10-Q 1 d10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB ( x ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 OR ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from to Commission file number 0-9311 Central Capital Venture Corporation -------------------------------------- (Exact name of registrant as specified in its charter) Nevada 87-0269260 ----------------------------- ------------------ (State or other jurisdiction (I.R.S. Employer of incorporation or organization Identification Number PMB 112, 5600 W. Lovers Lane, Dallas, TX 75209-4330 --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (214) 219-0516 -------------- (Registrant's telephone number, including area code) -------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (x) No ( ) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes (X) No ( ) As of March 31, 2001, there were 2,732,985 shares of common stock ($.001 par value) issued and outstanding. Total sequentially numbered pages in this document: 1 Part I. Financial Information Page Condensed Statements of Loss and Deficit Condensed Balance Sheet Condensed Statement of Cash Flows Capital stock Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosure about Market Risk Part II. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURE PART I. FINANCIAL INFORMATION

2 -------------------------------------------------------------------------------- Loss per share, basic and diluted (Note 1) $ (0.04) $ (0.021) ============ =========== Weighted average shares, basic and diluted 2,732,985 2,685,224 ============ =========== -------------------------------------------------------------------------------- See accompanying notes to the condensed financial statements. -------------------------------------------------------------------------------- Central Capital Venture Corporation (formerly Digital Technologies Media Group, Inc.) Condensed Balance Sheet (Unaudited) March 31, June 30, 2001 2000 ------------------------------------------------------------------------- Assets Investments $ 100,000 $1,509,928 Fixed assets, net of accumulated depreciation of $332 (June 30, 2000 - $221) 0 1,882 September 30, 2000 - $111 $ 1,990) Deposits 1,900 2,030 Accounts Receivables 0 Cash and cash equivalents 727 25,821 --------- ---------- $ 102,627 $1,539,772 ========= ========== ------------------------------------------------------------------------- Liabilities Payables and accruals $ 31,362 $ 25,776 Convertible preferred shares 0 1,309,928 Stockholders' Equity Capital stock (Note 2) 26,850 26,850 Paid-in capital 174,840 234,381 Deficit (130,425) (57,163) --------- ---------- 71,265 1,539,772 --------- ---------- $ 102,267 $1,539,772 ========= ==========

-------------------------------------------------------------------------------- See accompanying notes to the condensed financial statements.

See accompanying notes to the condensed financial statements. --------------------------------------------------------------------------------

1. General SIGNIFICANT ACCOUNTING POLICIESINTERIM FINANCIAL STATEMENTS - The interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q. The unaudited financial statements reflect, in the opinion of management, all adjustments which are of a normal recurring nature necessary for a fair presentation of the information presented herein. Interim results are not necessarily indicative of results to be expected for a full fiscal year. VALUATION OF INVESTMENTS - Investments in Preferred Stock are carried at fair value with the net change in unrealized appreciation or depreciation included in the determination of net assets. Cost is used to approximate fair value of these basis for valuing such investment at a number other than cost. The fair value of investments for which no market exists and for which our Evaluation Committee has determined that the original cost of the investment is no longer an appropriate valuation will be determined on the basis of procedures established in good faith by our Board of Directors. Valuations will be based upon such factors as the financial and/or operating results of the most recent fiscal period, the performance of the company relative to planned budgets/forecasts, the issuer's financial condition and the markets in which it does business, the prices of any recent transactions or offerings regarding such securities or any proxy securities, any available analysis, media, or other reports or information regarding the issuer, or the markets or industry in which it operates, the nature of any restrictions on disposition of the securities and other analytical data. In the case of unsuccessful operations, the valuation may be based upon anticipated liquidation proceeds. Because of the inherent uncertainty of the valuation of portfolio securities, which do not have readily ascertainable market values, the Company's estimate of fair value may significantly differ from the fair market value that would have been used had a ready market existed for the securities. Appraised values do not reflect brokers' fees or other normal selling costs which might become payable on disposition of such investments (See "Evaluating Committee" in Bylaw of Central Capital Venture Corporation, 8-K May 8, 2000 by reference). Investments in companies whose securities are publicly traded are valued at their quoted market price, less a discount to reflect the estimated effects of restrictions on the sale of such securities ("Valuation Discount"), if applicable. Short-term investments having maturities of 60 days or less are stated at amortized cost, which approximates fair value. Other fixed income securities are stated at fair value. Fair value of these securities is determined at the most recent bid or yield equivalent from dealers that make markets in such securities. