<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: February 28, 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: 0-12893
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SSI CAPITAL CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 14-1623047
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 311
150 Vanderbilt Motor Parkway
Hauppauge, New York 11788
- --------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(516) 273-0059
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No
---------------- ----------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
The issuer has outstanding one class of common stock. As of the close of the
period covered by this report, there were 1,749,541 shares outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
Index to Financial Statements
-----------------------------
Balance Sheet as at February 28, 1997 and November 30, 1996.
Statement of Stockholder's Equity for the period July 15, 1991 (inception of
development stage) through February 28, 1997.
Statement of Operations for the three months ended February 28, 1997 and
February 28, 1996 and for the period July 15, 1991 (inception of development
stage) to February 28, 1997.
Statement of Operations for the three months ended February 28, 1997 and
February 28, 1996.
Statement of Cash Flows for the three months ended February 28, 1997 and
February 28, 1996 and for the period July 15, 1991 (inception of development
stage) to February 28, 1997.
Notes to Financial Statements
2
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SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, November 30,
1997 1996
Unaudited
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 191,933 $ 193,002
------- -------
TOTAL ASSETS $ 191,933 $ 193,002
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 27,760 $ 27,584
--------- ---------
TOTAL CURRENT LIABILITIES 27,760 27,584
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value 1,000,000
shares authorized, none issued and outstanding
Common stock $.001 par value 100,000,000
shares authorized; 1,749,541 issued
and outstanding 1,749 1,749
Additional paid in capital 182,066 182,066
Retained earnings (deficit) ( 19,642) ( 18,397)
--------- ---------
TOTAL 164,173 165,418
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 191,933 $ 193,002
========= =========
</TABLE>
<PAGE>
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital In Prior During Total
Common Stock Excess of Retained Development Stockholders'
Shares Amount Par Value Earnings Stage Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, July 15, 1991
(Emergence of Chapter 11) 7,422,243 $ 7,422 $ 75,193 $40,440 $ 0 $ 123,055
Private Placement July 15, 1991 8,372,318 8,373 91,627 0 0 100,000
Issuance of shares to creditors,
July 15, 1991 1,200,068 1,200 0 0 0 1,200
Income for the period July 15, 1991
to November 30, 1991 0 0 0 0 7,704 7,704
Loss for the year ended November 30, 1992 0 0 0 0 (23,301) ( 23,301)
Issuance of stock re: bankruptcy plan 500,000 500 (500) 0 0 0
Loss for the year ended November 30, 1993 0 0 0 0 (17,017) ( 17,017)
Reverse split, one for ten (15,745,088) (15,746) 15,746 0 0 0
Loss for the year ended November 30, 1994 0 0 0 0 (31,118) ( 31,118)
----------- -------- -------- ------- -------- --------
Balance, November 30, 1994 1,749,541 1,749 182,066 40,440 (63,732) 160,523
Income for the year ended
November 30, 1995 0 0 0 0 7,773 7,773
----------- -------- -------- ------- -------- ---------
Balance, November 30, 1995 1,749,541 1,749 182,066 40,440 (55,959) 168,296
Loss for the year ended November 30, 1996 0 0 0 0 ( 2,878) (2,878)
----------- -------- -------- ------- -------- ---------
Balance, November 30, 1996 1,749,541 1,749 182,066 40,440 (58,837) 165,418
Loss for the three months ended
February 28, 1997, unaudited 0 0 0 0 ( 1,245) (1,245)
----------- ------- ------- -------- -------- ---------
Balance, February 28, 1997, unaudited 1,749,541 $ 1,749 $182,066 $40,440 $(60,082) $ 164,173
=========== ======== ======== ======= ======== =========
</TABLE>
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SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
For The Period
July 15, 1991
For The Three Months Ended (Inception) to
February 28, February 29, February 28,
1997 1996 1997
<S> <C> <C> <C>
REVENUE
Interest income $ 1,952 $ 1,547 $ 42,417
Other income 0 0 21,566
Insurance reimbursement 0 0 1,840
---------- ---------- ----------
TOTAL 1,952 1,547 65,823
---------- ---------- ----------
EXPENSES
Legal and professional 2,192 1,234 77,914
Transfer fees 425 0 15,642
Storage 502 0 4,431
Miscellaneous 78 66 1,665
Travel 0 0 2,112
Interest 0 0 8,842
---------- ---------- ----------
TOTAL 3,197 1,300 110,606
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (1,245) 247 (44,783)
INCOME TAXES 0 511 15,299
---------- ---------- ----------
NET LOSS $ 1,245) $ 264) $ 60,082)
LOSS PER SHARE $ NIL $ NIL $ (.03)
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,749,541 1,749,541 1,737,193
========== ========== ==========
</TABLE>
<PAGE>
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
For The Period
July 15, 1991
For The Three Months Ended (Inception) to
February 28, February 29, February 28,
1997 1996 1997
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C>
Net loss $ (1,245) $ ( 264) $ (60,082)
Changes in operating assets and liabilities
(Increase) decrease) in:
Accounts receivable 0 0 50,379
Due from Norstar Bank 0 0 50,000
Increase (decrease) in:
Accrued expenses 176 1,745 21,124
Accounts payable 0 0 ( 95,419)
-------- -------- --------
NET CASH USED BY OPERATING
ACTIVITIES (1,069) 1,481 (33,998)
BEGINNING CASH BALANCE 193,002 193,799 225,931
-------- -------- ---------
ENDING CASH BALANCE $ 191,933 $ 195,280 $ 191,933
======== ======== =========
</TABLE>
<PAGE>
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
FEBRUARY 28, 1997
UNAUDITED
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company filed an amended Certificate of incorporation on June 16, 1994
whereby they changed the name of the corporation from Saratoga Standbreds, Inc.
