U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) /X/ Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1998 / / Transition Report under Section 13 or 15(d) of the Exchange Act For the Transition Period from ________ to ___________ Commission File Number: 0-24971 MGPX Ventures, Inc. (Exact name of small business issuer as specified in its charter) Nevada 95-4067606 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17337 Ventura Boulevard, Suite 224 Encino, California 91316 Issuer's Telephone Number: (818) 981-7074 (Address and phone number of principal executive offices) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X --- --- The Registrant has 1,509,865 shares of Common stock, par value $.04 per share issued and outstanding as of December 31, 1998. Traditional Small Business Disclosure Format (check one) Yes No X --- --- 1

INDEX TO QUARTERLY REPORT ON FORM 10-QSB PART I FINANCIAL INFORMATION Page Item 1. Financial Statements 3 Balance Sheet (unaudited) 4 Statements of Operations (unaudited) 5 Statements of Cash Flows (unaudited) 6 Item 2. Management's Discussion and Analysis of Plan of Operation 7 PART II OTHER INFORMATION Item 1. Legal Proceedings 9 Item 2. Changes in Securities and Use of Proceeds 9 Item 3. Defaults upon Senior Securities 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 2

PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Financial Statements Commence on Following Page) 3

MGPX VENTURES, INC. BALANCE SHEETS JUNE 30, 1998 AND DECEMBER 31, 1998 (UNAUDITED) - ------------------------------------------------------------------------------ ASSETS June 30, December 31, 1998 1998 ----------- ------------ (unaudited) CURRENT ASSETS Cash and cash equivalents $ 559,102 $ 528,246 Prepaid insurance 16,005 13,337 ----------- ----------- TOTAL CURRENT ASSETS $ 575,107 $ 541,583 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 900 $ - Preferred stock dividends payable 45,339 60,452 ----------- ----------- Total current liabilities 46,239 60,452 ----------- ----------- SHAREHOLDERS' EQUITY Convertible Preferred stock, Series B, $0.04 par value $30 per share liquidation preference and certain voting rights 125,000 shares authorized 16,792 shares issued and outstanding 672 672 Common stock, $0.04 par value 12,375,000 shares authorized 1,509,865 shares issued and outstanding 60,395 60,395 Additional paid-in capital 12,168,399 2,168,399 Accumulated deficit (1,700,598) (1,748,335) ----------- ----------- Total shareholders' equity 528,868 481,131 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 575,107 $ 541,583 ----------- ----------- ----------- ----------- 4

MGPX VENTURES, INC. STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS DECEMBER 31, 1998 AND 1997 (UNAUDITED) - ------------------------------------------------------------------------------ Three Months Ended Six Months Ended December 31, December 31, ----------------------- ----------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) GENERAL AND ADMINISTRATIVE EXPENSES $ 26,524 $ - $ 45,818 $ - ---------- ---------- ---------- ---------- LOSS FROM OPERATIONS (26,524) - (45,818) - OTHER INCOME Interest income 6,129 - 13,194 - ---------- ---------- ---------- ---------- NET LOSS FROM CONTINUING OPERATIONS (20,395) - (32,624) - ---------- ---------- ---------- ---------- DISCONTINUED OPERATIONS Loss from operations, net of provision for income taxes of $0 (unaudited), $509,568 (unaudited), $0 (unaudited), and $515,058 (unaudited) - (504,944) - (497,044) Gain on disposition of operations, net of provision for income taxes of $0 (unaudited) - 207,572 - 207,572 ---------- ---------- ---------- ---------- Net loss from discontinued operations - (297,372) - (289,472) ---------- ---------- ---------- ---------- NET LOSS $ (20,395) $ (297,372) $ (32,624) $ (289,472) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- BASIC LOSS PER SHARE From continuing operations $ (0.01) $ - $ (0.02) $ - From discontinued operations - (0.16) - (0.15) ---------- ---------- ---------- ---------- TOTAL BASIC LOSS PER SHARE $ (0.01) $ (0.16) $ (0.02) $ (0.15) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- WEIGHTED-AVERAGE SHARES OUTSTANDING 1,509,865 1,872,241 1,509,865 1,872,241 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 5

