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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q/A
(AMENDMENT NO. 1)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended 9/30/95 Commission File No. 0-19499
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CHAMPION FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
UTAH 88-0169547
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
SUITE 1820, 36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (410) 234-0300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 such
filing requirements for the past 90 days. Yes X No
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The number of shares of Common Stock, $0.001 par value, outstanding as of
12/31/95 - 619,302 shares.
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CHAMPION FINANCIAL CORPORATION
INDEX
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1995 and March 31, 1995
Statements of Income for the Three Months and Six Months Ended September
30, 1995 and September 30, 1994
Statements of Cash Flows for the Six Months Ended September 30, 1995 and
September 30, 1994
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: Other Information
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CHAMPION FINANCIAL CORPORATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1995 1995
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ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 71,047 $ 356,755
Marketable securities (Note 2) 44,372 -0-
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Total Current Assets 115,419 356,755
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PROPERTY AND EQUIPMENT (Note 3)
Office furniture and equipment 80,629 -0-
Less: Accumulated depreciation 4,564 -0-
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Net Property and Equipment 76,065 -0-
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OTHER ASSETS
Investment - Vectar Trading Company Limited 4,400 -0-
Pre-acquisition costs (Note 4) 49,149 -0-
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Total Other Assets 53,549 -0-
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TOTAL ASSETS $ 245,033 $ 356,755
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturity of long-term debt (Note 5) $ 4,598 $ -0-
Accounts payable 17,687 -0-
Due to related party (Note 5) 35,309 -0-
Other current liabilities 1,737 -0-
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Total Current Liabilities 59,331 -0-
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LONG-TERM DEBT
Note payable - related party (Note 6) 26,587 -0-
Less: Current maturity 4,598 -0-
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Net Long-Term Debt 21,989 -0-
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TOTAL LIABILITIES 81,320 -0-
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STOCKHOLDERS' EQUITY
Common stock, $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding - 619,302 shares 619 619
Additional paid-in capital 2,586,651 2,586,650
Retained earnings (deficit) (2,423,557) (2,230,514)
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Total Stockholders' Equity 163,713 356,755
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 245,033 $ 356,755
=========== =============
</TABLE>
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CHAMPION FINANCIAL CORPORATION
STATEMENTS OF INCOME
THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES
Interest and dividends $ 72 $ 2,427 $ 952 $ 4,650
Miscellaneous -0- 360 -0- 410
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Total Revenues 72 2,787 952 5,060
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EXPENSES
Automotive expense 309 -0- 309 -0-
Bank charges 487 89 714 104
Charitable contributions 250 -0- 250 -0-
Consulting fees -0- 19 35,690 3,995
Depreciation 2,282 471 4,564 942
Dues and subscriptions 299 -0- 2,992 -0-
Employee benefits 1,763 -0- 1,763 -0-
Interest expense 3,102 -0- 7,301 -0-
Investment fees 6,991 -0- 8,972 -0-
Meals and entertainment 4,368 -0- 5,338 -0-
Office expense 2,487 1,739 4,340 1,799
Postage and delivery expense 1,490 33 2,883 33
Professional fees 32,109 4,460 39,992 5,225
Rent 6,419 -0- 12,838 -0-
Repairs and maintenance 155 -0- 595 -0-
Salaries 7,818 -0- 7,818 -0-
Taxes - payroll 1,217 -0- 1,217 -0-
Taxes - other -0- 100 -0- 100
Telephone 3,900 -0- 8,285 -0-
Travel 17,028 -0- 24,254 -0-
Net loss on sale of marketable
securities 8,888 -0- 6,052 -0-
Unrealized (gain) loss on market-
able securities (Note 2) (17,242) -0- 17,826 -0-
-------- ------- --------- -------
Total Expenses 84,120 6,911 193,993 12,198
-------- ------- --------- -------
LOSS BEFORE INCOME TAXES (84,048) (4,124) (193,041) (7,138)
PROVISION FOR INCOME TAXES -0- -0- -0- -0-
-------- ------- --------- -------
NET LOSS $(84,048) $(4,124) $(193,041) $(7,138)
======== ======= ========= =======
EARNINGS (LOSS) PER COMMON SHARE (.136) (.007) (.312) (.012)
======== ======= ========= =======
</TABLE>
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CHAMPION FINANCIAL CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (193,041) $ (7,138)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 4,564 942
Changes in operating assets and liabilities:
Accounts payable 17,687 -0-
Marketable securities (44,372) -0-
Other current liabilities 1,736 -0-
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Net Cash Used in Operating Activities (213,426) (6,196)
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (80,629) -0-
Pre-acquisition costs (49,149) -0-
Net investment - Vectar Trading Company Limited (4,400) -0-
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Net Cash Provided by Investing Activities (134,178) -0-
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CASH FLOWS FROM FINANCING ACTIVITIES
Due to related party 35,309 -0-
Loan from officer -0- 5,000
Note payable - related party 27,314 -0-
Reduction of note payable - related party (727) -0-
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Net Cash Provided by Financing Activities 61,896 5,000
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DECREASE IN CASH (285,708) (1,196)
CASH AT BEGINNING OF PERIOD 356,755 352,472
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CASH AT END OF PERIOD $ 71,047 $ 351,276
============ ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ 7,301 $ -0-
============ ===========
Income taxes paid $ -0- $ -0-
============ ===========
</TABLE>
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CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
NOTE 1: INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended September 30, 1995 and
1994 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 consolidated financial statements
and, accordingly, should be read in conjunction with the financial statements
and notes thereto as of March 31, 1995 and 1994 and for the years then ended.