to SSI Capital Corp. In addition, the issued and outstanding common shares were
reverse split on a one for ten basis. All information in these financial
statements have been adjusted to reflect this amendment.
The Company was incorporated in the State of New York on January 30, 1981. On
December 5, 1988, the Company filed a Voluntary Petition for Reorganization
under Chapter 11 of the Bankruptcy Code. At the time of the filing of its
petition, the Debtor was engaged in the business of serving the Standardbred
horse industry. The Plan of Reorganization was confirmed by the United States
Bankruptcy Court, Northern District of New York on October 9, 1990. Although
the Plan of Reorganization was confirmed on October 9, 1990 by the Bankruptcy
Court, the Company has deemed the plan consummated on July 14, 1991 with the
conveyance of its primary asset of real estate to Norstar Bank on such date
pursuant to the plan. As a condition to the confirmation of the Plan, the
Company effected a concurrent private placement of 8,372,318 common shares,
$.001 par value, for gross proceeds of $100,000 which are not subject to any
claims of creditors under the plan.
The financial data for the three months ended February 28, 1997 and February 29,
1996, and the period July 15, 1991 (commencement of development stage) through
February 28, 1997 is unaudited, but includes all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the results of operations for such periods.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates and assumptions.
INCOME TAXES
No provision has been made in the accompanying financial statements for income
taxes payable because of the Company's operating loss. At November 30, 1996 the
Company has approximately $44,000 of net operation loss carryforwards for
financial reporting and income tax purposes that expire through the year 2007.
BUSINESS ACTIVITY
The Company is presently engaged in seeking out a suitable business for
acquisition or merger. The Company has no formal business plan or any
particular area of business which it intends to engage. The Company will
attempt to acquire a business which it believes has potential for successful
development.
<PAGE>
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
FEBRUARY 28, 1997
UNAUDITED
RELATED PARTY TRANSACTIONS
The Company maintains its business office at the office of its President, 150
Vanderbilt Motor Parkway, Suite 311, Hauppauge, NY 11788. The Company is using
these offices on a rent free basis until such time as it is required to find its
own space. The Company has the benefit of a receptionist and clerical help
without cost to it until management finds it necessary to move into separate
space.
Edmond O'Donnell was elected President of the Company in October, 1990. He has
been a director since January, 1981. Mr. O'Donnell is a self employed
management consultant and is also a private investor.
Lawrence Kaplan was elected Secretary and Treasurer of the Company in October,
1990. He has been a director since July, 1981. He is also a registered
representative, officer, director and principal shareholder of G-V Capital
Corp., a brokerage firm registered with the NASD. Mr. Kaplan is a director of
American United Global, Inc., a distributor of JI Case construction equipment in
the Pacific Northwest and a manufacturer of specialty and commodity O-rings. He
is also an officer and director of Park Group and Andover Equities Inc., both of
which are public shell companies, and of Jenna Lane, Inc. an apparel
manufacturing company.
Management of the Company will devote only such time as they deem necessary to
the activities of the Company.
Edmond O'Donnell is primarily responsible for the financial and recordkeeping
affairs of the Company and is responsible for evaluating acquisitions for the
Company. Both he and Lawrence Kaplan are devoting a portion of their time to
looking for and investigating prospects for the Company.
Of the 8,172,318 common shares issued on July 15, 1991 in the private placement,
fifty percent (50%) were purchased by Edmond O'Donnell and Lawrence Kaplan.
