UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 14 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission file number 0-19817
Creative Programming and Technology Ventures, Inc.
--------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1236669
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
(303) 694-5324
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been suhject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 3,210,079 common shares as of
December 31, 1996.
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
INDEX
PART I. PART 1, ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET AS OF
NOVEMBER 30, 1996 (UNAUDITED) 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995 (UNAUDITED) 3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THREE MONTHS ENDED NOVEMBER 30, 1996 (UNAUDITED) 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE
MONTHS ENDED NOVEMBER 30, 1996 AND 1995 (UNAUDITED) 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7
PART 1, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS 9
PART II. OTHER INFORMATION
ITEMS 1 THROUGH 6
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
NOVEMBER 30, 1996
ASSETS
Current assets:
Cash and cash equivalents $5,534,497
Interest receivable 14,267
Investment 14,365
Certificate of deposit 281,000
Prepaid expenses 21,170
Note receivable under sale of discontinued
operations 84,200
----------
Total current assets 5,949,499
----------
Property and equipment, net 9,719
----------
Other assets:
Restricted cash 700,000
Note receivable under sale of discontinued
operations, net of current portion 7,481
Organization costs and other 8,831
----------
716,312
----------
Total assets $6,675,530
==========
(Continued)
1
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 111,890
Accrued income taxes 43,000
Accrued expenses and other 50,262
-----------
Total current liabilities 205,152
-----------
Shareholders' equity:
Preferred stock, par value $0.01; authorized
10,000,000 shares, issued and outstanding
1,000,000 (aggregate liquidation preference $10,000) 10,000
Common stock, par value $0.01; authorized
50,000,000 shares, issued 3,210,079 shares 32,101
Capital in excess of par 8,222,937
Deficit (1,794,660)
-----------
Total shareholders' equity 6,470,378
-----------
Total liabilities and shareholders' equity $ 6,675,530
===========
See notes to consolidated financial statements.
2
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
1996 1995
----------- -----------
Revenues $ $ 50,560
Cost of sales 189,017
----------- -----------
(138,457)
Selling general and administrative
expenses 235,429 719,233
----------- -----------
Operating loss (235,429) (857,690)
Other credits (charges):
Investment income 62,161 51,186
Interest expense (18,647) (6,048)
----------- -----------
Loss before gain on sale of subsidiary
and income taxes (191,915) (812,552)
Gain on sale of subsidiary (Note 2) 4,508,278
----------- -----------
Income (loss) before income taxes 4,316,363 (812,552)
Income taxes 43,000
----------- -----------
Net income (loss) $ 4,273,363 $ (812,552)
=========== ===========
Net income (loss) per common share $ 1.33 $ (0.24)
=========== ===========
Weighted average number
of common shares 3,210,079 3,424,317
=========== ============
See notes to consolidated financial statements.
3
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
Preferred stock Common stock
-------------------- --------------------- Capital
Shares Amount Shares Amount excess of par Deficit Total
------ ------ ------ ------ ------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
September 1, 1996 1,000,000 $ 10,000 3,210,079 $ 32,101 $ 8,222,937 $(6,068,023) $ 2,197,015
Net income 4,273,363 4,273,363
--------- -------- --------- -------- ---------- ----------- -----------
Balances,
November 30, 1996 1,000,000 $ 10,000 3,210,079 $ 32,101 $ 8,222,937 $(1,794,660) $ 6,470,378
========= ======== ========= ======== =========== =========== ===========
See notes to consolidated financial statements.
4
</TABLE>
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
1996 1995
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 4,273,363 $ (812,552)
----------- -----------
Adjustment to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 1,038 80,656
Gain on sale of subsidiary (4,508,278)
Loss on investments 33,749
Write-off of project costs 17,232
(Increase) decrease in assets:
Accounts receivable 55,464
Interest receivable (14,269)
Unbilled receivable 24,440
Prepaid expenses 5,421 (83,375)
Other current assets 10,008
Other assets 13,828
Increase (decrease) in liabilities:
Accounts payable (22,355) (223,753)
Other current liabilities (6,505) (18,398)
Accrued income taxes 43,000
----------- -----------
Total adjustments (4,488,120) (103,977)
----------- -----------
Net cash used in operating activities: (214,757) (916,529)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of subsidiary,
net of $700,000 cash held in escrow 5,907,448
Capital expenditures (134,256)
Purchase of treasury bills (15,169)
Proceeds from maturity of treasury bills 35,000 600,000
Payments received on note receivable 19,526
Project costs (314,906)
----------- -----------
Net cash provided by (used in)
investing activities 5,946,805 150,838
----------- -----------
(Continued)
5
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from financing activities:
Payment of notes payable (511,527) (32,778)
Proceeds from issuance of notes payable 11,552
Principal payments of
capital lease obligations (5,210) (9,848)
Purchase and retirement of common stock (62,511)
----------- -----------
Net cash used in financing
activities (516,737) (93,585)
----------- -----------
Net increase (decrease) in cash 5,215,311 (859,276)
Cash and cash equivalents, beginning 319,186 1,302,292
----------- -----------
Cash and cash equivalents, ending $ 5,534,497 $ 443,016
=========== ===========
Supplemental disclosure of cash flows information:
Cash paid for interest $ 25,213 $ 6,048
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
1. The interim financial statements:
These interim financial statements have been prepared by Creative
Programming and Technology Ventures, Inc. ("CPTV", the "Company") and, in
the opinion of management, reflect all material adjustments which are
necessary to a fair statement of results for the interim period presented.
