Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
General
Ventura Entertainment Group Ltd. ("Ventura" or the "Company") is a diversified broadcast, marketing and corporate communications services company. As of December 30, 1994, the Company acquired 80% of Soundview Media Investment, Inc., ("Soundview"), a development stage company established for the purpose of acquiring broadcast properties. (See Business - Broadcast.) In November 1994 the Company acquired a 51% interest in Greenwich Entertainment Group, Inc., a development stage company in the out-of-home motion simulation entertainment business. The Company was incorporated under the laws of the State of Delaware on May 16, 1988.
The Company is engaged in the business of marketing corporate services, owning broadcasting properties and marketing events. The Company provides related corporate services including creating and managing corporate sponsorships, specialty video productions, corporate promotions including product placement, facilities and production design, and the distribution of television programs.
The Company's principal office is located at 11466 San Vicente Boulevard, Los Angeles, California 90049. Its telephone number is (310) 820-0607. In addition to the principal office, the Company has primary offices in New York City and Charlotte, North Carolina. The New York office is located at 345 Park Avenue South, New York, New York 10010, and its telephone number is (212) 685-0666 . The Charlotte office is located at 147 N. Harbor Road, Davidson, North Carolina 28036, and its telephone number is (704) 896-0200.
Plan of Recapitalization and Change of Management
On July 25, 1994, the shareholders of Ventura approved a Plan of Recapitalization ("Recapitalization") whereby Ventura's common shareholders received an aggregate of 700,000 Units . Each Unit consisted of three and one-half shares of Common Stock; one Class C Warrant; one Class D Warrant; and one right to receive five shares (aggregate - 3,500,000 shares) of common stock of the Producers Entertainment Group Ltd. ("Producers") owned by Ventura. The Recapitalization also included an effective l-for-4 reverse stock split and therefore, all references to shares of Common Stock herein have been adjusted to give effect to the l-for-4 reverse stock split. Each Class C Warrant entitles the holder thereof to purchase one share of Common Stock at a price of $3.50 per share until July 25, 1997. Each Class D Warrant entitles the holder thereof to purchase one share of Common Stock at a price of $5.00 per share until July 25, 1997.
As a result of the Recapitalization, the 100 shares of Series A Preferred Stock that were issued by Ventura for EMC were converted into 966,666 shares of Common Stock and each of the 180 outstanding shares of Series B Preferred Stock became convertible into 11,111 shares of Common Stock (aggregate - - - - 1,999,980 shares) and were subsequently converted, including accrued interest, into 2,291,977 shares of Common Stock. The Company's Certificate of Incorporation was also amended to authorize 5,000,000 shares of $.001 par value preferred stock.
In connection with the Recapitalization, new officers and directors of the Company were elected. See "Item 10. Directors and Executive Officers."
History
Effective with the Recapitalization the Company changed its business focus to marketing, corporate communications services, and broadcasting. The Company has developed its business to date through the acquisition of several small entities.
Broadcast
In December 1994 the Company acquired 80% of Soundview, a development stage company with purchase agreements for the pending acquisition of two network affiliated television stations located in the southeast. The purchase of the ABC affiliate in Montgomery, Alabama was finalized April 11, 1995. The purchase agreement for the NBC affiliate in Tallahassee, Florida has been extended pending consumation of Soundview's financing package.
Also, in November 1994 the Company signed a letter of intent to purchase American Communications and Television, Inc., owner of WTGS FOX Channel 28, Hilton Head/Savannah, Georgia from Trivest Financial Services, Inc., (Trivest). The final purchase agreement was signed March 10, 1995 subject to FCC approval and the Company's ability to obtain financing. Also, in March 1995 the Company signed a letter of intent to purchase the FOX affiliates in Spokane, Washington, Yakima, Washington and Medford, Oregon. These six stations will form the base of the Company's broadcast division which the Company intends to expand to twelve stations in the next two years, subject to finding stations which meet its business and acquisition criteria and the Company's ability to obtain necessary financing.
Marketing and Corporate Communications Services
As of August 1, 1994, the Company acquired Kaleidoscope and its subsidiaries, Kaleidoscope Holdings, Inc. ("KHI"), Kaleidoscope Entertainment, Inc. ("Entertainment"), Lifestyle Marketing Group, Inc. ("LMG"), and People & Properties, Inc.("P&P"), (collectively referred to as "Kaleidoscope"). Kaleidoscope is in the business of event management; productions; promotions and corporate sponsorships; and distribution of television programs. Prior to the acquisition of Kaleidoscope, the principal business of the Company was to provide corporate sponsorship services to companies, including promotions, product placements, event marketing and speciality video production through Entertainment Marketing Corporation, ("EMC"), acquired in March 1993.
Earlier History
In October 1992, Ventura entered into a non-binding letter of intent with Mr. Floyd W. Kephart who, at that time, was the sole shareholder of EMC. This non-binding letter of intent contemplated, among other things, the private placement of shares of Ventura's preferred stock, the acquisition of certain television advertising time and the acquisition of EMC. The letter of intent also contemplated that, upon the completion of these transactions, Ventura would submit a Plan of Recapitalization to its shareholders which would, among other things, enable Ventura's shareholders to directly own Ventura's common stock interest in two partially owned publicly traded companies, The Producers Entertainment Group (Producers) and Harmony Holdings, Inc. (Harmony). The contemplated transactions were subject to further discussions between Ventura and Mr. Kephart and other conditions including the execution of definitive agreements, receipt of legal and tax opinions and compliance with regulatory requirements. These discussions resulted in certain modifications to the original terms of the non-binding letter of intent including the retention of the Harmony shares by Ventura.
In 1993 and 1992 Ventura sold 130 shares of its Series B Preferred Stock ("Series B Stock") for $1,300,000 ($10,000 per share), acquired television advertising time and EMC. The television advertising time was acquired for 50 shares of Ventura's Series B Preferred Stock and a cash payment of $100,000. As of March 31, 1993, EMC was acquired in exchange for 100 shares of Ventura's Series A Preferred Stock ("Series A Stock"). As a result of the Recapitalization, each share of Series B Stock became convertible into 11,111 shares of Common Stock (aggregate 1,999,980 shares) and the Series A Stock was automatically converted into 966,666 shares of Common Stock. In March 1995 all of the Series B Preferred Stock had been converted.
Business - Broadcasting
The Company's overall business strategy is to become a vertically integrated television company capable of developing and distributing television programming based on sports and other sponsored events and capable of capturing a larger measure of revenue than otherwise would be attained. The Company's current goal is to acquire up to twelve network-affiliated television stations in the television markets ranking between 50 and 125 DMA in the United States, the maximum currently permitted under law. Under appropriate circumstances, the Company may also consider acquisitions of television stations not meeting these criteria. The Company's management continuously evaluates various television broadcasting properties for possible acquisition and frequently engages in discussions with persons having an interest in such properties. There are existing agreements with regard to the acquisition of six television stations ("Stations").
As an integrated enterprise, the Company will attempt (1) to capture a larger portion of the revenue currently generated by the broadcast television industry through its relationship with its corporate clients utilizing its managed events and related promotions; (2) to lessen the financial risk associated with the operation of local television stations through access to lower cost programming resulting from television programs which it produces or syndicates; and (3) to increase its flexibility, both financially and operationally, to take advantage of new potential revenue streams and
methods of operation as they become available in the evolving television industry, including but not limited to, providing time for short and long form infomercials.
The Company hopes to create additional value for its shareholders by utilizing its corporate relationships and by adhering to the business strategy described above. There can be no assurance, however, that any significant relationships will be effectively utilized, and the Company's business strategy is subject to review and change at any time. If the Company does acquire the television broadcasting properties as outlined above, the Company will incur substantial additional indebtedness. Moreover, while several of the Company's competitors in the entertainment industry possess operations that are, to a certain extent, integrated, the Company believes that the integration of a marketing, and a distribution company coupled with broadcast stations under a single corporate structure represents, as yet, an unproven approach. The Company believes that this approach may result in benefits and synergies to the combined enterprise, but there can be no assurance that such benefits and synergies can be realized by the Company.
Television Broadcasting Industry Overview. The United States television market, the largest in the world, is primarily served by three distribution channels: (1) the National Networks: ABC, CBS, NBC and Fox; (2) independent commercial television stations; and (3) cable (including pay cable). The United States television market is comprised of 1,518 stations: 559 commercial VHF-TV, 594 commercial UHF-TV, 123 educational VHF-TV and 242 educational UHF-TV. The three major networks, ABC, CBS and NBC, each of which has approximately 200 affiliated stations, and the recently formed Fox network, which has approximately 140 affiliates, dominate the commercial markets. The major networks provide their affiliates with approximately 22 hours of prime time programming per week, as well as with a substantial amount of programming for other time periods, including news and sports. Fox provides its affiliates with approximately 15 hours of prime time programming per week, is not currently providing news and provides only a very limited amount of programming for time periods other than prime time except for NFL football. Network affiliates broadcast the networks' programming and national commercials in return for payments by the network's. This relationship results in the network being able to reach virtually all of the significant television markets in the United States. Cable services are generally classified as being either basic cable (advertiser-supported) or pay-per-view. The most successful cable networks each can reach more than one-half of United States television households.
Revenues of television stations are derived primarily from (i) national spot advertising, which consists of advertising time sold to national and regional advertisers (47.5%); (ii) local advertising, which consists of advertising time sold to local advertisers (45%); and (iii) network compensation payments, which are made by a network to an affiliated station in consideration for its broadcasting of network commercial programs (7.5%). Advertising rates are related to the population and number of television receivers located in the area served by a station; the demographic characteristics of such population; as well as the audience's aceptance of a station's programming as reflected in surveys by independent rating services. Many national spot and local advertising contracts are short-term and revenues from such contracts are sensitive to changes in prevailing economic conditions.
In 1994, television advertising revenues exceeded 33 billion dollars for all television, an increase over 1993. Television advertising revenues for 1994 included significant political or advertising revenues that were not generated in 1993. Industry analysts expect 1995 television advertising revenues to be between 4% to 6% above 1994, with most of the increase coming in fourth quarter 1995 as general economic conditions improve and national spot advertising shows some signs of resurgence.
A slowdown in the growth of television industry advertising revenues has been prevalent since 1986 and is due to several factors. These include a general decline in viewing shares garnered by over-the-air television stations due to increased competition from alternative viewing sources, especially cable television, the general economic slowdown and a resulting excess of available advertising time in many television markets. Revenues of network affiliated stations have been particularly affected by the increased programming choices provided to viewers by cable television operators. The networks' decreased market share from 85% of prime time TV households in 1980 to a projected 65% in 1995, has adversely impacted advertising revenues of affiliated stations. In addition, decreased network profits have caused the networks to signifiantly reduce the compensation fees they pay to affiliated stations.
During the past several years, there has been growth in the number of programming, entertainment and video distribution systems, such as cable television, satellite master antenna systems, multipoint distribution services, syndicated and pay television, pay-per-view interactive video and video cassette rentals. Many of these alternative program sources have expanded their channel or programming capacity. These additional program services compete with broadcast television stations for viewing shares since the customer is offered more viewing alternatives.
Several new technologies in their developmental stages are expected to provide competitive video program services, such as: distribution of programming on demand by telephone companies; "wireless cable" and direct broadcasting satellite systems, including Ku-band high frequency satellite transmission to smaller-sized receiving dishes; digital video compression, which may enable many video distribution media to substantially increase channel capacity; and high definition television ("HDTV") capable of transmitting television pictures with higher resolution, truer color and wider aspect ratios. At this time, it cannot be determined what impact these developing technologies will have on the television broadcast industry.
The FCC regulates television stations under the Communications Act of 1934, as amended (the "Communications Act") which, together with FCC rules and policies thereunder, govern the issuance, renewal and assignment of licenses, technical operations and, to a limited extent, program, employment and commercial practices. Television broadcast station licenses are issued for a maximum term of five years and are renewable upon application for additional five-year terms. Renewal applications are granted without hearing if the licensee's qualifications are not materially challenged either by a third party or the FCC and if no competing applications for the same license are filed.
