<PAGE> 1
U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ......September 30, 1996........................
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ..................... to .....................
Commission file number .................0-19499 ....................
......................CHAMPION FINANCIAL CORPORATION.................
(Exact name of small business issuer as
specified in its charter)
UTAH 88-0169547
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
19 HILLSYDE COURT
COCKEYSVILLE, MARYLAND 21030
(Address of principal executive offices)
...........(410) 628-0040 ..........
(ISSUER'S TELEPHONE NUMBER)
........................................................................
(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
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: .......Common stock, $0.001 par
value, 619,302 outstanding as of September 30, 1996 ....
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<PAGE> 2
CHAMPION FINANCIAL CORPORATION
INDEX
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1996 and March 31, 1996
Statement of Stockholders' Equity (Deficiency) for the Six Months Ended
September 30, 1996
Statements of Operations for the Three and Six Months Ended September 30,
1996 and September 30, 1995
Statements of Cash Flows for the Six Months Ended September 30, 1996 and
September 30, 1995
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: Other Information
Signatures
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<PAGE> 3
PART I: FINANCIAL INFORMATION
<PAGE> 4
CHAMPION FINANCIAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 MARCH 31,
(UNAUDITED) 1996
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -0- $ 469
Prepaid expenses -0- 348
----------- -----------
Total Current Assets -0- 817
----------- -----------
PROPERTY AND EQUIPMENT
Office furniture and equipment 80,629 80,629
Less: Accumulated depreciation (13,692) (9,128)
----------- -----------
Net Property and Equipment 66,937 71,501
----------- -----------
OTHER ASSETS
Loan receivable and investment 4,400 4,400
----------- -----------
TOTAL ASSETS $ 71,337 $ 76,718
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 38,750 $ 36,649
Due to related parties (Note 2) 47,780 6,202
Current portion of note payable - related party 7,379 4,809
----------- -----------
Total Current Liabilities 93,909 47,660
LONG-TERM DEBT
Long-term portion of note payable - related party 16,961 19,531
----------- -----------
TOTAL LIABILITIES 110,870 67,191
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $.001 par value:
100,000,000 shares authorized;
619,302 shares issued and outstanding 619 619
Additional paid-in capital 2,586,650 2,586,650
Accumulated deficit (2,626,802) (2,577,742)
----------- -----------
Total Stockholders' Equity (Deficiency) (39,533) 9,527
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 71,337 $ 76,718
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
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<PAGE> 5
CHAMPION FINANCIAL CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
SIX MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
TOTAL
STOCK-
ADDITIONAL HOLDERS'
COMMON PAID-IN ACCUMULATED EQUITY
STOCK CAPITAL DEFICIT (DEFICIENCY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE - March 31, 1996 $ 619 $ 2,586,650 $(2,577,742) $ 9,527
Net loss for the six months ended
September 30, 1996 (unaudited) (49,060) (49,060)
----------- ----------- ----------- -----------
BALANCE - September 30, 1996 (unaudited) $ 619 $ 2,586,650 $(2,626,802) $ (39,533)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
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<PAGE> 6
CHAMPION FINANCIAL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES $ -0- $ -0- $ -0- $ -0-
--------- --------- --------- ---------
OPERATING EXPENSES
Consulting and professional 23,459 32,109 40,951 75,682
Depreciation 2,282 2,282 4,564 4,564
Occupancy and office expense 1,670 26,285 2,328 43,695
Travel and entertainment -0- 21,705 -0- 29,901
--------- --------- --------- ---------
Total Operating Expenses 27,411 82,381 47,843 153,842
--------- --------- --------- ---------
LOSS FROM OPERATIONS (27,411) (82,381) (47,843) (153,842)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Investment income (loss) -0- (8,816) -0- (5,100)
Interest and other investment expense (504) (10,093) (1,217) (16,273)
Unrealized gain (loss) on marketable
securities -0- 17,242 -0- (17,826)
--------- --------- --------- ---------
Net Other Expense (504) (1,667) (1,217) (39,199)
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES (27,915) (84,048) (49,060) (193,041)
PROVISION FOR INCOME TAXES -0- -0- -0- -0-
--------- --------- --------- ---------
NET LOSS $ (27,915) $ (84,048) $ (49,060) $(193,041)
========= ========= ========= =========
NET LOSS PER SHARE $ (.045) $ (.136) $ (.0792) $ (.312)
========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited financial statements.
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<PAGE> 7
CHAMPION FINANCIAL CORPORATION
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
1996 1995
----------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (49,060) $ (193,041)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 4,564 4,564
Changes in operating assets and liabilities:
Increase in accounts payable and accrued expenses 2,101 17,687
Decrease in marketable securities -0- (44,372)
Decrease in prepaid expenses 348 -0-
Other -0- 1,736
----------- -----------
Net Cash Used in Operating Activities (42,047) (213,426)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -0- (53,315)
Pre-acquisition costs -0- (49,149)
Loan receivable and investment -0- (4,400)
----------- -----------
Net Cash Used in Investing Activities -0- (106,864)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances from related parties 41,578 35,309
Reduction of note payable - related party -0- (727)
----------- -----------
Net Cash Provided by Financing Activities 41,578 34,582
----------- -----------
DECREASE IN CASH (469) (285,708)
CASH AT BEGINNING OF PERIOD 469 356,755
----------- -----------
CASH AT END OF PERIOD $ -0- $ 71,047
=========== ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ -0- $ 7,301
----------- -----------
Income taxes paid $ -0- $ -0-
=========== ===========
Non-cash investing and financing activities:
Purchase of property and equipment $ -0- $ 80,629
Cash paid -0- (53,315)
----------- -----------
Note payable - related party $ -0- $ 27,314
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
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<PAGE> 8
CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1: INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended September 30, 1996 and
1995 are unaudited, but in the opinion of management, such financial statements
have been presented on the same basis as the audited financial statements and
include all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the financial position and results of
operations, and cash flows for these periods.
