
guaranteed by timely replacement of older systems and the associated demand for
32 bit software. During this period in 1994-1995, CPTV recognized the
difficulties in the market and set forth in the business cautiously with a

<PAGE>

defensive business model. The Company deployed the majority of its game
development capacity in 1994-1995 towards building for outside third-party
publishers, rather than focusing on its own publishing efforts, which is very
capital intensive. This strategy staved off some of the risk inherent in
developing interactive game software during a period when it was difficult to
justify the expense of a speculative publishing effort with a small installed
base of 32 bit platforms.

CPTV initiated its original development and publishing efforts by
co-founding and capitalizing a start-up company, Off World Entertainment, Inc.,
d/b/a OddWorld Inhabitants, Inc. The decision to launch OddWorld was part of a
plan to diversify CPTV from the lower margin "work for hire" services then being
performed by CPTV's Alexandria, Inc., subsidiary into the production of
proprietary games designed for advanced (32-bit and beyond) platforms. Under the
"work for hire" model, Alexandria built products around intellectual property
owned by major third party entertainment publishers in exchange for certain
development fees and a royalty from retail sales after development costs had
been recouped.

The investment in OddWorld was designed to be an alternative more
speculative strategy for CPTV centered around creating its own products and the
underlying intellectual property. However, significant increases in the proposed
development cost and time delays in OddWorld's product release dates required
CPTV to dedicate most of its resources towards OddWorld to mature its investment
therein. This eliminated some of the diversification that CPTV originally had
sought, curtailed activities at Alexandria. CPTV invested substantially all of
its 1996 capital budget into OddWorld, and borrowed an additional $500,000 from
affiliates to protect its shareholders investment in OddWorld resulting in total
expenditures by CPTV of approximately $3.7 million. The game, known as
"Soulstorm(TM) ," the first product of the proposed "StoryDwelling Adventure"
series, is still in development and will not be completed until late 1997. In
order to ensure the completion and marketing of Soulstorm(TM); to lock in and
guarantee CPTV a substantial return on its investment; and to allow CPTV to
divert its resources into other opportunities; CPTV agreed to sell its entire
interest in OddWorld to GT Interactive Software Corp. ("GT"), a NASDAQ-listed,
leading global publisher of interactive entertainment, edutainment, and
value-priced software.

Liquidity and Capital Resources
- -------------------------------

The Company's primary source of liquidity and working capital derived from
the public offering completed in November 1993. The Company subsequently used

<PAGE>

proceeds primarily to acquire Alexandria and to create and finance OddWorld and
its initial title Soulstorm(TM), an original advanced 32 bit CD ROM game product
slated for Sony's new 32 bit Playstation (PSX) game console and Windows 95
platforms. In addition, the Company has used a portion of its net proceeds to
finance its operations.

CPTV's investment in OddWorld during 1996 was $3.7 million. Delays
encountered in the completion of Soulstorm(TM) project had a negative impact on
CPTV's liquidity and the Company and the OddWorld principals commenced
discussions with various game publishers in early 1996 regarding the acquisition
and publishing of OddWorld and the Soulstorm(TM) title. The Company completed
the GT Transactions in September 1996 (subject only to CPTV shareholder approval
which was obtained on November 15, 1996) and funds were released from Escrow on
November 18, 1996.

As a result of the completion of the GT Transactions, CPTV's liquidity and
capital resources changed significantly after September 13, 1996. (See pro forma
balance sheet included as a part of the financial statements attached hereto.)
CPTV conveyed assets in which it had a total debt and equity investment of
approximately $3,700,000 to GT and received net cash of approximately $6,200,000
(including the purchase price and the return of collateral less professional
fees and approximately $500,000 in affiliated debt). The escrow holdback of
$700,000 is included in this $6,200,000 estimation and will be treated as
restricted cash on CPTV's balance sheet.

At this time, CPTV has no capital commitments for the use of these sale
proceeds but will, as discussed above, consider various alternatives.

<PAGE>

Results of Operations
- ---------------------

General Discussion. CPTV recognized a consolidated net loss of $3,790,681
or $1.16 per share for the year ended August 31, 1995, verses a consolidated net
loss of $1,438,688 or .43 per share for the year ended August 31, 1996. These
net losses do not include any financial benefit to CPTV from the subsequent
September 13, 1996 (fiscal 1997) disposition of its OddWorld investment, which
will result in a significant one time net income gain to CPTV of approximately
$4,000,000 during the first quarter November 30, 1996 of CPTV's 1997 fiscal
year.

During fiscal 1996, the Company's total revenues were $60,560,
significantly reduced from $412,936 total revenues in fiscal 1995. The lower
revenues reflect a change in CPTV's business plan whereby it ceased offering
game development services which were reflected as revenues, and commenced
expenditures of its own game product which was not a revenue producing activity
in fiscal 1996. This reduction in revenues was also due to the 1995 sale by CPTV
of its Celluloid Studios subsidiary, effective May 31, 1995, and its reduction
and eventual termination of operations of its Alexandria subsidiary. In
addition, while OddWorld's Soulstorm(TM) game was originally intended to be
completed for distribution in 1996 which would have generated revenues, release
date delays and development cost increases contributed to year end deficits.

CPTV's liabilities increased significantly in the third quarter ended
August 31, 1996 as it was forced to borrow money to sustain and protect its
investment in OddWorld. Professional fees incurred for legal and accounting also
increased significantly which were primarily associated with due diligence and
transactional cost associated with the OddWorld divestiture.

CPTV's stand alone loss in 1996 was $1,179,078 million. Approximately
$415,000 of this amount associated primarily with legal and accounting
professional fees and the remainder associated with administrative salaries,
insurance, travel and games project costs which will not be completed as a
result of completing the GT Transaction.

Because of the completion of the GT Transaction in the first quarter of
fiscal 1997, CPTV expects that its operating expenses will be significantly
reduced during the current fiscal year, although CPTV has incurred expenses in
connection with the completion of the GT Transaction and will incur expenses in
reviewing other business opportunities.

OddWorld. The Company's OddWorld subsidiary was a primary contributor to
CPTV's consolidated loss as it reported a stand alone loss of $881,660 for its
August 31, 1996 year as compared to $397,000 for 1995. Increased accounting and
legal fees and administrative fees accounting for approximately $500,000
(incurred at CPTV) were also directly allocable to the recent OddWorld
divestiture. Overall, the increases in OddWorld losses are attributable to a
significantly larger permanent staff necessary to support the maturing product
development effort with respect to the Soulstorm(TM) title publishing effort.

<PAGE>

The Company's decision to support the OddWorld subsidiary and its
associated publishing efforts proved to be a good investment as it was able to
liquidate its 50% interest therein for a gross purchase price of $7 million.
This sale was realized on a total investment of approximately $3.7 million. The
Company projects it will report net income of approximately $4 million in its
first quarter ended November 30, 1997 as a result of the OddWorld divestiture.

Alexandria. Alexandria ceased its operations in November 1995 and no longer
has any employees. Prior to that date, Alexandria took advances from its
publishing clients and designed and built interactive video games on a turnkey
basis. While Alexandria deployed a defensive business strategy by accepting
third-party monetary advances against future product royalty streams, Alexandria
severely suffered from some of the repercussions of a difficult game publishing
environment because publishers were more price sensitive and let fewer game
development and porting contracts during fiscal 1995 and 1996. Publishers also
canceled several contracts with Alexandria, citing its failure to meet
milestones and market conditions. Alexandria's revenues and performance have
been severely impacted in the process declining from $413,000 during 1995 to
only $60,560 in 1996.

As a consequence of these losses and other factors, including the inability
of Alexandria's management to win contracts for new business resulting in
declining year to year revenues and increasing net losses, and the loss or
failure to perform on certain contracts, CPTV's Board of Directors determined
that a restructuring, incorporating a change in management along with attrition
of certain employees and a reduction in general and administrative overhead at
Alexandria, was in order. Accordingly, effective November 20, 1995, the
employment relationships with several of the management personnel and employees
at Alexandria were ended. Although CPTV took immediate and decisive steps to
downsize and curtail Alexandria's losses, operating cost and impaired product
development cost, which was expensed, caused Alexandria to report a $1,699,500
million loss for the year ended August 31, 1996, verses a loss of $654,000 for
the year ended 1995.

Impact of Inflation
- -------------------

The Company believes that its activities are not materially affected by
inflation.

Recently enacted accounting pronouncement:

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121), Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of. SFAS
No. 121 is effective for fiscal years beginning after December 15, 1995. The
Company's management has elected early adoption of this standard. SFAS No. 121
establishes recognition and measurement standards for the impairment of
long-lived assets expected to be held and used and long-lived assets to be
disposed of. Generally, assets to be held and used in operations are considered
impaired if the sum of expected undiscounted future cash flows is less than the
assets' carrying amount. If an impairment is indicated, the loss is measured
based on the amount by which the assets' carrying value exceeds its fair value.
Assets to be disposed of are reported at the lower of their carrying value or
fair value less estimated selling costs. Based on its review, the company has
recognized an impairment loss related to the excess purchase price over net
assets acquired (Note 5).

In addition, the FASB issued SFAS No. 123 Accounting for Stock-based
Compensation. SFAS No. 123 defines a fair-value-based method of accounting for
stock-based employee compensation plans and transactions in which an entity
issues its equity instruments to acquire goods or services from nonemployees.
SFAS No. 123 allows entitles to measure compensation costs related to employee
stock plans by either using the fair-value-based method or continuing to uise
the intrinsic-value-based method prescribed in Accounting Principles Board
Opinion No. 25 Accounting for Stock Issued to Employees (APB No. 25). The
effective date of the statement is for years beginning after December 15, 1995.
No material financial statement impact form the adoption of SFAS No. 123 is
expected as the Company plans to continue to apply APB No. 25 for its employee
stock plans. The Company has not yet determined when it will adopt SFAS No. 123.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------

Financial statements prepared in accordance with Item 310 of Regulation S-B
follow the signature page and are listed in Item 13 of this Annual Report on
Form 10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------

None.