Under FCC policies, a timely filed renewal permits the licensee to continue operating the station until such time as the application may be denied, and such denial becomes final.
On October 5, 1992, Congress enacted the Cable Television Consumer Protection and Competition Act of 1992 (the "CPCA"), which proposed to substantially increase regulation of cable television and requires the FCC to conduct rule-making proceedings which may have a significant impact upon the environment in which the Stations compete. Television broadcasters generally have been supportive of cable regulation to balance the current economic and competitive advantages enjoyed by the cable industry. The Company is unable to predict at this time the ultimate impact of these developments on its television broadcast operations.
Other issues of significance to the television broadcast industry which are expected to be considered by Congress or the FCC include:
o Fin Syn rules - On April 1, 1993, the FCC substantially relaxed its financial interest and network syndication rules, which had been established in 1970 to bar television networks from having a financial interest in ownership or distribution of television programs. Effective June 5, 1993, all of the former restrictions were eliminated except with respect to active domestic syndication by existing television networks. The remaining restriction is scheduled to expire two years after the lifting of certain court consent decrees which essentially replicate the FCC's 1970 rules, and from which the networks have sought relief. The relevant decrees were lifted on November 8, 1993, however, the FCC has agreed to accept arguments for and against the rules and suggested that the remaining rules could be eliminated before they are scheduled to "sunset" in November 1995. The ultimate effect of these rules and developments upon the Company's operations cannot be predicted.
o Multiple ownership, duopoly and cable cross-ownership rules - On June 12, 1992, the FCC released a Notice of Proposed Rule Making to consider a relaxation of the national ownership rules which currently limit a television broadcaster to the ownership of 12 television stations or 25% of national audience; the duopoly rules which prohibit a television broadcaster from owning two or more television stations in the same market; one-to-a-market rules which limit common ownership of radio and television stations in the same market; the network-cable cross ownership restrictions which currently prohibit common ownership of a broadcast network and cable television systems, and the rule which prohibits commonly owned "dual networks" which operate simultaneously and serve substantially similar areas. Currently, the FCC may waive its one-to-a-market rule in certain well-served major metropolitan markets, or under certain circumstances, if a proposed sale is necessary to avoid loss of a station's broadcasting service. The Company is unable to predict the ultimate outcome of possible relaxation of these FCC rules and the impact on its television broadcast operations.
o HDTV - An FCC task force is currently evaluating several HDTV systems that would enhance the quality of television transmission and reception. The FCC has already determined that each existing television station will be allowed three years from the FCC's adoption of an HDTV system and HDTV spectrum allocation plan to apply for an additional UHF channel for HDTV broadcasting and another three years to construct an HDTV facility. The FCC has determined that HDTV will be a digital system, incompatible with current television transmitters and receivers. Each licensed station will ultimately be required to forfeit its existing channel at the conclusion of a mandatory conversion period to HDTV broadcasting, which the FCC expects to occur by 2008. It is also possible that technology may permit enhanced picture quality of current systems. The Company is unable to predict at this time the impact of such possible technical changes in its television broadcast operations or the financial requirements to convert to HDTV broadcasting.
o Political advertising - In response to ongoing and threatened litigation on behalf of certain political candidates against broadcasters over alleged violations of political advertising rules, the FCC took action in 1991 to clarify its political advertising rules. The requirement to charge political candidates the lowest rate charged other advertisers for advertising spots was modified to permit numerous categories of fixed and preemptible time for purposes of determining lowest unit price. The FCC also has asserted exclusive jurisdiction over political advertising complaints.
o Copyright reform - Certain members of Congress have expressed an interest in reviewing cable television's compulsory copyright license, which currently permits cable television systems to carry the signals of local broadcasters for free and to carry broadcast signals originating from other markets at a relatively inexpensive percent of their gross basic service revenues. The Motion Picture Association of America and some major league sports organizations advocate elimination of cable television's compulsory copyright license and requiring cable television systems to negotiate in the open marketplace with copyright holders for the right to broadcast their copyrighted programs including television stations' locally originated programming. In addition, some proposals advocate that local television broadcasters should be compensated for packaging and compiling the programming they telecast in which the copyrights are owned by others in addition to receiving compensation for copyrights they hold for locally originatd programming. The Company is unable to predict at this time the ultimate outcome of a possible modification or repeal of the compulsory copyright license and the impact on its television broadcast operations.
o Program length commercials - The CPCA required the FCC to determine, regardless of prior proceedings, whether stations that are predominantly utilized for the transmission of sales presentations or program length commercials (commonly known as "home shopping") are serving the public interest. In response, the FCC found that such stations indeed serve the public interest. On October 7, 1993, on its own motion, citing Congressional debates on the CPCA which reflected a more general concern with the issue of commercialization in broadcasting, the FCC issued a Notice of Inquiry to consider reestablishing limits on the amount of commercial matter that a television station can broadcast. Among the options being considered are limitations imposed on an hourly basis which would preclude the broadcasting of infomercials, or limitations based upon longer periods of time that would permit at least some such broadcasts. The Company is unable to predict at this time the ultimate outcome of this inquiry, however if enacted the Company believes it would have a negative impact upon its television broadcast operations.
o Beer and wine advertising - In 1984, the United States Supreme Court let stand a Mississippi ban upon broadcast and print alcoholic beverage advertising. In 1985, Congressional hearings were held on proposed federal restrictions on beer and wine advertising, but resulted in no legislation. In 1993, legislation was introduced in both the House and Senate to require five rotating messages on the danger of drinking to be included in all beer and wine commercials. Broadcasters generally oppose such an approach, which they believe would strongly discourage alcoholic beverage advertising. The Company is unable to predict at this time the ultimate outcome of this proposed legislation or its impact upon its television broadcast operations.
o State service taxes - In 1987, Florida imposed a 5% tax upon various types of service income, including advertising. In the face of significant threats to cancel business conducted within the State, the tax was repealed in 1988. Several states have explored the imposition of similar taxes in recent years, but have ben discouraged from doing so, in part reacting to the Florida experience. It is possible that such taxes could be enacted in states in which the Company owns Stations or conducts other business. The Company is unable to predict the impact of such taxes upon its operations.
o The Chairman of the FCC has proposed a plan which, if adopted, would required broadcasters to air more children's programming. The proposed plan would allow broadcasters to pay other stations to produce or broadcast some of the shows as an option. Under a 1990 law broadcasters are required to air programs that educate and inform children but there are no requirements for a minimum amount of such programming. The FCC determines at license renewal time whether a station has met its obligations. The Company is unable to predict the outcome of this proposed plan or its impact upon its television operations.
Business - Marketing and Corporate Communications Services
The Company is a provider of various services to major corporations whose media, marketing and promotional plans require identification with the "feel good" industries of sports, education and entertainment.
The services provided by the Company are usually pursuant to exclusive contracts directly with a corporate client. The Company will normally receive compensation based upon a monthly retainer; reimbursement of expenses; and either a success fee or participating interest in the program, project, event or promotion. It is the goal of the Company to acquire or own programming and events in conjunction with corporations which are committed to long term indentification with selected sport events, educational programs or entertainment markets.
The corporate communication services provided by the Company include corporate management and media consulting; event sponsorship and management; corporate video production and distribution; facilities design; event production; corporate presentations including trade shows, product introductions, conferences, seminars and training programs; event promotions and product placement in film and television.
The Company is recognized as a leader in media consulting, sponsorships and promotions relating to motor sports, golf, and the Olympics (as well as lighting and production design of corporate events).
Currently the Company is providing services to General Motors, General Motors Credit Card, Proctor & Gamble, Coca Cola, Mobil, Citigo, Ralston Purina, Pennzoil, AT&T, Cigna, Metropolitan Life, JVC, Hitachi, Sony, Parke Davis, General Mills and Reckitt & Coleman. The Company is serving as the exclusive Olympic marketing consultant for the 1996 Olympics for Xerox, York International, Cox Communications, General Motors, and the Champion Products and Coach Leatherware divisions of Sara Lee.
The Company directly competes with other entities that provide lifestyle and sports marketing; advertising and media consulting; educational programming and distribution; lighting and facility design; video production and distribution; event management and sponsorship. While some of its competitors are larger and have greater resources, management believes the Company has certain competitive advantages resulting from its recognized leadership position in motor sports, golf, the Olympics, lighting and production design as well as media consulting. In addition the Company does not know of any competitor that can provide the scope of corporate communication services represented by the Company. Management does not believe that any company commands a significant portion of the $4.2 billion corporate sponsorship market.
The Company has developed its current business through the acquisition of small privately owned service companies including EMC and Kaleidoscope. It is the intent of management to build its business based on competitive growth.
Management believes it can improve its broadcast operations by enhancing revenues and decreasing individual station programming costs through the corporate communication services business. It is believed this can be accomplished through the utilization of event programming, promotions and video distribution opportunities available to the company as a result of its corporate communication services activities. The company intends to explore these avenues of revenue enhancement and cost or programming reductions upon its acquisition of each television station.
Media and Marketing
During 1993 and 1994, the Company acquired certain television advertising time from Trivest in exchange for 50 shares of Series B Preferred Stock and a cash payment of $100,000. The advertising time is for the Savannah/Hilton Head television station (WTGS) and expires in March 1997. The Company has the right to either utilize this television advertising time itself or assign, sell and/or barter it to others. The spots are for various times throughout the day and are available for each day of the week. As part of the agreement to purchase WTGS, Trivest will substitute its note for the balance of unused time as of the closing date or provide substitute time acceptable to the Company.
The Company may barter either media time, services and/or products of a corporation in exchange for its agreement to provide media and marketing services. In 1994, the Company, together with an unaffiliated third party, entered into an agreement to provide certain media time to a vehicle manufacturer. In connection with this agreement, the manufacturer transferred certain vehicles to the Company which were subsequently sold for approximately $2,484,000. The manufacturer also agreed to pay approximately $2,000,000 to the Company as the media time is used. The Company is committed to acquire the media time based on a media plan to be provided by the manufacturer. To date, the manufacturer has not provided the Company with its media plan, accordingly, the Company has made no commitments to acquire any additional media time beyond the approximately $70,000 expended. The amended agreement with the unaffiliated third party provides for a cash payment of $400,000 and the payment of an additional amount of up to $200,000 based on the payments to be received from the vehicle manufacturer. In connection with this agreement, the Company issued this third party a five year option to purchase 25,000 shares of Common Stock at a price of $2.50 per share. The $400,000 payment has been reflected as an expense in the accompanying consolidated financial statements.
Foreign Bank Financing
In August 1994, the Company borrowed $2,750,000 from a foreign bank pursuant to a 8% convertible debenture due January 2, 2001. The registration of the underlying 1,100,000 common shares was completed in early 1995 and the debentures were converted by the bank in March 1995. The Company transferred 284,000 shares of Harmony and issued 190,000 shares of Common Stock to the bank as a result of the conversion and the penalty payment required by the agreement.
Competition
The Company competes with numerous other companies in all aspects of its operations. Many of these other companies are much larger than the Company and have substantially greater resources than the Company.
Employees
The Company employs 93 persons on a full-time basis. The Company does not anticipate any material change in the number of its full-time employees in the near future. None of the Company's employees are represented by a labor union and the Company believes that it has good relationships with its employees.
ITEM 2.



ITEM 2. PROPERTY
The principal office of the Company is located at 11466 San Vicente Boulevard, Los Angeles, California and consists of approximately 7,000 square feet. The lease for these premises expires on July 13, 1997. The Company also leases a 6,300 square foot office/warehouse in North Hollywood, California under a lease that expires on January 31, 1996, a 5,800 square foot office in Davidson, North Carolina under a lease that expires on May 31, 1995. The Company's office located at 345 Park Avenue South, New York, New York consists of approximately 22,000 square foot. The lease for these premises expires on October 31, 2002.