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME - Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). The cost of securities sold is determined on a first-in, first-out basis, unless otherwise specified. Dividend income on investment securities is recorded on the ex-dividend date. Interest income, which includes accretion of discount and amortization of premium, if applicable, is recorded on the accrual basis. CASH FLOWS - For the purpose of the Statement of Cash Flows, the Company considers all money market and all highly liquid temporary cash investments purchased with an original maturity of three months or less to be cash equivalents. RESTRICTED SECURITIES - Most, if not all securities, in which the Company acquires as venture capital investments will be restricted securities within the meaning of the Securities Act of 1933, as amended, and will not be permitted to be resold without compliance of the Securities and Exchange Act. Thus, the Company will not be permitted to resell portfolio securities unless a registration statement has been declared effective, or unless the Company is able to rely on an available exemption from such registration requirements. In most cases, the Company will endeavor to obtain from its Investment Companies registration rights pursuant to which the Company will be able to demand that an Investment Company register the securities owned by the Company at the expense of the Investment Company. Even if the Investment Companies bear this expense, however, the registration of the securities owned by the Company is likely to be a time consuming process, and the Company always bears the risk, because of these delays, that it will be unable to resell such securities, or that it will not be able to obtain an attractive price for the securities, Additionally, the Company may never be able to distribute the securities of certain Investment Companies to stockholders in certain states because the Investment Companies may not qualify for registration in those states, pursuant to each individual state blue sky laws. ACCOUNTING ESTIMATES - The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statement. Actual results could differ from those estimates. The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation for each of the periods presented. The results of operations for interim periods are not necessarily indicative of results to be achieved for full fiscal years. As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01 of Regulation S-X, the accompanying financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company's annual financial statements and footnotes thereto. For further information, refer to the financial statements and related footnotes for the fiscal year ended June 30, 2000 included in the Company's Amended Annual Report on Form 10-KASB. Income taxes Income taxes for the interim periods were computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. Loss per share The Company reports loss per share in accordance with the provisions of SFAS No. 128, Earnings Per Share. SFAS No. 128 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic loss per share excludes dilution and is computed by dividing income available to common shares by the weighted average common shares outstanding during the period. Diluted loss per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. 2. PORTFOLIO INVESTMENTS Prior to the period ended March 31, 2001 the Company invested $1,509,928 utilizing the cost method in two companies and made no follow-on investments, however the Company wrote off in its entirety it's investment in DataNet Information Systems, Inc. on February 5, 2001. Accordingly the Company expensed it cash investment of $100,000 (0ne hundred thousand dollars, and wrote off both the DataNet Information Systems, Inc. Asset and the Preferred A Stock linked Liability, additionally according to the rescission agreement (attached herein by reference) the Company was obligated to issue twenty five thousand shares of its Common Stock to Tow Shareholders of DataNet Information Systems, Inc. which the Company also expensed as a Settlement Charge. The individual equity and equity-linked security holdings of the Company at December 31, 2000 were comprised of the following investments: 1. DataNet Information Systems, Inc.; 1,000,000 Common Shares valued at $1,409,928.00 (based on book value at January 19, 2000 plus cash contributions) See Exhibit Item 5 attached as too the