<PAGE>

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
- ------- -----------------------------------------------

(a) Identification of Directors and Executive Officers.

The following table sets forth the names and positions of the directors,
executive officers and key employees of the Company:

Term of Office
Name Age Position as Director
- ---- --- -------- -----------

<S> <C> <C> <C>
Gary R. Vickers 37 President, Treasurer July 1993
and Chairman of the
Board of Directors,
President, OddWorld
Inhabitants Sept. 1994
President, Alexandria
Studios Nov. 1995

Gary Magness 42 Director July 1993

A. Richard Berman 52 Director September 1993

William Gladstone 46 Director* October 1993

Craig K. Tanner 43 Director* January 1994

Kim Magness Advisory Consultant N/A
</TABLE>

- ----------

* Messrs. Gladstone, and Tanner are members of the Company's audit/systems
committee and compensation committee.

The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Directors are nominated for election by the Board; any
shareholder may nominate directors for election at a meeting called for that
purpose provided the shareholder complies with certain advance notification

<PAGE>

procedural requirements including (without limitation) the requirement that not
less than 60 days before the record date for the meeting at which such
nomination is proposed to be made, the shareholder proposing to make a
nomination submits to the Corporate Secretary certain information regarding the
proposed nominee. Officers of the Company are elected annually by the Board of
Directors and hold office until their successors are elected and qualified.

The Company's Audit/Systems Committee acts as the liaison between the
Company and its independent public accountants. It's members consist of Messrs.
Gladstone and Tanner. The Audit/Systems Committee held one meeting during the
fiscal year and met and consulted several times with each other and the
Company's auditors by telephone. The Audit/Systems Committee is responsible for
reviewing and approving the scope of the annual audit undertaken by the
Company's independent accountants and will meet with the accountants to review
the progress and results of their work, as well as any recommendations the
accountants may offer. The Audit/Systems Committee will also review the fees of
the independent accountants and make recommendations to the Board of Directors
as to the appointment of the accountants. In connection with the Company's
internal accounting controls, the Audit/Systems Committee will review the
internal controls and reporting systems in place at the Company, review their
accuracy and adequacy with management and with the Company's independent
accountants.

The Company's Compensation Committee also consists of Messrs. Gladstone and
Tanner. The Compensation Committee also held two meetings during the fiscal
year. The Compensation Committee will review salaries, bonuses, and other forms
of compensation for officers and key employees of the Company and its
subsidiaries, and will establish salaries, benefits, and other forms of
compensation for new employees. Included in the Compensation Committee's
responsibility is issuance of stock bonuses and stock options under the
Company's two plans. In addition, the Compensation Committee will review other
matters concerning compensation and personnel as the Board of Directors may
request. The Compensation Committee will design the Company's compensation to
enable the Company to attract, retain, and reward highly qualified executives,
while maintaining a strong and direct link between executive pay, the Company's
annual financial performance, and stockholder return. The Committee believes
that officers and certain other key employees should have a significant stake in
the Company's stock price performance under programs which link executive
compensation to stockholder return.

Gary R. Vickers has been the President and Chairman of the Board of
Directors of the Company since its formation in July 1993. In September, 1994,
he became President and a director of OddWorld. In April, 1994 he became a
Director and in November, 1995 President, of the Company's Alexandria
subsidiary. Between 1991 and 1992 Mr. Vickers was employed by S.G.I. Corp., and
was the head of that firm's marketing and strategic planning for its entree into
on-line software and high-end graphics software development for a proprietary
line of parallel super computers. S.G.I. Corp. worked to produce and market

<PAGE>

a software product for on-line digital communications directed at home delivery
of information services accessible via personal computers. Prior to his
employment with S.G.I. Corp., Mr. Vickers has been involved in numerous private
and public ventures, inclusive of real estate development, investment banking
and other activities.

Gary Magness has been a Director of the Company since July 1993. Since
1976, Mr. Gary Magness has helped to manage family business interests. Since
1977 he has served as president of Magness Land and Cattle and of Limousine
Cattle and Arabian Corp. Both entities are primarily engaged in specialized
ranching and Arabian horse breeding. Since 1987, Mr. Magness has also served as
Vice President of IPC Corporation, a privately-held company that holds numerous
patents on plastic extrusion processes and compounds with potential application
in various industrial markets. Mr. Magness took courses in Business and
Agricultural Business at Western State College, Gunnison, Colorado.

Kim Magness has served the Company in an advisory capacity since July 1993.
Mr. Magness has been a director of Tele-Communications, Inc. ("TCI"), a
publicly-traded company, since 1985, representing his family interest in the
cable industry. He also manages other family business interests, mostly ranching
and breeding Arabian horses. Since 1987, he has also served as chairman and
president of IPC Corporation, a privately-held company that holds numerous
patents on plastic extrusion processes and compounds with potential application
in numerous industrial markets. In 1977, Kim Magness received a B.S. degree with
a major in Finance from the University of Denver.

The Magness family's interest in livestock, cattle, and Arabian horse
industries are widespread and comprehensive, and therefore draw upon a
substantial time commitment on the part of Messrs. Kim and Gary Magness. The
comprehensive cable and programming interests of the Magness family, as publicly
reported in the annual reports of TCI and Liberty Media, Inc., may also cause
certain conflicts of interest for Messrs. Gary and Kim Magness. See details,
below, in "Conflicts of Interest."

William Gladstone has been a Director of the Company since October, 1993
and has served as a consultant to the Company from time to time. See Item 11,
below. Mr. Gladstone is the founder and president of Waterside Productions,
Inc., a literary agency and book packager located near San Diego, California,
specializing in books about computers, technology and multimedia. Mr. Gladstone
founded Waterside in 1982 and since then has been devoting substantially his
full time to that business. With Waterside, Mr. Gladstone has developed an
expertise in the "how-to" market and has negotiated a large number of contracts
between his clients and publishers for whom his clients have created books,
videos, computer software, and CD-ROM products. Among the books he has assisted
are DOS for Dummies (IDG Press) and The Secrets of the Game (Prima Publishing).
Mr. Gladstone has also been editor-in-chief of Arco Publishing (1978-1980), a
book company that specialized in test preparation and how-to books, and from
1980 to 1981 was senior editor for trade books and founding editor for "Books

<PAGE>

for Professionals" for Harcourt Brace Jovanovich Publishing, Inc. Mr. Gladstone
received a bachelor's degree from Yale University in 1972 and a master's degree
from Harvard University in 1976. He is not the director of any other public
company.

Craig Tanner assumed a senior management position with Tele-TV, Inc. in
October 1995. From 1989 until 1995 he was Vice President, Advanced Television
Projects for Cable Television Laboratories, Inc. a non-profit corporation
conducting research and development activities for the cable television
industry. From March 1988 to May 1989, Mr. Tanner was Vice President, Planning
for the Engineering and Development Department of CBS Inc. Prior to 1988, Mr.
Tanner held various positions with CBS, Inc. and with Sony Communications
Products Company (including Business and Product Manager for Sony's high
definition systems video products). Mr. Tanner received bachelor's degrees in
Electrical Engineering and Communications from the University of Delaware in
1975, and a master's degree in Business Administration-Finance from Fairleigh
Dickenson University in 1981. He is not the director of any other public
company.

A. Richard Berman has been a Director of the Company since September, 1993.
Mr. Berman received a bachelor of Science degree in Finance from the University
of Southern California, in 1964, and a Juris Doctor degree from the University
of Denver , School of Law, in 1967. Mr. Berman maintained his own law practice
for a period of 20 years in the Denver area, engaged primarily in the practice
of general business law. During that time, and thereafter, he was involved in
numerous and varied business enterprises, acting as an attorney, real estate
broker, or a principal. Mr. Berman now pursues personal investment
opportunities.

(b) Identification of Significant Employees.

Not applicable. Prior to the sale of its interest in OddWorld, the Company
considered Sherry McKenna and Lorne Lanning to be significant employees. The
Company previously considered Charles E. Balthaser a significant employee, prior
to his departure.

Gary Magness is the brother of Kim Magness. Richard Berman is the
brother-in-law of Gary R. Vickers. There are no other family relationships among
the officers, directors and significant employees.

(d) Involvement in Certain Legal Proceedings:

During the past five years, and except as disclosed above, no director or
officer of the Company has:

<PAGE>

(1) Had any bankruptcy petition filed by or against him or any business of which
such person was a general partner or executive officer, either at the time of
the bankruptcy or within two years prior to that time;

(2) Had any conviction in a criminal proceeding or is subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);

(3) Been the subject of any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or

(4) Been found by a court of competent jurisdiction (in a civil action) or by
the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment or finding has not been subsequently reversed, suspended, or
vacated.

(e) Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers and persons who own more than ten
percent of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Directors, officers and greater than ten- percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
filed.

Based solely on its review of the copies of the reports it received from
persons required to file, the Company believes that during the 1996 fiscal year
and subsequently, all filing requirements applicable to its officers, directors
and greater than ten-percent shareholders were complied with except the
following instance: in 1996, Gary Magness filed a Form 5 reporting four
transactions that occurred in January, October, and December 1994; and in 1996,
Kim Magness filed a Form 3, and also filed a Form 5 reporting transactions that
occurred in April 1994. The Company is not aware of any other any other changes
in ownership by persons whose transactions are subject to reporting under
section 16(a) of the Exchange Act.

ITEM 10. EXECUTIVE COMPENSATION
- -------------------------------

(a,b) Summary Compensation Table.

The following table sets forth information regarding compensation earned by
the Company's chief executive officer, being the only executive officer of the
Company included in the table.

