<PAGE>
- -------------------------------------------------------------------------------
U.S. SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1997 Commission File Number:1-9925
HARRIER, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 87-0427731
- -------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2200 Pacific Coast Highway, Suite 301, Hermosa Beach, California 90254
- ---------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Not Applicable
--------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year (If Changed Since Last
Report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
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 December 15, 1997 the Registrant had 15,317,923 shares of its common
stock, par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format: Yes X No .
--- ---
- -------------------------------------------------------------------------------
Page 1 of 11 consecutively numbered pages.
<PAGE>
PART 1
FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
- -------------------------------------------------------------------------------
Harrier, Inc. (the "Registrant") files herewith the unaudited
condensed consolidated balance sheets of the Registrant and its subsidiaries
as of September 30, 1997, and the related unaudited condensed consolidated
statements of operations for the three months ended September 30, 1997 and
1996, and statements of cash flows for the three months ended September 30,
1997 and 1996, together with the unaudited condensed notes thereto. In the
opinion of management of the Registrant, the financial statements reflect all
adjustments, all of which are normal recurring adjustments, necessary to
present fairly the financial condition of the Registrant for the interim
periods presented. The financial statements included in this report on Form
10-QSB should be read in conjunction with the audited financial statements of
the Registrant and the notes thereto included in the annual report of the
Registrant on Form 10-KSB for the year ended June 30, 1997 on file with the
Securities and Exchange Commission on December 10, 1997 is hereby
incorporated by reference.
2
<PAGE>
HARRIER, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
SEPTEMBER 30,
1997
-------------
CURRENT ASSETS:
Cash and cash equivalents $ 17,437
Amount receivable from related party 115,478
Grant contribution receivable 0
Other current assets 15,083
------------
Total Current Assets 147,998
------------
PROPERTY AND EQUIPMENT, net 28,506
------------
Intangible assets 30,856
Total Assets $ 207,360
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 579,268
Convertible note payable to related party 579,833
Deferred grant revenue 0
Dividend payable to Glycosyn preferred stockholders 4,450
Total Current Liabilities 1,163,551
------------
Minority Interests 89,000
STOCKHOLDERS' EQUITY:
Common Stock 14,099
Additional paid-in capital 15,343,110
Accumulated deficit (16,364,689)
Cumulative translation adjustment (37,711)
------------
Total Stockholders' Equity (1,045,191)
------------
Total liabilities and
stockholders' equity $ 207,360
------------
------------
3
<PAGE>
HARRIER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1997 1996
---------------------------
SALES $ 0 $ 7,338
COST OF SALES 0 6,837
-------- --------
GROSS PROFIT 0 501
-------- --------
EXPENSES:
General and administrative 43,668 38,496
Amortization and depreciation 3,060 2,474
Salaries and related expenses 60,128 108,164
Research and development 0 5,000
-------- --------
Total Expenses 106,856 154,134
-------- --------
LOSS FROM OPERATIONS (106,856) (153,633)
-------- --------
OTHER INCOME (EXPENSE):
Grant income 20,000 0
Interest income/(expense) (15,244) (12,694)
-------- --------
Total other income (expense) 4,756 (12,694)
-------- --------
-------- --------
Income (loss) from continuing operations before
provision for income taxes (102,100) (166,327)
Provision for income taxes (800) (300)
-------- --------
Net income (loss) (102,900) (166,627)
-------- --------
Net income (loss) per common share $ (0.01) $ (0.01)
-------- --------
-------- --------
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
4
<PAGE>
HARRIER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1996
--------------------------
Cash Flows from (used for) Operating Activities:
Net Loss $(102,900) $(166,627)
--------- ---------
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 3,060 2,474
Accrued interest 15,333 0
Changes in assets and liabilities:
Related party receivable 45,000 (4,844)
Accounts receivable 0 23,879
Receivable from joint venture 0 34,679
Assets held for sale 0 17,500
Inventory 0 37,734
Other current assets 9,262 7,810
Accounts payable and accrued expenses (30,056) 104,314
--------- ---------
Total Adjustments 42,599 223,546
--------- ---------
Cash Used by Operating Activities $ (60,301) $ 56,919
--------- ---------
Cash Flows from Investing Activities:
Payment for property and equipment 0 (6,016)
Increase in patent costs 0 (1,289)
--------- ---------
Cash used by Investing Activities $ 0 $ (7,305)
--------- ---------
Cash Flows from Financing Activities:
Issuance of stock 19,501 150,595
Net Cash Flows Provided by
Financing Activities $ 19,501 $ 150,595
--------- ---------
Effect of Exchange Rate Changes on Cash $ 0 $ (28)
--------- ---------
Net Increase in Cash and Cash Equivalents (40,800) 200,181
Cash and Cash Equivalents at Beginning of Period 58,237 494,068
--------- ---------
Cash and Cash Equivalents at End of Period $ 17,437 $ 694,249
--------- ---------
--------- ---------
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements
5
<PAGE>
HARRIER, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Registrant
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1997, and
for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these unaudited condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Registrant's June 30, 1997 audited
financial statements. The results of operations for the three months ended
September 30, 1997 are not necessarily indicative of the operating results for
the full year.
