10-Q 1 pv10q.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 for the Quarterly period ended June 30, 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: 0-27161 ----------------------------------- PAYFORVIEW MEDIA GROUP HOLDINGS CORP. (Exact name of registrant as specified in its charter) Nevada, U.S.A. 91-1976310 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 509 Madison Avenue, 16th Floor, New York, New York 10022 (Address of principal executive offices) (212) 605-0150 (Issuer's telephone number, including area code) PAYFORVIEW.COM, INC. (Former name, former address and former fiscal year, if changed since last report) Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 [ ] As of June 30, 2001: 3,761,008 shares of the Company's Common Stock were issued and outstanding. TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT Part I. Financial Information ------- Item 1. Financial Statements (unaudited) Item 2. Managements Discussion and Analysis or Plan of Operation Part II. Other Information -------- Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to Vote of Security holders Item 5. Other Information Item 6. Exhibits and reports on form 8-K SIGNATURES PART I ITEM 1. FINANCIAL STATEMENTS C O N T E N T S Page Condensed Consolidated Balance Sheets F-2 Condensed Consolidated Statements of Operations F-3 Condensed Consolidated Statements of Cash Flows F-4 Condensed Consolidated Statement of Changes in Stockholders' Equity F-5 - F-6 Notes to Condensed Consolidated Financial Statements F-7 - F-11 F-1_ PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) CONDENSED CONSOLIDATED BALANCE SHEETS December 31, June 30 Assets 2000* 2001 (unaudited) Cash and cash equivalents $ 610,968 $ 10,405 Prepaid expenses 1,500 9,803 ------------ ----------- Total Current Assets 612,468 20,208 Fixed assets, net 412,654 371,659 Deferred offering costs 525,000 425,000 Intangible assets, net 92,748 73,497 Capitalized website development costs, net 267,479 203,881 Other assets 183,571 191,531 ---------- --------- $ 2,093,920 $ 1,285,776 ========= ======== _ LIABILITIES AND STOCKHOLDERS' EQUITY December 31, June 30 2000* 2001 (unaudited) Accounts payable $ 64,735 $ 68,191 Accrued consulting fees 53,009 - Accrued bonus 193,751 43,750 Liabilities from discontinued operations 275,065 285,679 ---------- ---------- Total Current Liabilities 586,560 397,620 Liabilities to be paid In common stock - 245,000 Stockholders' equity Common stock Authorized, 100,000,000 common shares with a par value of $0.0001; issued and outstanding,2,984,533 and 3,059,550 shares, respectively 298 376 Additional paid-in capital 20,296,144 21,077,648 Shares issued to Destiny (98,750) (56,682) Deficit, accumulated during the development stage (18,690,332) (20,378,186) ----------- ---------- Total Stockholders' equity 1,507,360 643,156 ----------- ---------- $2,093,920 $ 1,285,776 ========== ========== *Derived from audited financial statements. The accompanying notes are an integral part of these statements. F-2 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended June 30 -------------------- 2000 2001 --------- -------- Costs and expenses Selling, general and administrative Expenses $ 687,831 $ 536,764 Amortization of licenses and Goodwill 6,799 41,427 Interest income (40,812) (3,934) ---------- ---------- Total costs and expenses 653,818 574,257 ---------- ---------- Loss from continuing operations (653,818) (574,257) ---------- ---------- Discontinued operations (Street Solid Records) Loss from operations - - Loss on disposal - 26,000 ---------- --------- Loss from discontinued operations - 26,000 ---------- --------- Loss before extraordinary item (653,818) (600,257) Extraordinary item - gain on extinguishment of debt 200,151 ----------- --------- Net Loss $ (453,667) $ (600,257) ========== ========= Basic and diluted loss per share: Continuing operations $ (.22) $ (.17) Discontinued operations - (.01) Extraordinary item .07 - ---------- ---------- Basic and diluted loss $ (.15) $ (.18) per share ========== ========== Weighted-average shares Outstanding Basic and diluted 2,930,348 3,367,883 ========== ========== The accompanying notes are an integral part of these statements. (Format change) Payforview.com Corp. and Subsidiaries (formerly Sierra