SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 0-10909
CORNICHE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 22-2343568
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Wayne Interchange Plaza I
145 Route 46 West, Wayne, NJ 07470
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 201-785-3338
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
_________ ___________
4,572,743 shares, $.10 par value
(Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date)
________________________
Page 1 of 13 pages
<PAGE>
CORNICHE GROUP INCORPORATED
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statement (Unaudited)
Balance Sheet at June 30, 1997
and March 31, 1997 . . . . . . . . . . . . . . . . . . 3
Statement of Operations for the
three months ended June 30, 1997 and
June 30, 1996 . . . . . . . . . . . . . . . . . . . . . 4
Statement of Cash Flows for the three
months ended June 30, 1997 and June 30, 1996 . . . . . . . . . 5
Notes to Unaudited Financial Statements . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 13
The financial statements are unaudited. However, the management of the
registrant believes that all necessary adjustments (which include only normal
recurring accruals) have been reflected to present fairly the financial
position of the registrant at March 31, 1997 and June 30, 1997, the results of
its operations for the three months ended June 30, 1997 and 1996 and the
results of its operations and changes in its cash flows for the three months
ended June 30, 1997 and 1996.
<PAGE>2
CORNICHE GROUP INCORPORATED
Balance Sheet
ASSETS
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash $263,428 $13,167
Other receivables and prepaid expenses 1,087 1,000
---------- --------
Total current assets 264,515 14,167
Other assets:
Property and equipment, net 650 747
------------ --------
Total assets $265,165 $14,914
============ ========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
Current liabilities:
Notes payable $0 $400,000
Trade accounts payable 574 4,929
Dividends payable - preferred stock 162,086 148,397
Accrued liabilities 19,900 113,297
------------ -----------
Total current liabilities 182,560 666,623
------------ -----------
Stockholders' (deficiency) equity:
Stockholders (deficiency) equity
Preferred stock, $.01 par value,
authorized 5,000,000 shares
including 1,000,000 shares of
Series A 7% cumulative convertible
preferred stock, issued and outstanding
896,967 shares of Series A preferred stock
at June 30, 1997 (909,267 shares of Series
A preferred stock at June 30, 1996) 896,967 909,267
Common stock, $0.10 par value,
authorized - 30,000,000 shares,
issued 4,572,743 shares at June
30, 1996 (June 30, 1997 shares
June 30, 1996) 457,274 263,037
Additional paid-in capital 1,521,149 830,086
(Accumulated deficit) retained earnings (2,588,075) (2,449,398)
---------------- -------------
287,315 ( 446,999)
Treasury stock-at cost, 218,100
shares. ( 204,710) ( 204,710)
------------------ -------------
Total stockholders' (deficiency) equity 82,605 ( 651,709)
------------------ -------------
Total liabilities and stockholders'
(deficiency) equity $265,165 $14,914
================== ==============
</TABLE>
See accompanying notes
<PAGE>3
CORNICHE GROUP INCORPORATED
Statement of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
------ 3 Months Ended ------
June 30, June 30,
1997 1996
<S> <C> <C>
Net Sales $0 $0
Cost of Sales 0 0
- -
Gross profit 0 0
- -
Selling, General and
Administrative Expenses (120,816) (32,250)
------------- ----------
Operating Loss (120,816) (32,250)
Interest (net) (4,181) (1,800)
--------- ----------
Net loss before
Preferred Dividend (124,997) (34,050)
Preferred dividend (13,689) (15,912)
----------- -----------
Net Loss
(138,686) (49,962)
Loss per share
common stock $(0.04) $(0.02)
Weighted average
number of common
shares outstanding 3,083,159 2,412,278
</TABLE>
See Accompanying Notes
<PAGE>4
CORNICHE GROUP INCORPORATED
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
------ 3 Months Ended ------
June 30, June 30,
1997 1996
<S> <C> <C>
Cash Flows from Operations:
Net Loss from Continuing Operations $(138,686) $(49,962)
Adjustments to reconcile net loss
from continuing operations
to net cash used in operating
activities:
Depreciation 97 97
Changes in Assets and Liabilities:
(Inc)/Dec in Notes Receivable 0 35,000
(Inc)/Dec in Other Receivables 50 10,000
(Inc)/Dec in Prepaid Expenses (137) 0
Inc/(Dec) in Accounts Payable (4,355) (16,938)
Inc/(Dec) in Accrued Liabilities (93,397) 6,274
Increase in Dividends Payable 13,689 15,912
------------- ---------
Net Cash Used in Continuing Operations (222,739) 383
-------------- ---------
Cash Flows from Financing Activities:
Net proceeds from issuance of
common stock for cash 873,000 0
Payment of notes payable (450,000) 0
Additional borrowings 50,000 0
------------- -----------
Net Cash Provided by Financing Activities 473,000 0
------------- -----------
Net Increase in Cash 250,261 383
Cash at Beginning of Period 13,167 66
------------ -----------
Cash at End of Period $263,428 $449
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>5
CORNICHE GROUP INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1 The Company
Corniche Group Incorporated (hereinafter referred to as the "Company" or
"CGI") as a result of a reverse acquisition with Corniche Distribution Limited
and its Subsidiaries ("Corniche"), was engaged in the retail sale and
wholesale distribution of stationery products and related office products,
including office furniture, in the United Kingdom. The operating subsidiaries
of Corniche were Chessbourne International Limited ("Chessbourne") and The
Stationery Company Limited ("TSCL").
