<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1997
( ) Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________ to _____________
Commission file number 2-98014-D
FIRST COLONIAL VENTURES, LTD.
---------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0421903
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2046 Armacost Avenue, West Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (310) 642-0200
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has 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 X No
---- ----
As of September 30, 1997, the Company had 10,716,182 shares of common stock
issued and outstanding.
Transitional Small Business Disclosure Format: Yes No X
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Total sequentially numbered pages in this document: 9
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST COLONIAL VENTURES, LTD.
BALANCE SHEETS
(FROM
AUDITED
FINANCIAL
STATEMENTS) (UNAUDITED)
DECEMBER 31 SEPTEMBER 30
1996 1997
----------- ------------
ASSETS
Investments at fair value (cost - $4,222,541
1996 and $4,616,205 1997) $ 3,522,006 $ 3,915,670
Notes receivable from sale of common stock 1,691,633 976,774
Cash 2,872 132
Other assets 8,275 22,535
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TOTAL ASSETS $ 5,224,786 $ 4,915,111
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable $ 487,563 $ 487,563
Accounts payable and accrued liabilities 178,457 187,687
Related party debt 1,057,456 923,658
Management fees payable to officer 171,000 269,050
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Total liabilities 1,894,476 1,867,958
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Stockholders' Equity:
Common stock ($.001 par value; 500,000,000 shares
authorized; outstanding - 10,716,182 shares 10,716 10,716
Preferred stock (no par value; 10,000,000 shares
authorized; none outstanding) -- --
Additional paid-in capital 8,963,252 8,963,252
Accumulated deficit:
Accumulated (deficit) before becoming a BDC (3,508,063) (3,508,063)
Accumulated net investment (loss) (845,172) (1,128,329)
Accumulated net unrealized (loss) (1,290,423) (1,290,423)
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Total stockholders' equity (net asset value per
share - $.31 1996 and $.28 1997) 3,330,310 3,047,153
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,224,786 $ 4,915,111
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See accompanying notes to financial statements
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FIRST COLONIAL VENTURES, LTD.
STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED
---------------------------
SEPTEMBER 30 SEPTEMBER 30
1996 1997
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Revenues $ -- $ --
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Expenses:
General & administrative expenses 195,510 255,902
Depreciation -- 4,740
Interest 41,505 22,579
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Operating expenses 237,015 283,221
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Net loss $ (237,015) $ (283,221)
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Loss per share:
Weighted average number of shares 7,035,942 10,716,182
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Net (loss) per share $ (.03) $ (.03)
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See accompanying notes to financial statements
3
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FIRST COLONIAL VENTURES, LTD.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1997
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Revenues $ -- $ --
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Expenses:
General & administrative expenses 65,170 112,505
Depreciation -- 1,580
Interest 13,835 7,851
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Operating expenses 79,005 121,936
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Net loss $ (79,005) $ (121,936)
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Loss per share:
Weighted average number of shares 7,035,942 10,716,182
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----------- ----------
Net (loss) per share $ (.01) $ (.01)
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See accompanying notes to financial statements
4
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FIRST COLONIAL VENTURES, LTD.
STATEMENT OF CASH FLOWS
For The Nine Months Ended
(Unaudited)
SEPTEMBER 30
1997
------------
Cash flows from operating activities:
Net investment loss $ (283,157)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation 4,740
Increase in accounts payable
and accrued expenses 107,280
-----------
Net cash (used) in operating activities (171,137)
-----------
Cash flows from investing activities:
Investment in qualifying assets (393,664)
Purchase of equipment (19,000)
-----------
Net cash (used) in investing activities (412,664)
-----------
Cash flows from Financing activities:
Collection of notes receivable 714,859
Repayment of related party debt (133,798)
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Net cash provided by financing activities 581,061
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Net (decrease) in cash (2,740)
Cash - December 31, 1996 2,872
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Cash - September 30, 1997 $ 132
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See accompanying notes to financial statements
5
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FIRST COLONIAL VENTURES, LTD.
