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 March 31, 1995.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________________________ to
______________________.
Commission file number: Q-2549
BRIA COMMUNICATIONS CORP.
(Exact name of Registrant as specified in its charter)
New Jersey 22-1644111
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip Code)
(801) 575-8073
(Issuer's telephone number)
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 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 No XX
The number of shares of the issuer's common stock (par value $0.001 per
share) outstanding as of March 31, 1995 was 225,078.
Transitional Small Business Issuer Disclosure Format
(Check One):
Yes No XX
<PAGE>
TABLE OF CONTENTS
PART I ....................................................................... 4
ITEM 1. FINANCIAL STATEMENTS .......................................... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ......................... 10
PART II ..................................................................... 13
ITEM 1. LEGAL PROCEEDINGS ............................................. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS ........................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................. 14
SIGNATURES .................................................................. 14
EXHIBITS .................................................................... 15
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
Please see Pages F-1 through F-5 for the financial statements the Company
is required to file in this report.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
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BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
CONDENSED BALANCE SHEETS
Unaudited
March 31 December 31
1995 1994
----------- -----------
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ASSETS
CURRENT ASSETS:
Cash ....................................................................................... $ 107 $ 166
Accounts receivable ........................................................................ -- --
Inventory .................................................................................. -- --
----------- -----------
TOTAL CURRENT ASSETS .......................... 107 166
----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment .................................................................... -- --
Leasehold improvements and other equipment ................................................. -- --
----------- -----------
Total Property and Equipment ............................................................ -- --
Less accumulated depreciation .............................................................. -- --
----------- -----------
NET PROPERTY AND EQUIPMENT .......................... -- --
----------- -----------
OTHER ASSETS .......................... 41,713 41,713
----------- -----------
$ 41,820 $ 41,879
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable - officers and directors ..................................................... $ 59,310 $ 59,310
Accounts payable ........................................................................... 969,642 1,030,592
Other current liabilities .................................................................. 288,898 153,695
----------- -----------
TOTAL CURRENT LIABILITIES .......................... 1,317,850 1,243,597
----------- -----------
LONG-TERM DEBT - NET OF CURRENT PORTION
Long-term capital leases ................................................................... -- --
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock:
Class A, $.001 par value, shares issued and
outstanding, 225,078 and 8,299,800 .................................................... $ 225 $ 829,980
Class B $.001 par value, shares issued and
outstanding, 98,438 (convertible into Class A shares) ................................. 98 9,844
Capital in excess of par value ............................................................. 5,434,894 4,534,444
Accumulated deficit ........................................................................ (6,711,247) (6,575,986)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) .......................... (1,276,030) (1,201,718)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT .......................... $ 41,820 $ 41,879
=========== ===========
See accompanying notes to unaudited condensed financial statements
F-1
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BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
---------------------------
March 31 March 31
1995 1994
------------ ------------
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REVENUE ........................................................................................ $ -- $ 151,891
----------- ------------
COSTS AND EXPENSES:
Cost of sales ............................................................................. -- 94,950
Selling, general and administrative ....................................................... 135,261 252,984
Interest .................................................................................. -- 6,167
------------ ------------
135,261 354,101
------------ ------------
LOSS BEFORE EXTRAORDINARY ITEMS:
NET LOSS ....................................................................................... $ (135,261) $ (202,210)
============ ============
NET LOSS PER SHARE: ............................................................................ $ (0.02) $ (0.05)
AVERAGE COMMON SHARES OUTSTANDING .............................................................. 5,422,731 4,081,092
See accompanying notes to unaudited condensed financial statements
F-2
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<TABLE>
BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
Capital
Class A Class A Class B Class B In Excess Accumulated
Shares Amount Shares Amount Of Par Deficit
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1991 .................. 1,549,217 $ 154,922 98,438 $ 9,844 $ 2,776,365 $(1,135,756)