Gold Corporation) (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Cumulative amounts from Six months Ended April 6, 1998 June 30, (inception) to --------------------------- June 30, 2000 2001 2001 ------------ ------------ ------------- Costs and expenses Selling, general and administrative Expenses $ 4,977,289 $ 1,561,214 $ 10,709,147 Amortization of licenses and Goodwill 13,598 82,854 514,441 Investment expense - - 2,410,000 Loss on impairment - - 4,247,022 Interest expense - - 348,631 Interest income (74,107) (8,896) (123,661) ----------- ----------- ------------ Total costs and expenses 4,916,780 1,635,172 (18,105,580) ----------- ----------- ------------ Loss from continuing operations (4,916,780) (1,635,172) (18,105,580) ----------- ----------- ------------ Discontinued operations (Street Solid Records) Loss from operations - - (1,056,167) Loss on disposal - (52,682) (1,416,590) ----------- ----------- ------------ Loss from discontinued operations - (52,682) (2,472,757) ----------- ----------- ------------ Loss before extraordinary item (4,916,780) (1,687,854) (20,578,337) Extraordinary item - gain on extinguishment of debt (Note D) 200,151 - 200,151 ----------- ----------- ------------ NET LOSS $(4,716,629) $(1,687,854) $(20,378,186) =========== =========== ============ Basic and diluted loss per share: Continuing operations $ (1.75) $ (.51) $ (10.08) Discontinued operations - (.02) (1.37) Extraordinary item .07 - .11 ----------- ----------- ------------ Basic and diluted loss per share $ (1.68) $ (.53) $ (11.34) =========== =========== ============ Weighted-average shares outstanding 2,809,680 3,207,516 1,796,303 =========== =========== ============

F-3 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Cumulative Six months ended amounts from June 30 June 30 April 6,1998 2000 2001 inception) to June 30,2001 ------------- ------------ ------------ Cash flows from operating activities Loss from continuing operations $( 4,916,780) $ (1,635,172) $(18,105,580) Adjustments to reconcile net loss to cash used in operating activities Depreciation 7,585 40,995 131,692 Amortization of licenses and goodwill 13,598 82,849 514,436 Amortization of deferred offering costs - 100,000 175,000 Common stock to be issued for services and transaction costs 3,426,231 787,981 9,200,144 Noncash investment expense - - 2,410,000 Noncash interest expense - - 333,333 Changes in operating assets and liabilities Prepaid expenses (44,968) (6,303) (59,803) Other assets (177,840) (7,960) (141,331) Accounts payable and accrued expenses (18,939) (5,803) 255,692 ---------- --------- ---------- Net cash used in operating activities of continuing operations (1,711,113) (645,413) (5,286,417) ---------- --------- ---------- Net cash used in operating activities of discontinued operations - - (657,080) ---------- --------- ---------- Cash flows from investing Activities Payments for website costs (291,072) - (306,072) Payment of settlement costs Relating to sale of Discontinued Operations (58,000) - (83,000) Payment for licenses and rights - - (84,270) Proceeds from sale of - Discontinued operations - - 250,000 Investment in Turn-Key Entertainment LLC (1,400,000) - (1,400,000) Acquisition of fixed assets (124,146) - (161,351) ----------- --------- ---------- Net cash used in investing activities (1,873,218) - (1,784,693) ----------- --------- ---------- Cash flows from financing activities Issuance of common stock 5,159,000 44,850 5,688,444 Proceeds from loan payable - - 1,050,151 Proceeds from convertible debenture - - 1,000,000 ----------- ----------- ----------- Net cash provided by financing activities 5,159,000 44,850 7,738,595 ----------- ----------- ----------- Net change in cash and cash equivalents during the period 1,574,669 (600,563) 10,405 Cash and cash equivalents, beginning of period 342,004 610,968 - ----------- ----------- ----------- Cash and cash equivalents, end of period $1,916,673 $ 10,405 $ 10,405 =========== =========== =========== Supplemental disclosures of cash flow information: Cash paid during the period for Interest $ - $ - $ 15,298 =========== =========== =========== Supplemental disclosures of noncash financing and investing activities (Note F) The accompanying notes are an integral part of these statements.