Corniche experienced large operating losses and net cash outflows from
operating activities in fiscal 1995 and 1996 resulting in a significant
reduction in working capital during that period. The Company was unsuccessful
in its efforts to raise interim financing to resolve its liquidity problems.
Additionally, the Company was not able to convert a significant portion of its
bank debt to equity. As a result receivers were appointed to Corniche's
subsidiaries, Chessbourne and TSCL on February 7, 1996 by their primary
bankers and secured lender, Bank of Scotland and Corniche Distribution Limited
was placed in receivership on February 28, 1996. (See Note 2). Since then the
Company has been inactive.
Note 2 Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the statements contain
all adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of June 30, 1997 and the results of
operations and cash flows for the three months ended June 30, 1997 and 1996.
The results of operations for the three months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
The March 31, 1997 balance sheet has been derived from the audited
financial statements at that date included in the Company's annual report on
Form 10-K. These unaudited financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
annual report on Form 10-K.
<PAGE>6
CORNICHE GROUP INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 2 Basis of Presentation (continued)
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company's ability to
continue as a going concern may depend on its ability to obtain outside
financing sufficient to support it pending identification and completion of a
suitable acquisition or acquisitions and its ability to obtain financing and
consummate such acquisition or acquisitions. There can be no assurance given
that the Company will obtain such short-term or long-term outside financing or
complete the acquisition of new business operations.
Effective October 1, 1995 the Company declared a one-for-ten reverse
stock split and all numbers of shares and share values stated herein reflect
such reverse split unless otherwise noted.
Note 3 Income Taxes
Effective October 1993, the Company adopted SFAS 109, "Accounting for
Income Taxes", which recognizes (a) the amount of taxes payable or refundable
for the current year and (b) deferred tax liabilities and assets for the
future tax consequences of events that have been recognized in an enterprise's
financial statements or tax returns.
Income tax expense/benefit was calculated on a separate company basis
between CGI and Corniche.
The Tax Reform Act of 1986 enacted a complex set of rules limiting the
utilization of net operating loss carryforwards to offset future taxable
income following a corporate ownership change. The Company's ability to
utilize its NOL carryforwards is limited following a change in ownership in
excess of fifty percentage points. The Company has fully reserved the balance
of tax benefits of its operating losses because the likelihood of realization
of the tax benefits cannot be determined.
<PAGE>7
CORNICHE GROUP INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 4 New Accounting Standards
Effective fiscal 1996 the Company adopted Statement of Financial
Accounting Standards No. 107, "Disclosure About Fair Value of Financial
Instruments", and Statement of Position 94-6, "Disclosure of Certain
Significant Risks and Uncertainties".
Note 5 Notes Payable
The Company was in Default on a Note Payable dated January 12, 12995 in
the principal sum of $17,000. In March 1997 the Company entered into a
settlement agreement with the note holder pursuant to which the note holder
accepted $5,000 in full satisfaction of all remaining sums due including
accrued interest, payment of which was made in April 1997.
During the period July 1996 through December 1996, the Company engaged in
a private offering of securities pursuant to Rule 506 Regulation D of the
Securities Act of 1933, as amended. The offering of up to $300,000 was
conducted on a "best efforts" basis through Robert M. Cohen & Co., Inc.
("RMCC"), a New York based broker-dealer and was offered and sold in the form
of $25,000 units. Each unit consisted of one $25,000 face amount 90-day, 8%
promissory note and one redeemable common stock purchase warrant to purchase
60,000 shares of the Company's common stock at price of $0.50 per share during
a period of three years from issuance. The offering was terminated in
December 1996 upon the sale of 4 units resulting in $100,000 in gross
proceeds. In connection with such offering, RMCC was paid sales commissions
equal to 10% of the aggregate purchase price of the units sold resulting in
aggregate sales commissions of $10,000.