The Company believes that its current facilities are sufficient for its needs for the foreseeable future.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
An action entitled Steve Zackary v. Arthur Mogull, et. al. was commenced in the Los Angeles Superior Court on February 25, 1994 against the Company, its wholly owned inactive subsidiary Ventura Music Group Ltd. ("VMG") and other individual and corporate defendants. In his complaint, the plaintiff alleges, among other things, breach of contract, intentional and negligent misrepresentation, intentional and negligent infliction of emotional distress and seeks unspecified damages. All of these claims arose from a series of what the plaintiff describes as employment or settlement agreements between himself and defendant Arthur Mogull dated between August 23, 1990 and August 22, 1991. The Company denies any liability and is vigorously contesting this matter. Management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company.
In its normal course of business, the Company is involved in various claims and legal actions. Management believes that the ultimate outcome of these matters, either individually or in the aggregate, will not have a material adverse effect on the Company.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on NASDAQ. The following table sets forth the high and low bid price per share of the Common Stock for the years ended December 31 as adjusted for the 1-for-4 reverse split effected in July 1994 as a result of the approval of The Plan of Recapitalization.
On April 6, 1995, the closing bid and asked prices of the Common Stock were $2-3/8 and $2-7/16, respectively. On such date there were 138 holders of record of the Common Stock.
The Company has never declared or paid cash dividends on its Common Stock. The current policy of the Board of Directors is to retain earnings, if any, to provide for the growth of the Company. Consequently, no cash dividends are expected to be paid in the foreseeable future.
In view of the effects on the Company as a result of the Recapitalization, including the distribution of the Producers shares and the conversion of the Series A Stock into 966,666 shares of Common Stock, the foregoing prices prior to the Recapitalization are not necessarily indicative of the market prices of the Company's Common Stock had the Recapitalization been approved as of such dates.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data of the Company is set forth below (000's omitted except for per share data). This selected financial data should be read in conjunction with Item 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company is engaged in the business of owning broadcasting properties, marketing events, obtaining corporate sponsorships, creating and managing corporate promotions, product placements and the distribution of television programs. The Company conducts its operations through its wholly-owned subsidiaries, EMC and Kaleidoscope and its 80% owned subsidary Soundview. The Company intends to recommend a change in the Company's name to its shareholders at its annual meeting. Subsequent to the change of the name, management intends to conduct its operations through five divisions and to eliminate its operating subsidiaries.
As of December 30, 1994 the Company acquired 80% of Soundview Media Investments Inc. a development stage company established for the purpose of acquiring broadcast properties.
As of August 1, 1994 the Company acquired Kaleidoscope and as of March 31, 1993, the Company acquired EMC, in transactions accounted for as purchases. Accordingly, the accounts of EMC and Kaleidoscope have been included in the Company's consolidated financial statements since such dates.
During the year ended December 31, 1994, the Company sold or distributed all the remaining shares of Producers. In addition, in December 1994 the Company sold all but 284,000 shares of Harmony. The remaining Harmony shares were required to fulfill an obligation to the holders of the convertible debentures converted in March 1995. In addition, the Company discontinued all other direct marketing and related production activities during December 1994. Consequently, all revenues and costs associated with such activities, including Harmony and Producers, are reflected in the accompanying statements of operations as discontinued operations.
Results of Operations
Year Ended December 31, 1994 as Compared to Year Ended December 31, 1993
Revenues for the year ended December 31, 1994 were $5,796,297 as compared to $1,570,721 for the year ended December 31, 1993, an increase of $4,225,576. The acquisition of Kaleidoscope as of August 1, 1994 accounts for $3,730,863 of this increase. Ventura acquired EMC as of March 31, 1993 and its results of operations have been included in the Company's consolidated financial statements since that date. Accordingly, EMC's revenues have been included for twelve months in 1994 as compared to nine months in 1993, accounting for the balance of the increase in 1994 revenue. During 1994, the Company expanded its business to include corporate promotion, product placement and event marketing, in addition to its corporate sponsorship activities. The Company expects that the continued expansion of these activities will result in increased levels of revenues in future years.
Operating expenses for the year ended December 31, 1994 were $10,766,535 as compared to $4,275,442 for the year ended December 31, 1993 or an increase of $6,491,093. Of this increase, $4,061,729 was due to the inclusion of Kaleidoscope for five months in 1994. The balance of the increase related to the inclusion of EMC for a full year in 1994 versus nine months in 1993, costs related to contracts purchased of $1,341,294, expenses relating to the Recapitalization which was approved by the Company's shareholders on July 25, 1994, and expenses relating to the development and expansion of the Company's business. These expenses included additional personnel, advertising costs, promotional expenses and related items.
Other income (expense) consists of the following:
Interest expense in 1994 primarily relates to borrowings by the Company from Harmony, an officer and the Kaleidoscope notes payable for five months. The loss on return of television time represents the cash portion of the amount paid for the television advertising time that was returned to the seller. Minority interests in operations of a subsidiary relate to the operating expenses of Greenwich Entertainment shared by the 49% minority shareholders since acquisition in November 1994.
During 1994, the Company disposed of the balance of its interest in Harmony and Producers and discontinued all direct marketing and related production activities. Consequently, all revenues and costs associated with these activities are reflected as discontinued operations. In 1994 this includes a gain on sale of Harmony and Producers' shares of $848,195, the Company's equity in the net loss of Harmony and Proucers of $1,333,947, and internal net costs incurred in direct marketing and related production of $1,095,061. For the year ended December 31, 1993, the discontinued operations included a gain on sale of Harmony and Producers' shares of $1,187,913 and a gain on sale of tax loss carry forwards to Harmony of $456,765, offset by a share of operating losses of $3,626,292, a write-off of film costs of $1,425,125, and other net direct marketing and related production expenses of $118,166.
Year Ended December 31, 1993 as Compared to Year Ended December 31, 1992
Revenues for the year ended December 31, 1993 were $1,590,721 as compared to $182,796 for the year ended December 31, 1992. Revenues for 1993 consisted of revenues of EMC that were earned since its acquisition as of March 31, 1993. Revenues of EMC consist of fees earned with respect to corporate sponsorship management. The Company did not receive any revenues from completed projects during 1993. During 1992, the Company received $120,000 of revenues from the licensing of its completed projects and recorded $90,000 in related amortization expense. The balance of the revenue came from rental of the Studio.
Operating expenses for the year ended December 31, 1993 were $4,393,603 as compared to $946,072 for the year ended December 31, 1992, an increase of $3,447,531. This increase was primarily due to matters relating to the Recapitalization and the inclusion of EMC from March 31, 1993.
Other income (expense) consists of the following:
Interest expense primarily relates to interest on the mortgage on the Studio. Subsequent to December 31, 1992, the Studio was returned to the mortgage holder in lieu of foreclosure. During 1993, the Company and Producers agreed to settle a lawsuit and to issue securities with a value of $500,000 and $400,000, respectively.
The discontinued operations amount for the year ended December 31, 1992 includes, a $370,934 gain on the sale of shares of Harmony and Producers and $490,656 representing the Company's share of their income, and $351,480 due to the write-down of film costs.
Due to the uncertainty regarding amounts to be received from its completed projects in the future, the Company wrote off the $1,425,125 unamortized balance of film costs as film amortization during 1993 which is included in discontinued operations. Also during 1993, the Company and Harmony agreed to exchange all amounts owed by the Company to Harmony in the approximate amount of $457,000 for the additional future tax benefits to be received by Harmony as a result of Harmony's inclusion in the Company's 1990 and 1991 consolidated federal income tax returns.
Liquidity and Capital Resources
As of December 31, 1994, the Company had cash of $3,439,459, total current assets of $6,090,605 and current liabilities of $7,012,315 or a working capital deficiency of $921,710. Included in current liabilities is $2,413,000 of deferred revenue which will be recognized upon the utilization of media time to be acquired by the Company in connection with a barter advertising agreement. See "Item 1. Business - Barter Advertising."
The Company's operations during 1994 and 1993 used cash of $6,500,000 which has been primarily financed by proceeds received from sales of its securities ($1,395,00), sales of Producers and Harmony common stock ($4,555,000), loans from a foreign bank and private placement of convertible debentures ($3,690,000). Such proceeds, net of repayments aggregated approximately $9,500,000. In connection with the Recapitalization, the shares of Producers that were owned by the Company were distributed to the Company's shareholders. Of the 1,484,000 shares of Harmony common stock owned by the Company, 1,200,000 shares have been sold in December 1994 for $2,520,000.
In August 1994, the Company borrowed $2,750,000 from a foreign bank pursuant to a note with principal due on January 2, 2001. The note was converted into 1,100,000 shares of the Company's common stock in March 1995. (See "Item 1. Business - Foreign Bank Borrowing.")
The Company's barter agreement with a vehicle manufacturer obligates it to acquire certain media time to be used by this manufacturer. Upon its utilization of this advertising time, the vehicle manufacturer has agreed to pay the Company an additional $2,000,000. To the extent that these future payments are less than the cost of the media time to be acquired, the Company will be required to utilize its resources.
Pursuant to employment agreements, certain of the executive officers and other key employees of the Company are entitled to minimum base compensation aggregating approximately $2,035,000 for the year ending December 31, 1995. The Company's leases and other commitments provide for minimum annual payments of approximately $750,000.
In connection with the acquisition of Kaleidoscope, the Company guaranteed an aggregate of $750,000 of Kaleidoscope's debt due to one of Kaleidoscope's former shareholders. The Company has also agreed to obtain releases on behalf of this shareholder from approximately $1,251,000 of debt guaranteed by him. The Company has not obtained such releases and the former shareholder has issued notice to the Company regarding this failure. The Company has not made any other arrangements for sources of external financing, such as bank lines of credit. The Company has no commitments for capital expenditures.
For the years ended December 31, 1994 and 1993, the Company incurred an aggregate operating loss of approximately $7,700,000 and interest expenses aggregating approximately $146,000. A substantial portion of this operating loss was related to matters in connection with the Recapitalization. Since October 1992, when the Company entered into the non-binding letter of intent with Mr. Kephart, and March 31, 1993, when the Company acquired EMC, the Company has expended funds on the development of its present business. The Company believes that it could not fully exploit its current business and enter into additional agreements until the Recapitalization was approved by the Company's shareholders and the uncertainties relating thereto were removed. The Recapitalization was approved by the Company's shareholders on July 25, 1994. Subsequently, the Company, among other things, completed a long-term borrowing of $2,750,000 from a foreign bank which was converted to common equity in March 1995; completed the placement of $1,100,000 in convertible debt; sold Harmony shares for $2,520,000; and acquired Kaleidoscope and Soundview. In addition, the Company has definitive plans to acquire six television stations, and in a related transaction to these acquisitions the Company has proposed debt financing of $25,000,000. Management believes it will be necessary to raise additional equity and/or to obtain additional financing to complete the proposed acquisitions and implement its business plan. Management believes that the actions being taken, when complete, will enable the Company to substantially increase its revenues and operate on a positive cash flow basis.
If the Company does not operate on a positive cash flow basis and its present resources are not sufficient to absorb any cash losses, the Company will need to obtain financing through the debt or equity markets. In order to fulfill its overall plan and its financial obligations, the Company is pursuing several financing alternatives. However, there can be no assurance that any financing will occur. The independent auditors report indicates that they believe there is sufficient reason to have substantial doubt about the Company's ability to continue as a going concern. The Company could also use the proceeds from the exercise of its Class C Warrants and Class D Warrants to fund any cash requirement. However, there can be no assurance that any of these warrants will be exercised. Management believes that the Company will be able to meet its cash obligations for at least the next twelve months.
Inflation
Inflation has not had a significant effect on the Company.
Recent Accounting Pronouncements
As of July 1, 1993, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 109 "Accounting for Income Taxes". The adoption of SFAS No. 109 did not have an effect on the Company's financial statements.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements have been included herein under Item 14 (a)(1).
