<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-24690
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CLARION HOUSE, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 91-1407411
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1901 North Roselle Road, Suite 1030, Schaumburg, Illinois 60195
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(Address of principal executive offices)
(847) 490-5977
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(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
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 X
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State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of July 1, 1998, the
Company had 8,888,418 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one);
Yes No X
--- ---
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial Statements:
Consolidated Balance Sheet....................................... 1
Consolidated Statement of Operations and Accumulated
Deficit................................................. 2
Consolidated Statement of Cash Flows............................. 3
Notes to Consolidated Financial Statements.................. 4 - 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.......... 7
PART II - OTHER INFORMATION................................................... 8
(i)
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CLARION HOUSE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
ASSETS
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CURRENT ASSETS -
Cash and cash equivalents $ 19
EQUIPMENT, net of accumulated depreciation 628
OTHER ASSETS -
Organization costs, net of accumulated
amortization 362
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$ 1,009
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
Accounts payable $ 53,117
Notes payable 72,715
Accrued expenses 6,472
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Total current liabilities 132,304
STOCKHOLDERS' DEFICIT:
Common stock - $.01 par value
Authorized - 10,000,000 shares
Issued and outstanding - 2,807,000 28,070
Paid-in capital 621,804
Accumulated deficit (781,1699)
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(131,295)
$ 1,009
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CLARION HOUSE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
MARCH 31, 1997
(UNAUDITED)
SALES $ -
COST OF GOODS SOLD -
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GROSS PROFIT -
ADMINISTRATIVE EXPENSES 123,895
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NET LOSS $ (123,895)
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CLARION HOUSE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
MARCH 31, 1997
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $ (123,895)
Adjustments -
Depreciation and amortization 330
Changes in assets and liabilities -
Increase (decrease) in accounts payable and
accrued expenses (4,861)
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Net cash to operating activities (128,426)
CASH FLOW FROM FINANCING ACTIVITIES -
Issuance of common stock 128,426
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NET DECREASE IN CASH AND
CASH EQUIVALENTS -
CASH AND CASH EQUIVALENTS:
Balance - January 1 19
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Balance - March 31 $ 19
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CLARION HOUSE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies of Clarion House,
Inc. and Subsidiary is presented to assist in understanding the
Company's financial statements. The financial statements and
notes are representations of the Company's management which is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the
financial statements.
PRINCIPLES OF CONSOLIDATION
---------------------------
The accompanying consolidated financial statements include the
results of operations of Clarion House, Inc. and Insecta Sales,
Inc. its wholly owned subsidiary, for the period ended March 31,
1997. All significant intercompany activities between Clarion
House, Inc. and its wholly- owned subsidiary have been eliminated
in consolidation.
BUSINESS ACTIVITY
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Clarion House, Inc. is a holding company.
Insecta Sales, Inc. (the Subsidiary) is principally engaged in
the manufacture and distribution of insecticidal products within
the United States.
CASH AND CASH EQUIVALENTS
-------------------------
For purposes of the statement of cash flows, cash equivalents
include all highly liquid debt instruments with original
maturities of three months or less.
INVENTORIES
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Inventories are valued on the first-in, first-out method based on
the lower of cost or market.
PROPERTY AND EQUIPMENT
----------------------
Improvements and equipment are carried at cost. Major
replacements and refurbishings are charged to the property
accounts while replacements, maintenance and repairs which do not
improve or extend the life of the respective assets are expensed
currently.
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CLARION HOUSE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1997
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
DEPRECIATION
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Depreciation is calculated by use of the straight-line and
accelerated cost recovery methods over useful lives of 5 to 10
years.
INCOME TAXES
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Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
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
of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
NOTE 2 - NOTES PAYABLE:
Notes payable consists of accounts payable that were converted to
notes payable. The notes are due on demand and bear interest at
10%.