F-4 Payforview.com Corp. and Subsidiaries (formerly Sierra Gold Corporation) (a development stage company) CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) Period from April 6, 1998 (inception) through June 30, 2001 Deficit, accumulated Common Stock issued Additional during the Shares --------------------- paid-in development Issued to Number Amount capital stage Destiny Total ---------------------------------------------------------------------- Balance, April 6, 1998 - $ - $ - $ - $ - Capital stock of Voyager International Entertainment Inc. issued for services 190,000 19 37,981 - 38,000 Capital stock of Voyager International Entertainment Inc. issued for acquisition of Voyager Film Sales Inc. 10,000 1 199 - 200 Capital stock of Voyager International Entertainment Inc. issued for cash 16,357 2 112,490 - 112,492 Net loss - - - (275,528) (275,528) ---------------------------------------------------------------------------------------------- Balance, December 31, 1998 216,357 22 150,670 (275,528) (124,836) Capital stock of Payforview.com Corp. at January 5, 1999 187,500 18 982 - 1,000 Issuance of shares for acquisition of Voyager International Entertainment Inc. 389,442 39 1,521 - 1,560 Issuance of shares for acquisition of Voyager International Entertainment, Inc. for potential commission 75,000 8 ( 8) - - Cancellation of Voyager shares ( 216,357) ( 22) 22 - - Issuance of shares for acquisition of Squadron One Records and creation of Street Solid Records, Inc. 58,675 6 1,598,274 - 1,598,280 Issuance of shares for acquisition of licenses and rights 55,125 5 3,067,395 - 3,067,400 Issuance of shares for services 6,100 1 77,835 - 77,836 Issuance of shares for consulting services 90,000 9 652,491 - 652,500 Issuance of shares for consulting services 16,667 2 49,998 - 50,000 Issuance of shares for financial advisor services 90,000 9 1,386,867 - 1,386,876 Issuance of shares for acquisition of Software 10,000 1 291,999 - 292,000 Issuance of shares for advertising 10,000 1 59,999 - 60,000 Issuance of shares upon conversion of debt 1,141,850 114 827,386 - 827,500 Allocation of proceeds of convertible debt to additional paid-in-capital - - 333,333 - 333,333 Issuance of shares for cash 27,027 3 99,997 - 100,000 Shares held in escrow with attorney relating to debentures 12,500 1 ( 1) - 0 Net loss (9,479,413) (9,479,413) ------------------------------------------------------------------------------------------------ Balance December 31, 1999 2,169,886 217 8,598,760 (9,754,941) (1,155,964) Issuance of shares for cash, net of share issuance costs 180,500 18 5,381,482 - 5,381,500 Issuance of shares for convertible debt 345,000 35 172,465 - 172,500 Shares issued to officers and consultants for services 150,000 15 2,933,985 - 2,934,000 Shares issued for acquisition of MAS Acquisition Corporation 16,750 1 30 - 31 Shares issued for transaction costs for MAS Acquisition Corporation 16,750 1 375,199 - 375,200 Shares issued for investment in Turn-Key Entertainment 100,000 10 999,990 - 1,000,000 Proceeds from sale of 64,000 shares of the 75,000 shares held in escrow from Voyager - - 899,602 - 899,602 acquisition Cancellation of remaining escrow shares ( 11,000) ( 1) 1 - - Additional compensation for services performed - - 117,000 - 117,000 Warrants issued for commitment Fees - - 600,000 - 600,000 Stock options issued for Services - - 82,232 - 82,232 Cancellation of partial shares Related to Bacchus ( 20,853) ( 2) 2 - 0 Cancellation of shares held in Escrow relating to debentures ( 12,500) ( 1) 1 - 0 Shares issued for Destiny legal Settlement 50,000 5 135,395 135,400 Liability Valuation Account for Destiny 0 0 (98,750) (98,750) Net loss (8,935,391) (8,935,391) ---------------------------------------------------------- Balance, December 31, 2000 2,984,533 298 20,296,144 (18,690,332)(98,750) $1,507,360 Issuance of common stock under equity line of credit (unaudited) 34,500 4 44,846 - - 44,850 Stock held by investment banker (unaudited) 40,500 4 (4) - - - Compensation expense for stock options (unaudited) - (75,086) - - (75,086) Warrants Issued for investment banking fees (unaudited) - - 21,067 - - 21,067 Proceeds received by Destiny Music from previously issued shares (unaudited) - - - 42,068 42,068 Shares issued to officers And consultants for Services (unaudited) 701,366 70 790,680 - - 790,750 Reverse split odd Lot adjustment (unaudited) 109 - - - - - Net loss for six months Ended June 30, 2001 (unaudited) - - - (1,687,854) (1,687,854) Balance June 30, 2001 ---------- -------- ----------- ----------- -------- ---------- (unaudited) 3,761,008 377 21,077,647 (20,378,186) (56,682) 643,156 ---------- -------- ----------- ----------- -------- ---------- The accompanying notes are an integral part of this statement.