Annual Compensation ($$) Long Term Compensation
------------------------ ----------------------
Awards Payouts
------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted
Name and Stock Options LTIP Other
Position Year Salary Bonus Other Awards & SARs Payouts Compensation
-------- ---- ------ ----- ----- ------ ------ ------- ------------
($$) ($$) ($$) ($$) (##) ($$) ($$)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary R. Vickers
as President and 1996 186,000 -0- -0- -0- -0- -0- -0-
Chief Executive 1995 186,000 -0- -0- -0- -0- -0- -0-
Officer 1994 186,000 -0- -0- -0- -0- -0- 5,412
</TABLE>

The Company has no plans which result in the payment or accrual for payment
of any amounts to any executive officer in connection with his resignation,
retirement, or other termination, or change of control or change in the
executive officer's responsibilities except to the extent a change of control
will require a payment of the remaining amount due under Mr. Vickers' employment
contract.

The Company has not adopted a medical insurance, life insurance, or other
benefit plan for its employees. The Company currently has no stock ownership or
other profit-sharing or pension plans, but may adopt such plans in the future.
The Company has no retirement plans and, therefore, has made no contributions to
any such plan on behalf of the named officers. Alexandria has adopted a 401(k)
plan, but this plan is funded and managed by the plan participants. Alexandria
has made no contributions to this plan to date.

Stock Option and Stock Bonus Plan
- ---------------------------------

The Company adopted its 1993 Stock Option and Bonus Plan which provides for
the issuance of options or stock bonuses to purchase up to 1,000,000 shares of
Common Stock to employees, officers, directors of, and consultants to, the
Company. The purposes of the Plan are to encourage stock ownership by employees,
consultants and directors of the Company so that they may acquire or increase
their proprietary interest in the Company, to reward employees, directors and
consultants for past services to the Company and to encourage such persons to
become employed by or remain in the employ of or otherwise continue their
association with the Company. No stock bonuses or options to purchase any shares
have yet been issued under the 1993 Plan.

<PAGE>

The 1993 Plan is administered by the Board of Directors of the Company. In
its discretion, the Board may determine the persons to whom Options or Stock
Bonuses may be granted and the terms thereof. As noted above, the Board may
issue options to itself.

The terms of any Options or Stock Bonuses granted under the Plan are not
required to be identical as long as they are not inconsistent with the express
provisions of the Plan. In addition, the Board may interpret the Plan and may
adopt, amend and rescind rules and regulations for the administration of the
Plan.

Options may be granted as incentive stock options ("Incentive Options")
intended to qualify for special treatment under the Internal Revenue Code of
1986, as amended (the "Code"), or as non-qualified stock options ("Non-Qualified
Options") which are not intended to so qualify. Only employees of the Company or
its subsidiary are eligible to receive Incentive Options. The period during
which Options may be exercised may not exceed ten years. The exercise price for
Incentive Options may not be less than 100% of the fair market value of the
Common Stock on the date of grant; except that the exercise price for Incentive
Options granted to persons owning more than 10% of the total combined voting
power of the Common Stock may not be less than 110% of the fair market value of
the Common Stock on the date of grant and may not be exercisable for more than
five years. The exercise price for Non-Qualified Options may not be less than
80% of the fair market value of the Common Stock on the date of grant. The 1993
Plan defines "fair market value" as the closing price per share of the Common
Stock as reported on NASDAQ or any stock exchange trading the Common Stock or,
in the absence thereof, a price determined by the Board of Directors (or
committee) in good faith to be the fair market value.

The 1993 Plan contains provisions for proportionate adjustment of the
number of shares issuable upon the exercise of outstanding Options and the
exercise price per share in the event of stock dividends, recapitalizations
resulting in stock splits or combinations or exchanges of shares.

In the event of the dissolution or liquidation of the Company, a corporate
separation or division or the merger or consolidation of the Company, the Board
may provide that (i) each Option holder may exercise such Option on such terms
as it may have been exercised immediately prior to such dissolution,
liquidation, corporate separation, division, merger or consolidation or (ii)
that the Options granted under the 1993 Plan will expire by a fixed date and
that the Option holders may exercise their Options as to all or any part of the
shares covered including shares as to which the Options would not otherwise be
exercisable.

The 1993 Plan also provides that in the event of a tender offer or exchange
offer for the Company, certain mergers or consolidations of the Company or
certain changes in control of the Company's Board of Directors, all Options may
become fully exercisable immediately.

<PAGE>

The Board may suspend, terminate, modify or amend the 1993 Plan, but
without shareholder approval the Board may not materially increase the number of
shares as to which Options or Stock Bonuses may be granted, change the
eligibility requirements for persons entitled to participate in the 1993 Plan or
materially increase the benefits to be received by any participant under the
1993 Plan. The Board may not adversely affect any Option or Stock Bonus
previously granted without the consent of the participant. Unless sooner
terminated, the 1993 Plan will expire on September 16, 2003.

Options/Bonuses Granted. The Company has granted no stock options or stock
bonuses pursuant to either plan.

(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.

No executive officer or director exercised any options or stock
appreciation rights during the 1996 fiscal year. The following table sets forth
the fiscal year-end value of the options held by the Company's executive
officers and other significant shareholders:

(a) (b) (c) (d) (e)
Value of
Unexercised
Number of In-the-money
options at options at
10/31/96 10/31/96
----------- ------------
Shares Acquired Value Exercisable Exercisable
Name on Exercise Realized Not-exercise Not-exercise
---- ----------- -------- ------------ ------------
(##) ($$) (##) ($$)
<S> <C> <C> <C>
Gary R. Vickers -0- -0- 489,000 a
-0- -0- $ -0-
</TABLE>

- ----------

* Based on the average of the bid and asked prices on November 20, 1996, of
$0.938 per share. It should be noted that, for the purpose of this table, the
Series A Preferred Stock, which is convertible into common stock at $5.40 per
share, is being treated as options to purchase common stock.

(e) Long Term Incentive Plan -- Awards in Last Fiscal Year

The Company has no long term incentive plans, and consequently has made no
such awards.

(f) Defined benefit or actuarial plan disclosure

Not applicable since the Company has no defined benefit or actuarial plans.

<PAGE>

(g) Compensation of Directors

(1) Standard Arrangements.

Members of the CPTV Board of Directors who are not also employees of the
Company are paid $2,000 per fiscal quarter. The Board is also evaluating an
additional incentive bonus plan to reward management and directors based on
fiscal 1997 operating performance.

(2) Other Arrangements.

CPTV has granted members of the Board of Directors who are not employees of
the Company (including Messrs. Berman, Tanner, Gary Magness, and Gladstone)
options to acquire 22,500 shares of common stock each at $4.00 per share. These
options expire October 1, 1998.

CPTV has also granted members of the Board of Directors who are not
employees of the Company (including Messrs. Berman, Tanner, Gladstone, and Gary
Magness) options to acquire an additional 22,500 shares of common stock each at
$1.00 per share. One-half of the options granted to directors (11,250 each
director) vested and became exercisable on November 1, 1996, and the remaining
one-half will vest and become exercisable on November 1, 1997. The options will
vest if the holder continues to be a director at the vesting date. These options
expire January 16, 2001.

The vesting of both sets of options is accelerated in the event of certain
events, such as a change of control.

In addition, the Company will reimburse on an accountable basis all of its
officers, directors, and employees for expenses incurred on behalf of the
Company.

(h) Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.

Except for Mr. Gary Vickers, the Company has no plans which result in the
payment or accrual for payment of any amounts to any executive officer in
connection with his resignation, retirement, or other termination, or change of
control or change in the executive officer's responsibilities.

The Company has entered into an employment agreement with Mr. Vickers. This
employment agreement will require Mr. Vickers to devote a substantial portion of
his services to the Company through November 16, 1998 for a salary at the rate
of $186,000 per year payable on a semi-monthly basis. This salary will be
payable to Mr. Vickers in the event of a change of control of the Company. This
contract contains certain non-compete covenants as well. On November 1, 1995,
Mr. Vickers voluntarily deferred approximately 33% of his base compensation,
which is approximately $5,000 per month, or approximately $60,000 per annum.
This deferred amount was paid to Mr. Vickers in August 1996.

<PAGE>

In conjunction with CPTV's acquisition of a majority interest in
Alexandria, Inc., Alexandria entered into a three-year employment agreement with
Mr. Balthaser and certain other principals of Alexandria. As a result of the
Alexandria restructuring, these employment relationships have ended.

In conjunction with the formation of OddWorld and CPTV's agreements with
OddWorld as described herein, OddWorld entered into employment agreements with
Ms. Sherry McKenna and Mr. Lorne Lanning, each for the term of two years
commencing November 15, 1994. As a result of the completion of the GT
Transactions as described above, these agreements are no longer material to
CPTV.

Except as described above with respect to Mr. Vickers' employment contract,
the Company has no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's employment
with the Company. The Company has no plan or arrangement with respect to any
such persons which will result from a change in control of the Company or a
change in the individual's responsibilities following a change in control.

(i) Report on Repricing of Options/SARs.

Not applicable, as no options or SARs were repriced during the fiscal year
ended August 31, 1996.

(j) Additional information with respect to Compensation Committee Interlocks and
Insider Participation.

The Company has appointed a Compensation Committee. There are no
interlocking relationships among the members of the Compensation Committee.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------

(a) and (b) Security Ownership of Certain Beneficial Owners and Management.

Set forth below is certain information with respect to ownership of the
Company's securities by the Company's executive officers, directors, and persons
or entities who are known by the Company to own beneficially more than 5% of the
outstanding shares of the Common Stock:

<PAGE>

Set forth below is certain information with respect to ownership of CPTV's
securities by the CPTV's executive officers, directors, and persons or entities
who are known by CPTV to own beneficially more than 5% of the outstanding shares
of the Common Stock and Preferred Stock:

Name and address Number of Shares Percentage of
of Beneficial Owner Common Preferred Class
- ------------------- ------ --------- -----

<S> <C> <C> <C>
Kim Magness (a)(g) 267,200 255,500 15.1
Gary D. Magness (b)(g) 283,750 255,500 15.5
4643 South Ulster
Suite 1520
Englewood, CO 80237

Gary R. Vickers (f)(g) 565,000 489,000 28.5
7900 East Union Avenue
Suite 1100
Denver, CO 80237

A. Richard Berman 33,750(d) -0- 1.0
46 A Bulkley Avenue
Sausalito, CA 94965

William Gladstone (e)(g) 75,250(d) -0- 2.3
2191 San Elijo Avenue
Cardiff-by-the-Sea, CA 92007

Craig K. Tanner 33,750(d) -0- 1.0
1880 Campus Common Drive
Reston, VA 22091

All Directors and 1,258,700 1,000,000 52.3
Executive Officers
as a Group (5 persons)
</TABLE>

- ----------

* Less than 1%.