As permitted under the applicable rules and regulations of the
Securities and Exchange Commission, these financial statements do not include
all disclosures normally included with audited financial statements and,
accordingly, should be read in conjunction with the financial statements and
notes thereto and Annual Report on Form 10-K as of March 31, 1996 and for the
year then ended. The results of operations presented in the accompanying
financial statements are not necessarily representative of operations for an
entire year.
NOTE 2: DUE TO RELATED PARTIES
As of September 30, 1996, various advances were made to the Company by
Risk Resolution Group, a partnership whose principal partner is also the
principal stockholder of the Company. The advances were unsecured and
non-interest bearing. The outstanding balances as of September 30, 1996 and
1995 were $192 and $6,202, respectively.
As of September 30, 1996, various advances were made to the Company by
Infoplan, Inc., a corporation whose stockholders are the principal stockholder
of the Company and her spouse. The advances were unsecured, non-interest
bearing, and had no specific terms of repayment. The outstanding balance as of
September 30, 1996 was $47,588.
NOTE 3: LOSS PER SHARE
Net loss per share of common stock is based on the weighted average
number of shares outstanding during the periods presented.
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<PAGE> 9
CHAMPION FINANCIAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
QUARTER ENDED SEPTEMBER 30, 1996 COMPARED TO QUARTER ENDED
SEPTEMBER 30, 1995
No revenues were earned by the Company in either the quarter
ended September 30, 1996 or the quarter ended September 30,
1995, which is a result of the operating inactivity of the
Company during the last two fiscal years. The Company is
currently seeking to restart business operations through the
acquisition of Winifred B. Hayes, Inc. ("Hayes"). See
"Liquidity and Capital Resources." During the quarter ended
September 30, 1995, the Company held and traded marketable
equity securities, which resulted in an investment loss of
$5,100. The investments were all disposed of before March 31,
1996. Therefore, the Company earned no investment income during
the quarter ended September 30, 1996.
Operating expenses decreased from $82,381 during the quarter
ended September 30, 1995 to $27,411 during the quarter ended
September 30, 1996. This decrease results from the fact that,
during the quarter ended September 30, 1995, the Company
incurred substantial consulting and professional fees ($32,109)
in an attempt to purchase a life insurance company. The offer
was withdrawn when the acquisition was determined to be
unfeasible. In addition, the Company incurred, during the
quarter ended September 30, 1995, substantial travel and
entertainment costs ($21,705) to seek other merger candidates.
The Company had a net loss of $27,915 in the quarter ended
September 30, 1996 compared to a net loss of $84,048 in the
quarter ended September 30, 1995. The significant decrease in
the quarterly loss resulted from the fact that acquisition costs
for the purchase of Hayes and substantially all occupancy and
office expenses are being borne by MPLC, Inc., a Maryland
corporation owned by the principal stockholder of the Company.
The costs incurred by MPLC, Inc. are to be recovered from the
proceeds of the private placement. See "Liquidity and Capital
Resources."
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<PAGE> 10
CHAMPION FINANCIAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had no cash and no credit
facilities. The Company is seeking to restart business
operations through the purchase of Hayes, a privately-held
company engaged in the business of health care technology
assessments, which acquisition will enable the Company to become
operational. The acquisition is dependent on the Company's
ability to raise a minimum of $700,000 in a private placement
offering of its common stock. Subsequent to the execution of
the agreement, all costs of the acquisition and substantially
all occupancy and office expenses have been borne by MPLC, Inc.,
a Maryland corporation owned by the principal shareholder of the
Company.
No assurance can be given that the Company will be able to raise
capital sufficient to effect the acquisition. In the event that
the Company is not successful in raising the capital or
undertaking other activities or acquiring businesses that will
generate funds internally, it is unlikely that the Company would
be able to continue in business.
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<PAGE> 11
PART II: OTHER INFORMATION
<PAGE> 12
CHAMPION FINANCIAL CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
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) Exhibits.
(1) Exhibit 27 Financial Data Schedules (SEC use only).
(b) The following reports were filed on Form 8-K:
(1) On July 17, 1996, the Company filed a current
report on Form 8-K disclosing a change in the
Company's auditors.
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<PAGE> 13
CHAMPION FINANCIAL CORPORATION
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.
CHAMPION FINANCIAL CORPORATION
By:
--------------------------------------------
Marcy M. Engelbrecht
President
(Principal Executive and Financial Officer)
Date:
------------------------------
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 80,629
<DEPRECIATION> (13,692)
<TOTAL-ASSETS> 71,337
<CURRENT-LIABILITIES> 93,909
<BONDS> 0
0
0
<COMMON> 619
<OTHER-SE> (40,152)
<TOTAL-LIABILITY-AND-EQUITY> 71,337
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 47,843
<OTHER-EXPENSES> 1,217
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,217
<INCOME-PRETAX> (49,060)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49,060)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49,060)
<EPS-PRIMARY> (.079)
<EPS-DILUTED> (.079)
</TABLE>