(Format change) PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three and six months ended June 30, 2000 and 2001 (unaudited) NOTE A - ORGANIZATION OF THE COMPANY AND NATURE OF BUSINESS The Company was incorporated on August 26, 1998 under the name Sierra Gold Corporation. On January 4, 1999, Sierra Gold Corporation changed its name to Payforview.com Corp. The Board of Directors approved on April 17, 2001 to change the name of the Company from PayForView.com Corp to PayForView Media Group Holdings Corp. ("the Company") Effective April 24, 2001, the new trading symbol is PMGH. On January 15, 1999, the Company implemented a two-for-one forward stock split. On April 9, 1999, the Company implemented a three-for-two forward stock split. On March 29, 2001 the Board of Directors approved a reverse split of twenty-for one effective with the close of business on April 23, 2001. All share and per share amounts in the financial statements have been retroactively restated to give effect to all of the above splits. The Company is considered a development stage company as its planned principal operations have not yet commenced. Presently, the Company is developing an internet-based website to distribute movies, music, live events and sports events direct to consumers on a pay-for-view basis. It is also marketing a rich and streaming media advertising product, and is developing certain traditional media business opportunities in film, broadcasting, and sports marketing. NOTE B - BASIS OF PRESENTATION AND LIQUIDITY MATTERS Information in the accompanying condensed consolidated financial statements as of June 30, 2001 and for the three and six months ended June 30, 2001 and 2000 and the cumulative amounts from April 6, 1998 (inception) through June 30, 2001 is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America applicable to interim financial information and the rules and regulations F-7 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Three and six months ended June 30, 2001 and 2000 (Unaudited) NOTE B (continued) promulgated by the Securities and Exchange Commission. These financial statements should be read in conjunction with the Company's annual financial statements included in its Annual Report on Form 10KSB for the year ended December 31, 2000. In the opinion of the Company's management, the June 30,2001 and 2000 unaudited condensed consolidated interim financial statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of such financial statements. The results of operations for the three and six months ended June 30, 2001 and 2000 are not necessarily indicative of the results to be expected for any other interim period or the entire year. F-8 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three and six months ended June 30, 2001 and 2000 NOTE B (continued) As of June 30, 2001, the Company had recurring net losses, a deficit accumulated in the development stage and limited working capital. As of June 30, 2001 the Company had approximately $10,400 in cash. On November 21, 2000 the Company filed a shelf registration for the private placement of shares having aggregate market value not to exceed $40,000,000. An aggregate of 34,500 shares have been sold in 2001 for gross proceeds of approximately $45,000. The Company's future operations are dependent upon market acceptance of its media and advertising products and services. There can be no assurance that the Company's products and services will be able to secure market acceptance. The Company is likely to require substantial funding to continue its website development, marketing, sales, and administrative activities. The Company has raised funds in the past through the sale of securities, and may raise funds in the future through public offerings or private placements of securities, collaborative arrangements or from other sources. We have an agreement with Swartz Private Equity, LLC for an equity line of up to $40,000,000. Drawdowns on this equity line are subject to market factors, and there can be no assurance that the Company will be able to draw down funds from such line. Historically, the Company has been successful in meeting ongoing cash requirements with equity placements, both public and private. However, there can be no assurance that future discussions will result in any investments, collaborative arrangements, agreements or funding, or that future additional financing through debt or equity financing will be available to us on acceptable terms, if at all. Further, there can be no assurance that any arrangements resulting from these discussions will successfully reduce our funding requirements. If additional funding is not available to the Company when needed, the Company may be required to scale back its website development, marketing and administrative activities and its business and financial results and condition could be materially and adversely affected. As of June 30, 2001, the Company does not have sufficient working capital to sustain operations until December 31, 2001. The Company will pursue opportunities to finance its operations and satisfy its cash requirements with a combination of debt financing, stock sales, and, in the longer term, revenue from operations. Among the options available to and being considered by management to ensure the Company has sufficient working capital for the next twelve months are a) plans to reduce or delay expenditures, b) plans to increase cash flow through acquisitions, c) plans to borrow money using the assets and cash flow of potential acquisitions and/or existing equity investors such as Turn-Key Entertainment LLC and d) plans to increase ownership equity through various funding vehicles including convertible