(a) Includes 3,700 shares of Common Stock held in the name of Kim Magness'
wife.

(b) Includes shares of Common Stock held in the names of Gary Magness' wife
(12,000 shares) and minor child (5,000 shares). Also includes 11,250 shares
underlying options exercisable from November 1, 1996 through January 16,
2001, at $1.00 per share. Does not include 11,250 shares underlying similar
options which are not exercisable until November 1, 1997.

<PAGE>

(c) The shares of Preferred Stock are entitled to convert to Common Stock on a
share-for-share basis upon the holder paying a conversion premium of $5.40
per share. Any unconverted share of Preferred Stock will be canceled on
December 31, 1998. Pending conversion, the shares of Preferred Stock have
the right to vote on a share-for-share basis with the Common Stock. The
Preferred Stock also has dividend rights equivalent to the Common Stock.

(d) Consists of options to acquire 22,500 shares at $4.00 per share exercisable
through October 1, 1998. Also includes 11,250 shares underlying options
exercisable from November 1, 1996 through January 16, 2001, at $1.00 per
share. Does not include 11,250 shares underlying similar options which are
not exercisable until November 1, 1997.

(e) Includes 7,500 shares held in the name of Mr. Gladstone's wife.

(f) Includes 74,000 shares held in the name of a family member as to which Mr.
Vickers holds an irrevocable proxy to vote.

(g) Messrs. Magness, Vickers, and Gladstone entered into a Voting Agreement by
which they voted FOR the proposal by which CPTV sold its interest in
Oddworld to GT Interactive Software Corp. In addition, Messrs. Magness have
granted an irrevocable proxy to Mr. Vickers with respect to the voting of
their shares on all business issues.

To the best knowledge of CPTV, there are no arrangements, understandings or
agreements relative to the disposition of any of CPTV's securities, the
operation of which would at a subsequent date result in a change in control of
CPTV.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------

In Connection with the GT Transactions. During fiscal 1996, CPTV reported
that its available capital was insufficient to continue to wholly finance the
operations of OddWorld and to continue to meet its own obligations. At that
time, however, negotiations with GT were proceeding well and these negotiations
eventually resulted in letters of intent with GT in early July 1996. Thereafter,
CPTV and certain of its principal shareholders provided bridge financing for
OddWorld's operations based on the prospect of completing the final agreements
with GT.

<PAGE>

As a means of financing OddWorld and providing CPTV with collateral for
amounts previously advanced, CPTV entered into the Loan and Security Agreement
on July 12, 1996. To obtain the necessary funds to meet its commitments under
the Loan and Security Agreement, CPTV borrowed $500,000 from three shareholders,
Gary Vickers (also president and a director of CPTV, $100,000), Gary Magness
(also a director, $200,000), and Kim Magness ($200,000). A condition of these
advances was that CPTV would pass through to Messrs. Vickers, Magness and
Magness all interest and conversion rights to OddWorld common stock which were
bargained for and included in the Loan and Security Agreement.

Once the due diligence period expired, GT's agreement to proceed with the
transactions required GT to begin funding OddWorld's operation up to $625,000,
and, in its discretion, GT was allowed to make further advances up to an
aggregate of $825,000, pending CPTV shareholder approval. GT conditioned its
agreement to provide this working capital financing on the assurance of
repayment of up to $625,000 by CPTV and an agreement from Messrs. Kim and Gary
Magness to act as surety for CPTV's repayment obligation if CPTV did not timely
obtain shareholder approval of the GT Transactions. Messrs. Magness agreed to
provide this assurance of repayment in the form of a surety agreement,
conditional on them obtaining CPTV's commitment to include any amounts paid by
them on this surety as indebtedness of CPTV and OddWorld, convertible into
OddWorld Class A Common Stock should the GT Transactions not be completed. Mr.
Vickers in turn agreed to reimburse Messrs. Magness for up to one-third of the
aforesaid surety amount to the extent called.

Since CPTV obtained shareholder approval of the GT Transactions, these
agreements expired and neither CPTV, Mr. Vickers, nor Messrs. Magness have any
remaining direct or indirect interest in OddWorld. CPTV continues to have
outstanding a demand note in favor of Messrs. Vickers, Magness and Magness under
which CPTV will be obligated to repay the $500,000 which they advanced to CPTV,
plus interest at the rate of 12% per annum from the inception of the loan. (The
interest rate payable to Messrs. Vickers and Magness is identical to the
interest rate in the Loan and Security Agreement.) CPTV has made full repayment
to Messrs. Vickers, Magness and Magness.

Issuance of Stock to Founders. On formation of CPTV, 800,000 shares of
Common Stock were issued to Gary R. Vickers and Gary Magness, officers and
directors of the Company, for a total investment by them of $392,000. An
additional 200,000 shares of Common Stock were issued to Kim Magness, Mr. Gary
Magness' brother, for an investment of $98,000. Shortly thereafter, Messrs.
Vickers, G. Magness, and K. Magness paid a total of $490,000 for the 1,000,000
shares of Common Stock they purchased. In addition, 1,000,000 shares of Series A
Convertible Preferred Stock was issued to Messrs. Vickers, Gary Magness, and Kim
Magness for an aggregate investment of $10,000. In October 1993 Mr. Vickers
transferred 55,500 shares of his common stock and of his preferred stock to each
of Messrs. K. Magness and G. Magness at cost.

<PAGE>

The existence of the dividend rights underlying the Series A Preferred
Stock may result in a conflict of interest between the holders of the Series A
Preferred Stock and the other stockholders of the Company.

Consulting Arrangement With Directors. The Company entered into consulting
arrangements with several of its directors as described above in Item 10(g)(2),
"Compensation of Directors -- Other Arrangements."

Alexandria-OddWorld Relationship. Pursuant to inter-company agreements,
OddWorld contracted for services, personnel and equipment provided by
Alexandria, Inc., a wholly-owned subsidiary of CPTV ("Alexandria") to perform
software development services with funds provided by CPTV. OddWorld paid
Alexandria these costs (including overhead and a profit margin) on a fixed
contract basis. In addition, OddWorld paid Alexandria for the use of certain
software development tools which had been developed and were owned by
Alexandria. Prior to the completion of the GT Transactions, OddWorld also
subleased space from Alexandria at Alexandria's offices in San Luis Obispo.
Alexandria leased equipment to OddWorld. As a result of the completion of the GT
Transactions, OddWorld is now paying 100% of the office lease rental; Alexandria
conveyed substantially all of its equipment to OddWorld and there are no longer
any relationships between Alexandria and OddWorld.

KG Squared and OddWorld Inhabitants. As described above, on September 27,
1994, directed an affiliate, KG Squared, to acquire common and preferred stock
issued by OddWorld. As a result of the GT Transactions, CPTV no longer has any
interest in OddWorld.

Business Opportunities. Management of the Company, including Mr. Vickers,
may make other personal investments in businesses which operate in the
entertainment or cable industries, and these investments may require management
participation and otherwise conflict with his activities on behalf of CPTV and
its subsidiaries. The Company has required that should any investment
opportunity in the cable industry or the entertainment industry (including,
without limitation software product development or online digital
communications) become available to any executive officer of the Company, such
officer must first offer it to the Company and the offer must be reviewed by the
independent directors. If the independent directors reject the offer, the
executive officer may pursue it provided such activities do not conflict with
his time commitments to the Company.

Directors of the Company who are not executive officers or employees may
pursue any other business opportunities of interest to them, whether or not such
activities may conflict with, or compete with, the activities of the Company.
Should any director offer the Company participation in any business opportunity,
the offer will be evaluated on behalf of the Company by disinterested directors.

<PAGE>

In general, there are no agreements existing or contemplated by the Company
with respect to pursuit of business opportunities. No formal policies or
guidelines have been adopted by the Company's board of directors to deal with
board actions that may involve the actual or potential conflicts of interests
between the Company and other cable industry interests. If there appears to be
any direct conflict of interest in CPTV's business activities then Messrs.
Magness and the other directors will take actions consistent with their
fiduciary obligations under applicable state laws to all of their respective
stockholders. Messrs. Magness may also elect to abstain from voting on such
matters as directors, or the Company may seek outside fairness and evaluations
opinions with respect thereto.

The Magness interest in other outside business endeavors are widespread and
comprehensive, and therefore draw upon a substantial time commitment on the part
of Messrs. Kim and Gary Magness. There can be no assurances that Kim and Gary
Magness will be able to dedicate substantial time to the Company.

Limitation of Liability of Directors. The Company's Articles of
Incorporation limit the liability of directors to shareholders for monetary
damages for breach of a fiduciary duty except in the case of liability: (i) for
any breach of their duty of loyalty to the Company or its shareholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 7-5-114 of the Colorado
Corporation Code or (iv) for any transaction from which the director derived an
improper personal benefit.

The Company's Articles of Incorporation and By-laws provide for the
indemnification of directors and officers of the Company to the maximum extent
permitted by law, including Section 7-3-101.5 of the Colorado Corporation Code.
That Section provides generally for indemnification as to all expenses incurred
or imposed upon them as a result of actions, suits or proceedings if they act in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interests of the Company. The Company has entered into agreements to
indemnify its directors and officers in addition to the indemnification provided
for in the By-laws. These agreements, among other things, indemnify the
Company's directors and officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by such person in any
action or proceeding, including any action by or in the right of the Company, on
account of services as a director or officer of the Company or as a director or
officer of any subsidiary of the Company, or as a director or officer of any
other company or enterprise that the person provides services to at the request
of the Company.

<PAGE>

In addition, the Company has obtained directors' and officers' liability
insurance.