The results of operations presented in the accompanying financial statements
are not necessarily representative of operations for an entire year.
NOTE 2: MARKETABLE SECURITIES
On April 1, 1995, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115 to account for investments in marketable
securities. Statement No. 115 requires that investments in debt and equity
securities be classified into one of three categories: held to maturity,
trading, or available-for-sale. The Company has classified all marketable
securities held at September 30, 1995 as trading. Statement No. 115 requires
trading securities to be carried at fair value and the net unrealized gain or
loss on those securities to be reported on the statement of income.
The following table presents pertinent information pertaining to
marketable securities as of September 30, 1995:
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<CAPTION>
Cost/
Fair Sales Price Unrealized
Value (short) Loss
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<S> <C> <C> <C>
Equity Securities:
Other $ 174,372 $ 174,372 $ -0-
Short sales (130,000) (112,174) 17,826
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$ 44,372 $ 62,198 $ 17,826
============ ============ ============
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The fair value of liabilities for short sales of equity securities is
determined by quoted market prices. Short sales liabilities are generally
covered within thirty days after the sale.
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CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
NOTE 3: PROPERTY AND DEPRECIATION
Property is stated at cost, less accumulated depreciation. Depreciation
is computed under the straight-line method over the estimated useful lives of
the assets. Expenditures for maintenance and routine repairs are charged to
expense as incurred. Expenditures for improvements and major repairs that
materially extend the useful lives of assets are capitalized.
NOTE 4: PRE-ACQUISITION COSTS
The Company has incurred pre-acquisition costs of $49,149, consisting of
consulting fees and legal costs, relating to a possible acquisition of a life
insurance company.
NOTE 5: DUE TO RELATED PARTY
As of September 30, 1995, loans were made to the Company from Risk
Resolution Group, a partnership whose principal partner is also the principal
stockholder of the Company. The loans are unsecured, non-interest bearing, and
are expected to be repaid prior to March 31, 1996.
NOTE 6: LONG-TERM DEBT/RELATED PARTY TRANSACTIONS
The Company acquired various office furniture and equipment from Marcy
M. Hallock, P.A., a corporation owned by the principal stockholder of the
Company, for $80,629 based upon its estimated fair market value. $53,315 was
paid to Marcy M. Hallock, P.A., with the remaining balance of $27,314 evidenced
by a note payable. The note bears interest at 9% and is payable in monthly
installments of principal and interest totaling $567 over a sixty-month period
commencing August 1, 1995. The balance of the note as of September 30, 1995
was $26,587.
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CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
NOTE 7: SUBSEQUENT EVENTS
On November 7, 1995, the Company executed a letter of understanding to
acquire up to 75% of the issued and outstanding stock of Hayes, Incorporated
(Hayes). Hayes is a Pennsylvania corporation engaged in the business of health
care research technology which writes and publishes the Hayes Directory of New
Medical Technology's Status. MPLC, Inc. A Maryland corporation owned by the
principal stockholder of the Company, will acquire 51% of the issued and
outstanding shares of Hayes in exchange for shares of common stock of MPLC,
Inc. to be issued which will represent 29.5% of the issued and outstanding
stock of MPLC, Inc. Subsequent to the acquisition by MPLC of the stock of
Hayes, MPLC, Inc. will merge with and into Champion Financial Corporation. As
part of the merger, Champion will issue to the shareholders of MPLC, Inc. an
aggregate of 2,726,000 shares of common stock of Champion.