NOTE 2 - CONVERTIBLE NOTE PAYABLE TO RELATED PARTY
On June 9, 1996, the Company entered into a $500,000 loan agreement with an
entity affiliated with the President and the Chairman of the Board. The loan
bears interest of 12% and is due on June 4, 1998. At the Company's option, the
loan's principal and interest can be repaid using the Company's stock (or its
subsidiary's stock, if publicly traded), valued at 75% of the average price 90
days preceding the repayment date. In consideration for entering into the
agreement, Glycosyn Pharmaceuticals, Inc. issued 52,100 shares valued to
represent 1% in loan fees.
NOTE 3- LETTER OF INTENT
On March 2, 1997, the Company entered into a non-binding letter of intent to
acquire a Swiss-based corporation engaged in the business of computer data
storage ("Acquisition Candidate"). Under the terms of the letter of intent, the
Company would acquire all of the capital stock the the Acquisition Candidate and
the present shareholders of the Acquisition Candidate will acquire approximately
88.5% of the issued and outstanding common stock of the Company. The Company's
acquisition of the Acquisition Candidate is subject to further due diligence on
the part of both parties, a definitive agreement between the parties and the
approval of the transaction by the Company's directors and shareholders. There
can be no assurance that the Company will consummate the proposed transaction or
that the terms of any transaction will not materially vary from the foregoing
terms.
NOTE 4 - ISSUANCE OF COMMON STOCK
During the quarter ended September 30, 1997 the Company issued approximately
130,000 shares of Harrier, Inc. common stock as payment in lieu of cash in the
settlement of a lawsuit.
6
<PAGE>
NOTE 5 - SUBSEQUENT EVENTS
Subsequest to September 30, 1997 the Company issued 1,200,000 shares of Harrier,
Inc. common stock at $0.10 per shares and 900,000 common stock warrants. The
shares were sold pursuant to Regulation S under the Securities Act of 1933 to
seven European investors. There was no underwriter involved in the transaction.
The proceeds from the sale of the shares will be used for working capital and
administrative and professional fees associated with a prospective merger.
7
<PAGE>
- -------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
GENERAL:
Harrier, Inc., a Delaware corporation ("Harrier" or "the Company"), has
historically been engaged in the discovery, development and sale of selected
products and technologies in the health, fitness and medical markets. Since
1996, the Company's strategic force has been to find a merger candidate. The
Company has considered a merger to be a priority due to the absence of
significant sales of the Company's Bioptron lamps and the Company's
continuing inability to obtain the additional capital necessary to fund its
pharmaceutical research and development operations.
Unless the context otherwise requires, the term "Company" refers to Harrier,
Inc., a Delaware corporation, and its majority subsidiary, Glycosyn
Pharmaceuticals, Inc., a Delaware corporation, and it equity interest in
DermaRay International, LLC, a California limited liability company.