PART IV

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------------------------------------------------------------------------

(a) The following documents are filed as a part of this Form 10-K
immediately following the signature pages:

1. Financial Statements

Independent Auditors' Report

Balance Sheet - August 31, 1996

Statements of Income - For the Years
Ended August 31, 1995 and 1996

Statement of Shareholders' Equity -
For the Years Ended August 31, 1995 and
1996

Statements of Cash Flows - For the
Years ended August 31, 1995 and 1996

Notes to Financial Statements - for the
Years ended August 31, 1995 and 1996

3. Exhibits required to be filed are listed below.

Certain of the following exhibits are hereby incorporated by reference
pursuant to Rule 12b-23 as promulgated under the Securities and Exchange Act of
1934, as amended, from the reports noted below:

Exhibit
Number Description
- ------ -----------

3.1(a) Articles of Incorporation, as amended
3.2(a) Designation of Preferences for the Series A Preferred Stock, as amended
3.3(a) Bylaws

<PAGE>

10.1 Omitted
10.2 Omitted
10.3(a) Employment Agreement with Gary R. Vickers
10.4 Omitted
10.5 Omitted
10.6(a) Shareholder Purchase Agreement among the Registrant's shareholders
10.7(a) Form of 1993 Stock Option and Bonus Plan
10.8 Omitted
10.9(a) Omitted
10.10(a) Form of Indemnification Agreement between the Company and its
directors
10.11 Omitted
10.12(c) Stock Purchase Agreement for loan to KG Squared for project
financing to Off World Entertainment, Inc., d/b/a OddWorld
Inhabitants, Inc.
10.13(a) Omitted
10.14(a) Omitted
10.15(a) Underwriting Agreement
10.16(a) Underwriter's Warrant
10.17(b) Acquisition Agreement dated April 15, 1994, between CPTV and
Alexandria
10.18(b) Employment Agreement between Alexandria, Inc. and Charles E.
Balthaser
10.19(b) Stock Pledge Agreement relating to 828,695 shares of Alexandria
common stock
10.20(b) Voting, Right of First Refusal and Operating Agreement
10.21(d) Acquisition Agreement dated October 28, 1994, between CPTV and
Alexandria
10.22(d) Agreement for Termination of Collateral Agreements
10.23(e) Merger Agreement between Celluloid Studios, Inc., Visitor, Inc.
and the Company dated June 19, 1995
10.24(f) Stock Purchase Agreement dated September 13, 1996, by and among GT
Interactive Software, Inc., KG Squared, Inc., and Creative
Programming and Technology Ventures, Inc.
10.25(f) Share Exchange Agreement dated September 13, 1996, by and among
Creative Programming and Technology Ventures, Inc., KG Squared,
Inc., Off World Entertainment, Inc., Sherry McKenna, and Lorne
Lanning.
21.1 Subsidiaries of the Registrant.

Alexandria, Inc., a California corporation
KG Squared, Inc., a Delaware corporation
Virtual Nonsense, Inc., a Delaware corporation
OddWorld Inhabitants, Inc., a Delaware corporation
(divested as of September 13, 1996)
- ----------
* Filed herewith.

<PAGE>

(a) Incorporated by reference from the Company's Registration Statement on Form
SB-2, Commission file number 33-69582-D

(b) Incorporated by reference from the Company's current report on Form 8-K
reporting an event of April 27, 1994

(d) Incorporated by reference from the Company's current report on Form 8-K
reporting an event of November 1, 1994

(e) Incorporated by reference from the Company's current report on Form 8-K
reporting an event dated June 19, 1995

(f) Incorporated by reference from the Company's Form 8-K reporting an event of
September 13, 1996.

(b) During the last quarter of the period covered by this report and
subsequently the Company filed one current report on Form 8-K
reporting an event of September 13, 1996 reporting an event pursuant
to Item 2 of Form 8-K.

(c) Required exhibits are attached hereto and are listed in Item 14(a)(3)
of this Report. Item 14(a)(2) of this Report lists all required
financial statement schedules to be attached hereto.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned there unto duly authorized.

December 12, 1996

CREATIVE PROGRAMMING AND TECHNOLOGY
VENTURES, INC.

By /s/ Gary R. Vickers
-------------------
Gary R. Vickers, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

/s/ Gary R. Vickers
- -----------------------------
Gary R. Vickers President, Chief December 12, 1996
Executive Officer,
Chief Financial
Officer and Director

/s/ Gary D. Magness
- -----------------------------
Gary D. Magness Director December 12, 1996

/s/ A. Richard Berman
- -----------------------------
A. Richard Berman Director December 12, 1996

/s/ William Gladstone
- -----------------------------
William Gladstone Director December 12, 1996

/s/ Craig K. Tanner
- -----------------------------
Craig K. Tanner Director December 12, 1996
</TABLE>

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

YEARS ENDED AUGUST 31, 1996 AND 1995

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

YEARS ENDED AUGUST 31, 1996 AND 1995

CONTENTS

Page

Independent auditors' report F-1

Consolidated financial statements:

Balance sheet F-2 - F-3

Statements of operations F-4

Statements of shareholders' equity F-5

Statements of cash flows F-6 - F-7

Notes to consolidated financial statements F-8 - F-24

<PAGE>

INDEPENDENT AUDITORS' REPORT
----------------------------

Board of Directors
Creative Programming
and Technology Ventures, Inc.
Denver, Colorado

We have audited the accompanying consolidated balance sheet of Creative
Programming and Technology Ventures, Inc. and subsidiaries as of August 31,
1996, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the years in the two-year period ended August
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Creative Programming
and Technology Ventures, Inc. and subsidiaries as of August 31, 1996, and the
results of their operations and their cash flows for each of the years in the
two-year period ended August 31, 1996, in conformity with generally accepted
accounting principles.

As described in Note 17 to the consolidated financial statements, on September
13, 1996, the Company sold its interest in OffWorld Entertainment, Inc., and
certain assets of Alexandria Studios, Inc. (the Company's major operating
subsidiaries) to an unrelated third party.

Denver, Colorado
November 18, 1996

F-1

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

AUGUST 31, 1996

ASSETS

Unaudited
pro forma Historical
--------- ----------
(Note 17)
Current assets:
Cash and cash equivalents $ 5,859,520 $ 319,186
Accounts receivable, net of allowance
for doubtful accounts of $47,746 2,734
Investment (Note 10) 34,196 34,196
Certificate of deposit (Note 8) 281,000 281,000
Prepaid expenses 26,591 26,591
Notes receivable under sale of
discontinued operations (Note 16) 81,724 81,724
---------- ---------
Total current assets 6,283,031 745,431
---------- ---------

Property and equipment, net (Note 7) 15,481 711,832
---------- ---------

Other assets:
Restricted cash 700,000
Project costs 1,827,680
Note receivable under sale of discontinued
operations, net of current portion (Note 16) 29,483 29,483
Organization costs and other 29,507 84,275
---------- ----------
758,990 1,941,438
---------- ----------

Total assets $7,057,502 $3,398,701
========== ==========

(Continued)
F-2

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (CONTINUED)

AUGUST 31, 1996

LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

Unaudited
pro forma Historical
--------- ----------
(Note 17)
<S> <C> <C>
Current liabilities:
Notes payable:
Financial institution (Note 8) $ 237,349
Shareholders (Note 9) 500,000
Current portion of obligations under
capital leases (Note 10) 22,924
Accounts payable, trade $ 146,719 321,035
Accrued salaries and other 56,767 118,134
------------ ------------
Total current liabilities 203,486 1,199,442
------------ ------------

Obligations under capital leases,
net of current portion (Note 10) 2,244
------------ ------------
Total liabilities 203,486 1,201,686
------------ ------------

Shareholders' equity (Note 12):
Preferred stock, par value $0.01; authorized
10,000,000 shares, issued and outstanding
1,000,000 (aggregate liquidation
preference $10,000) 10,000 10,000
Common stock, par value $0.01, authorized
50,000,000 shares, issued and outstanding
3,210,079 shares 32,101 32,101
Capital in excess of par 8,222,937 8,222,937
Deficit (1,411,022) (6,068,023)
----------- -----------

Total shareholders' equity 6,854,016 2,197,015
----------- -----------

Total liabilities and
shareholders' equity $ 7,057,502 $ 3,398,701
============ ============

See notes to consolidated financial statements.
F-3
</TABLE>

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>

1996 1995
----------- -----------

<S> <C> <C>
Revenues $ 60,560 $ 412,936
Cost of sale 1,095,411 473,473
----------- -----------
(1,034,851) (60,537)

Selling, general and administrative expenses 2,765,122 2,148,990

Impairment loss (Note 5) 73,732
----------- -----------

Operating loss (3,873,705) (2,209,527)

Other credits (charges):
Investment income 112,738 265,482
Interest expense (29,714) (17,063)
----------- -----------

Loss from continuing operations before
income tax and minority interest (3,790,681) (1,961,108)
Income tax benefit (Note 13) 124,920
Minority interest in loss of
consolidated subsidiary 26,720
----------- -----------
Loss from continuing operations (3,790,681) (1,809,468)

Discontinued operations (Note 16):
Income from operations of divested
subsidiary, net of income tax
expense of $95,100 294,760
Gain on disposal of divested subsidiary,
net of income tax expense of $29,820 76,020
----------- -----------

Net loss $(3,790,681) $(1,438,688)
=========== ===========

Loss per common share (Note 14):
Loss from continuing operations $ (1.16) $ (0.54)
Income from discontinued operations 0.09
Gain on disposal of divested subsidiary 0.02
----------- -----------
Net loss $ (1.16) $ (0.43)
=========== ===========

Weighted average number of common shares 3,273,897 3,380,499
=========== ===========

See notes to financial statements
F-4

</TABLE>
<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>

Preferred stock Common stock Capital in Retained
-------------------------- ---------------------- excess of earnings
Shares Amount Shares Amount par (deficit) Total
------ ------ ------ ------ ------------ --------- -----------

<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
September 1, 1994 1,000,000 $ 10,000 3,300,000 $ 33,000 $ 8,156,890 $ (838,654) $ 7,361,236