Shares issued through private
placement ............................. 423,437 42,343 -- -- 1,486,885 --
Net loss for the year ................... -- -- -- -- -- (1,751,900)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1992 .................. 1,972,654 $ 197,265 98,438 $ 9,844 $ 4,263,250 $(2,887,656)
Exercise of stock options ............... 1,400,000 140,000 -- -- 55,000 --
Additional shares issued ................ 250,000 25,000 -- -- -- --
Net loss for the year ................... -- -- -- -- -- (2,552,896)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1993 .................. 3,622,654 $ 362,265 98,438 $ 9,844 $ 4,318,250 $(5,440,552)
Exercise of stock options ............... 4,487,800 448,780 -- -- 216,194 --
Additional shares issued for
services .............................. 189,346 18,935 -- -- -- --
Net loss for the year ................... -- -- -- -- -- (1,135,434)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1994 .................. 8,299,800 $ 829,980 98,438 $ 9,844 $ 4,534,444 $(6,575,986)
1-to-40 reverse stock split ............. (8,092,305) (809,230) -- -- 809,230 --
Reduction in par value (Class A & B) .... -- (20,542) -- (9,746) 30,287 --
Debt settlement through stock ........... 17,583 18 -- -- 60,933 --
Net loss for period ..................... -- -- -- -- -- (135,261)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, March 31, 1995 ..................... 225,078 $ 225 98,438 $ 98 $ 5,434,894 $(6,711,247)
=========== =========== =========== =========== =========== ===========
See accompanying notes to unaudited condensed financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended
March 31 March 31
1995 1994
--------- ---------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................. $(135,261) $(202,210)
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ..................................... -- --
Common stock issued for services .................................. -- --
Loss on disposal of property ...................................... -- --
Abandonment of fixed assets ....................................... -- --
Gain from elimination of debt ..................................... -- --
(Increase) decrease in accounts receivable ........................ -- 211,409
(Increase) decrease in inventories ................................ -- 79,562
(Increase) decrease in other current assets ....................... -- (3,750)
Increase (decrease) in accounts payable ........................... -- (27,714)
Increase (decrease) in accrued liabilities ........................ 135,202 (10,845)
--------- ---------
Total adjustments .......... 135,202 248,662
--------- ---------
Net cash provided (used) by operating activities .......... $ (59) $ 46,452
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of property ........................... -- (3,212)
Cash proceeds from the sale of property .............................. -- 96,767
--------- ---------
Net cash provided (used) by investing activities .......... $ -- $ 93,555
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and
issuance of additional shares ...................................... -- --
Net proceeds from private placement .................................. -- --
Repayment of debt .................................................... -- (135,585)
Principal payments on capital leases ................................. -- --
Principal payments on long-term debt ................................. -- --
Loans from officers and directors .................................... -- --
Repayment of officers and directors loans ............................ -- --
--------- ---------
Net cash provided (used) by financing activities .......... $ -- $ (135,585)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash, beginning ...................................................... 166 6,006
--------- ---------
Cash, ending ......................................................... $ 107 $ 10,428
========= =========
See accompanying notes to unaudited condensed financial statements
F-4
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<PAGE>
BRIA COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and,
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should, therefore, be read in conjunction
with the Company's Annual Report to Shareholders on Form 10-KSB for fiscal year
ended December 31, 1994. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair presentation of the
statements. The interim operation results are not necessarily indicative of the
results for the full year ending December 31, 1995.
2. Changes in Common Stock
On February 1, 1995, the Company effectuated a 1-40 Reverse Stock Split of the
Company's Class A Common stock and a corresponding decrease in the authorized
number of shares of Class A Common Stock.
On March 31, 1995, the Company settled past debts owed to various vendors
totaling $60,951 through the issuance of 17,583 shares of the Company's Class A
Common Stock.
Effective March 21, 1995, the Company increased the number of authorized shares
of Class A Common Stock to 200,000,000 and Class B Stock to 220,000. The par
value of both Class A and Class B Common Stock was reduced from $0.1 to $0.001.
3. Additional footnotes included by reference
Except as indicated in the Note #2 above, there has been no other material
changes in the information disclosed in the notes to the financial statements
included in the Company's annual Report on Form 10-KSB for the year ended
December 31, 1994. Therefore those footnotes are included herein by reference.
F-5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
BRIA Communications Corporation, a New Jersey corporation that is hereafter
referred to as the "Company," ceased all active operations on June 30, 1994.
Four administrative employees remained on the payroll until September 30, 1994
in order to facilitate the sale of the final Company assets in preparation for a
proposed merger with MAXMusic, Inc. that was subsequently rescinded. The
services of the four employees were terminated on September 30, 1994.