NOTE 3 - FEDERAL INCOME TAX:
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109,
ACCOUNTING FOR INCOME TAXES, which requires an asset
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CLARION HOUSE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1997
(UNAUDITED)
NOTE 3 - FEDERAL INCOME TAX - CONTINUED:
and liability approach to financial accounting and reporting for
income taxes. The difference between financial statement and tax
basis of assets and liabilities is determined annually. Deferred
income tax assets and liabilities are computed for those
differences that have future tax consequences using the currently
enacted tax laws and rates that apply to the periods in which
they are expected to effect taxable income. Valuation allowances
are established, if necessary, to reduce the deferred tax asset
to the amount that will more likely than not be realized. Income
tax expense is the current tax payable or refundable for the
period plus or minus the net change in the income reported for
financial statement purposes which differs from income reported
for tax purposes principally because of the methods of
recognizing depreciation expense. Deferred income taxes have been
provided for timing differences.
The Company's total deferred tax asset and deferred tax asset
valuation allowances resulting from net operating loss
carryforwards are as follows:
Total deferred tax assets $ 334,800
Less valuation allowance 334,800
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Total deferred tax assets (current) $ -
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Future profits are not reasonably expected to be generated.
Therefore, a valuation allowance has been recorded. For tax
return purposes, the Company has approximately $984,800 of net
operating loss carryforwards as of March 31, 1997. The net
operating loss carryforwards expire as follows:
2006 $ 24,300
2007 14,100
2008 43,400
2009 310,100
2010 464,100
2011 4,900
2012 123,900
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$ 984,800
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This "Management's Discussion and Analysis or Plan of Operation"
should be read in conjunction with the Company's unaudited financial statements,
the notes thereto and the other financial data included elsewhere herein and
includes forward-looking statements which involve risks and uncertainties which
are based upon the Company's beliefs, as well as assumptions made by and
information currently available to the Company. The Company's actual results may
differ materially from the results predicted by such forward-looking statements
due to various factors, including, but not limited to, those risks and
uncertainties which are discussed below.
During the three month period ended March 31, 1997, the Company
had no revenue producing operations. The Company has incurred accounting
expenses associated with the preparation of financial statements, legal expenses
in connection with proposed reorganizations with operating companies, transfer
agent fees and other general and administrative costs of maintaining the shell
corporation for eventual sale. The expenses incurred during the three months
ended March 31, 1997 for such activities was approximately $123,895. As of March
31, 1997, the Company had cash assets of $19 and current liabilities of
$132,304.
On March 1, 1997, the Company issued 1,244,255 shares of common
stock, $.01 par value ("Common Stock"), to various consultants as consideration
for services rendered to the Company. The total amount payable to the
consultants was $124,425.50. Also on March 1, 1997, the Company issued 957,860
shares of Common Stock in exchange for the cancellation of several notes payable
by the Company. The total amount of the notes payable exchanged for shares was
$95,786.
On March 24, 1997, the Company issued 60,000 shares of Common
Stock in a private placement for accredited investors only. The price per share
was $0.25. On March 31, 1997, the Company issued an additional 40,000 shares of
Common Stock in the private placement.
During the next twelve months, general and administrative
expenses are expected to substantially increase due to legal and accounting fees
related to maintaining the Company's reporting status with the Securities and
Exchange Commission and other expenses related to the Company's efforts.
The Company's efforts during the next twelve months will be
dedicated principally to transforming the Company into an operating company. On
December 31, 1997, the Company completed the acquisition of Triangle Plastics,
Inc., an Ohio corporation ("Triangle"). Triangle is a manufacturer of various
injection molded plastic products.
-7-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Inapplicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Inapplicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Inapplicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
ITEM 5. OTHER INFORMATION
Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits and Index of Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Inapplicable.
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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.
CLARION HOUSE, INC.
Dated: August 18, 1998 By: /S/ Troy D. Wiseman
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Troy D. Wiseman,
Chief Executive Officer
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0
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