Issuance of 125,000
shares of common
stock (Note 5) 125,000 1,250 198,751 200,001

Net loss (1,438,688) (1,438,688)
---------- ---------- ---------- -------- ------------ ------------ ------------

Balances,
August 31, 1995 1,000,000 10,000 3,425,000 34,250 8,355,641 (2,277,342) 6,122,549

Repurchase and retirement
of common stock (Notes
5 and 12) (214,921) (2,149) (132,704) (134,853)

Net loss (3,790,681) (3,790,681)
---------- ---------- ---------- -------- ------------ ------------ -----------

Balances,
August 31, 1996 1,000,000 $ 10,000 3,210,079 $ 32,101 $ 8,222,937 $ (6,068,023) $ 2,197,015
========= ========== ========== ========= ============ ============ ===========

See notes to consolidated financial statements.
F-5

</TABLE>

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED AUGUST 31, 1996 AND 1995

1996 1995
----------- -----------

Cash flows from operating activities:
Net loss $(3,790,681) $(1,438,688)
----------- -----------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 300,224 273,076
Loss (gain) on investments 36,869 (54,445)
Write-off of accounts receivable 52,318
Write-off of organization costs 52,385
Impairment losses 949,392 151,075
Gain on sale of discontinued operations (76,020)
Minority interest in loss of
consolidated subsidiaries (26,720)
(Increase) decrease in assets:
Accounts receivable (6,721) 232,800
Work in process 24,440 17,932
Prepaid expenses 9,942 2,206
Other current assets 18,960
Other assets (25,538) (106,339)
Increase (decrease) in liabilities:
Accounts payable (5,488) 250,133
Accrued salaries and other 3,824 19,672
Noncash charges and working capital
changes, discontinued operations (126,815)
----------- -----------
Total adjustments 1,391,647 575,515
----------- -----------

Net cash used in operating activities (2,399,034) (863,173)
----------- -----------

Cash flows from investing activities:
Capital expenditures (174,306) (470,929)
Proceeds from sale of computer software 55,000
Costs incurred to acquire interest
in Alexandria (7,354)
Purchase of treasury bills (1,528,518)
Proceeds from maturity of treasury bills 900,000 2,306,000
Proceeds from sale of treasury bills 1,449,560 893,628
Purchase of certificate of deposit (412,000)
Proceeds from maturity of certificate of deposit 131,000
Payments received on note receivable 72,525 321,268
Project costs (1,233,696) (1,489,334)
Cash used in discontinued operations (6,761)
----------- -----------

Net cash provided by (used in)
investing activities 1,200,083 (394,000)
----------- -----------

(Continued)
F-6

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>

1996 1995
----------- -----------

<S> <C> <C>
Cash flows from financing activities:
Payment of notes payable (120,378) (54,273)
Proceeds from issuance of notes payable 500,000
Principal payments of capital lease obligations (28,924) (36,482)
Purchase and retirement of common stock (134,853)
Cash used for discontinued operations (185,000)
----------- -----------
Net cash provided by (used in) financing activities 215,845 (275,755)
----------- -----------

Net decrease in cash (983,106) (1,532,928)
Cash and cash equivalents, beginning 1,302,292 2,835,220
----------- -----------
Cash and cash equivalents, ending $ 319,186 $ 1,302,292
=========== ===========

Supplemental disclosure of cas flows information:
Cash paid for interest $ 23,148 $ 17,063
=========== ===========
Cash paid for income taxes $ 0 $ 0
=========== ===========

Supplemental schedule of noncash investing
and financing activities:
In November 1994, the Company acquired the
minority interests of Alexandria, Inc. by
issuing 100,000 shares of its restricted
common stock with a market value of
approximately $2.00 per share. In April
1995, the Company issued an additional
25,000 shares of restricted common stock
to the prior Alexandria shareholders as
contingent consideration for the acquisition
of their minority interest

In December 1994, the Company acquired $32,322
in fixed assets through capital lease obligations

Notes payable in the amount of $412,000 were
incurred in March 1995 for the acquisition of
equipment

See notes to consolidated financial statements
F-7
</TABLE>

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED AUGUST 31, 1996 AND 1995

1. Organization and principles of consolidation:

Creative Programming and Technology Ventures, Inc. ("CPTV", the "Company"),
was formed in July 1993, and in August 1993 acquired an ownership interest
in Celluloid Studios, Inc. ("Celluloid"). This interest was subsequently
sold, effective May 31, 1995 (Note 16). On April 25, 1994, CPTV acquired an
ownership interest in Alexandria Studios, Inc. ("Alexandria") (Note 5). On
June 26, 1995, CPTV acquired ownership of KG Squared, Inc. ("KG Squared"),
which resulted in CPTV obtaining an indirect interest in Off World
Entertainment, Inc., ("OffWorld") now doing business as ODDWORLD
Inhabitants ("ODDWORLD") (Note 6). This interest was sold September 13,
1996 (Note 17).

2. Description of business:

The Company, through its operating subsidiaries, develops electronic video
games. The Company's customers consist primarily of publishers of video
games predominantly in California (Note 17).

3. Summary of significant accounting policies:

Cash and cash equivalents:

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

Investment:

The Company's investment consists of a 5.1% U.S. Treasury Bill maturing in
October 1996 which has been classified as a held to maturity security. The
investment has been assigned as collateral to secure a letter of credit
(Note 10). The investment is reported at amortized cost which approximates
its quoted market value.

F-8
<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

3. Summary of significant accounting policies (continued):

Property and equipment:

Property and equipment consists of furniture, fixtures, equipment,
leasehold improvements, and computer software. Furniture, fixtures,
equipment, and leasehold improvements are stated at cost and are
depreciated over their estimated useful lives. Depreciation is provided
using accelerated methods for both financial statement and income tax
purposes.

Direct costs and allocated overhead associated with the development of
software products, intended for internal use, have been capitalized. During
the year ended August 31, 1995, prior to the development of detailed
program designs or working models of these products, research and
development costs of $96,711 were incurred and charged to operations. There
were no research and development costs incurred during 1996.

Capitalized costs are amortized over the estimated useful life of the
software on the straight line method for both financial statement and
income tax purposes.

Project costs:

The Company capitalizes the direct costs and allocated overhead associated
with the development of proprietary interactive entertainment games. Upon
completion and sale of the product, capitalized costs will be amortized
over the estimated life of the product in the market place. The management
of the Company periodically assesses whether there has been an impairment
in the carrying value of project costs. If it is determined that costs
associated with an individual project will not provide any future benefit,
they will be charged to operations as costs of goods sold or general and
administrative expenses. During the year ended August 31, 1996, the Company
wrote-off $875,660 of previously capitalized project costs of which
$821,466 has been charged to cost of goods sold and $54,194 has been
charged to selling, general and administrative expenses. During the year
ended August 31, 1995, the Company wrote-off $151,075 of previously
capitalized costs which has been charged to selling, general and
administrative expenses.

F-9

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

3. Summary of significant accounting policies (continued):

Excess purchase price over net assets acquired:

The excess of purchase price over the net assets acquired for subsidiaries
is amortized on the straight-line method over 15 years. At each balance
sheet date, the Company evaluates the realizability of the excess of
purchase price over net assets acquired for each subsidiary based upon
expectations of nondiscounted cash flow and operating income on an
individual subsidiary basis. If the Company believes expected future cash
flow and operating income is insufficient to recover the asset, an amount
necessary to reduce the asset to its estimated realizable basis is charged
to income (Notes 5 and 16).

Organization costs:

During 1995, the Company incurred organization costs of $88,449 in
connection with the formation of KG Squared and ODDWORLD. These costs are
being amortized over five years using the straight line method. For the
years ended August 31, 1996 and 1995, the amortization of these costs was
$19,417 and $17,689, respectively. As a result of the sale of the Company's
interest in ODDWORLD on September 13, 1996 (Note 17), organization costs of
$52,385 pertaining to the formation of ODDWORLD were charged to operations
and included in general and administrative expenses for the year ended
August 31, 1996.

Electronic games:

Payments received during development of the video games are based on a
schedule specified in each contract. Revenues are recognized during
development when milestones in the contract schedule are reached. Royalty
payments are to be paid after royalties provided by the contract exceed the
payments received during development. If a project is canceled prior to
completion, or royalties from sales do not exceed payments during
development, no refund is required by any of the contracts. All revenues
through August 31, 1996 and 1995 are from development payments; no royalty
payments have been received.

F-10

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

3. Summary of significant accounting policies (continued):

Income taxes:

The provision for income taxes is based upon income recognized for
financial statement purposes and includes effects of temporary differences
between such income and that recognized for income tax purposes. The
significant temporary differences of the Company result from conversion
from accrual to cash basis reporting, which is used by the Company for
income tax reporting.

Use of estimates in preparation of financial statements:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Management makes these estimates using the
best information available at the time the estimates are made; however,
actual results could differ from the estimates.

Financial instruments:

For the year ended August 31, 1996, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 107 (SFAS No. 107),
Disclosures About Fair Value of Financial Instruments. SFAS No. 107
requires the Company to disclose estimated fair values for financial
instruments for which it is practicable to estimate fair value. The
carrying amounts of the Company's financial instruments, including cash,
accounts receivable, notes payable to financial institution, notes payable
to shareholders, accounts payable and accrued expenses approximate fair
value, primarily because of the short-term maturities of those instruments.

The fair value of the Company's long-term note receivable is not
practicable to estimate because the terms of the note were negotiated in
the sale of the Company's subsidiary, Celluloid Studios, Inc. (Note 16).
This note bears interest at 12% per annum, matures in December 1997, and
has a balance outstanding at August 31, 1996 in the amount of $111,207.