On February 14, 1994, the Company signed a Binding Letter of Intent with
MAXMusic, Inc. a privately owned company located in Denver, Colorado ("MAX").
The Letter of Intent called for recapitalization of the Company and a subsequent
merger between MAX and the Company. This information was disclosed in a report
on Form 8-K filed with the Securities and Exchange Commission ("SEC") on March
11, 1994. On July 11, 1994, MAX and the Company signed a Definitive Merger
Agreement. A current report on Form 8-KSB was filed on July 12, 1994 with the
SEC and is incorporated herein by this reference.
The Company was advised on November 8, 1994, that MAX was exercising its
option to rescind the Definitive Merger Agreement pursuant to the terms of such
Agreement. MAX had signed promissory notes totaling over $776,000 plus accrued
interest, that were due on July 31, 1994. These notes would have been eliminated
as part of the merger, however, since the merger was canceled, $287,000 worth of
the notes, including interest, became immediately due with the remaining
$489,250 worth of notes, plus accrued interest, becoming due over a twelve month
period.
MAX filed Chapter 7 bankruptcy on March 3, 1995, claiming that no assets
were available for bankruptcy liquidation to unsecured creditors such as the
Company. The Company does not expect to receive any portion of the $776,000
worth of promissory notes unless MAX's bankruptcy trustee declares that assets
are available to MAX's unsecured creditors. As of November 15, 1995, no such
declaration had been made and the Company does not expect such a statement to be
made in the future. The Company is currently in negotiations to settle this
matter although no assurances can be given that this will in fact occur.
The move of the Company's principal offices, which began on December 16,
1994, was completed in early January 1995. The move of offices occurred after
Richard D. Surber gained control of the Company pursuant to a Settlement
Agreement dated December 16, 1994, by and among the Company, Ira L. Friedman,
formerly the president, chief executive officer and a director of the Company
("Friedman"), Richard T. Johnson, formerly the chief financial officer, vice
president of finance and a director of the Company ("Johnson"), The Canton
Industrial Corporation, a Nevada corporation ("Canton"), and A-Z Professional
Consultants, Inc., a Utah corporation ("A-Z") (the "Settlement Agreement"). The
Settlement Agreement resolved disputes over agreements that involved consulting
arrangements and organizational consolidations among the Company, Canton and
A-Z. Richard D. Surber, a director and the chief executive officer of Canton,
became the president and sole director of A-Z. Mr. Surber's control arose from
his appointment as the Company's president and a director, and his indirect
beneficial ownership of voting securities. For more information on the
Settlement Agreement, please see "Item 6 - Management Discussion and Analysis"
of the Company's Form 10-KSB for the period ended December 31, 1994, which is
incorporated herein by this reference.
Pursuant to a Letter Agreement dated July 7, 1995, and an Addendum dated
July 11, 1995, the parties to the Settlement Agreement modified certain terms of
the Settlement Agreement to include, among other terms, the issuance of certain
shares of the Company's common stock to Friedman and Johnson. The Company also
agreed to use its best efforts to register said shares (as well as all shares
issued to Friedman, Lawrence Friedman and Johnson pursuant to paragraph 1(b)(v)
of the Settlement Agreement) on an available registration statement format,
which may include Form S-8, as soon as it is feasible for the Company to so
undertake. This Letter Agreement was included in the Company's Form 10-KSB for
the period ended December 31, 1994 and is incorporated herein by this reference.
The services of Canton Financial Services Corporation, a Nevada corporation
and wholly owned subsidiary of Canton ("CFSC"), were retained pursuant to the
Settlement Agreement. The Settlement Agreement required Canton, or its assign
(CFSC), to assist the Company in completing the proxy statement ultimately used
for the March 14, 1995 Special Meeting. The compensation Canton, or its assign,
was to receive in exchange for these services was established in the Settlement
Agreement at 1,612,000 shares of the Company's Class A common stock.