<PAGE> 9
CHAMPION FINANCIAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
QUARTER ENDED SEPTEMBER 30, 1995 COMPARED TO QUARTER ENDED
SEPTEMBER 30, 1994
Total revenues decreased to $72 during the quarter ended
September 30, 1995 compared to $2,787 during the quarter ended
September 30, 1994 primarily due to the decrease in cash and
marketable security balances.
Operating expenses increased to $84,120 in the quarter ended
September 30, 1995 compared with $6,911 for the quarter ended
September 30, 1994 primarily as a result of the resumption of
business activity by new management in the area of investing in
marketable securities and the Company's active search for
potential acquisitions.
The Company had a net loss of $84,048 in the quarter ended
September 30, 1995 compared to a net loss of $4,124 in the
quarter ended September 30, 1994,. The significant loss in the
second quarter resulted from the payment of expenses associated
with the active search for potential acquisitions.
QUARTER ENDED SEPTEMBER 30, 1995 COMPARED TO FISCAL YEAR ENDED
MARCH 31, 1995
The Company's total assets decreased to $245,033 during the
period ended September 30, 1995 from $356,755 at March 31, 1995.
This decrease primarily is the result of the following
transactions:
(1) The Company purchased certain office furniture and
equipment for $80,629. Pursuant to the Agreement of Sale
and Purchase of Assets, $53,314 was paid in cash by the
Company and the balance of $27,314 will be paid pursuant
to a 60 month promissory note that bears interest at 9%.
(2) During the first quarter, the Company incurred
$49,149 in pre-acquisition costs.
(3) The Company has incurred losses during the
six-month period ended September 30, 1995 in the amount
of $193,041 for reasons discussed above.
Total liabilities increased to $81,320 for the period
ended September 30, 1995 from $0 at March 31, 1995. This
increase primarily reflects liabilities incurred in connection
with loans from related parties of the Company.
The Company, as part of their activities investing in
marketable securities, made several short sales of stock during
the six months ended September 30, 1995. The short sales were
collateralized by the Company's margin account with its broker
and less than 30 days elapsed between the sales and subsequent
purchases of stock to cover the sale. Net realized losses on
short sales totaled $5,147 for the six months ended September
30, 1995.
<PAGE> 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Exhibit Index.
(b) The following reports were filed on Form 8-K during the
first quarter of the current fiscal year:
(1) Form 8-K, dated April 6, 1995, regarding change
in control of the Company;
(2) Form 8-K, dated May 12, 1995, regarding change
in control and relocation of the Company's
principal office;
(3) Form 8-K, dated May 22, 1995, regarding a change
in accountants;
(4) Amendment No. 1 to Form 8-K, dated May 25, 1995,
submitting the accountant's letter indicating
agreement;
(5) Amendment No. 2 to Form 8-K, dated July 19,
1995, relating to changes in accountants.
<PAGE> 11
CHAMPION FINANCIAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had $71,047 in cash. The
Company currently has no credit facilities. Management intends
to identify potential acquisition candidates, and to explore the
prospect of raising equity capital for the purpose of effecting
acquisitions. No assurance can be given that suitable
acquisition targets can be identified, that any acquisition can
be effected on terms favorable to the Company, or that the
Company will be able to raise capital sufficient to effect any
acquisition. In the event that the Company is not successful in
raising capital or undertaking activities or acquiring
businesses that will generate funds internally, it is unlikely
that the Company would be able to continue in business.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The information required by this item is incorporated herein by
reference to Item 3 of the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995.
<PAGE> 12
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
Date:
-----------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 71,047
<SECURITIES> 44,372
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,419
<PP&E> 80,629
<DEPRECIATION> 4,564
<TOTAL-ASSETS> 245,033
<CURRENT-LIABILITIES> 59,331
<BONDS> 0
0
0
<COMMON> 619
<OTHER-SE> 163,094
<TOTAL-LIABILITY-AND-EQUITY> 245,033
<SALES> 0
<TOTAL-REVENUES> 952
<CGS> 0
<TOTAL-COSTS> 170,115
<OTHER-EXPENSES> 23,878
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,301
<INCOME-PRETAX> (193,041)
<INCOME-TAX> 0
<INCOME-CONTINUING> (193,041)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193,041)
<EPS-PRIMARY> (.312)
<EPS-DILUTED> (.312)
</TABLE>
