FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended May 31, 1996
2-87709
- --------------------------------------------------------------------------------
(Commission File Number)
THE 87 ACQUISITION CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in Charter)
Louisiana 59-2308161
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of Incorporation) Identification Number)
245 Park Avenue, 40th Floor, New York, New York 10167
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 245-1500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
None
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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 report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of the close of the period covered by this report. 509,980
shares of common stock, $.01 par value, were issued and outstanding as of
May 31, 1996.
<PAGE>
THE 87 ACQUISITION CORP.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet --
May 31, 1996 (unaudited), and August 31, 1995
Statement of Operations --
Three months ended May 31, 1996 and May 31, 1995 (unaudited)
and nine months ended May 31, 1996 and May 31, 1995 (unaudited).
Statement of Cash Flows --
Nine months ended May 31, 1996 and May 31, 1995 (unaudited).
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. OTHER INFORMATION
SIGNATURES
2
<PAGE>
<TABLE>
THE 87 ACQUISITION CORP.
CONDENSED BALANCE SHEET
(UNAUDITED)
<CAPTION>
May 31, August 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash ............................................................................................. $ 5,020 $ 5,020
Due to affiliate, net of allowance of $7,000 ..................................................... -- --
----------- -----------
$ 5,020 $ 5,020
=========== ===========
LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses ............................................................ $ 8,117 $ 525
Due to Shareholder ............................................................................... 548,346 532,243
----------- -----------
Total Current Liabilities ................................................................... 556,463 532,768
----------- -----------
Deficit in Stockholders' Equity:
Common stock, $.01 par value, 25,000,000 shares authorized, 509,980 shares issued and
outstanding May 31, 1996 and August 31, 1995, respectively ...................................... 5,100 5,100
Additional paid-in capital ....................................................................... 488,063 488,063
Retained earnings (deficit) ...................................................................... (1,044,606) (1,020,911)
----------- -----------
Total Deficit in Stockholders' Equity ....................................................... (551,443) (527,748)
----------- -----------
$ 5,020 $ 5,020
=========== ===========
</TABLE>
3
<PAGE>
<TABLE>
THE 87 ACQUISITION CORP.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Interest Income .............................................................. $ 267 $ -- $ 387 $ --
--------- --------- --------- ---------
Costs and Expenses:
Selling and Administrative ................................................... 3,690 121,048 24,082 332,643
Interest Expense ............................................................. -- 9,651 -- 23,662
--------- --------- --------- ---------
Total Costs & Expenses ....................................................... 3,690 130,699 24,082 356,305
--------- --------- --------- ---------
Net Loss ........................................................................... $ (3,423) $(130,699) $ (23,695) $(356,305)
========= ========= ========= =========
Loss per share, based on average weighted number of shares outstanding ............. $ (0.01) $ (0.16) $ (0.05) $ (0.70)
========= ========= ========= =========
Number of Shares ................................................................... 509,980 509,980 509,980 509,980
========= ========= ========= =========
</TABLE>
4
<PAGE>
<TABLE>
THE 87 ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the Nine Months
Ended May 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash paid for goods and services ................................................................. $ (16,490) $ (374)
Interest received ................................................................................ 387 --
Interest paid .................................................................................... -- (23,662)
----------- -----------
Total Cash Flows from Operating Activities ....................................................... (16,103) (24,036)
----------- -----------
Cash Flows from Financing Activities:
Advances from related parties .................................................................... 16,103 --
----------- -----------
Decrease in cash ....................................................................................... -- (24,036)
Cash balance, beginning ................................................................................ 5,020 35,152
----------- -----------
Cash balance, end ...................................................................................... $ 5,020 $ 11,116
=========== ===========
</TABLE>
5
<PAGE>
<TABLE>
THE 87 ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the Nine Months
Ended May 31,
1996 1995
----------- -----------
<S> <C> <C>
Reconciliation of Net Loss to Cash Flows from Operating Activities:
Net Loss ............................................................................................... $ (23,695) $ (356,305)
----------- -----------
Adjustments:
Increase in deposits ............................................................................. -- (50,000)
Increase in accounts payable and accrued expenses ................................................ 7,592 382,269
----------- -----------
Total Adjustments ........................................................................... 7,592 332,269
----------- -----------
Cash Flows from Operating Activities ................................................................... $ (16,103) $ (24,036)
=========== ===========
</TABLE>
6
<PAGE>
THE 87 ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1: FAIR PRESENTATION
The balance sheet as of May 31, 1996, the statement of operations for
the three months and nine month periods ended May 31, 1996 and May 31,
1995, and the statement of cash flows for the six month periods ended
May 31, 1996 and May 31, 1995, have been prepared by the Company without
audit. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary to present fairly the
financial position and results of operations at May 31, 1996 and for all
periods presented have been made. The operations for the three months
and nine months ended are not necessarily indicative of the results of
operations to be expected for the Company's fiscal year. These
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1995.