After the completion of the special meeting's proxy statement on 2/18/95,
CFSC's services were retained pursuant to a Consulting Agreement. Pursuant to
the Consulting Agreement, which has a term of one year that is terminable or can
be extended on a monthly basis, CFSC has continued to provide a variety of
consulting services and administrative tasks in exchange for a monthly fee based
on the rates at which the services of CFSC's employees are billed that is
payable in the restricted shares of the Company's Class A common stock. CFSC has
provided the Company with office space as well as internal record keeping, the
preparation of reports required to be filed with SEC, the negotiation of
settlement of the Company's debts, and the search for a viable merger or
acquisition candidate.
Two additional directors were appointed to the Company's board of directors
on January 15 and 16, 1995, Bobby G. Welch II and Christopher Swaner,
respectively. On March 1, 1995, Richard Surber resigned as president of the
Company. The board of directors accepted this resignation and appointed him as
the Company's Secretary/Treasurer and appointed Richard Lifschutz ("Lifschutz")
as the President and a director of the Company.
For personal reasons and with no complaints, disagreements or disputes with
the Company or its management in any respect, Mr. Welch resigned as director on
March 3, 1995. Mr. Swaner resigned due to personal reasons and not because of
any disagreements or disputes with the Company or its management in any respect,
on March 30, 1995. Mark Knudson was appointed as a director of the Company on
March 30, 1995, to fill the vacancy created by Christopher Swaner's resignation.
Mr. Knudson subsequently resigned on July 31, 1995 without any disagreements
with the Company.
The appointment of Lifschutz allowed the Company to begin its pursuit of
profit. Lifschutz is very experienced in the barter industry and has been an
Itex broker for many years. (Itex is America's largest barter exchange.) Soon
after the arrival of Lifschutz, the Company began trading its publicly-traded
Class A common stock for other tangible assets such as media and trade credits,
including the following transactions:
- the purchase of $500,000 worth of media credits on July 31, 1995,
from Associated Reciprocal Traders ("ART"), a British Virgin Island
corporation, in exchange for 500,000 restricted shares of the Company's
Class A common stock.
- the sale of 200,000 shares of its Class A restricted common stock,
effective July 11, 1995, to Itex Corporation, a Nevada corporation, in
exchange for 100,000 ITEX Trade Dollars which can be used on the Itex
Barter Exchange to acquire a variety of goods and services.
On March 1, 1995, the Company entered into a two Consulting Agreements, one
with Karston Electronics, Ltd., a corporation formed under the laws of the
British Virgin Islands ("Karston"), and the other with East-West Trading Corp.,
a corporation formed under the laws of the West Indies ("East- West"). The
Company retained East-West and Karston to assist the Company in general business
consulting. As compensation for these services, the Company issued to Karston
and East-West each 120,000 shares of its Class A common stock pursuant to
Regulation S of the Securities Act of 1933. The Company also granted both
Karston and East-West options to purchase up to 250,000 shares of the Company's
common stock at an exercise price of $0.50 per shares to be exercised no later
than August 4, 1996. These agreements were included in the Company's Form 10-KSB
for the period ended December 31, 1994 and are incorporated herein by this
reference.
On February 1, 1995, the Board of Directors unanimously approved a 1-for-40
reverse stock split of the Class A Common Stock (the "Reverse Stock Split"). The
bid price of the Class A common stock before the Reverse Stock Split was $1/32,
roughly three cents per share whereas after the Reverse Stock Split, on February
6, 1995, the bid price was $1.13. Simultaneous with the Reverse Stock Split, the
Board of Directors decreased the authorized number of shares to assure that the
rights and preferences of the holders of outstanding shares of Class A Common
Stock were not adversely affected by the reverse split. The percentage of
authorized shares of Class A Common Stock that remained unissued after the
Reverse Stock Split did not significantly exceed the percentage of authorized
shares of Class A Common Stock that was unissued before the Reverse Stock Split.
Pursuant to the Reverse Stock Split, the authorized number of shares of Class A
Common Stock decreased from 10,000,000 to 250,000, although the total
capitalization of the Company and the intrinsic value of each shareholders'
investment did not change significantly when the Reverse Stock Split took
effect.
The Reverse Stock Split was effectuated with the intention of calling a
special meeting of Company's shareholders. A special meeting of shareholders
took place on March 14, 1995. The special meeting was adjourned to, and
completed on, March 21, 1995, so a quorum of shares were represented. For full
information on the special meeting, please see Item 4 - Submission of Matters to
a Vote of Security Holders.