MGPX VENTURES, INC. STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED) - ------------------------------------------------------------------------------ 1998 1997 ----------- ----------- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss from continuing operations $ (32,624) $ - Increase (decrease) in Accounts payable (900) - Prepaids 2,668 - --------- --------- Net cash used in continuing operating activities (30,856) - Net cash used in discontinued operating activities - (46,670) --------- --------- Net cash used in operating activities (30,856) (46,670) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in discontinued investing activities - (39,976) --------- --------- Net cash used in investing activities - (39,976) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net cash provided by discontinued financing activities - 82,612 --------- --------- Net cash provided by financing activities - 82,612 --------- --------- Net decrease in cash and cash equivalents (30,856) (4,034) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 559,102 4,034 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 528,246 $ - --------- --------- --------- --------- 6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION PLAN OF OPERATION As a "shell" company, the Company currently has no revenues from operations. The Company's business plan is to identify and complete an acquisition, merger or other transaction that will enhance shareholder value. The Company's Board of Directors is reviewing potential business opportunities, without limiting the scope of its review to only one or a few types of businesses or industries. Currently, the Company has no plans, agreements, arrangements or understandings, written or oral, with respect to any acquisition, merger or similar transaction. No assurances can be given as to the Company's ability to identify and complete a transaction by any given date or as to the nature of the business or profitability of the Company if a transaction is completed. A proposed transaction could be subject to significant regulatory, business, financing and other contingencies and might require shareholder and other approvals. RESULTS OF OPERATIONS The following is a limited discussion of the results of operations for the quarter ended December 31, 1998 compared to those for the quarter ended December 31, 1997. A comparison of the results of operations for the quarter ended December 31, 1998 are not directly comparable to results for the quarter ended December 31, 1997 because of the sale of substantially all of the Company's net operating assets effective December 31, 1997. FISCAL 1998 COMPARED TO FISCAL 1997 CONTINUING OPERATIONS. During the quarter ended December 31, 1998, when the Company was operating as a shell corporation, it incurred general and administrative expenses of $26,524. These expenses were mainly comprised of a consulting fee of $14,510 paid to the Company's President and Chief Executive Officer, and approximately $11,000 paid for legal and accounting services. Income for the same period totaled $6,129, and was derived mainly from interest earned on the Company's cash and cash equivalents. DISCONTINUED OPERATIONS. Effective December 31, 1997, the Company sold substantially all of its net assets used in operations to management for $650,000. Net proceeds were approximately $585,000 after closing costs. As a condition of the transaction, management agreed to the cancellation of its stock options and the sale of their common shares to the Company for $1,000, representing more than a 25% reduction in beneficial control of common 7

shares. As a result, the Company's operations for the quarter ended December 31, 1997 are reported as discontinued operations. The results from discontinued operations for the quarter ended December 31, 1997 included total revenues of approximately $1,296,000 and pre-tax net income from operations of approximately $4,625. Management anticipates that while the Company operates as a shell corporation, it will incur expenses of approximately $7,500 per month. Net loss per share for the quarter ended December 31, 1998 was $.01, as compared to $0.00 per share for the quarter ended December 31, 1997. LIQUIDITY Working capital at December 31, 1998 was $528,246, comprised of cash and cash equivalents, which management believes is sufficient to cover current operations for at least the next twelve months. Depending on the success of the Company's efforts to locate a potential candidate for merger or acquisition, management believes that the Company's present working capital may need to be supplemented to support the operations of the merged or acquired company over the next 12 months. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or shareholders), or from industry-available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all. 8

PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not a party to any legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the quarter ended December 31, 1998, no matters were submitted to the Company's security holders. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None. 9

SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MGPX VENTURES, INC. (Registrant) Dated: February 12, 1998 /s/ Buddy Young -------------------------------- Buddy Young, President and Chief Executive Officer 10

  

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1999 OCT-01-1998 DEC-31-1998 528,246 0 0 0 0 541,583 0 0 541,583 60,452 0 0 672 60,395 420,064 541,583 0 0 0 0 (26,524) 0 6,129 (20,395) 0 (20,395) 0 0 0 (20,395) (0.01) 0