Certain information and footnote disclosures made in the Company's Form
10KSB have been condensed or omitted for the interim statements. Certain
costs are estimated for the full year and allocated to interim periods
based on activity associated with the interim period. Accordingly, such
costs are subject to year-end adjustment. It is the Company's opinion that,
when the interim statements are read in conjunction with the Company's
financial statements for the year ended August 31, 1996 included in Form
10KSB, the disclosures are adequate to make the information presented a
fair presentation of the Company's financial condition. The results of
operations for the three months ended November 30, 1996 are not necessarily
indicative of the results to be expected for the full year.
2. Sale of the Company's interest in ODDWORLD and certain assets of Alexandria:
On 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.
7
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
2. Sale of the Company's interest in ODDWORLD and certain assets of Alexandria
(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 Company received $6,128,088 of cash (the purchase price of $7,000,000
net of unpaid expenses of $171,912 and net of the $700,000 held in escrow
of ODDWORLD as of August 16, 1996) in exchange for the Company's interest
in ODDWORLD and the assets of Alexandria conveyed to ODDWORLD. In addition,
$220,640 of transaction expenses were incurred and these have been netted
against the $6,128,088 to give net cash received on the sale of $5,907,448.
At September 13, 1996. The Company's interest consisted of accounts
receivable of $2,734, property and equipment of $701,075 project costs of
$1,827,680, other assets of $61,616, notes payable to financial
institutions of $225,822, capital lease obligations of $19,958, accounts
payable of $186,790, and accrued salaries and other expenses of $61,365.
The sale results in a gain of $4,508,278. The Company used $500,000 of the
sale proceeds to repay notes payable, shareholders.
8
<PAGE>
PART I, Item 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
- --------
On September 13, 1996, Creative Programming and Technology Ventures, Inc.
("CPTV" or the "Company") sold its entire interest in its Oddworld
Entertainment, Inc. subsidiary to GT Interactive Software Corp. (the "GT
Transaction"). As a result of the completion of the GT transaction, CPTV's
liquidity and capital resources changed significantly after September 13, 1996.
CPTV, which had seen substantial operating deficits associated with the expense
of producing its own advanced interactive game, was able to sell its investment
and shed the associated liabilities while recognizing a substantial economic
gain. In summary effect, CPTV sold assets in which it had a total debt and
equity investment of approximately $3,700,000 for net cash of $6,128,088. The
Company also received a return of approximately $316,000 it had posted as
collateral securing certain associated liabilities which were assumed by GT in
connection with the GT Transaction. Costs of the transaction expensed during
fiscal 1996 were approximately $85,000, and an additional approximately $131,000
were recognized and expensed in the current quarter. $520,800 was paid to retire
certain indebtedness owed to affiliates, including interest. The sale resulted
in a gain to CPTV of $4,273,363. Cash in the account of $700,000 was retained in
a two-year escrow account.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
As a result of the completion of the GT Transaction, CPTV has a working
capital in excess of $5,700,000 and shareholders equity in excess of $6,400,000,
as compared with an historical working capital deficit of more than $450,000 and
shareholders equity of less than $2,200,000 at August 31, 1996. Consequently,
CPTV has renewed opportunities to invest in a new growth opportunity. CPTV has
begun the process of evaluating possible business opportunities and transactions
but is at a very early stage at considering any new business opportunity. 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.In the meantime, CPTV Board
recognized that its stock price is a substantial discount to its book value and
authorized a stock repurchase program on December 19, 1996. The primary
motivation of the buyback plan is to add value to those shareholders who have
chosen to retain their interest in CPTV as an investment vehicle, and to take
advantage of what management believes is an advantageous CPTV share price that
currently trades at a significant discount to its cash value.
During the period in which CPTV seeks out new and evaluates new business
opportunities the company projects sharply declining operating expenses as it
now employs only two full-time people. CPTV intends to rely on outside
professional services for as much of its operations as it can practically
outsource and to seek new business opportunities through a select group of
advisors that it is evaluating. CPTV has invested its cash in short-term
government backed instruments which are yielding approximately 4.8% and
management believes that this interest income will offset a substantial portion
of CPTV's direct operating overhead, thereby helping to preserve equity during
the period of evaluation.
9
<PAGE>
Results of Operations
- ---------------------
In the first quarter ended November 30, 1996, CPTV recognized net income of
more than $4,200,000 or $1.33 per share as compared to a net loss of $(812,552)
or $(.24) per share for the same quarter the previous year. This gain was due to
the GT Transaction described above, a non-recurring event. In November 30, 1995,
CPTV was still in the process of building the game and adding value to its
investment in OddWorld which was a non-revenue producing and capital intensive
event which accounts for the significant variability in First Quarter operating
results.
The First Quarter, November 30, 1996, balance sheet also reflects
approximately $312,000 in additional operating expenses and professional legal
and accounting fees primarily attributable to the GT transaction and the
year-end auditing and accounting cost. The additional cost reflects the bulk of
the changes from our August 31, 1996, pro-forma balance sheet, which cut off
final phase expenses associated with the GT closing, to our actual November 30,
First Quarter end financials.
10
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
Creative Programming and Technology Ventures, Inc.
BY: /S/ GARY R. VICKERS
-------------------------------------------
Gary R. Vickers, President
Date: January 14, 1997
-------------------------------------------
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED NOVEMBER 30, 1996 FOR CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES, INC.
AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,534,497
<SECURITIES> 295,365
<RECEIVABLES> 105,948
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,949,499
<PP&E> 19,761
<DEPRECIATION> 10,042
<TOTAL-ASSETS> 6,675,530
<CURRENT-LIABILITIES> 205,152
<BONDS> 0
0
10,000
<COMMON> 32,101
<OTHER-SE> 6,428,277
<TOTAL-LIABILITY-AND-EQUITY> 6,675,530
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 235,429
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,647
<INCOME-PRETAX> 4,316,363
<INCOME-TAX> 43,000
<INCOME-CONTINUING> 4,273,363
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,273,363
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
