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 June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from . . . . . . . . . to . . . . . . . . . .
Commission File Number: 0-23258
HOLLYWOOD TRENZ, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 59-2839130
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3471 North Federal Highway
Ft. Lauderdale, FL 33306
(Address and of principal executive offices)
(954) 568-0433
(Issuer's telephone number)
NA
(Former name, former address if changed since last report)
Check whether the issuer (1) has filed all reports required by Section 13 or
15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to the filing requirements for at least the past 90 days.
YES X NO
-------- ---------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by the Court.
YES NO
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the last practicable date:
Number of Shares Outstanding
Class June 30, 1996
----- ----------------------------
Common Stock, $.0001 par value 51,205,544
<PAGE>
Hollywood Trenz, Inc.
---------------------
Index
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Part I FINANCIAL INFORMATION
- ------ ---------------------
Balance Sheet
June 30, 1996 3
Statements of Operations
Six Months and Three Months Ended
June 30, 1995 and 1996 and
Inception to June 30, 1996 4
Statements of Cash Flows
Six Months Ended
June 30, 1995 and 1996 and
Inception to June 30, 1996 5
Notes to Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II
- -------
Other Information 9
Signatures 10
2
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 1996
(Unaudited)
ASSETS
Current Assets:
Cash -
Property, Plant and Equipment (at cost) 26,371
Less: Accumulated Depreciation 10,148
---------
16,223
Other Assets:
Deposits 99,171
Receivable from Related Party 22,795
Investments 861,339
---------
999,528
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts and Taxes Payable 1,401,864
Accrued Expenses 138,157
Due to Stockholders 876,608
----------
Total Current Liabilities 2,416,629
Commitments and Contingencies
Stockholders' Equity
Common Stock, $.0001 par value,
80,000,000 shares authorized,
51,205,544 shares issued and outstanding 5,121
Paid In Capital 22,709,269
Deficit accumulated during the
Development Stage (24,131,491)
----------
(1,417,101)
---------
999,528
=========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Hollywood Trenz, Inc.
(A Development Stage Company)
Statements of Operations
For the Six Months and Three Months Ended June 30, 1995 and 1996, and
Inception (April 23, 1992) to June 30, 1996
Six Months Ended Three Months Ended Inception to
June 30 June 30 June 30 June 30 June 30
1995 1996 1995 1996 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue 133,235 -- 127,271 -- 348,579
Costs and Expenses
Cost of Sales -- -- -- 104,243
General and Administrative 4,233,997 3,964,235 3,279,751 3,747,631 20,909,415
---------- --------- --------- --------- ------------
4,233,997 3,964,235 3,279,751 3,747,631 21,013,658
Net Income (Loss) from Operations (4,100,762) (3,964,235) (3,152,480) (3,747,631) (20,665,079)
Other Income and (Expense)
Loss on Abandonment of Fixed Assets -- -- -- -- (107,217)
Gain on Disposition of Subsidiary -- -- -- -- 172,591
Realized Loss on Marketable Securities (50,641) -- (50,641) -- (3,239,865)
Interest Expense -- -- -- -- (291,921)
---------- ------------ ---------- ---------- ----------
(50,641) -- (50,641) -- (3,466,412)
Net Loss (4,151,403) (3,964,235) (3,203,121) (3,747,631) (24,131,491)
========= ========= ========= ========= ==========
Per Share Information:
Weighted Average Number of
Common Shares Outstanding 2,676,469 27,311,813 3,283,135 33,502,488 14,251,315
========= ========== ========= ========== ===========
Net Loss Per Share (1.55) (.15) (.98) (.11) (1.69)
========= ========== ========= ========== ===========
The accompanying notes are an integral part of the financial statements.
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Hollywood Trenz, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Six Months Ended June 30, 1995 and 1996,
and Inception (April 23, 1992) to June 30, 1996
(Unaudited)
Inception to
June 30,
1995 1996 1996
---------- ----------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities (1,244,604) (991,886) (3,280,520)
Cash Flows from Investing Activities:
Purchase of Fixed Assets - - (163,469)
Deposit Received from the Sale of Investments - - 341,450
Acquisition of Investments - - (1,697,111)
---------- ----------- ----------
- - (1,519,130)
Cash Flows from Financing Activities:
Sale of Common Stock for Cash 1,247,277 310,000 3,738,601
Net Cash from Mortgages - - 84,441
Officer's Capital Contribution - - 100,000
Shareholder Loans - 681,886 876,608
----------- ----------- ----------
Net Cash provided by Financing Activities 1,247,277 991,886 4,799,650
Net Increase (Decrease) in Cash 2,673 - -
Cash, Beginning of Period 535 - -
----------- ----------- ----------
Cash, End of Period 3,208 - -
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
5
</TABLE>
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes to Financial Statements
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full year. The accompanying financial statements
should be read in conjunction with the Company's Form 10-KSB filed for the year
ended December 31, 1995.
Income (loss) per share was computed using the weighted average number of common
shares outstanding. Common stock equivalents are not included as their effect
would be anti-dilutive.
Note A. INVESTMENTS
During July, 1995 the Company entered into a long-term lease for space to
construct a family entertainment center in Phoenix, Arizona. On July 11, 1995
the Company received a construction permit and commenced construction.