debentures, private placements and registration of shares for sale to the public. There can be no assurance that any of these opportunities will be successful. F-9 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Three and six months ended June 30, 2001 and 2000 NOTE C LOSS PER SHARE The Company computes net loss per share in accordance with Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share." Under the provisions of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted- average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of common and common equivalent shares outstanding during the period. However, as the Company generated net losses in all periods presented, common equivalent shares, composed of incremental common shares issuable upon exercise of stock options and warrants are not reflected in diluted net loss per share because such shares are anti-dilutive. An aggregate of 68,750 outstanding stock options and 110,534 outstanding warrants as of June 30, 2001 were excluded from the loss per share calculation because the effect would be anti-dilutive. No warrants or options were outstanding as of June 30, 2000. All stock splits have been retroactively reflected in the loss per share calculations for all periods presented.(see Note A) F-10 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Three and six months ended June 30, 2001 and 2000 NOTE D - DISCONTINUED OPERATIONS As of June 30, 2001 and 2000 the following liabilities relating to Street Solid, an operation discontinued by the Company as of October 29, 1999, remained on the books of the Company. June 30, 2000 2001 Amounts due to Destiny Music $ 198,000 $ 285,679 ======= ======= On November 8, 2000 the Company settled an outstanding lawsuit with Destiny Music ("Destiny") for $325,000 subject to adjustment to $350,000. In November 2000, a cash payment of $25,000 was made. The remainder of the obligation is payable in cash or at the option of the Company through the liquidation of shares held by Destiny. The settlement requires a minimum monthly payment to Destiny of $25,000 payable either in cash or through liquidation of stock. Such minimum payments have not been made. In connection with its purchase of Street Solid, the Company had assumed a liability of $198,000. Accordingly, an additional $127,000 was recorded in the third quarter of 2000 as additional loss on disposal of discontinued operations. As of December 31, 2000, an aggregate of 50,000 post-split shares were transferred to Destiny. Destiny is restricted under certain laws from selling these securities, except as permitted under such laws. Additionally, the Company is required to transfer collateral of additional shares of stock aggregating $10,800 of value per month to Destiny pursuant to the settlement agreement. Through June 30, 2001, 30,000 shares were liquidated for proceeds to Destiny of $66,733, which reduced the value of the Company's liability to Destiny and the contra-equity account. As of June 30, 2001, the Company estimated its remaining loss on this litigation settlement and recognized losses which were charged to discontinued operations, due to the decline in value of the shares of the Company held by Destiny between January 1, 2001 and June 30, 2001, aggregating $52,682. The Company will continue to estimate its remaining obligation pursuant to this litigation periodically and as of each reporting date, and adjust the account accordingly. _ F-11 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Three and six months ended June 30, 2001 and 2000 NOTE E - LIABILITIES TO BE PAID IN COMMON STOCK During the six months ended June 30, 2001 the Board of Directors authorized the issuance of 205,910 of the Company's common shares that were valued as follows: Name Shares Purpose Amount ------------- ---------- --------------- -------------- Sid Amira 22,727 Pursuant to $25,000 (1) consulting agreement (2) Marc Pitcher 68,183 Pursuant to 75,000 (1) employment agreement (2) Former Officers And Director 85,000 Contract 85,000 cancellation Four current Directors 30,000 Annual Directors 60,000 (1) --------- compensation ----------- Total 205,910 $ 245,000 ========= =========== (1) Restricted securities under Sec Rule 144 (2) See Note I The shares were not issued as of June 30, 2001. All are included as long term liabilities as of June 30, 2001. F-12 PayForView Media Group Holdings Corp. (formerly PayForView.com Corp) (a development stage company) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Three and six months ended June 30, 2001 and 2000 Note F SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND INVESTING ACTIVITIES In 1999, the following transactions occurred 1. In January 1999 in order to complete the acquisition of Voyager, the Company issued 389,442 common shares (and a commission of 75,000 shares). 2. In January 1999, the Company issued 58,675 common shares to acquire Street Solid. The value of the shares issued was estimated to be $1,598,280 (see Note D-1). In connection with such acquisition, liabilities assumed were $198,000. 3. The Company issued 55,125 common shares valued at $3,067,400 towards the acquisition of licenses and rights 4. The Company issued 202,767 common shares valued at $2,167,212 for services rendered. 5. The Company issued 10,000 shares valued at $342,000 towards the acquisition of software. 6. The Company issued 10,000 shares valued at $60,000 for fees incurred for advertising. 7. The Company issued 1,141,850 common shares upon the conversion of 825,500 of convertible debentures. In 2000, the following transactions occurred 8. In January 2000, holders of $172,500 of convertible debentures exchanged such debentures into 345,000 shares of the Company's common stock. 