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On October 25, 1994, the Company with the approval of the Audit Committee, advised Kellogg & Andelson that it was dismissing such accounting firm, and was retaining the accounting firm of BDO Seidman as auditors for the next fiscal period. The decision to retain BDO Seidman was based upon a need for an accounting firm with a national presences and was not motivated by any disagreements between the Company and Kellogg & Andelson concerning any accounting matters. During the entire period of their engagement (September 22, 1992, to October 25, 1994), there have been no disagreements with Kellogg & Andelson relative to accounting principles or practices, financial statement disclosure, auditing scope or procedures, which if not resolved to Kellogg & Andelson's satisfaction, would have resulted in a reference to the subject matters of the disagreement, in connection with its report. Kellogg & Andelson reports on the Company's financial statements have not contained an adverse opinion or a disclaimer of opinion, nor were the opinions qualified or modified as to uncertainty, audit scope, or accounting principles, nor were there any events of the type requiring disclosure under Item 304(a)(1)(v) of Regulation S-K.
On October 25, 1994, the Company informed BDO Seidman that they had been appointed as the Company's certifying accounting firm for the current fiscal year. During the last two years, the Company has not consulted BDO Seidman concerning any matter.
On July 27, 1992, the Company terminated Coopers & Lybrand as its independent auditors because it did not believe that it had received sufficient or timely advice from them. The Company reported that it had a disagreement with Coopers & Lybrand regarding the calculation of the amount of income to be realized on a transaction. The decision to terminate Coopers & Lybrand was approved by the Board of Directors of the Company.
The Company was subsequently provided with a copy of a letter from Coopers & Lybrand dated August 17, 1992 wherein Coopers & Lybrand agreed that there was a disagreement regarding the calculation of the amount of income to be realized and disagreed with the Company's statement that it did not receive sufficient or timely advice from them.
Coopers & Lybrand has not advised the Company that this disagreement, if not resolved to its satisfaction, would have caused them to make reference thereto in their report on the consolidated financial statements of the Company for the year ended June 30, 1992. The audit report of Coopers & Lybrand for the year ended June 30, 1991 did not contain any adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting procedures.
The disagreement related to the computation of the amount of the gain realized by the Company as a result of the initial public offering of securities by Harmony which occurred in November 1991. Prior to filing its Form 10-Q for the quarter ended December 31, 1991, the Company computed the amount of the gain realized as approximately $1,767,000.
Subsequent to filing its December 31, 1991 Form 10-Q, the Company received a memorandum from Coopers & Lybrand which calculated the amount of gain to be realized in a different manner than the Company's computation. The calculation provided by Coopers & Lybrand resulted in the amount of gain to be realized of approximately $537,000. The Company advised Coopers & Lybrand that it did not agree with its computation of the gain to be realized.
In connection with its dismissal of Coopers & Lybrand, the Company reported that it would review the computation of the gain realized on Harmony's initial public offering with its new independent auditors, when engaged.
In connection with the filing of the Company's proxy material relating to The Plan of Recapitalization, this gain was recomputed to be $143,641.
On September 25, 1992, the Company engaged Kellogg & Andelson as its independent auditors. In connection with the engagement of Kellogg & Andelson, neither the Company nor anyone acting on its behalf, consulted Kellogg & Andelson as to the application of accounting principles to a specified transaction either completed or proposed, or the type of opinion that might be rendered on the Company's consolidated financial statements.
In connection with its engagement of Kellogg & Andelson, the Company authorized Kellogg & Andelson to communicate directly with Coopers & Lybrand, if they so desired, with respect to this disagreement. The Company did not place any limitation on Coopers & Lybrand to respond fully if so requested by Kellogg & Andelson.
PART III
MANAGEMENT
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each of the current directors, executive officers and other key employees of the Company.
Name Age Position With Company ---- --- ---------------------
Floyd Kephart 52 Chairman, Chief Executive Officer and Director
Ray Volpe 55 President, Co-Chief Executive Officer and Director
Carleton Burtt 60 Chief Operating Officer
David Ward 56 Chief Financial Officer and Treasurer
Harvey Bibicoff 55 Director*
Gary Horowitz 58 Director
Gary Teel 43 Executive Vice President
Donald B. Lifton 55 Corporate Secretary
Bruce Albert 54 Assistant Secretary
Coy Eklund 79 Director
Frank A. Woods 52 Director
William D. Eberle 71 Director
Bennett Smith 35 President of Soundview Media Investment, Inc. and Director
Don Dixon 48 President, CEO, Lifestyle Marketing Group, Inc.
Tony Andrea 50 President, CEO, People & Properties, Inc.
* Mr. Bibicoff resigned from the Board effective April 5, 1995.
Directors are elected to an annual term that expires at the Company's annual meeting of stockholders. The present directors were elected on July 25, 1994 or appointed by the Board on October 31, 1994. There are no family relationships between any of the officers and directors.
Floyd Kephart has been Chairman, Chief Executive Officer and a director of Ventura since July 25, 1994. Mr. Kephart served as a consultant to the Company and as the Chief Executive Officer of a Company subsidiary from July 1, 1992 to July, 1994. He has been the President of EMC since 1988. Mr. Kephart was formerly President of Sports News Network, a sports data base company. He has served as a member of the Board of Directors and CEO of several public companies, including McDowell Corporation and Southern States Corporation.
Ray Volpe has been President, Co-Chief Executive Officer and a director of Ventura since July 25, 1994. Mr. Volpe has been a founder and/or senior partner of Kaleidoscope Entertainment, Sports Marketing International and People & Properties, Inc., since 1986. Prior to forming these companies, Mr. Volpe was a founder and President from 1982-1985 of Ohlmeyer Communications Companies which specialized in entertainment, sports and advertising. Mr. Volpe served as the first Commissioner of the Ladies' Professional Golf Association from 1975 to 1982. Mr. Volpe also serves as television programming and media consultant to General Motors Corporation and as event marketing consultant to Buick Motor Division.
Carleton Burtt became Chief Operating Officer on March 7, 1995. Mr. Burtt, since 1991, has served and continues to serve as President of Trivest Financial Services Corp., the parent of American Communications & Television Inc., the owner of the license of WTGS-TV, Channel 28 in Hilton Head/Savannah. Prior to joining Trivest he was an independent financial advisor and trustee.
David Ward became Chief Financial Officer and Treasurer on October 27, 1994. Since September 1, 1993 Mr. Ward has been a financial consultant; prior to that date he was a senior partner at Deloitte & Touche. During 1983-1984 he served as the Chief Operating Officer of Sotheby's Holdings Inc. the international auction house.
Harvey Bibicoff was an executive officer and a director of the Company from its inception. Mr. Bibicoff is also an officer and director of Harmony and prior to March 1995 was an officer and director of Producers. Mr. Bibicoff is the sole shareholder and president of Bibicoff & Associates, Inc., a corporation that has a non-compete agreement with the Company. Mr. Bibicoff resigned from the Board effective April 5, 1995.
Donald Lifton became Corporate Secretary on October 27, 1994. Mr. Lifton operates a private merchant banking and financial consulting firm, Lifton & Company. He was a founding partner of a Detroit area law firm.
Gary Horowitz has been a director of Ventura since July 25, 1994. Mr. Horowitz has been a director of Harmony since March 1992 and has been President, Chief Executive Officer and Chief Financial Officer of Harmony since July 31, 1993. Previously, he served as a director of L.A. Weekly since 1986 and its Chief Executive Officer since January 1990. Mr. Horowitz spent nearly 30 years directly involved in the field of commercial production. He became President of Jenkins, Covington, Newman, Inc. in 1980, a television commercial production organization. In 1976 he co-founded Communications Group West where he acted as media director for several political campaigns and produced television commercials.
Gary Teel has been Executive Vice President since April 1993. For the past five years prior thereto he served as President of Entertainment Placements, Inc. (formerly known as Premier Entertainment Services), a company specializing in the placement of identifiable products in motion pictures and television programs.
Bruce Albert has been Assistant Secretary of Ventura since August 1, 1994 and has been an Executive Vice President and Chief Operating Officer of Kaleidoscope since January 1, 1993. From March 1992 to January 1, 1993, Mr. Albert was a Director of Strategic Planning of Kaleidoscope. Prior to joining Kaleidoscope, Mr. Albert was a Managing Director at Lord, Geller, Federico, Einstein and a Partner, Executive Vice President and Chief Operating Officer of Lord, Einstein and O'Neil from 1985 to March 1992. Mr. Albert was employed as Corporate Senior Vice President by the marketing communications firm of Doyle Dane Bernbach from 1964-1985, where he managed accounts such as General Foods, Sara Lee and Heinz.
Coy Eklund, has been a director of Ventura since July 25, 1994. Mr. Eklund has served as Chief Executive Officer and Chairman of the Board of Trivest Financial Services Corp. since 1988. Prior thereto, he served as Chief Executive Officer and Chairman of the Board of Directors of The Equitable Life Assurance Society of the United States. He has served on the Boards of Directors of Bendix Corporation, Burroughs Inc. and Chase Manhattan Bank. He also served as a member of the Grace Commission, the President's Commission on Executive Exchange, the President's Council for International Youth Exchange and Grand Central Art Galleries. For several years, Mr. Eklund was a board member of the National Urban League and, for a period of five years, served as National Chairman of the National Urban League.
Frank A. Woods, has been a director of Ventura since July 25, 1994. Mr. Woods, has been Chairman of the Board of Woods Group and MediaOne, Inc., both of which are merchant banking firms, since 1991. From 1984 to 1991, Mr. Woods was President, Chief Executive Officer and a member of the Board of Directors of Sungroup, Inc., an owner and operator of radio stations primarily in Texas, Louisiana, Florida and Nebraska. For the past five years, as a specialist in the communications field and an attorney, Mr. Woods has served as a member of the Boards of Directors of several public companies including Townsend Broadcasting Corporation and Tennessee Valley Broadcasting Corporation.
William Eberle became a director of Ventura on October 31, 1994. Mr. Eberle is currently Chairman of the Board of both Showscan Entertainment, Inc. (the leading worldwide provider of motion simulator equipment for out-of-home entertainment venues) and Manchester Associates (a venture capital and international consulting firm), and is of Counsel to the law firm Kaye, Scholer, Fierman, Hays & Handler. Mr. Eberle is the former Chairman and CEO of American Standard, and a former Vice President of Boise Cascade. Mr. Eberle was United States Trade Representative with rank of Ambassador from 1971 to 1975.
Bennett Smith became a director on October 31, 1994. Mr. Smith is the President and CEO of Soundview Media Investment, Inc., a Ventura subsidary. Prior to Soundview, Smith was President, CEO and co-owner of New Vision Communications, a broadcasting company which owns eight network affiliate television stations. Smith previously held the offices of Vice President and Secretary of Clear Channel Communications, a publicly traded broadcasting company which owns and operates 12 television stations and 36 radio stations.
Don Dixon has been the President of Lifestyle Marketing Group since he founded it in partnership with Saatchi & Saatchi PLC in 1985. Mr. Dixon has extensive Olympic-related promotional and marketing experience working with the United States Olympic Committee, the International Olympic Committee, and the Los Angeles, Calgary, Seoul and Barcelona Olympic Organizing Committees.
Tony Andrea is the founder, CEO and President of People & Properties, Inc., a sports marketing and television packaging agency started in 1975. Prior to that date he was director of advertising and promotion for the National Hockey League.
The Delaware Supreme Court has held that directors' duty of care to a corporation and its stockholders requires the exercise of an informed business judgment. Having become informed of a11 material information reasonably available to them, directors must act with requisite care in the discharge of their duties. The Delaware General Corporation Law permits a corporation through its Certificate of Incorporation to exonerate its directors from personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty of care as a director, with certain exceptions. The exceptions include a breach of the director's duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law, improper declarations of dividends, and transactions from which the directors derived an improper personal benefit. The Company's Certificate of Incorporation exonerates its directors, acting in such capacity, from monetary liability to the extent permitted by this statutory provision. The limitation of liability provision does not eliminate a stockholder's right to seek nonmonetary, equitable remedies such as injunction or rescission to redress an action taken by directors. However, as a practical matter, equitable remedies may not be available in all situations and there may be instances in which no effective remedy is available.