During the period January 1997 through April 30, 1997, the Company
engaged in a private offering of securities pursuant to Rule 506 of Regulation
D of the Securities Act of 1933, as amended. The offering consisted of up to
19 units being sold at an offering price of $25,000 per unit. Each unit
consisted of one $25,000 face-amount 90-day, 8% promissory note and one
redeemable common stock purchase warrant to purchase 60,000 shares of the
Company's common stock at price of $0.50 per share during a period three year
from issuance. The offering of up to $475,000 was conducted on "best efforts"
basis through RMCC. Part of the proceeds were used to pay the promissory
notes and redeem the common stock purchase warrants issued in the prior
offering. In connection with such offering, RMCC was paid sales commissions
equal to 10% of the purchase price for each unit sold or $2,500 per unit.
RMCC sold 17 units. The notes issued in this offering were paid and the
common stock purchase warrants issued in this offering were redeemed during
the quarter ended June 30, 1997.
<PAGE>8
CORNICHE GROUP INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 6 Commitments and Contingencies
Legal Proceedings
In the opinion of management there are no lawsuits or claims pending
against the Company.
<PAGE>9
CORNICHE GROUP INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 7 Stockholders Equity
Effective October 1, 1995 the Company declared a one-for-ten reverse
stock split and all numbers of shares and share values stated herein reflect
such reverse split unless otherwise noted.
Equity Offering
On May 15, 1997, the Company commenced a private securities offering
pursuant to Rule 506 of Regulation D of the Securities Act of 1933, as
amended. The offering consists of up to 400 units, each unit consisting of
10,000 shares of common stock being offered at a price of $5,000 per unit.
RMCC is the placement agent for such offering and is entitled to receive a
sales commission equal to 10% of the offering price for each unit sold. The
first 50 units were offered on a "best efforts, all or none" basis. The
remaining 350 units are being offered on a "best-efforts" basis. Through June
30, 1997, 194 units were sold resulting in gross proceeds to the Company of
$970,000. The proceeds of such offering are intended to be utilized to enable
the Company to attempt to effect the acquisition of an operating business
entity, for working capital and to pay off the promissory notes and to redeem
the common stock purchase warrants issued in the Company's private securities
offering which was completed on April 30, 1997. The proceeds raised to date
have been utilized for working capital and to pay off the above described
notes and redeem the above described common stock purchase warrants.
<PAGE>10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Unaudited
Financial Statements and notes thereto.
Results of Operations
The Company has not engaged in any operating activities nor generated any
operating revenues since February 1996 when its then operating subsidiaries
were placed in receivership in the UK.
During the period March 1996 through the date hereof, the Company's
primary activities have been to engage in three private securities offerings,
one of which is still ongoing, and to settle and pay off certain of its
outstanding liabilities thereby making it a more desirable acquisition
candidate.
The Company recorded losses in the three months ended June 30, 1997 of
$120,816 before interest expense and preferred stock dividends accrual
($32,250 in 1996). Such losses arose from general and administrative expenses
which principally comprise professional fees, travel expenses and general
offices costs. Compared to the three months ended June 30, 1996 such costs
were $88,566 higher. The increase is primarily due to the cost of redeeming
common stock purchase warrants ($76,500) and higher year on year professional
fees and general corporate costs.
<PAGE>11
Liquidity and Capital Resources
During the three months ended June 30, 1997 the Company relied on the net
proceeds of its securities offering which was completed on April 30, 1997
(see Note 5 of the Company's unaudited financial statements included in Part I
- - Item I) and the securities offering described below and in Note 7 of the
Company's unaudited financial statements included in Part I - Item 1 hereof
to meet its cash needs.
On May 15, 1997 the Company commenced a private securities offering. The
proceeds raised in such offering have been used as working capital and to pay
off the promissory notes, and redeem the common stock purchase warrants issued
in the private securities offering which was completed April 30, 1997.
Additional proceeds raised in such offering are intended to be utilized for
working capital and to enable the Company to attempt to effect the acquisition
of an operating business entity. The Company does not expect to generate any
operating revenues until, at the earliest, the consummation of an
acquisition. No assurance can be given however, that the Company will
successfully consummate a business acquisition or that if consummated that the
Company will derive any material revenues or profits therefrom.
<PAGE>12
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits filed herewith:
None
(b) Forms 8-K filed during quarter:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNICHE GROUP INCORPORATED
(Registrant)
By /s/ James J. Fyfe
JAMES J. FYFE, Vice President and
Principal Financial Officer
Date: July 10, 1997
<PAGE>13
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<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 263428
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<RECEIVABLES> 76087
<ALLOWANCES> (75000)
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<CURRENT-ASSETS> 264515
<PP&E> 1426
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0
896967
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