settlement agreement with DataNet Information Systems, Inc. Investment and the related write off of the investment. Prior to October 18, 2000 the Registrant and Bernie Budney, a Director and a Director of DataNet Information Systems, Inc. ("DataNet"), engaged in a disagreement over several matters relating to the Registrant's wholly owned Investee Company DataNet. On October 13, 2000 Mr. Budney resigned from his position as Director and Executive Vice President of the Registrant. A hand written stipulation had been signed by both Mr. Bernie Budney and Mr. Leonard Ludwig on January 5, 2001,although the stipulation never lead to an executed General Release with the same language as set forth in the Stipulation. Since October DataNet had not paid it's management fee nor has made the Registrant aware of its financial condition. On February 5, 2001 the Registrant and DataNet Information Systems, Inc. entered into a rescission agreement, which called for the Registrant to surrender 25,000 restricted common shares to Mr. Budney and Mr. Leonard Ludwig the Chief Executive Officer of First Portland Corporation, in addition to liquidating its entire investment, In DataNet Information Systems, Inc. to Mrss. Ludwig and Budney See EXHIBIT 10 OTHER EVENTS. 2. Digi Commerce Corporation 4,000,000 Common Shares, valued at $100,000 (based on cash contribution) The Registrants Investee Company Digi Commerce Corporation, which had opened its first I Cafe in Telluride Colorado on February 13 2001, thus discontinued said operations on March 15, 2001 due to lack of operating funds. Since the Registrant has been unsuccessful in raising any additional investment funds for either its Investee Companies, three shareholders of the Registrant invested capital consisting of personal guarantees and cash contributions so as to open the I Cafe. To date only one law suit has been filed against a guarantor of an operation lease for Digi Commerce. On March 16, 2001 Ely Mandell, President of Digi Commerce Corporation, decided to resign from the Investee Company in lieu of the proceeding facts. The Registrants management believes however, that Digi Commerce has other significant assets that might be able to be exploited with additional funding opportunities. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company and its investment portfolio companies. Words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," "might," or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Forward-looking statements are included in this report pursuant to the "Safe Harbor" provision of the Private Securities Litigation Reform Act of 1995. Such statements are only predictions and the actual events or results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those relating to investment capital demand, pricing, market acceptance, the effect of economic conditions, litigation and the effect of regulatory proceedings, competitive forces, the results of financing and investing efforts, the ability to complete transactions and other risks identified below or in the Company's filings with the Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The following analysis of the financial condition and results of operation of the Company should be read in conjunction with the Financial Statements, the Notes thereto and the other financial information included elsewhere in this report. GENERAL INVESTMENT CLIMATE The overall investment climate was generally volatile in the second quarter. Because of the continued volatility in the public markets, a number of attractive companies chose to seek further rounds of venture capital Companying rather than risk an initial public offering (IPO). Furthermore, given the correction in publicly traded technology stock prices, the valuations of many companies seeking additional financing were reasonable compared to March highs. Uncertainty continues to affect publicly traded technology stocks, but we believe that this uncertainty does not warrant the amount of negative press that this sector has received from time to time. In our view, many companies that received Companying in 1999 did not have solid business models or survivability strategies, and in many cases were brought to market prematurely. We believe that this trend has now run its course. We do not believe, however, that the pace of growth in new technologies and markets is decelerating. To the contrary, we believe that it is accelerating and that new markets are being created, leading to exciting investment opportunities. Looking forward, we also anticipate an improvement in the IPO market. In our opinion, issues are now being priced more attractively to encourage investors to revisit technology. RESULTS OF OPERATIONS The Company began operations upon the emergence from a Chapter 11 Proceeding on May 8, 2000. Its principal investment objective is the realization of long-term capital appreciation from investing primarily in equity and equity-linked debt securities of private companies. Pending the completion of equity and equity- linked debt security investments that meet the Company's investment objective, available Company's are invested in short-term securities Bank guaranteed Money Market accounts. Due to the Company's limited operating history, the Company's financial performance at March 31, 2001 is primarily composed of interest on temporary investments, and minimal management fee accrual. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2001, the Company had $100,000 of its net assets invested in portfolio securities of one Investee company. Current balance sheet resources are not believed to be sufficient to finance future commitments. Net cash provided by operating activities was $1,732 for the three months ended March 31, 2001. Net investment income and net realized gains from the sales of portfolio investments are intended to be distributed at least annually. Management believes that its cash reserves and the ability to sell its investments in publicly traded securities are not adequate at this time to provide payment for any expenses and contingencies of the Company. The Company Management reserves the right to retain net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses. Such retained amounts, if any, will be taxable to the Company as long-term capital gains and shareholders will be able to claim their proportionate share of the federal income taxes paid by the Company on such gains as a credit against their own federal income tax liabilities. Shareholders will also be entitled to increase the adjusted tax basis of their Company shares by the difference between their undistributed capital gains and their tax credit. INVESTMENT INCOME AND EXPENSES Net Loss after all expenses amounted to $(130,425) for the three months ended March 31, 2001 and $(57,163) for the fiscal year ended June 30 2000. The most significant portion of the lost was caused from the write off of the $100,000 previous investment in DataNet Information Systems, Inc. and a corresponding issuance of twenty five thousand share of restricted common stock of the Company to DataNet Shareholders in which the Com[any took a one time charge of $25,000 REALIZED GAINS AND LOSSES ON SALES OF PORTFOLIO SECURITIES The Company realized no net capital gains or losses from the sale of securities during the three months ended March, 2001. UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES The Company had no net unrealized appreciation for the three months ended March 31, 2001. DIVIDENDS No dividends were declared for the four months ended March 31, 2001. PORTFOLIO INVESTMENTS At March 31, 2001 the cost of equity and equity-linked security investments made by the Company to date was $100,000 and their aggregate market value was reduced $1,409,928. However, any such pending transaction could have an impact on the further valuation of an investment, which may be adjusted prior to the transaction being publicly announced or completed. SUBSEQUENT EVENTS The Registrant had previously entered into two separate letters of Intent to acquire (1) CareDecision.Net, Inc. (2) PayMD, Inc., these letters of Intent were never consummated due to various circumstances. The Registrants wholly owned Investee Company Digi Commerce Corporation became party to an Oregon Lawsuit entitled First Portland Corporation v Eli Mandell (sic), Julie Mandell, and Digi Commerce Corporation. Digi Commerce Corporation has not yet been served with the lawsuit which is specifically for a breach of a Restaurant equipment lease. Ely Mandell, Past President of Digi Commerce Corporation, has counter sued First Portland Corporation and Leonard Ludwig President individually (CEO of First Portland Corporation) for Fraud, Securities fraud, and numerous other claims and counter claims. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is subject to financial market risks, including changes in marketable equity security prices. The Company does not use derivative financial instruments to mitigate any of these risks. The return on the Company's investments is generally not affected by foreign currency fluctuations. Concentrations of market and credit risk exist with respect to debt and equity investments in portfolio companies, which are subject to significant, risk usual to companies in various stages of start-up. Generally, there is no ready market for the Company's investments, as they are closely held, generally not publicly traded or, in circumstances where an investment is publicly traded, the Company may be subject to certain trading restrictions for a specified period of time. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K NONE (a) Exhibits EXHIBIT INDEX Exhibit 27 Financial Data Schedule Only submitted to SEC in electronic format Exhibit 10 Settlement Agreement by and Between Leonard Ludwig and Bernie Budney, DataNet Information Systems, Inc. and Central Capital Venture Corporation. Opinion Letter of Glast, Phillips, Murray dated May 16, 2001 Consent of Glast, Phillips, Murray dated May 25, 2001 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Central Capital Venture Corporation ------------------------------------- (Registrant) Date: Dec 16, 2000 /s/ Rex E Crim ----------------------- Rex E. Crim, President

CENTRAL CAPITAL VENTURE CORP 10-Q