The Company understands that it is the position of the Securities and Exchange Commission that insofar as the foregoing provisions may be invoked to disclaim liability for damages arising under the Securities Act of 1933, the provision is against public policy as expressed in the Act and is therefore unenforceable.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
(1) Represents amounts paid from August 1, 1994 to December 31, 1994 to Bibicoff & Associates under a non-compete agreement. Mr. Bibicoff resigned as a Director effective April 5, 1995.
(2) Represents compensation since the acquisition of Kaleidoscope as of August 1, 1994.
(3) Represents automobile allowances, club memberships, and premiums on life insurance not owned by the company.
OPTION/SAR GRANTS TABLE
There were Stock Option Grants during the year ended December 31, 1994 to five non-executive members of the Board of Directors for 25,000 shares each and 250,000 shares pursuant to a non-compete agreement with Mr. Bibicoff. In addition stock options for 25,000 were granted to an unaffiliated third party. All grants were at $2.50 a share. At December 31, 1994 all 400,000 stock options referred to above were outstanding.
In January 1995, the Board of Directors approved the granting of stock options for 550,000 shares to management personnel and for 100,000 shares to a consultant, all at $2.50 a share.
All options referred to above were issued at a price which was at or above the market price at date of grant.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Options/SAR Exercises in Fiscal Year Ended December 31 1994 and Fiscal Year-End Option/SAR Value
LONG-TERM INCENTIVE AWARDS TABLE
There were no long-term incentive awards granted during the year ended December 31, 1994.
Employment Agreements
Floyd W. Kephart
On January 10, 1995 the Board of Directors approved an Employment Agreement with Mr. Kephart outlining the terms of his employment as Chairman and Chief Executive Officer. The Employment Agreement is for an initial term expiring December 31, 2000, with automatic three year extensions unless prior written notice of termination is given by either party. Mr. Kephart's annual salary was fixed at $360,000, and he is eligible to receive a bonus, at the discretion of the Board of Directors. Mr. Kephart was awarded options to purchase 350,000 shares of the Company's common stock at $2.50 per share, which vested immediately and expire on the earlier of October 15, 2004, or the fifth anniversary of the termination of Mr. Kephart's employment. Mr. Kephart may require the Company to repurchase all vested options at a price equal to the difference between the exercise price of the options and the market price of the Company's stock and Mr. Kephart will continue to receive payments under the Employment Agreement. Mr. Kephart may not, while employed by the Company or for a period of one year thereafter, if he voluntarily terminates his employment, become involved in any entity which competes with the Company.
Ray Volpe
Mr. Volpe is employed by the Company pursuant to an agreement dated July 1, 1994, which expires on June 30, 2001. The agreement provides for annual base compensation of $300,000 and he will be reimbursed for reasonable business expenses in an amount not to exceed $25,000. This agreement is cancelable by the Company in the event of Mr. Volpe's death, incapacity or for cause. In the event of a change of control, as defined in the agreement, and the agreement is terminated, or Mr. Volpe has suffered a substantial diminution in his duties, he shall be entitled to receive compensation equal to twice his annual compensation for the remaining term of the agreement.
Harvey Bibicoff
Mr. Bibicoff was not compensated for his services as an executive officer of Ventura during the years ended December 31, 1992, 1993 and 1994. On August 1, 1994, as amended on April 5, 1995, the Company entered into a non-compete agreement with Bibicoff & Associates, Inc., a corporation owned by Mr. Bibicoff, and Mr. Bibicoff. The agreement provides for annual fees of $165,000 to July 31, 1999. In connection with this agreement, Mr. Bibicoff was granted a five year option to purchase 250,000 shares of the Company's Common Stock at a price of $2.50 per share. Mr. Bibicoff resigned as an officer in October, 1994 and as a director effective April 5, 1995.
David H. Ward
On January 10, 1995, the Board of Directors approved an Employment Agreement with Mr. Ward containing the terms of his employment as Chief Financial Officer. The Employment Agreement is for a term of one year and will be automatically extended for successive one year periods unless prior written notice of termination is given by either party. Mr. Ward's annual salary was fixed at $175,000. Mr. Ward is also provided with an automobile allowance, and, at the discretion of the Board of Directors, may be awarded a bonus. Mr. Ward was awarded options to purchase 100,000 shares of the Company's common stock at $2.50 per share.
Donald B. Lifton
On October 15, 1994, the Company entered into an Independent Consulting Agreement ("Agreement") with Mr. Lifton, outlining the terms of his engagement as the Corporate Secretary and a business consultant. Mr. Lifton is not an employee of the Company, but rather provides services as an independent contractor. The Agreement expires on December 31, 1995 and will be automatically renewed for successive one year periods unless prior written notice of termination is given. Mr. Lifton's compensation was set at a rate of $6,250 per month through December 31, 1995; during this same period, Mr. Lifton will accrue an additional $6,250 per month. If the Company obtains commitments for financing in excess of $10 million prior to December 31, 1995, Mr. Lifton will receive the amount accrued. Subsequent to December 31, 1995, Mr. Lifton is entitled to $12,500 per month. Mr. Lifton was awarded options to purchase 100,000 shares of the Company's common stock at $2.50 per share.
Don Dixon
Mr. Dixon is employed by the Company pursuant to an agreement dated July 1, 1994, which expires on June 30, 1999. The agreement provides for annual base compensation of $275,000, and he will be reimbursed for reasonable business expenses in an amount not to exceed $25,000. This agreement is cancelable by the Company in the event of Mr. Dixon's death, incapacity, or for cause. In the event of a change of control, as defined in the agreement, and the agreement is terminated, or Mr. Dixon has suffered a substantial diminution in his duties, he shall be entitled to receive compensation equal to twice his annual compensation for the remaining term of the agreement.
Tony Andrea
Mr. Andrea is employed by the Company pursuant to an agreement dated July 1, 1994, which expires on June 30, 1999. The agreement provides for annual base compensation of $250,000, and he will be reimbursed for reasonable business expenses in an amount not to exceed $10,000. This agreement is cancelable by the Company in the event of Mr. Andrea's death, incapacity, or for cause. In the event of a change of control, as defined in the agreement, and the agreement is terminated, or Mr. Andrea has suffered a substantial diminution in his duties, he shall be entitled to receive compensation equal to twice his annual compensation for the remaining term of the agreement.
Bruce Albert
Mr. Albert is employed by the Company pursuant to an agreement dated July 1, 1994, which expires on June 30, 1999. The agreement provides for annual base compensation of $175,000 and a $10,000 annual non-accountable expense allowance. This agreement is cancelable by the Company in the event of Mr. Albert's death, incapacity or for cause. In the event of a change of control, as defined in the agreement, and the agreement is terminated, or Mr. Albert has suffered a substantial diminution in his duties, he shall be entitled to receive compensation equal to twice his annual compensation for the remaining term of the agreement.
Bennett Smith
Soundview entered into an employment agreement with Bennett Smith effective November 4, 1994 and expiring on October 31, 1999. The agreement is guaranteed by the Company and provides for annual base compensation of $200,000. The agreement terminates upon the death or disability of Mr. Smith and is cancelable by the Company for cause.
Stock Option Plan
The Company's Stock Option Plan (the "Option Plan") provides that a total of 1,000,000 shares of Common Stock may be issued under the Option Plan.
Pursuant to the Option Plan, the Company may grant "incentive stock options" within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended ("incentive stock options") as well as non-incentive stock options to salaried employees. The Option Plan provides for administration by the Board of Directors of the Company or by a Committee of the Board of Directors which selects the optionees, authorizes the grant of options and determines the exercise price of the options. Currently, the Board of Directors administers the Option Plan and Board members are eligible for grants under the Option Plan. The exercise price of each incentive stock option granted under the Option Plan must be at least 100% of the fair market value per share of the Common Stock as determined by the Board of Directors on the date of the grant. Each incentive stock option may be exercisable for a period, as determined by the Board of Directors, but not in excess of ten years from the date of grant. The exercise price of all options granted under the Option Plan to stockholders possessing more than 10% of the total combined voting power of all classes of stock of the Company must be not less than 110% of the fair market value of the Common Stock on the date of grant and such options may be exercisable for a period not in excess of five years from the date of grant.
Incentive stock options granted under the Option Plan are non-transferable, except upon death, by will or by operation of the laws of descent and distribution, and may be exercised during the employee's lifetime only by the optionee. There is no limit on the number of shares with respect to which options may be granted under the Option Plan to any participating employee. However, under the terms of the Option Plan, the aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year (under all such plans of the Company and any parent and subsidiary corporations of the Company) may not exceed $100,000.
Options granted under the Option Plan may be exercised within twelve months after the date of an optionee's termination of employment by reason of his death or disability, or within six months after the date of termination by reason of retirement or voluntary termination approved by the Board of Directors, but only to the extent the option was otherwise exercisable at the date of termination. In the event an optionee's employment is terminated for any reason other than death or disability, or retirement or voluntary termination approved by the Board of Directors, such optionee's option shall terminate thirty days after the date of such termination.
The Option Plan expires on May 7, 2000, unless terminated earlier by the Board of Directors. The Option Plan is subject to amendment by the Board of Directors without stockholder approval, except that no amendment which increases the maximum aggregate number of shares which may be issued under the Option Plan for changes the class of employees who are eligible to participate in the Option Plan would be allowed without the approval of the stockholders of the Company.
At December 31, 1994, there were no outstanding stock options under the Option Plan.
Compensation of Directors
No fees are paid to members of the Board of Directors of the Company for their services as members of the Board of Director's. During 1994 non-executive members of the Board of Directors were each granted options to purchase 25,000 shares at $2.50 per share. It is the policy of the Company to reimburse directors or reasonable travel and lodging expenses incurred in attending meetings of the Board of Directors.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April 6, 1995, the Company had 9,917,501 shares of Common Stock outstanding. The following table sets forth the number of shares of Common Stock of the Company beneficially owned as of such date by: (i) each person who beneficially owns more than five percent of the Company's Common Stock; (ii) each of the officers and directors of the Company; and (iii) all officers and directors of the Company as a group. Except as noted, the person named has sole voting and dispositive power over the total number of shares beneficially owned.
* Less than 1% - - - ------------------------------------
(1) Includes 350,000 shares of common stock that are issuable upon the exercise of stock options granted in 1995.
(2) Does not include 640,734 shares of Common Stock issued to Trivest upon the conversion of shares of Series B Preferred Stock. Mr. Eklund is the Chairman of the Board and Chief Executive Officer of Trivest and Mr. Burtt is President of Trivest. However, Mr. Eklund and Mr. Burtt disclaim beneficial ownership of the shares owned by Trivest.
(3) Represents shares of Common Stock issuable upon the exercise of stock options granted in 1994. Mr. Eberle also owns 1,189 common shares and 389 Class D Warrants.
(4) Represents shares of Common Stock issued in connection with the acquisition of product placement contracts by the Company.
(5) Represents 128,147 shares of Common Stock issued upon the conversion of shares of Series B Preferred Stock and 25,000 shares of Common Stock issuable upon the exercise of stock options.
(6) Represents shares of Common Stock issued upon the conversion of shares of Series B Preferred Stock.
(7) Represents shares of Common Stock issued in connection with the acquisition of Kaleidoscope.
(8) Represents shares of Common Stock issued in connection with the acquisition of Soundview.
(9) Represents shares of Common Stock issuable upon the exercise of stock options granted in 1995.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 14, 1994 the Company sold 1,200,000 shares of Harmony Holdings, Inc. to Harvey Bibicoff, a director, for $2,520,000. Of this amount, $2.4 million was cash and the remaining $120,000 a one year note.
During 1994 the Company invested $255,000 for 51% of Greenwich Entertainment. Mr. William Eberle, through a controlled corporation, owns 19.6% of Greenwich Entertainment. Also during 1994 the Company purchased 80% of Soundview Media Investment Inc. Mr. Smith and Mr. Brady own 10.1% and 6.4% of Soundview respectively.