One of the more important results of the Meeting was to increase the amount
of authorized but unissued shares of common stock. When combined with the
heightened attraction of the Class A common stock due to its increased price,
which stemmed from the Reverse Stock Split, this increase in authorized shares
has made it possible for the Company to issue shares of its common stock to
settle a portion of its debts as well as to trade and barter for other assets.
See immediately below for additional information on the Company's acquisition of
other assets and settlement of debts.
Through the efforts of CFSC, in the Spring of 1995 the Company was able to
settle debts with 16 of the Company's creditors. The terms typically offered by
the Company to its creditors involve the issuance of restricted shares of common
stock in the Company equal to 10% of the amount of each debt in exchange for the
creditors' complete discharge of such liabilities. The Company issued 158,166
restricted shares of the Class A common stock in exchange for the written
discharge of $233,726 in debt. This debt settlement campaign reduced the
Company's accounts payable from over $1,030,592 on December 31, 1994, to less
than $730,750 on September 30, 1995. Although the Company is still attempting to
settle its existing liabilities, no assurances can be given that any additional
debts will be settled for a number of shares of common stock acceptable to the
Company.
On or about June 30, 1994, the Company's charter was involuntarily
dissolved by the State of New Jersey for failure to file its 1994 annual tax
return and remit the necessary fees due to preserve its status as a corporation
in good standing. The Company paid the State of New Jersey $5,652.66 to settle
all outstanding obligations on or about September 30, 1995. On November 29,
1995, the Company filed Form CBT-100 (corporate business tax return) with the
State of New Jersey. The Company received its Certificate of Reinstatement on
December 22, 1995. The reinstatement became effective on December 20, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (SUBSEQUENT TO MARCH
31, 1995)
The Company entered into a Stock Exchange Agreement on December 8, 1995
with AltaChem Group, Inc., a corporation formed under the laws of the Republic
of Ireland ("AltaChem"). AltaChem is a chemical company that manufactures,
distributes, and sells chemicals used in the building industry, including a
polyurethane foam product used as insulation, sealants and caulking materials.
The Stock Exchange Agreement provides for the Company's acquisition of 100% of
the issued and outstanding capital stock of AltaChem in exchange for 21,623,996
shares of the Company's Class A common stock, which equaled 75% of the issued
and outstanding shares of Class A common stock on September 1, 1995, the date of
stock issuance.
The legal and beneficial shareholders of AltaChem's common stock "ACS,"
include James Tilton, the Company's current chief executive officer and, one of
its directors, and ADS Group, Inc., a Belgian corporation, whose majority
shareholder and president is Aster De Schrijver, one of the Company's current
directors, and whose chief executive officer is James Tilton. Jane Zheng is the
wife of James Tilton and also one of the Company's current directors. These
shares were issued with the understanding that they would be retired in the
event the merger did not transpire. The net effect of this stock exchange (which
has been effected as a tax free reorganization pursuant to Section 368(1)(b) of
the Internal Revenue Code of 1986, as amended) was that ACS acquired a 75%
interest in the Company and the Company acquired 100% of AltaChem.
To encourage AltaChem and ACS to enter into the Stock Exchange Agreement,
on August 3, 1995, the Company's board of directors unanimously appointed James
Tilton, Jane Zheng and Aster De Schrijver to serve as directors of the Company.
Upon the resignation of Richard D. Surber, on August 5, 1995, as a director of
the Company and as its secretary/treasurer, the board of directors appointed Ms.
Zheng to serve as Secretary/Treasurer, and also appointed Mr. Tilton as the
chief executive officer of the Company. Mr. Surber resigned for personal reasons
and with no disagreements or disputes with the Company or its management.
The Company is not aware of any arrangements that may result in a change in
control of the Company in the future.
Results of Operations
Revenue for the first quarter of 1995 was $0 compared with $151,891 for the
first quarter of 1994. This decrease can be attributable to the termination of
the Company's active operations in June 1994.
The Company incurred $0 in costs of sales in first quarter 1995 since there
was no active operations in that period. The costs of sales were $94,950 in
first quarter of 1994. Selling, general and administrative expenses for the
first quarter of 1995 decreased to $135,261 from $252,984 for the first quarter
of 1994. The decrease in selling, general, and administration costs was, again,
due primarily to the Company's inactive status.