9. In February 2000, the Company issued an aggregate of 150,000 shares of common stock valued at $2,934,000 to officers and consultants. 10. In February 2000, the Company issued 16,750 shares in payment of transaction costs related to the MAS acquisition. 11. In May 2000, the Company invested 100,000 shares that were valued at $1,000,000, as part of its investment in Turn-Key Entertainment LLC. This investment was subsequently written down to zero as of June 30, 2000 12. As of June 30, 2000, the Company recognized an aggregate of $117,000 of additional compensation relating to stock awards granted in 1999, for which services were still being performed through June 30, 2000. No additional compensation was required to be recorded during the remainder of the year ended December 31, 2000. 13. On August 31,2000 the Company issued warrants to purchase 100,000 shares of common stock to an investment bank in connection with a proposed financing at an exercise price of $1.40 per share, subject to adjustment under certain conditions. The Company valued such warrants at $600,000 based on a Black-Scholes pricing model, and included these warrants in deferred offering costs. 14. In December 2000 the Company issued 50,000 shares to Destiny in connection with a settlement of an outstanding lawsuit. Through March 31, 2001, approximately 30,000 shares have been liquidated, for net proceeds to Destiny of $66,733. 15. In May 2000, the Company sold 64,000 of the 75,000 shares placed in escrow in connection with the Voyager acquisition for proceeds of $899,502 of which $850,000 was used to settle a debt of $1,050,151. In 2001, the following transactions occurred 16. In February 2001, the Company issued additional warrants to purchase 10,534 shares of common stock to an investment bank in connection with the equity agreement and Put exercised in February 2001. The Company valued such warrants at $21,067 based on a Black-Scholes pricing model. 17. In May 2001, the Company issued 701,366 shares of common stock valued at $790,750 to officers and consultants as follows: Senior Consultant 312,502, officer 136,364, former officer and director 112,500, former officers 40,000 and for legal services 100,000. NOTE G - ISSUANCE OF WARRANTS On February 27,2001 the Company issued additional warrants to purchase 10,534 shares of common stock , at an exercise price of $1.87 per share in connection with the equity agreement and put exercised in February 2001. The Company valued the warrants at $21,067 based on Black- Scholes pricing model. The warrants have been included in equity related financing costs. NOTE H - CONTINGENCIES The Company has been sued by a software firm. Discovery is under way. The Company believes the case is meritless and is vigorously defending its position. NOTE I SUBSEQUENT EVENTS 1. On July 30, 2001, the Company purchased an additional 5% equity interest in Turn-Key Entertainment LLC, thereby increasing the Company's investment to 30%, by issuing 545,455 shares. 2. On July 30, 2001, an aggregate of 300,000 shares were to be issued to consultants in exchange for services to be rendered. No services were rendered prior to June 30, 2001. 3. On March 12, 2001, the Company signed compensation agreements with Marc Pitcher and Sid Amira. Under such agreements, Marc Pitcher would receive $75,000, payable in shares, for each of up to three letters of agreement to acquire business that are signed before December 31, 2001 and Sid Amira would receive $25,000 payable in shares, for each of up to three letters of agreement to acquire business that are signed before December 31, 2001. One conditional letter of agreement subject to financing was signed on May 30, 2001 and subsequent to June 30, 2001, 204,545 shares were issued to Marc Pitcher and none to Sid Amira ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Information. This Quarterly Report on Form 10-QSB contains certain forward looking statements and information relating to us that are based on the beliefs of management, as well as assumptions made by and information currently available to us. When used in this document, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to us, are intended to identify forward looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including those described in this discussion and elsewhere in this Quarterly Report on Form 10-QSB. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. We do not intend to update these forward-looking statements. DESCRIPTION OF BUSINESS. PayForView Media Group Holdings Corp. is an integrated on-line and off-line broadcast entertainment and information, advertising and design company with broad experience and expertise in the on-line streaming, rich-media and advertising sectors. Since launching the PayForView.com website in April of 2000, PayForView Media Group Holdings Corp. has distributed movies, music, sports and live events direct to viewers on a pay-for-view, retail and e-commerce basis. The Company also uses its streaming media expertise and a proprietary, rich-media template to design on-line advertising and marketing solutions. Additionally, the Company owns several other interests. Turn-Key Entertainment, (in which the company owns as of June 30, 2001 a 25% interest) is building an on- line, pay-per-view industry product that is synergistic with the Company's core business. Voyager International Entertainment, a wholly owned subsidiary of the Company, intends to develop and package motion picture projects for production. Voyager Film Sales, a wholly owned subsidiary of the Company, is our foreign sales division for these projects. We intend to produce and own programming and distribute it through new media (the Internet) and old media (broadcast, DBS and cable television). In this manner, we will be able to generate revenues from traditional sources while we build a strong brand in the Internet space in preparation for an expanding broadband universe and the upcoming convergence of old media with new media. We continue to enter into alliances with entertainment and technology companies that provide elements needed for the completion of our plans. These companies include those providing Internet-related technical support, filmed or live programming, recorded music and sports related programming. Results of Operations. General. We have incurred a cumulative net loss in our development stage of approximately $20.4 million as of June 30, 2001. We expect to continue to incur substantial and increasing losses during our development stage due to continued and increased spending on our web site, hiring of employees, research and the costs of marketing, sales, video streaming and administrative activities. We anticipate that results of operations may continue to fluctuate significantly depending on, among other factors, the number of available subscribers who have access to high speed Internet connections, the costs associated with the streaming of video based content over the Internet, our ability to recruit and retain advertising clients, and our ability to successfully provide viewers with compelling and entertaining events. We anticipate our operating activities will result in substantial net losses while in our development stage and expect losses to continue for a period of time once we are in our operational stage. Three and six months ended June 30, 2001 compared to three and six months ended June 30, 2000 Revenues. We had no revenues from continuing operations from our inception on April 6, 1998 to date. Selling, general and administrative expenses: Selling, general and administrative expenses decreased to $536,764 for the three months ended June 30, 2001 from $687,831 for the three months ended June 30, 2000, which is a net decrease of $151,067. The decrease was primarily due to decreases in personnel costs and consulting fees of $240,011 and a $150,881 decrease in travel and web events. The decreases in personnel costs, consulting fees resulted from our consolidation of executive offices, and the reduction in consulting and management personnel. These decreases were offset by an increase in non- cash compensation of $272,793. Selling, general and administrative expenses decreased to $1,561,214 for the six months ended June 30, 2001 from $4,977,289 for the six months ended June 30, 2000, which is a net decrease of $3,416,075. The decrease was primarily due to decreases in personnel costs, consulting fees and financing fees of $3,062,408 (of which $2,563,219 was non cash equity- based compensation) and a $31,418 decrease in professional fees. The decreases in personnel costs and consulting and professional fees resulted from our consolidation of executive offices, and the reduction in consulting and management personnel. Amortization of Licenses and Goodwill: We had amortization of license fees and goodwill of $41,427 and $6,799 for the three months ended June 30, 2001 and 2000 respectively. The increase is due to additional license agreements signed in the third and fourth quarters of 2000. We had amortization of license fees and goodwill of $82,854 and $13,598 for the six months ended June 30, 2001 and 2000 respectively. The increase is due to additional license agreements signed in the third and fourth quarters of 2000. Interest Income: Interest income for the three months ended June 30, 2001 decreased to $3,934 from $40,812, a net decrease of $36,878 as compared to June 30, 2000. This is due to a decrease in available cash and cash equivalents balances. Interest income for the six months ended June 30, 2001 decreased to $8,896 from $74,107, a net decrease of $65,211 as compared to June 30, 2000. This is due to a decrease in available cash and cash equivalents balances. Loss From Discontinued Operations: In October 1999 we disposed of 81% of our interest in Street Solid, a record label that we acquired on January 5, 1999. The results of operations of Street Solid through October 29, 1999, the date of disposition, have been accounted for as discontinued operations. During six months ended June 30, 2001 we recorded an additional loss on disposal of $52,682, which represents our estimate of additional losses on the shares issued to Destiny Music. Liquidity and Capital Resources Since inception through June 30, 2001, we had a deficit accumulated during the development stage of approximately $20.4 million and expect to continue to incur losses for the next several years. We have financed our operations primarily through private placements of our common stock. From inception to June 30, 2001 we received proceeds from the sale of equity securities, net of share issuance expenses, of approximately $6 million. We used net cash in operating activities of $645,413 for the six months ended June 30, 2001. Net cash and cash equivalents used in operations for the six months ended June 30, 2001 primarily consisted of the net loss from continuing operations of $1,635,172 less non cash items of 1,011,825. Net cash provided by financing activities was $44,850 for the six months ended June 30, 2001. Cash provided by financing activities consisted of proceeds from the sale of our common stock of pursuant to the equity line with Swartz Private Equity, LLC. Our capital funding requirements will depend on numerous factors, including the progress and magnitude of our website development, marketing plans, technological advances, competitive and market