F-11

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

3. Summary of significant accounting policies (continued):

Recently enacted accounting pronouncement:

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121), Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of.
SFAS No. 121 is effective for fiscal years beginning after December 15,
1995. The Company's management has elected early adoption of this standard.
SFAS No. 121 establishes recognition and measurement standards for the
impairment of long-lived assets expected to be held and used and long-lived
assets to be disposed of. Generally, assets to be held and used in
operations are considered impaired if the sum of expected undiscounted
future cash flows is less than the assets= carrying amount. If an
impairment is indicated, the loss is measured based on the amount by which
the assets' carrying value exceeds its fair value. Assets to be disposed of
are reported at the lower of their carrying value or fair value less
estimated selling costs. Based on its review, the Company has recognized an
impairment loss related to the excess purchase price over net assets
acquired (Note 5).

In addition, the FASB issued SFAS No. 123 Accounting for Stock-based
Compensation. SFAS No. 123 defines a fair-value-based method of accounting
for stock-based employee compensation plans and transactions in which an
entity issues its equity instruments to acquire goods or services from
nonemployees. SFAS No. 123 allows entities to measure compensation costs
related to employee stock plans by either using the fair-value-based method
or continuing to use the intrinsic-value-based method prescribed in
Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to
Employees (APB No. 25). The effective date of the statement is for years
beginning after December 15, 1995. No material financial statement impact
from the adoption of SFAS No. 123 is expected as the Company plans to
continue to apply APB No. 25 for its employee stock plans. The Company has
not yet determined when it will adopt SFAS No. 123.

4. Warrants:

At August 31, 1996, warrants to purchase up to 200,000 shares of common
stock are outstanding. The warrants are exercisable through November 1997
at a price of $4.80 per share. No warrants were exercised or issued and no
warrants expired during the years ended August 31, 1996 and 1995.

F-12

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

5. Acquisition of Alexandria Studios, Inc.:

On April 25, 1994, the Company paid $700,000 to Alexandria and issued a
promissory note in the amount of $800,000 in consideration of 1,040,816
newly issued shares of Alexandria Class A common stock. The acquisition,
accounted for under the purchase method of accounting, resulted in a total
ownership interest by CPTV in Alexandria of 51%, and excess purchase price
over net assets acquired of approximately $628,000.

In November 1994, the $800,000 promissory note under the original agreement
was canceled and the original excess purchase price over net assets
acquired was reduced by approximately $525,000 (Note 1). Also in November
1994, CPTV acquired the remaining 49% of the outstanding Alexandria common
stock by issuing to the minority shareholders 100,000 shares of the
Company's restricted common stock with a market value of $2 per share. The
Company issued an additional 25,000 shares of its restricted common stock
on April 28, 1994 as required by the terms of the acquisition agreement, as
the average of the highest bid and lowest asked prices through April, 1995
did not exceed $3.00 per share.

The minority interest in the loss of consolidated subsidiary for the year
ended August 31, 1995, represents the minority interest in Alexandria's
losses for the three months ended November 30, 1994, prior to the remaining
49% acquisition by CPTV.

During the year ended August 31, 1996, as a consequence of Alexandria's
continued losses, inability to win contracts for new business and failure
to perform on certain contracts, the Company's board of directors
determined that a reduction in general and administrative overhead at
Alexandria was in order. Accordingly, effective November 1995, the
employment relationships with several employees at Alexandria ended. Under
the terms of a written agreement executed in connection with the
termination of their employment relationship, the Company repurchased
111,121 shares of its restricted common stock from certain members of
Alexandria's management for $62,511.

F-13

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

5. Acquisition of Alexandria Studios, Inc. (continued):

In addition, in an attempt to reduce future operating losses, the Company
continued down-sizing Alexandria's workforce throughout 1996. As of August
31, 1996, the operations of Alexandria have effectively ceased. This
resulted in the Company recognizing an impairment loss for the remaining
excess purchase price over net assets acquired pertaining to the purchase
of Alexandria in the amount of $73,732.

Subsequent to August 31, 1996, substantially all of Alexandria's assets
were conveyed to ODDWORLD and included in the sale of the Company's
interest in ODDWORLD to a third party (Note 17).

6. KG Squared, Inc. and ODDWORLD:

In July 1994, three significant shareholders of CPTV, the president, one
member of the board of directors, and one other shareholder of CPTV formed
KG Squared and acquired all of its outstanding Class A and B common stock
for $2,000. KG Squared was founded with the intent of seeking and providing
additional financial support from the private capital markets on better
economic valuations than the then current CPTV market capitalization rate.

The principals of KG Squared also advanced private seed capital of
approximately $100,000 to KG Squared, $50,000 of which was provided in cash
and $50,000 put forth as a note collateralized by one of the principal's
CPTV stock. As a condition precedent of this financing commitment, the
principals of KG Squared agreed to surrender their entire interest in KG
Squared to CPTV on demand by the CPTV board of directors. The agreement
between the principals and the Company provided that the principals would
be reimbursed the amount of their cash investment plus interest at the
applicable Federal rate.

In September 1994, the Company loaned $500,000 and agreed to advance an
additional $1,752,450 to KG Squared. KG Squared invested the money loaned
to it by the Company and committed to invest the additional advances from
the Company in ODDWORLD. As a result of these transactions, KG Squared
acquired all of the preferred stock and 49.5% of the common stock of
ODDWORLD. The other shareholders in ODDWORLD paid $204 to acquire 50.5% of

F-14

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

6. KG Squared, Inc. and ODDWORLD(continued):

the common stock of ODDWORLD. ODDWORLD was formed to produce electronic
video games with KG Squared acting as a private holding company for the
investments in ODDWORLD. The Company maintained the right, under its
agreement with KG Squared, to require the shareholders of KG Squared to
transfer their entire interest in KG Squared to the Company in satisfaction
of the loans that the Company had made to KG Squared. The Company agreed to
reimburse the KG Squared shareholders for their investment in KG Squared
and expenses they had incurred, if the Company acquired the KG Squared
shareholders' interest.

Pursuant to CPTV's agreement dated June 26, 1995 with KG Squared, the
shareholders of KG Squared transferred their entire interest in KG Squared
to the Company in satisfaction of the loans that the Company made to KG
Squared. As a result to this assignment, CPTV owns KG Squared, and thereby
indirectly all of KG Squared's interests in ODDWORLD.

Because the Company has been the source for substantially all of the funds
which have been provided to ODDWORLD, the Company has included the losses
incurred by KG Squared and ODDWORLD in its August 31, 1996 and 1995,
consolidated financial statements as if they were majority owned
subsidiaries since inception.

7. Property and equipment:

As of August 31, 1996, property and equipment consisted of the following:

Furniture and fixtures $ 69,015
Equipment 1,144,174
Leasehold improvements 59,526
Computer software 70,291
------------
1,343,006
Less accumulated depreciation (631,174)
------------
$ 711,832
============

F-15

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

8. Notes payable, financial institution:

During 1996, the Company entered into new note agreements which effectively
changed the terms of certain notes payable to a financial institution which
were incurred in 1995. These notes were incurred for the purpose of
acquiring equipment. The new notes bear interest at 5.7%, require total
monthly payments of $12,402 through February 1, 1997, and balloon payments
totaling $156,644 upon maturity in March 1997. The notes are guaranteed and
collateralized by a certificate of deposit in the amount of $281,000
bearing interest at 4.7% with a maturity date in February 1997. In
connection with the sale of the Company=s interest in ODDWORLD on September
13, 1996 (Note 17), the third party purchaser assumed the Company's
obligation for these notes and the collateral was released to the Company.

9. Related party transactions:

Notes payable, shareholders:

During 1996, three shareholders of the Company made advances to the Company
totaling $500,000 under promissory note agreements. The funds were advanced
for the purpose of providing additional financing for the operations of
ODDWORLD. The notes bear interest at 12% per annum and are due on demand at
any time on or after the earlier of: September 1, 1996 or such time as a
third party acquires all of the Company's interest in ODDWORLD. The notes
are collateralized by a security interest in all of ODDWORLD=s tangible and
intangible assets. In addition, the notes are convertible into ODDWORLD
Class A common stock at a rate of $230 per share at any time after
September 1, 1996.

At the time that these notes were entered into, the Company was engaged in
negotiations to sell its entire interest in ODDWORLD to a third party.
Pending the closing of this transaction, which took place subsequent to
August 31, 1996 (Note 17), the holders of these notes agreed not to
exercise their conversion rights as provided in the notes. These notes were
repaid from the net proceeds received in connection with the sale of
ODDWORLD.

F-16
<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

10. Commitments and contingencies:

Operating leases:

The Company leases facilities under operating leases. For the years ended
August 31, 1996 and 1995, rent expense of approximately $260,000 and
$176,000, respectively, was incurred.

Future minimum rental payments subsequent to August 31, 1996 under all
noncancelable operating leases having initial remaining lease terms in
excess of one year are approximately as follows:

1997 $185,000
1998 122,000
1999 59,000
--------
$366,000
========

Capital leases:

The Company leases certain equipment under capital leases which generally
include options for renewal after the initial lease period. The present
value of the net minimum lease payments, which equals the fair market
value, has been capitalized. The following is a schedule of the future
minimum lease payments under capital leases by year together with the
present value of the net minimum lease payments:

Year ended
August 31,
----------

1997 $ 25,426
1998 2,244
---------
Total minimum lease payments 27,670
Less amount representing interest (2,502)
---------
Present value of net minimum lease payments 25,168
Less current portion (22,924)
---------
Long-term portion $ 2,244
=========

F-17

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

10. Commitments and contingencies (continued):

Capital leases (continued):

Capital leases classified as property and equipment consist of the
following at August 31, 1996:

Equipment $ 76,126
Less accumulated depreciation (43,147)
---------

$ 32,979
========

Depreciation of leased equipment is included with depreciation for property
and equipment.

Under the terms of the sale of the Company's interest in ODDWORLD on
September 13, 1996 (Note 17), the third party purchaser assumed the
Company's obligation under its operating and capital leases.

Letter of credit:

At August 31, 1996, the Company has available a letter of credit with a
financial institution in the amount of $30,000. The letter of credit has
been assigned as security to guarantee the performance of the Company as a
party to an equipment lease. The letter of credit is collateralized by the
Company's investment in a U.S. Treasury Bill (Note 3). In connection with
the sale of the Company's interest in ODDWORLD on September 13, 1996 (Note
17), the third party purchaser assumed the Company's obligation as
guarantor on the equipment lease and the collateral was released to the
Company.