In May 1994, the Company returned $1,500,000 of the $2,000,000 of advertising time to Trivest in exchange for 150 of the 200 shares of Series B Preferred Stock issued by the Company to Trivest in the original acquisition of the advertising time. Trivest did not agree to return any part of the $100,000 cash payment. Trivest did agree to waive all accrued but unpaid dividends with respect to the 150 shares of Series B Stock that were returned. Trivest indirectly owns a majority interest in the television station that will provide the remaining advertising time. Mr. Coy Eklund, who was elected a director of Ventura on July 25, 1994 and was a nominee for director at the time of this exchange, is Chief Executive Officer and Chairman of the Board of Trivest. In November 1994 the Company signed a letter of intent to purchase from Trivest all the shares of American Communications and Television, Inc., owner of WTGS FOX Channel 28, Hilton Head/Savannah Georgia, the station referred to above. A purchase agreement was signed in March 1995 with the only contingency relating to FCC approval. Also in March 1995 Carleton Burtt became Chief Operating Officer of the Company. Since 1991 he has served as President of Trivest and will continue to hold that position.
In February 1994, the Company entered into a $700,000 revolving line of credit with Harmony Holdings which was collateralized by a receivable of the Company's. In August 1994, the balance of $522,000 was paid in full.
During the year ended December 31, 1993, Mr. Bibicoff made loans aggregating $1,422,00 to the Company pursuant to unsecured promissory notes which bore interest at 10%. The balance due at December 31, 1993 of $315,000, as well as the net borrowings in 1994 of $15,000 were repaid by August 1994 from the net proceeds received from the Company's foreign bank loan.
In connection with the Recapitalization, Ventura acquired all the capital stock of EMC from Floyd Kephart in exchange for 100 shares of Series A Stock. Upon the approval of the Plan of Recapitalization, the Series A Stock was automatically converted into 966,666 shares of Common Stock.
During the year ended December 31, 1994, the Company acquired certain contracts relating to its product placement business from Mr. Gary Teel and two other employees of the Company. In exchange for these contracts, the Company paid $360,000 and issued 201,465 shares of Common Stock
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
All schedules are omitted because the information is included in the consolidated financial statements or notes thereto or is not applicable.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO SEIDMAN
Board of Directors, Ventura Entertainment Group Ltd.
We have audited the accompanying consolidated balance sheet of Ventura Entertainment Group Ltd. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1994. 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 financial statement referred to above present fairly, in all material respects, the consolidated financial position of Ventura Entertainment Group Ltd. and subsidiaries at December 31, 1994 and 1993, and consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the Note 2 to the consolidated financial statements, the company has negative working capital at December 31, 1994, negative cash flows and operating losses from operations for the year ended December 31, 1994, and anticipates that negative cash flows from operations will continue. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BDO Seidman BDO Seidman
Los Angeles, California April 14, 1995
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of the consolidated financial statements.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Three Years Ended December 31, 1994
Shares of Preferred Stock Outstanding:
The accompanying notes are an integral part of the consolidated financial statements.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the consolidated financial statements.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------
Organization and Business
Ventura Entertainment Group Ltd. (the "Company") was incorporated under the laws of the State of Delaware on November 17, 1987. The Company's operations are conducted through its wholly owned subsidiaries, Entertainment Marketing Corporation of America, ("EMC") and Kaleidoscope Entertainment, Inc., Lifestyle Marketing Group, Inc. and Peoples and Properties, Inc., (collectively "Kaleidoscope"), as well as its 80% owned subsidiary, Soundview Media Investments, Inc. (Soundview). Unless the context indicates otherwise, the term "Company" includes Ventura Entertainment Group Ltd. and all subsidiaries. The Company is a diversified broadcast, marketing, and corporate communications services company. It is in the process of building a communications company based on the ownership of broadcast properties and supported through the development, acquisition, and sales of programming and related media services.
Plan of Recapitalization
On July 25, 1994, the shareholders of the Company approved a Plan of Recapitalization ("Recapitalization). In connection with the Recapitalization, the Company's common shareholders received an aggregate of 700,000 Units. Each Unit consisted of three and one-half shares of the Company's common stock; one Class C Warrant; one Class D Warrant; and one right to receive five shares (aggregate 3,500,000 shares) of common stock of The Producers Entertainment Group ("Producers") owned by the Company. The Recapitalization also included an approximate l-for-4 reverse stock split. Each Class C Warrant entitles the holder thereof to purchase one share of common stock at a price of $3.50 per share until July 25, 1997. Each Class D Warrant entitles the holder thereof to purchase one share of common stock at a price of $5.00 per share until July 25, 1997. The Class C and Class D Warrants are redeemable at any time by the Company upon 30 days' notice to the holders thereof at a price of $.001 each.
As a result of the Recapitalization, the 100 shares of Series A Preferred Stock that were issued by the Company for EMC were converted into 966,666 shares of common stock and each of the 180 outstanding share of Series B Preferred Stock became convertible into 11,111 shares of common stock (aggregate - 1,999,980 shares). Subsequent to July 25, 1994, all Series B Preferred shares including accrued interest were converted into 2,291,977 shares of common stock. The Company's Certificate of Incorporation was also amended to authorize 5,000,000 shares of $.001 par value preferred stock. The Company also paid a financial advisor a $50,000 fee and issued to this financial advisor an aggregate of 160,000 warrants on terms substantially the same as the Class C Warrants.
For financial reporting purposes, the Recapitalization is reflected as a quasi-reorganization and the accumulated deficit at the date of the recapitalization was charged against paid-in capital.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED ------------------------------------------------------
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company changed its fiscal year for reporting purposes from one ending on June 30 to the claendar year ending December 31. All Information in these financial statements are presented based on the December 31 year end.
The acquisitions described in Note 3 have all been accounted for as purchases and consequently their operations have been included from the respective date of each acquisition.
Discontinued Operations
During the year ended December 31, 1994, the Company sold or distributed all the remaining shares of Producers. In addition, the Company sold all but 284,000 shares of Harmony Holdings Inc. ("Harmony"). The remaining Harmony shares were transferred to a lender as required to fulfill an obligation to the holders of the convertible debentures converted in March 1995. In addition, the Company discontinued all other direct marketing and related production activities during December 1994. Consequently, all revenues and costs associated with such activities, including Harmony and Producers, are reflected in the accompanying statements of operations as discontinued operations. (See Note 11)
Licensing and Rights and Amortization
Amortization of acquired licensing and rights related to films is charged to operations on an individual-film basis in a ratio that the current year's revenue bears to management's estimate of total revenues (current and future years) from all sources. When estimates of total revenues indicate that such revenues will be less than the carrying amount of the related licensing and rights, the applicable loss is recognized currently. In December 1994 the Company charged the balance of $395,000 to expense as part of discontinued operations.
Deferred Financing Costs Cost associated with financing transactions such as legal or brokerage costs are capitalized and amortized over the term of the particular financing. Unamortized costs relating to debt obligations that are extinguished by conversion to equity are charged to paid-in capital at the time of conversion. The Convertible Debentures due 2001 contained a pre-conversion penalty that required the transfer of Harmony shares in March 1995. The carryiung value of these Harmony shares was classified as dererred financing costs as of December 31, 1994.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED ------------------------------------------------------
Barter Advertising In 1994, the Company, together with an unaffiliated third party, entered into an agreement to provide certain media time to a vehicle manufacturer. In connection with this agreement, the manufacturer transferred certain vehicles to the Company which were subsequently sold for approximately $2,484,000. The Company is committed to acquire the media time based on a media plan to be provided by the manufacturer. To date, this manufacturer has not provided the Company with its media plan and, accordingly, except for approximately $70,000 expended on media time the Company has made no commitments to acquire any additional media time. The manufacturer also agreed to pay approximately $2,000,000 to the Company as the media time is used. Included in deferred revenue at December 31, 1994 is $2,413,000 of the proceeds received from the sale of the vehicles. Such revenues will be recognized as the media time is acquired by the Company. The Company's amended agreement with the unaffiliated third party provided for a cash payment of $400,000 and the payment of additional amounts of up to $200,000 based on the payments to be received from the vehicle manufacturer. In connection with this agreement, the Company issued this third party a five year option to purchase 25,000 shares of the Company's common stock at a price of $2.50 per share. The $400,000 payment has been included in operating expense in the accompanying December 31, 1994 consolidated financial statements.
Income Taxes Effective July 1, 1993 the Company adopted the Financial Accounting Standards Board Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes". SFAS 109 requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in company's financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company has not recognized the benefit of any net operating loss carryforwards as a result of adopting SFAS 109 and the effect of the aforementioned implementation has been determined by management to be immaterial.
Sales of Stock by Harmony and Producers At the time Harmony or Producers sold their stock to unrelated parties the Company's ownership interest in each company decreased. The difference between the Company's ownership interest in each company's equity as a result of such issuance is recorded as an adjustment of additional paid-in capital.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED ------------------------------------------------------
Sales of Stock of Harmony and Producers
When the Company sells shares of Harmony or Producers, the gain on these sales is measured by the difference between the net cash proceeds received and the Company's carrying amount of the shares sold using the equity method of accounting. These gains are included in operations at the time that the shares are sold and reflected as part of discontinued operations in the accompanying financial statements.
Cash and Cash Equivalents
Cash and cash equivalents include money market funds and certificates of deposit with a maturity of initial three months or less.
Equipment and Depreciation
Purchases of equipment are capitalized. Maintenance and repairs are expensed. Upon the disposition of equipment, the applicable cost and accumulated depreciation are removed from the accounts and any gains or losses are included in operations. Depreciation of equipment is provided on the straight-line method based on the estimated useful lives of the related assets (generally 3 to 5 years).
Loss on Studio
The Company's wholly owned subsidiary, Ventura Media Center Ltd. ("Center") owned a film and television production facility located in Orem, Utah, which was held for sale and leased to others. During the year ended December 31, 1993, Center agreed to return this facility to the mortgage holder and accordingly, the carrying amount and the related mortgage were written off in the year ended December 31, 1993. The Company is not directly or contingently liable for the mortgage on this facility or any other debts of Center.
Goodwill
The excess of the fair value of the consideration given, over the fair value of the net assets received as part of an acquisition accounted for as a purchase, is shown as goodwill. When shares of the Company's Common Stock are part of the consideration, such shares may be valued based on a discount from the quoted market value. In determining whether a discount is appropriate, management considers whether the shares are currently registered, whether the Company is committed to future registration, and whether the shares are to be held by an "insider" with restrictions on subsequent sale. In the Kaleidoscope and Soundview acquisitions, 1,428,796 and 1,000,000 shares were issued respectively and recorded at approximately 50% of the quoted market value at date of issue. All such shares were unregistered and are held by executives of the Company or minority shareholders of Soundview. This goodwill is being amortized over twenty years.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED ------------------------------------------------------
Reverse Stock Split
In connection with the approval of the Recapitalization, an approximate one-for-four reverse split of the Company's common stock was effective. The effects of this reverse split have been retroactively reflected in the accompanying consolidated financial statements and notes.
(Loss) Per Share
(Loss) per share is based on the weighted average number of common shares outstanding during the periods after giving effect (in 1994 and 1993) to the dividend requirement of the Series B Preferred Stock. Outstanding warrants and options are not included in per share calculations because the effects of their inclusion would be anti-dilutive.
NOTE 2 - LIQUIDITY AND CAPITAL RESOURCES -------------------------------
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates the continuation of the Company as a going concern including the realization of assets and liquidation of liabilities in the ordinary course of business.
As of December 31, 1994, the Company had cash of $3,439,459, total current assets of $6,090,605 and current liabilities of $7,012,315 or a working capital deficiency of $921,710. Included in current liabilities is $2,413,000 of deferred revenue which will be recognized upon the utilization of media time to be acquired by the Company in connection with a barter advertising agreement. See "Item 1. Business - Barter Advertising."