conditions, our ability to establish and maintain collaborative arrangements, the cost of streaming video content on the Internet and effectiveness of commercialization activities and arrangements. We are likely to require substantial funding to continue our website development, marketing, sales, and administrative activities. We have raised funds in the past through the sale of securities, and may raise funds in the future through public offerings or private placements of securities, collaborative arrangements or from other sources. We have an agreement with Swartz Private Equity, LLC for an equity line of up to $40,000,000. Draw downs on this equity line are subject to market factors, and there can be no assurance that the Company will be able to draw down funds from such line. Historically, the Company has been successful in meeting ongoing cash requirements with equity placements, both public and private. However, there can be no assurance that discussions will result in any investments, collaborative arrangements, agreements or funding, or that future additional financing through debt or equity financing will be available to us on acceptable terms, if at all. Further, there can be no assurance that any arrangements resulting from these discussions will successfully reduce our funding requirements. If additional funding is not available to us when needed, we will be required to scale back our website development, marketing and administrative activities and our business and financial results and condition would be materially and adversely affected. As of June 30, 2001, we do not have sufficient working capital to sustain operations through December 31, 2001. We will pursue opportunities to finance operations and satisfy cash requirements with a combination of debt financing, stock sales, and, in the longer term, revenue from operations. Among the options available to and being considered by management to ensure the Company has sufficient working capital for the next twelve months are a) plans to reduce or delay expenditures, b) plans to increase cash flow through acquisitions, c) plans to borrow money using the assets and cash flow of potential acquisitions and/or our existing equity investors such as Turn-Key Entertainment LLC and d) plans to increase ownership equity through various funding vehicles including convertible debentures, private placements and registration of shares for sale to the public. There can be no assurances that any of these opportunities will be successful. PART II - - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are subject to claims and suits arising in the ordinary course of business. At this time, except as otherwise indicated, it is not possible to estimate the final outcome of these legal matters or the ultimate loss or gain, except as otherwise stated. On February 5, 2000, Destiny Music ("Destiny") filed a lawsuit against PayForView (Los Angeles Superior Court Case #BC225482), claiming that the Company owed a long-term lease obligation, further financial support on certain projects and/or group promotional efforts and a return of funds allegedly loaned to Street Solid Records, a subsidiary of the Company at the time, which have not been returned as promised. In addition to PayForView, the suit also named Solid Disc Records; Solid Disc, Inc.; Street Solid Records, Inc.; Jay Warsinske, Marc Pitcher and Nic Meredith. On November 8, 2000 the Company settled the outstanding lawsuit with Destiny for $325,000 subject to adjustment to $350,000. In November 2000 the Company paid $25,000 in cash to Destiny. The remainder is payable either in cash or through the liquidation of shares of the company's common stock. On December 6, 2000, 50,000 shares were issued to Destiny to be liquidated to settle the remaining obligation of $300,000. The Company is required to pay Destiny a monthly minimum of $25,000 which is payable either in cash or through the liquidation of shares. On December 6, 2000, the Company transferred 50,000 restricted shares to Destiny. Destiny is restricted under certain securities laws from selling these securities, except as permitted under such laws. The Company is required to transfer additional shares of stock aggregating $10,800 of value per month to Destiny pursuant to the settlement agreement. Through June 30, 2001, 30,000 shares have been liquidated for proceeds of $66,733. The Company has been sued as a Defendant in a Superior Court case in Los Angeles, California, titled NetMynd vs. Payforview (#SC061720), and, after some initial filings to correct errors in service, an answer and cross-complaint have been filed by the Company. The Company believes the case is essentially meritless and will be providing a vigorous defense to the allegations. ITEM 2. CHANGES IN SECURITIES In February 2001, the Company issued additional warrants to purchase 10,534 shares of common stock to an investment bank in connection with the equity agreement and Put exercised in February 2001. The Company valued such warrants at $21,067 based on a Black-Scholes pricing model. In May 2001, the Company issued 701,366 shares of common stock valued at $790,750 to officers and consultants as follows: for payment of past due amounts on consulting contract and contract renewal incentive to Senior Consultant 312,502, contract renewal incentive for an officer 136,364, contract buy-out for former officer and director 112,500, severance payment for former officers 40,000 and for legal services 100,000. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. PAYFORVIEW MEDIA GROUP HOLDINGS CORP. Date: August 13, 2001 By: /s/ Marc A. Pitcher Marc A. Pitcher, President & Director

PAYFORVIEW MEDIA HOLDINGS GROUP CORP 10-Q