SCHEDULE OF INVESTMENTS
September 30, 1997
(Unaudited)
NUMBER OF COST
SHARES AND/OR FAIR
COMPANY OWNED EQUITY VALUE
- ------------------------------------ --------- ---------- -------
Wholly-Owned Portfolio Companies:
Contemporary Resources, Inc.-
Common stock, appraisal method 13,700 $ 773,115 $ 649,952
First Colonial Real Estate, Inc.-
Common stock, appraisal method 10,000 1,630,130 1,620,000
Advances, at cost n/a 228,085 --
Baja Pacific International, Inc.-
Common stock, appraisal method 10,000 7,600 7,500
YPE, Inc.-
Common stock, cost method 10,011 3,367 3,367
First Colonial Studios, Inc. -
Common stock, appraisal method 500 690,000 690,000
Advances, at cost n/a 152,610 152,610
Dryden Energy, Inc.-
Common stock, appraisal method 7,000 182,241 182,241
- -------------------------------------
Controlled (50%) Portfolio Companies:
Sherwood Properties, Inc. -
Common stock, appraisal method 12,500 1,919 --
Advances, at cost n/a 73,000 --
Gulf Coast Hotels, Inc. -
Common stock, appraisal method 1,875 209,782 --
Advances, at cost n/a 110,000 60,000
- -------------------------------------
Other Portfolio Companies:
TND/Medical International, Inc. -
Common stock, cost method 666,666 350,000 350,000
And In Justice For All, Inc. -
Common stock, cost method 450,000 200,000 200,000
Gerant Industries, Inc. -
Common stock, appraisal method 2,500 4,356 --
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Investments - June 30, 1997 $4,616,205 $3,915,670
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See accompanying notes to financial statements
6
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FIRST COLONIAL VENTURES, LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - COMMENTS:
First Colonial Ventures, Ltd. ("FCVL" or "Company") was incorporated
under the laws of the State of Utah on March 25, 1985, for the purpose of
acquiring interests in various business opportunities.
On January 10, 1995, FCVL elected to become an Investment Company
pursuant to the Investment Company Act of 1940. On June 27, 1995, FCVL
elected to become a "Business Development Company" (BDC), as that term is
defined in the Small Business Investment Incentive Act of 1980, which Act is
an amendment to the Investment Company Act of 1940. The election resulted in
FCVL becoming a specialized type of investment company. Consistent with this
change in type of business entity, the Company changed its method of
financial reporting and valuation of investments from cost to fair value.
The financial statements include only the accounts of FCVL because,
pursuant to industry practice, an investee of a business development company
is not consolidated unless such investee is a small business investment
company or a wholly-owned business development company.
The accompanying financial statements are unaudited, but in the opinion
of the management of the Registrant, contain all adjustments, consisting of
only normal recurring accruals, necessary to present fairly the financial
position at September 30, 1997, the results of operations for the three
months and nine months ended September 30, 1997, and the changes in cash
flows for the nine months ended September 30, 1997. Certain information and
footnote disclosures normally included in financial statements that have been
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, although management of the Registrant
believes that the disclosures contained in these financial statements are
adequate to make the information presented therein is not misleading. For
further information, refer to the financial statements and footnotes thereto
included in the Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission.
The results of operations for the three months and nine months ended
September 30, 1997, are not necessarily indicative of the results of
operations to be expected for the full year ending December 31, 1997.
NOTE 2 - INVESTMENTS:
Investments increased $393,664 during the nine months ended September
30, 1997 due to the investment in Dryden Energy, Inc. of $182,241, and due to
additional advances to Gulf Coast Hotels, Inc. and Acclaim Studios in the
amounts of $60,000 and $151,423, respectively
7
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NOTE 3 - NOTES RECEIVABLE:
Notes receivable from common stock are notes payable by Colonial Funds,
Limited to the Registrant for shares issued pursuant to Regulation E and
pertaining to transactions not yet completed by Colonial Funds, Limited.
NOTE 4 - RELATED PARTY DEBT:
Related party debt owing to Contemporary Resources, Inc. decreased by
$133,798 during the nine months ended September 30, 1997.