The Company capitalized $861,339 in costs related to this project through June,
1996. Should the Company not complete the project it will charge the capitalized
costs to operations during the period in which it determines that the project
will not be completed.
Note B. MARKETABLE SECURITIES
The Company accounts for its investments in marketable securities under the
provisions of FAS 115. The provisions of this pronouncement apply to all
marketable securities where the fair value of the securities are readily
determinable and do not apply to restricted common stock except if the holder of
the stock has the power by contract or otherwise to cause the restriction to
terminate within one year. The common shares which were held by the Company were
restricted pursuant to Rule 144 however, the Company had obtained from each of
the companies whose common stock it held rights to register these securities at
its expense. The securities held by the Company were classified as available for
sale. Under this pronouncement changes in the fair value of the securities are
adjusted to a valuation reserve included in stockholders' equity unless the
decline is other than temporary in which case the decline in value is reflected
in the Company's statement of operations as realized losses on marketable
securities.
Upon the expiration of the registration rights related to marketable securities
held by the Company the Company records its investments in equity securities
pursuant to FAS 12 which values marketable securities at the lower of cost or
market.
6
<PAGE>
Hollywood Trenz, Inc.
(A Development State Company)
Notes to financial Statements
(Continued)
During February, 1995 the Company issued 600,000 restricted shares of its common
stock with registration rights in exchange for 300,000 shares of restricted
common stock of BDR, Industries, Inc. with registration rights. These shares
were valued at the approximate bid price of the Company's common stock on the
issue date of $4.00. During February, 1996 the Company entered into an agreement
to return the 300,000 shares of BDR in exchange for the return of the 600,000
shares of its common stock. The carrying value of the BDR common stock of
$1,050,000 was charged to paid in capital upon the return and retirement of the
Company's common stock.
Note C. CONTINGENCIES
The Securities and Exchange Commission (SEC) is conducting a formal
investigation into the Company's financial records. In this regard the SEC has
issued a subpoena for certain of the Company's records. The Company has
cooperated and will continue to cooperate fully with the SEC.
Note D. SHAREHOLDER'S EQUITY
During the period from January to March, 1996 the Company issued 1,450,000
shares of its common stock for cash aggregating $230,000 pursuant to a private
placement. During the period from April to June, 1996 the Company issued 400,000
shares of its common stock for cash aggregating $80,000 pursuant to a private
placement.
During April, 1996 the Company filed a Form S-8 registration statement
registering 3,800,000 common shares. These shares were issued to certain of the
Company's consultants (including an affiliate) pursuant to consulting
agreements. The value of these shares of $1,064,000.00 was charged to operations
during April, 1996. In addition, the Company issued 40,000 shares of restricted
common stock for services. These shares were valued at $4,600.00
During May, 1996 the Company filed a Form S-8 registration statement registering
4,700,000 common shares. These shares were issued to certain of the Company's
consultants (including an affiliate) pursuant to consulting agreements. The
value of these shares of $705,000.00 was charged to operations during May, 1996.
In addition, the Company issued 22,200,000 shares of restricted common stock for
services.
These shares were valued at $1,665,000.
During June, 1996 the Company issued 100,000 shares of restricted common stock
for services. These shares were valued at $6,250.
Note E. STOCKHOLDER ADVANCES
During the period ended March 31, 1996 affiliates of the Company made working
capital advance to the Company aggregating $230,652. During the period from
April to June, 1996 affiliates of the Company made working capital advances to
the Company aggregating $451,234.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Planned principal operations of the Company have not commenced. The Company's
activities, since inception, have consisted of conceptualizing a projected plan
for the Company's business and obtaining financing for its activities. In June
1975, the Financial Accounting Standards Board, in its Statement No. 7, set
forth guidelines for identifying an enterprise in the development stage and the
standards of financial accounting and reporting applicable to such an
enterprise. In the opinion of the Company, its activities since its inception in
August 1987, fall within the referenced guidelines. Accordingly, the Company has
reported its activities in accordance with the aforesaid Statement of Financial
Accounting Standards No. 7.
Financing of the Company's activities during the period ended June 30, 1996 have
consisted principally of the sale of common shares for cash aggregating
$310,000.00 and advances from affiliates of $681,886.00.
The Company is currently attempting to arrange financing for the development of
its entertainment centers. There are currently no other material commitments for
capital expenditures or long-term credit arrangements. The Company's ability to
continue its operations, as well as its future liquidity condition and capital
resource position are dependent on the Company's ability to develop its
operations and arrange for additional debt and equity financing.
Results of Operations
The Company had no significant revenue producing operations for the period ended
June 30, 1996. General and administrative expenses decreased during 1996 as
compared to 1995 principally as a result of common shares issued for services
during the 1995 period.
8
<PAGE>
Other Information
ITEM 1. LEGAL PROCEEDING.
-----------------
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
----------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
--------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION.
------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Not applicable.
(b) Not applicable.
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.
HOLLYWOOD TRENZ, INC.
(Registrant)
Date: August 12, 1996 By:/s/ Edward R. Showalter
-----------------------
Edward R. Showalter
Chairman, President, C.E.O.
Principal Financial and Chief
Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,371
<DEPRECIATION> 10,148
<TOTAL-ASSETS> 999,528
<CURRENT-LIABILITIES> 2,416,629
<BONDS> 0
0
22,714,390
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 999,528
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,964,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,964,235)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,964,235)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