Capital Resources and Liquidity
During first quarter 1995, the Company settled $60,951 in past due debts
through the issuance of 17,583 shares of the Company's Class A Common Stock.
The deficiency in working capital increased from $1,240,194 in the first
quarter of 1994 to $1,317,743 in the first quarter of 1995. This deterioration
was primarily attributable to the fact that the Company incurred additional
debts to various consultants for services rendered after March 31, 1994.
Net stockholders' deficit was $913,320 for the first quarter of 1994 and
$1,276,030 for the first quarter of 1995. The increase was due to the
substantial loss incurred for the year ended December 31, 1994 and loss
sustained during the first quarter of 1995.
PART II
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings against the Company were initiated during the first
quarter of 1995, and no pending legal proceedings involving the Company had any
material developments during the first quarter of 1995. For a discussion of the
pending legal proceedings involving the Company, please see the Form 10-KSB for
the fiscal year ended December 31, 1994, which is incorporated herein by this
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 17, 1995, the Company mailed all of its shareholders a notice
of a special meeting to be held on March 14, 1995 and asked them to consider and
vote upon the following matters:
1. PROPOSAL NO. 1 - amendment of the Company's Articles of Incorporation to
increase the number of the Company's authorized shares of Class A common
stock to two hundred million (200,000,000) and Class B common stock to two
hundred and twenty thousand (220,000);
2. PROPOSAL NO. 2 - amendment of the Company's Certificate of Incorporation to
reduce the par value per share of Class A and Class B Common Stock of the
Company from $0.10 to $0.001;
3. PROPOSAL NO. 3 - amendment of the Company's Certificate of Incorporation to
permit amendments to the Company's Certificate of Incorporation by a
majority vote of the Company's shareholders;
4. PROPOSAL NO. 4 - ratification of the appointment of Michael L. Roper, CPA,
as the Company's independent auditor for the fiscal year ending December
31, 1994;
5. PROPOSAL NO. 5 - amendment of the Company's Certificate of Incorporation to
change the Company's name to BRIA Communications Corp;
6. PROPOSAL NO. 6 - transaction of such other business as may properly come
before the Special Meeting or any adjournment thereof.
Included with the notice of meeting was a proxy statement furnished in
connection with the solicitation of proxies by the Board to be voted at the
special meeting. Due to an inability to form a proper quorum on March 14, 1995,
the meeting was adjourned to March 21, 1995. As of March 21, 1995, the total
number of shares eligible to vote was approximately 306,516, of which 153,258
(or at least 50%) was required to constitute a quorum. The number of shares
represented at the meeting was 157,544 (or 51%).
The Board of Directors removed Proposal 4 from the agenda of the Special
Meeting because it had decided against engaging Michael L. Roper, CPA, as its
independent auditor for the fiscal year ending December 31, 1994.
Shareholders voted as follows for the proposals addressed at the Special
Meeting:
<TABLE>
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
PROPOSALS(1)(2) Number of Shares That Number of Shares That Number of Abstentions
Voted For Proposal Voted Against Proposal Shares Not
Represented
<S> <C> <C> <C> <C>
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
Proposal No. 1 143,832 13,712 148,971.5 Not Applicable
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
Proposal No. 2 143,672 13,872 148,971.5 Not Applicable
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
Proposal No. 3 143,999 13,545 148,971.5 Not Applicable
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
Proposal No. 5 145,147 12,397 148,971.5 Not Applicable
- ----------------------- --------------------------- -------------------------- ----------------- -------------------
</TABLE>
(1) Proposals 1,2,3 and 5 involved an amendment to the Company's articles of
incorporation and therefore required two-thirds majority vote (or 105,029 voting
shares) of the quorum represented at the meeting to pass and thus be approved.
(2) Proposal 4 was withdrawn at the discretion of the board of directors because
it decided against engaging Michael L. Roper, CPA, as its independent auditor
for the fiscal year ending December 31, 1994. See Item 8 Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure for a
discussion on the Company's past and present independent auditors.