NOTE 2: INVESTMENTS
The Company, since prior to the filing of its petition, was the General Partner
of Niavest, L.P., a limited partnership engaged in the breeding of Standardbred
Horses. The Company was also the owner of 307 Units of Limited Partnership
interests in Niavest. Under the Plan, the Units were transferred to Norstar
Bank, the Company's secured lender. The Company remained as the General partner
of Niavest and, as such, could be contingently liable for the debts of the
Limited Partnership. There is no known claim with respect to any such
liability. Following the close of the Company's fiscal year ending November 30,
1995, Niavest was terminated and all of its assets were distributed to the
limited partners. Thereafter, Niavest was formally dissolved with the filing of
a Certificate of Dissolution.
<PAGE>
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
FEBRUARY 28, 1997
UNAUDITED
NOTE 3: COMMON STOCK
As authorized in the Plan of Reorganization, the certificate of incorporation
was amended to change the authorized common shares from 8,500,000 shares to
100,000,000 shares. The par value of the common shares was changed from $.01 to
$.001. The par value of the preferred stock was changed from $.10 to $.01.
Pursuant to the plan, the Company issued 1,000,043 new common shares to the
general unsecured creditors and 200,025 new common shares to the subordinated
creditors effective July 15, 1991. At the same time the private placement of
8,172,318 new common shares were issued for proceeds of $100,000. On December
4, 1993 the Company issued 500,000 shares to Norstar Bank to be held for
investment purposes only, pursuant to an agreement entered into as part of the
bankruptcy proceedings. On June 16, 1995 the Company filed an amended
Certificate of Incorporation whereby the issued and outstanding common shares
were reverse split on a one for ten basis. The information in these financial
statements have been adjusted to reflect this amendment.
NOTE 4: MERGER DISCUSSIONS
The Company is in the midst of merger talks with OraLabs, Inc. a privately held
corporation engaged in the business of licensing for manufacture, selling and
distributing breath freshener products for the general consumer market.
As part of the proposed transaction, the Company intends to offer for sale
certain shares of its Common Stock in an effort to provide additional financing
to the business ventures of the surviving corporation. Under the transaction
being discussed, immediately prior to the closing of the offering, a subsidiary
of the Company would merge with OraLabs. In connection therewith, the Company
would acquire all of the outstanding capital stock of OraLabs from its
shareholders and retain the name SSI Capital Corp. In return for merging
OraLabs into a subsidiary of the Company, OraLabs' shareholders would receive
share of Common Stock in the Company. As a result of the acquisition, which
would be treated as a reverse triangular merger into Company, OraLabs would
become a wholly-owned subsidiary of the Registrant, which would remain a
publicly held company.
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
The Company is deemed to be a development stage company since July 15,
1991, the date of the consummation of its Plan of Reorganization. The Company's
former business has been terminated completely and its ongoing activities are
expected to consist of finding a suitable business for acquisition or merger.
Results of Operations
- ---------------------
During the three months ended February 28, 1997, the Company's revenue
amounted to $1,952. Its expenses, consisting primarily of legal and
professional fees, amounted to $3,197. As a result, the Company sustained a net
loss during such period of $1,245.
Liquidity and Capital Resources
- -------------------------------
As of February 28, 1997, the Company had working capital of $163,573. The
significant amount of capital necessary to acquire and develop a successful
business in today's economy will limit the Company's ability to locate one
suitable for acquisition or merger. Given the limited amount of working
capital, the potential venture is likely to involve the acquisition of, or
merger with a company which is not seeking immediate substantial amounts of cash
but one which desires to establish a public trading market for its shares. As
indicated in the Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1996, the Company is currently negotiating with OraLabs, Inc., a
privately held Colorado corporation, with respect to a possible merger, but the
final terms of such a transaction have not been established as of the date of
filing this report. There can be no assurance that the Company will consummate
a transaction with this or any other merger or acquisition candidate. It is
possible that the Company will require additional financing to expand and fund
any business which it acquires or establishes. If additional funds are
required, there can be no assurance given that additional financing will be
available on commercially reasonable terms or otherwise.
<PAGE>
PART II - OTHER INFORMATION
Exhibits
27.1 Financial Data Schedule
<PAGE>
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.
SSI CAPITAL CORP.
Dated: April 14, 1997 By: /s/Edmond O'Donnell
-------------------------------
Edmond O'Donnell, President
By: /s/Lawrence Kaplan
-------------------------------
Lawrence Kaplan, Treasurer
<PAGE>
Exhibit Index
-------------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SSI
Capital Corp. financial statements for the three months ended February 28,
1997 and is qualified in its entiretyby reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 191,933
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 191,933
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 191,933
<CURRENT-LIABILITIES> 27,760
<BONDS> 0
0
0
<COMMON> 1,749
<OTHER-SE> 162,424
<TOTAL-LIABILITY-AND-EQUITY> 191,933
<SALES> 0
<TOTAL-REVENUES> 1,952
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,197
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,245)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,245)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,245)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