11. Sales to major customers:

Sales to one customer for the year ended August 31, 1996 and five customers
for the year ended August 31, 1995, comprised 100% of total sales for each
of the years then ended. Sales to these customers are as follows:

F-18

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

11. Sales to major customers (continued):

1996 1995
------------ -----------

Customer A $182,100
Customer B 81,090
Customer C 58,523
Customer D 48,473
Customer E $ 60,560 42,750
-------- --------
$ 60,560 $412,936
======== ========

12. Shareholders' equity:

Preferred stock:

In August 1993, the Company issued 1,000,000 shares of Series A voting
preferred stock, convertible at the option of the holder at any time
through November 1997 into the Company's common stock at a conversion price
of $5.40 per share, subject to adjustment in certain events. The preferred
stock has a liquidation preference of $.01 per share, plus any declared and
unpaid dividends.

The Company established a stock option and stock bonus plan during August
1993 for eligible employees, officers, directors and consultants of CPTV
and its subsidiaries. Grants may be made in the form of incentive and
non-qualified options, or bonuses, and are exercisable up to ten years from
the date of grant (five years for a person owning in excess of 10% of the
total voting power of the common stock). One million shares of common stock
have been reserved under the plan. Incentive stock options may be granted
only to employees of the Company, at a price not less than 100% of the fair
market value at the date of grant (110% for options granted to a person
owning in excess of 10% of the total voting power of the common stock). The
price of non-qualified options can not be less than 80% of the fair market
value at the date of grant.

F-19

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

12. Shareholders' equity (continued):

Preferred stock (continued):

Non-qualified options granted to outside directors who are not employees of
the Company or significant shareholders, are exercisable at $4.00 per share
when vesting requirements are met and expire five years from the date of
grant. On October 1, 1993, 67,500 options were granted which expire October
1, 1998. One half of the options vested October 1, 1994, and the balance
vested October 1, 1995. In January 1994, an additional 22,500 options were
granted to an outside director. One-half of the options vested in January
1995, and the balance vested in January 1996. During the year ended August
31, 1995, no additional stock options or stock bonuses had been issued
under this plan. On December 29, 1995, options to purchase 90,000 shares of
the Company's common stock were granted to directors of the Company. These
options are exercisable through January 16, 2001, at $1.00 per share. No
compensation expense was recognized at the date of grant as the exercise
price of the options exceeded the market value of the Company's common
stock. One-half of these options will vest on November 1, 1996, and the
balance will vest on November 1, 1997. No stock options have been exercised
during the years ended August 31, 1996 and 1995.

Repurchase and retirement of common stock:

On December 19, 1995, the board of directors of the Company adopted a
resolution to implement a share repurchase program. Under the share
repurchase program, the Company may repurchase shares of its common stock
in the open market. These shares are subsequently canceled. As of August
31, 1996, in connection with the provisions of the share repurchase
program, the Company has repurchased a total of 103,800 shares of its
common stock for $72,342.

F-20

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

13. Income taxes:

A reconciliation of income tax benefit (expense) to income taxes based on
the effective Federal statutory income tax rate applied to the loss before
income taxes and minority interest is as follows:

1996 1995
---------- ----------

Statutory income tax benefit $ 989,000 $ 649,000
Nondeductible amortization expense (1,000) (5,300)
Nondeductible penalties and other (1,000) (200)
Change in deferred income
tax valuation allowance (987,000) (703,000)
Benefit from discontinued operations 124,920
Other 59,500
---------- ---------
$ 0 $ 124,920
========== =========

The temporary differences which give rise to deferred tax assets and
liabilities are as follows: 1996 1995

Cash to accrual conversion $ 69,000 $ 103,000
Net operating loss carryforwards 1,440,000 813,000
----------- ----------
1,509,000 916,000
Valuation allowance (1,509,000) (916,000)
----------- -----------
$ 0 $ 0
=========== ===========

13. Income taxes (continued):

A valuation allowance is provided when it is not certain that some portion
or all of the deferred tax asset will be realized. The Company has
established a valuation allowance for 100% of the deferred tax assets as of
August 31, 1996 and 1995.

F-21

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

13. Income taxes (continued):

Net operating loss carryforwards at August 31, 1996, were approximately
$4,235,000 and expire as follows:

2008 $ 1,000
2009 284,000
2010 1,000,000
2011 2,950,000
--------------
$ 4,235,000
==============

14. Loss per share:

Primary loss per share is computed based on the weighted average number of
shares of common stock outstanding for the years ended August 31, 1996 and
1995. No effect has been given to the conversion of preferred stock and
exercise of stock options as they would decrease loss per share. Fully
diluted loss per share is not presented for 1996 and 1995 because it would
decrease loss per share.

15. Profit-sharing plan:

Effective July 1, 1994, Alexandria established a qualified 401(k)
profit-sharing plan (the "Plan") covering substantially all of its eligible
employees (as defined). Eligible employees can elect to contribute an
amount equal to a percentage of their compensation up to 15%. Employer
contributions to the Plan are made at the discretion of Alexandria's
compensation committee. There were no employer contributions made during
the years ended August 31, 1996 and 1995.

16. Sale of the Company's 80% interest in Celluloid:

Effective May 31, 1995, the Company sold its 80% interest in Celluloid to
certain members of Celluloid management for $320,000, consisting of
$100,000 cash and a promissory note in the amount of $220,000 maturing in
December 1997 and requiring total monthly payments of principal and
interest of $7,556.

F-22

<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

16. Sale of the Company's 80% interest in Celluloid (continued):

The sale was treated as a disposal of a discontinued business segment, and
resulted in a gain of $76,020, net of income tax expense of $29,820. In
addition, approximately $275,000 of excess purchase price over net assets
acquired relating to the original acquisition of Celluloid was written off
in connection with the sale of the subsidiary (Note 1). Summary operating
results of discontinued operations, excluding the aforementioned gain, are
as follows:

1995
----------
Revenues $3,524,551

Income before income taxes 389,860
Income tax expense 95,100
----------
Income from discontinued operations $ 294,760
==========

17. Subsequent events:

Effective September 13, 1996, the Company sold its entire interest in
ODDWORLD to an unrelated third party for $7,000,000 less unpaid expenses
incurred as of August 16, 1996. In addition, Alexandria conveyed all of its
assignable assets to ODDWORLD which have been included in the sale.

Shareholder approval of this transaction occurred on November 15, 1996.
From August 16, 1996, through the date of shareholder approval, the
purchaser made advances to ODDWORLD of $225,210. These advances were made
for the purpose of providing working capital and to fund the operations of
ODDWORLD subsequent to August 16, 1996. As a result of the approval of this
transaction and pursuant to the provisions of the purchase agreement, the
purchaser became responsible for all liabilities of ODDWORLD incurred
subsequent to August 16, 1996 including the $225,210 of advances, thus, the
consolidated financial statements of the Company do not include expenses or
liabilities incurred by ODDWORLD subsequent to August 16, 1996.

F-23

<PAGE>

CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED AUGUST 31, 1996 AND 1995

17. Subsequent events (continued):

The purchase agreement requires that 10% of the purchase price ($700,000)
be retained in a hold back escrow account, until September 1998, to provide
the purchaser with potential recourse against the Company for any valid
future claims arising regarding any of the representations and warranties
made to the purchaser by the Company. As stipulated in the agreement, the
purchaser may make no claim unless the total of all damages suffered
exceeds $100,000, but all potential future claims will be capped at
$2,000,000.

The accompanying consolidated balance sheet includes an unaudited pro forma
balance sheet as of August 31, 1996, that gives effect to the sale of the
Company's ownership interest in ODDWORLD as if the transaction had been
consummated on August 31, 1996. The unaudited pro forma consolidated
balance sheet should be read in conjunction with the historical financial
statements of the Company. The unaudited pro forma consolidated balance
sheet does not purport to be indicative of the financial position of the
Company had the sale occurred on August 31, 1996.

The unaudited pro forma balance sheet includes the following pro forma
adjustments:

a. The receipt of $6,128,088 of cash (the purchase price of $7,000,000
net of unpaid expenses of ODDWORLD as of August 16, 1996) in exchange
for the Company's interest in ODDWORLD and the assets of Alexandria
conveyed to ODDWORLD. At August 16, 1996, the Company's interest
consisted of accounts receivable of $2,734, property and equipment of
$696,351, project costs of $1,827,680, other assets of $54,768, notes
payable to financial institutions of $237,349, capital lease
obligations of $25,168, accounts payable of $174,316, and accrued
salaries and other expenses of $61,367. The sale results in a gain of
approximately $4,000,000, reflected as a increase to shareholders'
equity on the unaudited pro forma balance sheet.

b. The use of $500,000 of cash proceeds to repay the outstanding notes
payable, shareholders, which were due upon the closing of the
transaction.

c. The transfer of $700,000 of cash proceeds to the hold back escrow
account.

F-24

<ARTICLE> 5

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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 319,186
<SECURITIES> 315,196
<RECEIVABLES> 161,687
<ALLOWANCES> (47,746)
<INVENTORY> 0
<CURRENT-ASSETS> 745,431
<PP&E> 1,343,006
<DEPRECIATION> (631,174)
<TOTAL-ASSETS> 3,398,701
<CURRENT-LIABILITIES> 1,199,442
<BONDS> 0
0
10,000
<COMMON> 32,101
<OTHER-SE> 6,811,915
<TOTAL-LIABILITY-AND-EQUITY> 3,398,701
<SALES> 60,560
<TOTAL-REVENUES> 60,560
<CGS> 1,095,411
<TOTAL-COSTS> 1,095,411
<OTHER-EXPENSES> 2,765,122
<LOSS-PROVISION> 47,746
<INTEREST-EXPENSE> 29,714
<INCOME-PRETAX> (3,790,681)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,790,681)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,790,681)
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</TABLE>