The Company's operations during 1994 and 1993 used cash of $6,500,000 which has been primarily financed by proceeds received from sales of its securities ($1,395,00), sales of Producers and Harmony common stock ($4,555,000), loans from a foreign bank and private placement of convertible debentures ($3,690,000). Such proceeds, net of repayments aggregated approximately $9,500,000. In connection with the Recapitalization, the shares of Producers that were owned by the Company were distributed to the Company's shareholders. Of the 1,484,000 shares of Harmony common stock owned by the Company, 1,200,000 shares have been sold in December 1994 for $2,520,000.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - LIQUIDITY AND CAPITAL RESOURCES - CONTINUED -------------------------------------------
Management believes that a substantial portion of the Company's operating losses was related to matters in connection with the Recapitalization which was approved by the Company's shareholders on July 25, 1994. The Company has also expended substantial sums on the development and expansion of its current business. Management believes that the Company could not fully exploit its current business and enter into additional agreement until the Recapitalization was approved by the Company's shareholders and the uncertainties relating thereto were removed. Subsequent to this approval, the Company, among other things, completed a long-term borrowing of $2,750,000 from a foreign bank which was converted to common equity in March 1995; completed the placement of $1,100,000 in convertible debt; sold Harmony shares for $2,520,000; and acquired Kaleidoscope and Soundview. In addition, the Company has definitive plans to acquire six television stations, and in a related transaction to these acquisitions the Company has proposed financing of $25,000,000. Management believes it will be necessary to raise additional equity and/or to obtain additional financing to complete the proposed acquisitions and implement its business plan. Management believes that the actions being taken, when complete, will enable the Company to substantially increase its revenues and operate on a positive cash flow basis.
If the Company does not operate on a positive cash flow basis and its present resources are not sufficient to absorb any cash losses, the Company will need to obtain financing through the debt or equity markets. In order to fulfill its overall plan and its financial obligations, the Company is pursuing several financing alternatives. However, there can be no assurance that any financing will occur. The Company could also use the proceeds from the exercise of its Class C Warrants and Class D Warrants to fund any cash requirement. However, there can be no assurance that any of these warrants will be exercised. Management believes that the Company will be able to meet its cash obligations for at least the next twelve months.
NOTE 3 - ACQUISITIONS ------------
Broadcasting
As of December 30, 1994 the Company acquired 80% of Soundview in exchange for one million Ventura common shares. Soundview had purchase agreements pending for the acquisition of two network-affiliated television stations, WHOA-TV, the ABC affiliate in Montgomery, Alabama for $8,500,000 (subject to potential future reductions) and WYWC-TV, the NBC affiliate in Tallahassee, Florida for $5,500,000. In addition, in November 1994, the Company signed a letter of intent to purchase WTGS-TV the Fox affiliate in Savannah, Georgia for 2,875,000 shares of common stock. The purchase agreement on WTGS-TV was signed on March 10, 1995 subject to FCC approval and the Company's ability to obtain financing.
The purchase of WHOA-TV Montgomery was completed on April 11, 1995 and the closing of the purchase of WTWC-TV Tallahassee was extended pending final documentation and funding. In March 1995, Soundview signed a letter of intent to buy the Fox affiliates in Spokane, Washington, Yakima, Washington and Medford, Oregon for $16,400,000 cash, 1,283,000 shares of Ventura common stock and assumption of debt.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - ACQUISITIONS - CONTINUED ------------------------
Kaleidoscope
As of August 1, 1994, the Company acquired Kaleidoscope which is in the business of event management; productions; promotions and corporate sponsorships; and producing and distributing television programs. In exchange for all of the stock of Kaleidoscope, the Company issued 1,428,796 shares of common stock.
In connection with the transaction, Kaleidoscope issued a $500,000 note to a prior shareholder in addition to a LMG note of $250,000 to the same shareholder. The Company has guaranteed both of these notes and has pledged the stock of Kaleidoscope as collateral. The Company has also agreed to secure, by May 1, 1995, releases on behalf of this shareholder from his guarantee of $935,000 bank loans, $221,000 letter of credit and a $106,000 bank loan made to an unrelated party. If the Company does not secure such releases, the shareholder has the right to reacquire the shares of P&P and LMG that were sold to Kaleidoscope and $1,371,416 of advances made to P&P.
If the Company had acquired Kaleidoscope as of January 1, 1993 the Statement of Operations would have been as follows: (in thousands)
Earlier Acquisition
As of March 31, 1993, the Company acquired EMC in exchange for 100 shares of Series A Preferred Stock which were valued at their aggregate par value of $500. The assets and liabilities of EMC have been recorded at their fair market values as of the date of acquisition. The $500 aggregate par value of the Series A Preferred Stock plus the $85,937 net shareholder's equity of EMC at March 3l, 1993, has been recorded as licensing and rights. Prior to March 31, 1993, the operations of EMC were not significant.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - TELEVISION ADVERTISING TIME ---------------------------
In March 1993, the Company acquired certain television advertising time in exchange for 200 shares of its Series B Preferred Stock and a cash payment of $100,000 (see Note 9). This television advertising time was valued at $2,000,000 and consisted of commercial spots on certain television stations that could be used in 30 second, 60 second or 90 second segments through December 1997. The Company has the right to assign, sell and/or barter this television advertising time to others. During the year ended December 31, 1994, the Company returned $1,500,000 of the $2,000,000 of advertising time in exchange for 150 of the 200 shares of Series B Preferred Stock originally issued by the Company. The seller did not agree to return any part of the $100,000 cash payment. The seller did agree to waive all accrued but unpaid dividends with respect to the 150 shares of Series B Preferred Stock that were returned. The adjustment for the return reduced the television advertising time by $1,500,000. The Series B Preferred Stock and additional paid-in capital were reduced by an aggregate of $1,425,000 and $75,000 was charged to operations.
NOTE 5 - NOTES PAYABLE -------------
The note payable to bank at December 31, 1994 represents amounts due a New York bank by two subsidiaries and guaranteed by a prior shareholder of a Kaleidoscope. The weighted average interest rate was 9.45% in 1994. The company is obligated to secure the release of this guarantee by May 1, 1995, the current due date of the notes. The balance of $315,000 at December 31, 1993 represents amounts due an officer bearing interest at 10% which was repaid in August 1994.
NOTE 6 - LONG-TERM DEBT --------------
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Convertible Debentures due 1996 have interest at 8%, and are convertible, including interest, at $2.50 a share at the option of the holder. The Company can force conversion if the share price is $5.00 a share for a specified period. The holders also received 220,000 warrants to purchase shares at $3.50 for five years.
Maturities on long-term debt for the next five years are as follows:
NOTE 7 - REDEEMABLE PREFERRED STOCK OF SUBSIDIARY ----------------------------------------
The Company's 80% owned subsidiary, Soundview, has issued Redeemable Preferred Stock amounting to $950,000. Such stock has no dividends rights but has preferred liquidation rights. The Company has agreed to redeem these shares prior to November 7, 1996.
NOTE 8 - CONVERTIBLE DEBENTURES DUE 2001 -------------------------------
The Convertible Debentures due 2001 related to borrowings from a foreign bank. The entire amount was converted to 1,100,000 shares of common in March 1995. The Company transferred 284,000 shares of Harmony to the bank and issued 190,000 shares of the Company's common stock as a result of the conversion and the penalty payment required by the agreement.
NOTE 9 - SHAREHOLDERS' EQUITY --------------------
In connection with the approval of the Recapitalization (see Note 1), the Company's Certificate of Incorporation was amended to authorize 5,000,000 shares of $.001 par value preferred stock. Prior to that time the Company's Certificate of Incorporation authorized 1,000 shares of preferred stock, $5 par value per share.
The Company's Certificate of Incorporation also authorized 25,000,000 share of common stock, .001 par value per share. As of December 31, 1994 and 1993 there were 7,708,303 and 2,278,750 shares of common stock outstanding, respectively.
During the year ended December 31, 1993, the Company issued 100 shares of its Series A Preferred Stock in exchange for EMC. The Series A Preferred Stock was entitled to one vote per share and was not entitled to dividends. Upon the approval of the Recapitalization (See Note 1), the Series A Preferred Stock was converted into 966,666 shares of common stock.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - SHAREHOLDERS' EQUITY - CONTINUED --------------------------------
During the years ended December 31, 1993 and 1992, the Company sold 130 shares of its Series B Preferred Stock at a price of $10,000 per share. The Company also issued 200 shares of Series B Preferred Stock (which were valued at $1,900,000) in connection with its acquisition of certain television advertising time. In connection with the return of certain of this advertising time (see Note 4), 150 of these shares were returned to the Company and canceled. The Series B Preferred Stock is nonvoting. Holders of the Series B Preferred Stock were entitled to cumulative dividends of 8% or $800 per annum commencing on June 15, 1993. Upon the approval of the Recapitalization (see Note 1), each share of Series B Preferred Stock became convertible into 11,111 shares of the Company's common stock. Subsequent to July 24 but prior to December 31, 1994, 120 shares of Series B Preferred Stock (including accrued dividends) were converted into 1,523,096 shares of common stock. Subsequent to December 31, 1994, the remaining 60 shares of Series B Preferred Stock were converted into 768,881 shares of common stock.
In connection with the exchange of benefits to be received from the additional tax loss carryforwards received from the Company, Harmony charged the portion previously represented by the $325,000 nonrecourse obligation to its equity. The Company has reflected its portion of this charge ($124,000) as a reduction of additional paid-in capital in 1993.
During the year ended December 31, 1994, Producers acquired a Company in a transaction which was accounted for as a pooling of interests. Accordingly, Producers has retroactively restated its financial statements to include the accounts of this company. The Company's proportionate share of this transaction has been recorded by the Company as a charge to accumulated deficit. The company acquired by Producers had elected to be taxed as a Subchapter S corporation under the provisions of the Internal Revenue Code and applicable state tax regulations. The amount of losses recorded by this company's shareholders has been recorded by Producers as a reduction of additional paid-in capital with a corresponding decrease in Producers' accumulated deficit. The Company has recorded its proportionate share of this adjustment in the same manner as Producers. This adjustment had no effect on net shareholders' equity.
In connection with the acquisition of Kaleidoscope and Soundview (see Note 3 Acquisitions) the company issued 1,428,796 and 1,000,000 shares respectively.
During the year ended December 31, 1994, the Company acquired certain contracts. As part of the purchase price, the Company agreed to issue 201,465 shares of its common stock. In addition in 1994 the Company issued 93,000 shares for services valued at $195,195 and 45,445 shares in settlement of a lawsuit recorded in 1993.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES DISCONTINUED OPERATIONS
NOTE 10 - STOCK OPTIONS
Pursuant to the Company's stock option plan the Company may issue options to officers and key employees to purchase an aggregate of 1,550,000 shares of common stock. The Company may also issue non-qualified options. During the year ended December 31, 1994, the Company issued 171,250 shares of its common stock upon the exercise of stock options and received proceeds of $327,500.
In addition, during the year the Company issued 125,000 stock options to non-executive board members and 250,000 to a director as part of a noncompete contract. An additional 25,000 options were issued in relation to the barter agreement discussed in Note 1. All options were at $2.50 a share and none were exercised.
In January 1995 the Board of Directors approved the issuance of stock options for 550,000 shares to management personnel and for 100,000 shares to a consultant, all at $2.50 a share. All options were issued at a price which was at or above the market price at date of grant.
NOTE 11 - DISCONTINUED OPERATIONS
The following is the detailed amounts included in discontinued operations:
Accrued expenses at December 31, 1994 include $150,000 of accrued termination and costs related to direct marketing. There were no assets at December 31, 1994 related to the discontinued operations.
NOTE 12 - INCOME TAXES At December 31, 1994, the Company had unused federal and state net operating loss carryforwards which, at a minimum, are estimated to be approximately $7 million for federal purposes and $3.5 million for state purposes, expiring in various amounts through 2009. However, ultimate realization of these net operating loss carryforwards is dependent upon the Company's future taxable income and may be limited by appropriate regulations. Consequently the recorded amount of such loss carryover benefits, aggregating $2.7 million, has been fully reserved.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - RELATED PARTY TRANSACTIONS On December 14, 1994, the Company sold 1,200,000 shares of Harmony Holdings, Inc. to Harvey Bibicoff, a director, for $2,400,000 cash and a one-year note for $120,000.