NOTE 2: CHANGE IN AUTHORIZED AND ISSUED CAPITAL STOCK
On January 18, 1994, the Company effected a reverse stock split whereby
each 100 shares of its Common Stock, $.001 par value per share, issued
and outstanding immediately prior thereto was converted into one share
of its common stock par value $.01 per share. As a result, the total
number of shares issued and outstanding was reduced from 50,000,000 to
500,000. Because the company elected to pay cash in lieu of issuing
fractional shares, the actual number of shares issued and outstanding
following the completion of the reverse split was 499,990. Retroactive
effect has been given in the accompanying financial statements to the
reverse stock split.
On January 24, 1994, the Company changed its domicile from Delaware to
Louisiana by merging with and into its wholly-owned subsidiary, The 87
Merger Corp., a Louisiana corporation (the "Surviving Corporation")
Simultaneously with the merger, The 87 Merge Corp, as the Surviving
Corporation, changed its name to The 87 Acquisition Corp. The merger did
not result in a change of ownership as each shareholder of the Company
received one share of the Surviving Corporation's common stock, par
value $.01 per share, for each share of The 87 Acquisition Corp.'s
7
<PAGE>
common stock, par value $.01 per share, held at the effective time of
the merger.
NOTE 3: NOTE PAYABLE
Since November 1993, the Company has borrowed funds from its principal
stockholder now Allied Marketing Holding Limited ("AMHL") and formerly
AG Strategic Holding Limited ("AG"), under a revolving credit line
opened by AG and continued by AMHL for the company, with the proceeds of
such borrowing being and to be used for working capital purposes. The
loan is payable on demand and accrued interest through December 31, 1994
at the prime rate (7.75% and 8.5% at August 31, 1994 and December 31,
1994 respectively). Effective January 1, 1995, the loan is non-interest
bearing. Accrued interest payable through May 31, 1996 and May 31, 1995
is $14,027 and $14,027 respectively.
In September 1996, the Company issued 490,020 shares of its common stock
in exchange for the cancellation of the note indebtedness, including
accrued interest, which aggregated approximately $545,000. Accordingly,
common stock was credited at par value and the balance was credited to
additional paid-in-capital. The statements included herein do not give
effect to this transaction.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This analysis of the company's financial condition, capital resources and
operating results should be viewed in conjunction with the accompanying
financial statements, including the notes thereto.
Financial Condition - As of May 31, 1996, the Company had current assets
(consisting of all cash) of $5,020, compared to $5,020 (consisting of all cash)
at August 31, 1995. The Company had current liabilities of $556,463 as of May
31, 1996, compared to current liabilities of $532,768 at August 31, 1995. Total
assets of the Company at May 31, 1996 amounted to $5,020, compared to $5,020 at
August 31, 1995, and a negative net worth of $551,443 compared to a negative net
worth of $527,748 at August 31, 1995. The decrease in net worth was the result
of incurring operating expenses, primarily professional fees. The Company's
financial condition was greatly enhanced by the issuance of its common stock in
exchange for the cancellation of the indebtedness and accrued interest to AMHL
in the amount of approximately $545,000.
Liquidity and Capital Resources - At May 31, 1996, the Company had cash of
$988. The Company's operating expenses for the nine months ended May 31, 1996
8
<PAGE>
consisted primarily of professional fees. The Company is currently seeking
suitable investment opportunities and its expenses will consist primarily of
fees and expenses in connection with seeking such opportunities.
The Company knows of no trend, additional demand, event or uncertainties
that will result in, or that are reasonable likely to result in, its current
liquidity increasing or decreasing in any material way.
The Company had no outstanding resource commitments as of May 31, 1996. The
Company has no present material commitments for additional capital expenditures.
Except of the loan described in The Notes to the accompanying financial
statements, the Company has not outstanding credit lines or commitments in place
and has no current need for financial credit.
Results of Operations - The Company had interest income of $387 for the
nine month period ended May 31, 1996 and no revenue for the nine month period
ended May 31, 1995. Operating expenses for the three month period ended May 31,
1996 were $3,690, consisting of stock transfer fees, professional fees and other
operating expenses compared to operating expenses for the six months ended
February 29, 1996 of $20,392. Operating expenses of $121,048 during the three
month period ended May 31, 1995 consisted of professional fees, stock transfer
fees, and other operating expenses.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit Index.
(b) Reports on Form 8-K
None.
9
<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.
THE 87 ACQUISITION CORP.
(Registrant)
Dated:November 13, 1996 By: /s/ Dennis Charter
------------------------------------
Name: Dennis Charter
Title: Chairman of the Board and
Chief Financial Officer
10
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- ----------------------------------------------------------------
27 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE 87 ACQUISITION CORP. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000732415
<NAME> THE 87 ACQUISITION CORP.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 5,020
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,020
<CURRENT-LIABILITIES> 556,413
<BONDS> 0
0
0
<COMMON> 5,100
<OTHER-SE> (556,543)
<TOTAL-LIABILITY-AND-EQUITY> 5,020
<SALES> 0
<TOTAL-REVENUES> 387
<CGS> 0
<TOTAL-COSTS> 24,082
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (23,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,695)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