Accrued management fees payable to the Registrant's president increased
by $98,050 during the nine months ended September 30, 1997.
NOTE 5 - SUBSEQUENT EVENTS:
On November 3, 1997, the Registrant received a subpoena for documents
and notification of a private investigation by the Securities and Exchange
Commission (the "Commission"). The Registrant is fully cooperating with this
investigation and is responding to the Commission's request for documentary
evidence.
During December 1997, the Registrant plans to file Form 1-E with the
Securities and Exchange Commission in connection with the issuance of common
stock to complete certain acquisitions and for working capital. Stock to be
issued will be 10,000,000 shares but will not exceed $5,000,000.
In June 1997, the Registrant formed a wholly-owned subsidiary, First
Colonial Productions, Inc., which commenced audio/video production and
post-production operations in the West Los Angeles area under the name
"Acclaim West". To Date, this business has required minimal capital
investment, however, completion of the facility will involve issuance of
approximately 1,500,000 to 2,000,000 shares of the Registrant's stock to be
issued pursuant to Regulation E.
During November 1997, the Registrant relocated the operating facility of
First Colonial Studios, Inc. ("Acclaim Studios") from Studio City,
California, to West Los Angeles, California, to consolidate the two
facilities. This move eliminated duplicate overhead costs and will increase
post-production revenues.
During 1997, the Registrant entered into an agreement with a lending
institution for the acquisition of a non-public Florida corporation which
operates in the television production industry. Completion of this
acquisition will require the issuance of approximately 2,250,000 shares of
the Registrant's stock to be issued pursuant to Regulation E and 750,000
shares to be issued pursuant to Rule 144.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION - SEPTEMBER 30, 1997
The Registrant's acquired 100% of the outstanding shares of Dryden
Energy, Inc. ("Dryden"), a non-public Texas corporation in an exchange of
common stock. Dryden owns lease rights for various properties located in
Coleman County, Texas. The properties include six natural gas wells which
were previously capped and which Dryden has subsequently opened and is
operating through a management company. The Registrant is committed to
providing an additional 818,000 shares of its common stock in connection with
the acquisition.
8
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The Registrant advanced additional funds in connection with an escrow
involving the real estate investment, Gulf Coast Hotels, Inc., and in
connection with operations of Acclaim Studios and Acclaim West, the
Registrant's investment in the production/post-production industry.
The Registrant reached an agreement in principal to sell the hotel
amenity line of business conducted by Contemporary Resources, Inc. At one
time that line of business represented the major business conducted by the
Registrant, however, revenues from hotel amenities steadily declined over the
past several years leading to the Registrant's decision to sell. The
agreement, which has not yet been executed, calls for future payments to be
made to Contemporary Resources, Inc. based on future sales of the Buyer. In
addition, the Buyer is obligated to purchase, at cost, all of its inventory
from Contemporary Resources, Inc. until the Contemporary inventories are
exhausted.
RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
Operations conducted by investees of the Registrant included the
following:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
----------------- ------------------
INCOME INCOME
SALES (LOSS) SALES (LOSS)
--------- --------- ---------- -----------
Acclaim West & Studios $ 678,402 $(285,167) $1,444,362 $ (299,242)
Contemporary Resources 86,762 (117,668) 593,959 (189,127)
The Acclaim loss for the nine months ended September 30, 1997 included
depreciation expense of approximately $250,000. Since Acclaim is a
relatively new investment of the Registrant, there are no sales or
income(loss) for the comparable prior year periods.
Contemporary Resources had sales of $749,632 and net income of $52,522
for the nine months ended September 30, 1996.
The Registrant's administrative expenses and net losses for the three
and nine months ended September 30, 1997 exceeded the same period in the
prior year due to legal fees in connection with providing information in a
matter which did not directly involving the Registrant, and for successfully
defending against an legal action brought against the Registrant.
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.
FIRST COLONIAL VENTURES, LTD.
(Registrant)
November 25, 1997 By: Murray W. Goldenberg
--------------------------
Murray W. Goldenberg
President
(Chief Executive, Financial
and Accounting Officer)
9
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