During 1994 the Company signed a letter of intent to purchase WTGS FOX Channel 28 in Hilton Head/Savannah from Trivest Financial Services, Inc. for 2,875,000 shares of common stock. On March 10, 1995, a definitive agreement was signed subject to FCC approval. Mr. Coy Eklund, a director, is Chairman and CEO of Trivest and Mr. Carleton Burtt, the Company's COO, is President of Trivest. In addition, Mr. Frank Woods, a director, is Chairman of the Board of Media One, Inc., a merchant banking firm which will earn a fee when the transaction is closed.
The Company's television advertising time was acquired from a company of which a director of the Company is an officer and director. In exchange for such television time, the Company issued 200 shares of its Series B Preferred Stock which were valued at $1,900,000 and made a cash payment of $100,000. During the year ended December 31, 1994, the Company returned a portion of this television advertising time to the seller in exchange for 150 shares of the Series B Preferred Stock originally issued (see Note 7).
In connection with the Recapitalization, Ventura acquired all the capital stock of EMC from Floyd Kephart in exchange for 100 shares of Series A Stock. Upon the approval of the Plan of Recapitalization, the Series A Stock was automatically converted into 966,666 shares of Common Stock.
During the year ended December 31, 1994, the Comapny acquired certain contracts relating to its product placement business from Mr. Gary Teel and two other employees of the Company. In exchange for these contracts, the Comapny paid $360,000 and issued 201,465 shares of Common Stock.
In February 1994, the Company entered into a $700,000 revolving line of credit with Harmony which was collateralized by a receivable of the company's. All of the Company's loans from Harmony were repaid in August 1994 from the net proceeds of the Company's foreign bank loan.
During the year ended December 31, 1993, the Company borrowed $1,422,000 from an officer at 10% interest. The unpaid balance at December 31, 1993 of $215,000 as well as the net borrowings in 1994 of $15,000 were repaid in August 1994 from the net proceeds of the Company's foreign bank loan.
During the years ended December 31, 1992 and 1993, the Company sold 130 shares of its Series B Preferred Stock at $10,000 per share. A company owned by the brother of one of the Company's officers purchased 10 of these shares for $100,000.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - RELATED PARTY TRANSACTIONS (Continued)
During the year ended December 31, 1992, the Company transferred one of its completed television series to Producers in exchange for 150,000 shares of Producers' common stock and a warrant to purchase 750,000 shares of Producers' common stock at a price of $5.50 per share which warrant expired in July 1993. Producers has also agreed to pay the Company 10% of its profits from this series up to a maximum of $100,000. No amounts were earned pursuant to this provision through December 31, 1994. No gain or loss was recorded on this transaction and the portion of the Company's historical carrying amount of this series attributable to the minority shareholders of Producers ($248,520) has been charged to additional paid-in capital.
NOTE 14 - COMMITMENTS
The Company has entered into agreements (including agreements entered into subsequent to December 31, 1994), which expire through 2001 for the services of certain officers and others. These agreements are multi-year and provide for aggregate annual compensation of approximately $2,035,000. Certain of these agreements provide for payments in the event of death or disability of these individuals. Certain of these agreements also provide for additional compensation based on operating results and under certain circumstances in the event of a change in control of the Company. During the year ended December 31, 1994, no additional compensation was earned pursuant to the terms of these agreements.
The Company leases various facilities under operating leases. Future minimum lease payments for the years ending December 31 are as follows: 1995-$736,300; 1996-$688,600; 1997-$587,300; 1998-$444,800 and 1999-$463,200.
The Company had rent expense of $495,143 in 1994, $284,485 in 1993 and $97,020 in 1992.
NOTE 15 - SETTLEMENT OF LAWSUIT
During 1993, the Company and Producers were parties to an action which claimed, among other things, certain violations of federal securities laws. This action was purportedly brought as a class action on behalf of purchasers of equity securities of the Company and Producers. The Company denied any wrong doing and the Company and Producers settled this lawsuit. The Company issued to the plaintiff 45,455 shares of its common stock and 412,371 stock purchase warrants having an aggregate value of $500,000. Producers issued to the plaintiff warrants to purchase its common stock having an aggregate value of $400,000. The effects of this settlement agreement, consisting of the Company's $500,000 settlement plus the Company's $176,000 share of the Producers' settlement, have been reflected in the consolidated financial statements as a charge to operations and a corresponding increase to additional paid-in capital in the year ended December 31, 1993.
In its normal course of business, the Comapny is involved in various vlaims and legal actions. Management believes that the ultimate outcome of these matters, either individually or in the aggregate, will not have a material adverse effect on the Company.
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant concentrations of credit risk primarily consist of cash. The Company places its cash with high credit quality financial institutions or in high quality short-term investments. At times the cash in any one bank may exceed the FDIC $100,000 limit.
NOTE 17 - SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND ------------------------------------------------- FINANCIAL ACTIVITIES -------------------- In March 1993, the Company issued 100 shares of Series A Preferred Stock in exchange for EMC (see Note 3). In March 1993, the Company issued 200 shares of Series B Preferred Stock in connection with its acquisition of television advertising time (see Note 4). In April 1994, the Company agreed to issue shares of common stock in connection with the acquisition of certain contracts (see Note 9). In August 1994, the Company agreed to issue shares for the acquisition of Kaleidoscope and in December 1994 for the acquisition of Soundview (see Note 3).
NOTE 18 QUARTERLY DATA (Unaudited)
A summary of operations by quarter for the past two years is presented in the following table (in thousands except per share amounts)
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:
VENTURA ENTERTAINMENT GROUP LTD.
Date: April 17, 1995 By s/b Floyd W. Kephart -------------------- Floyd W. Kephart, Chairman and Chief Executive Officer (Principal Executive Officer)
Date: April 17, 1995 By s/b David H. Ward ----------------- David H. Ward, Chief Financial Officer and Treasurer
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 Registrant and in the capacities and on the dates indicated:
PART IV
ITEM 14

ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Schedules
The financial statements of the Company listed on the Index to Financial Statements of this Annual Report on Form 10-K are filed as a part hereof.
(b) Reports and Form 8-K The following reports on Form 8-K were filed during the last quarter of the period covered by this report:
(1) October 1, 1994 regarding purchase of Kaleidoscope (2) October 25, 1994 regarding change of independent accountants (3) January 10, 1995 regarding change of year end (4) March 23, 1995 regarding acquisition of American Communications and Television, Inc.
(c) Exhibits The following exhibits required by Item 601 of Regulation S-K are filed herewith or are incorporated by reference.
Exhibit Number Description
3.6.1 Restated By laws of Registrant. (1) 3.7 Form of Restated Certificate of Incorporation (1) 4. Warrant Agreement (including Form of Class C and Class D Warrants) (1) 5. Opinion of Cooper & Dempsey, P.C. (1) 7. Opinion of Richards, Layton & Finger (1) 8. Opinion of Greenebaum Doll & McDonald (1) 10.17 Form of Shareholders Trust Agreement (1) 10.18 Office lease for Los Angeles, California premises (1) 10.19 Office lease for Nashville, Tennessee premises (1) 10.20 Office lease for Davidson, North Carolina premises 10.21 Office lease for North Hollywood, California premises (1) 10.22 Employment Agreement dated May 1, 1993 between Gary Teel and Ventura Media Group Ltd. (1) 10.22.1 Employment Agreement dated as of April 1, 1994 between Gary Teel and Ventura Media Group Ltd. (3) 10.24.1 Amendment No. 1 to Stock Exchange Agreement between Registrant and Floyd W. Kephart (1) 10.26 Agreement dated April 1, 1994 between Gary Teel, Michael Nusinow and Tony Engedal and Ventura Entertainment Group, Ltd. (3) 10.27 Personal Services Agreement dated July 1, 1994 between Ray Volpe and Ventura Entertainment Group, Ltd. (2) 10.28 Personal Services Agreement dated July 1, 1994 between Bruce Albert and Ventura Entertainment Group, Ltd. (2) 10.29 Consulting Agreement dated August 1, 1994 between Bibicoff & Associates, Inc. and Ventura Entertainment Group, Ltd. (3) 10.30 Personal Services Agreement dated August 1, 1994 between Don Dixon and Ventura Entertainment Group Ltd. (2)
10.31 Personal Services Agreement dated July 1, 1994 between Tony Andrea and Ventura Entertainment Group Ltd. (2) 10.32 Personal Services Agreement dated July 1, 1994 between Edd Griles and Ventura Entertainment Group Ltd. (2) 10.33 Stock Exchange Agreement dated August 1, 1994 between Ray Volpe, Tony Andrea, Edd Griles, Bruce Albert and Don Dixon and Ventura Entertainment Group, Ltd. (2) 10.31 Stock Purchase Agreement dated August 1, 1994 by and among Peter Chapman, Kaleidoscope Acquisition Corp. and Ventura Entertainment Group, Ltd. 10.32 Promissory Note dated August , 1994 executed by Kaleidoscope Acquisition Corp. in the original amount of $500,000 in favor of Peter Chapman (2) 10.33 Promissory Note dated August , 1994 executed by Lifestyle Marketing Group, Inc. in the original principal amount of $250,000 in favor of Peter Chapman (2) 10.34 Guaranty dated August , 1994 executed by Ventura Entertainment Group Ltd. in favor of Peter Chapman (2) 10.35 Pledge and Security Agreement dated as of August 1, 1994 by Kaleidoscope Acquisition Corp. and Peter Chapman (2) 10.36 Pledge and Security Agreement dated as of August 1, 1994 by Ventura Entertainment Group Ltd. and Peter Chapman (2) 10.37 Note Purchase, Paying and Conversion Agency Agreement dated August 8, 1994 between Banco del Gottardo and Ventura Entertainment Group, Ltd. 10.38 Agreement dated September 30, 1994 between The Lakeside Group, Ltd. and Ventura Entertainment Group, Ltd. (3) 10.39 Agreement dated September 30, 1994 between an automotive manufacturer and Ventura Entertainment Group Ltd. (6) 10.40 Letter from Kellogg & Adelson regarding change of independent accountants dated October 31, 1994 (4). 10.41 Independent Consulting Agreement between Donald Lifton and Ventura Entertainment Group Ltd. dated October 15, 1994 (6). 10.42 Employment agreement between Soundview Media Investments Inc. and Bennett Smith dated November 4, 1994 and guaranteed by Ventura Entertainment Group Ltd. (6) 10.43 Stock Exchange Agreement between Soundview Media Investments Inc. and Ventura Entertainment Group Ltd. dated November 9, 1994 (6). 10.44 Asset Purchase Agreement between Thomas M. Duddy, Receiver for Holt- Robinson Television, Inc. and Soundview Media Investments Inc. dated July 29, 1994 (6). 10.45 Agreement and Plan of Reorganization between Soundview Television of Montgomery Inc., Frey Communications South Inc., Michael M. Sanders, WHOA-TV Inc., Frey Communications Corporation, etc. dated June 20, 1994. (6) 10.46 Employment Agreement between David Ward and Ventura Entertainment Group Ltd. approved by the Board of Directors on January 10, 1995. (6). 10.47 Employment Agreement between Floyd W. Kephart and Ventura Entertainment Group Ltd. approved by the Board of Directors on January 10, 1995 (6).
10.48 Agreement and Plan of Reorganization between Ventura Entertainment Group Ltd., Soundview Media Investments, Inc., American Communications and Television, Inc. and Trivest Financial Services Corp. dated March 10, 1995 (5). 10.49 Amendment dated as of March 31, 1995 to Consulting Agreement between Ventura Entertainment Group Ltd. and Bibicoff & Associates Inc. (6). 22 Subsidiaries of the Company (6)
- - - -------------------------- (1) Incorporated herein by reference to Registrant's registration statement on Form S-4 declared effective on June 9, 1994 (File No. 33-63834). (2) Incorporated by reference to Registrant's current Report on Form 8-K dated October 1, 1994. (3) Incorporated by reference to Registrant's current Report on Form 10-K dated October 12, 1994. (4) Incorporated by reference to Registrant's current Report on Form 8-K dated October 25, 1994. (5) Incorporated by reference to Registrant's current Report on Form 8-K dated March 23, 1995. (6) Filed herewith