On October 30, 1997, the Company entered into a Securities Purchase Agreement
and Plan of Reorganization ("Reorganization Agreement") with COPE AG
("COPE"), a Swiss stock corporation engaged in the business of providing high
volume information management consulting, services and solutions to Swiss,
German and Austrian industries. Pursuant to the Reorganization Agreement,
the shareholders of COPE will become the controlling stockholders of the
Company and COPE will become a wholly-owned subsidiary of the Company
(referred to herein as the "COPE Reorganization"). In connection with the
COPE Reorganization, the Company has terminated its Bioptron Lamp operations
and intends to conduct the following series of transactions (refereed to
herein as the "Glycosyn Recapitalization"):
- Concurrent with the close of the COPE Reorganization, Harrier will transfer
all of its assets and liabilities to Glycosyn. In connection therewith,
the principal creditors of Harrier, except NCIF which is presently owed
$590,000 by Harrier, will agree to release Harrier of any further liability
for their claims.
- Concurrent with the close of the COPE Reorganization, Harrier will sell to
NCIF 2,850,000 shares of its 5,000,000 Glycosyn Common Stock in
consideration of NCIF's agreement to cancel the $590,000 of indebtedness
owed by Harrier.
This report contains forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this registration statement, the
words "believe," "expect," "anticipate," "estimate" and similar expressions
are intended to identify forward-looking statements. Such statements are
subject to certain risks, uncertainties and assumptions, including, without
limitation, the Company's continuing losses and working capital deficit. The
Company's lack of adequate working capital, the miscellaneous risks
associated with the proposed COPE reorganization, including the risk that the
transaction will not be consummated; and general economic conditions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially form those
anticipated, estimated, or projected. The Company cautions potential
investors not to place undue -reliance on any such forward-looking statements
all of which speak only as to the date made.
8
<PAGE>
RESULTS OF OPERATIONS
All corporate overhead is focused on restructuring the Company and
facilitating a merger transaction. The operating expenses incurred during the
quarter ended September 30, 1997 totaled $106,856 and relate primarily to the
proposed COPE Reorganization. (See ITEM 2).
LIQUIDITY AND CAPITAL RESOURCES
For the purpose of preserving the Company as a going concern, the Company has
entered into the COPE Reorganization Agreement. In connection with the
proposed COPE Reorganization, Harrier will transfer all of its assets and
liabilities to Glycosyn. In connection therewith, the principal creditors of
Harrier, except New Capital Investment Fund ("NCIF") which is presently owed
$590,000 by Harrier, will agree to release Harrier of any further liability
for their claims. At the same time, Harrier will sell to NCIF 2,850,000
shares of its Glycosyn Common Stock in consideration of NCIF's agreement to
cancel the $590,000 of indebtedness owed by Harrier.
Subsequent to June 30, 1997, the Company raised an additional $120,000 from the
private placement sale of its securities. All proceeds raised from the private
placement were used for working capital.
In the event the Company fails to consummate the COPE Reorganization and the
Glycosyn recapitalization, the Company will require substantial additional
capital in order to continue its present level of operations, of which there
can be no assurance. The report of the Company's independent accountants for
the Company's 1997 fiscal year includes an explanatory paragraph with respect
to substantial doubt existing about the Company's ability to continue as a
going concern in the absence of additional capital.
9
<PAGE>
PART II
OTHER INFORMATION
- -------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
- -------------------------------------------------------------------------------
NONE
- -------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------------
(A) NONE
(B) REPORTS ON FORM 8-K:
10
<PAGE>
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.
HARRIER, INC.
Dated: December 15, 1997 By /s/ KEVIN DEVITO
---------------------------------
Kevin DeVito - President
/s/ CANDACE M. BEAVER
---------------------------------
Candace M. Beaver
Chief Financial Officer/Secretary
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,437
<SECURITIES> 0
<RECEIVABLES> 115,478
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 147,998
<PP&E> 28,506
<DEPRECIATION> 0
<TOTAL-ASSETS> 207,360
<CURRENT-LIABILITIES> 1,163,551
<BONDS> 0
0
0
<COMMON> 14,099
<OTHER-SE> (1,059,290)
<TOTAL-LIABILITY-AND-EQUITY> 207,360
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 106,856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,333
<INCOME-PRETAX> 102,100
<INCOME-TAX> 800
<INCOME-CONTINUING> 102,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,900
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