One of the more important results of the Meeting was to increase the amount
of authorized but unissued shares of common stock. When combined with the
heightened attraction of the Class A common stock due to its increased price,
which stems from the Reverse Stock Split, this increase in authorized shares has
made it possible for the Company to issue shares of its common stock to settle a
portion of its debts as well as trade and barter for other assets. See
immediately below for additional information on the Company's acquisition of
other assets and settlement of debts.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached and filed by Item 601 of
Regulation S-K are listed in the Index to Exhibits on page 8 of this Form
10-Q and are incorporated herein by this reference.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended March 31, 1995.
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, this 11th day of December 1995.
BRIA COMMUNICATIONS CORP.
Date: December 11, 1995 By:
Name: Richard Lifschutz
Title: President
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
3a * Certificate of Incorporation of the Company.
(Incorporated herein by reference from exhibit of
like number with the Company's Form 10-KSB for the
year ended December 31, 1988.)
3b * By-Laws of the Company. (Incorporated herein by
reference from exhibit of like number with the
Company's Form 10-KSB for the year ended December
31, 1988.)
4a * Warrant issued December 31, 1986 by the Company
to Mid-Monmouth Realty Associates (Incorporated
herein by reference from exhibit of like number
with the Company's Form 10-KSB for the year ended
December 31, 1988.)
10(i) *Exhibits
MATERIAL CONTRACTS
10(i)(a) * Letter of Agreement dated March 1, 1995 between the
Company and Richard Lifschutz. Incorporated herein
by reference from exhibit of like number from the
Company's Annual Report on Form 10-KSB filed by the
Company on December 28, 1995).
10(i)(b) * Settlement Agreement dated December 16, 1994
between the Company, Richard T. Johnson, Ira
Freidman, A-Z Professional Consultants and The
Canton Industrial Corporation. (Incorporated herein
by reference from exhibit of like number from the
Company's Annual Report on Form 10-KSB filed by
the Company on December 28, 1995).
10(i)(c) * Consulting Agreement dated August 4, 1995, but
made effective March 1, 1995, between the Company
and East-West Trading Corporation.(Incorporated
herein by reference from exhibit of like number from
the Company's Annual Report on Form 10-KSB filed by
the Company on December 28, 1995).
10(i)(d) * Consulting Agreement dated August 4, 1995, but
made effective March 1, 1995, between the Company
and Karston Electronics, Ltd. (Incorporated herein
by reference from exhibit of like number from the
Company's Annual Report on Form 10-KSB filed by
the Company on December 28, 1995).
10(i)(e) * Consulting Agreement dated May 16, 1995, but
effective February 18, 1995, between the Company and
Canton Financial Services Corporation. (Incorporated
herein by reference from exhibit of like number
from the Company's Annual Report on Form 10-KSB
filed by the Company on December 28, 1995).
10(i)(f) * Letter of Agreement and Settlement of All Claims
dated July 7, 1995, amending the Settlement agreement
dated December 16, 1994, between the Company, The
Canton Industrial Corporation, A-Z Professional
Consultants, Inc., Ira L. Friedman and Richard T.
Johnson. (Incorporated herein by reference from
exhibit of like number from the Company's Annual
Report on Form 10-KSB filed by the Company on
December 28, 1995).
10(i)(g) * Amendment to Letter of Agreement, Settlement of All
Claims, dated July 11, 1995, between the Company, The
Canton Industrial Corporation, A-Z Professional
Consultants, Inc., Ira L. Friedman and Richard T.
Johnson. Incorporated herein by reference from
exhibit of like number from the Company's Annual
Report on Form 10-KSB filed by the Company on
December 28, 1995).
10(i)(h) * Binding Letter of Intent between the Company and
MAXMusic, Inc. dated February 14, 1994.
(Incorporated herein by reference from Exhibit 10
to Current Report on Form 8-K filed by the Company
on March 11, 1994.) Incorporated herein by reference
from exhibit of like number from the Company's
Annual Report on Form 10-KSB filed by the Company
on December 28, 1995).
10(i)(i) * Stock Exchange Agreement of December 8, 1994 between
the Company and AltaChem Group, Inc. Incorporated
herein by reference from exhibit of like number
from the Company's Annual Report on Form 10-KSB/A
filed by the Company on January 5, 1996).
27 17 Financial Data Schedule
* These exhibits appear in the manually signed original Reports for the periods
indicated by each item and are hereby incorporated by this reference.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MARCH 31, 1994
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
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0
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