<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 ......June 30, 1996.............................
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from .................... to ......................
Commission file number .................0-19499......................
..................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 June 30, 1996 ....
-1-
<PAGE> 2
CHAMPION FINANCIAL CORPORATION
INDEX
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 1996 and March 31, 1996
Statement of Stockholders' Equity (Deficiency) for the Quarter Ended
June 30, 1996
Statements of Operations for the Quarters Ended June 30, 1996 and
June 30, 1995
Statements of Cash Flows for the Quarters Ended June 30, 1996 and
June 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
-2-
<PAGE> 3
PART I: FINANCIAL INFORMATION
<PAGE> 4
CHAMPION FINANCIAL CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
JUNE 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 (11,410) (9,128)
----------- -----------
Net Property and Equipment 69,219 71,501
----------- -----------
OTHER ASSETS
Loan receivable and investment 4,400 4,400
----------- -----------
TOTAL ASSETS $ 73,619 $ 76,718
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Bank overdraft $ 1,822 $ -0-
Accounts payable and accrued expenses 40,531 36,649
Due to related parties (Note 2) 18,544 6,202
Current portion of note payable - related party 6,080 4,809
----------- -----------
Total Current Liabilities 66,977 47,660
LONG-TERM DEBT
Long-term portion of note payable - related party 18,260 19,531
----------- -----------
TOTAL LIABILITIES 85,237 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 (2,598,887) (2,577,742)
----------- -----------
Total Stockholders' Equity (Deficiency) (11,618) 9,527
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 73,619 $ 76,718
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
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<PAGE> 5
CHAMPION FINANCIAL CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
THREE MONTHS ENDED JUNE 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 three months ended
June 30, 1996 (unaudited) (21,145) (21,145)
----------- ----------- ----------- -----------
BALANCE - June 30, 1996 (unaudited) $ 619 $ 2,586,650 $(2,598,887) $ (11,618)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
-4-
<PAGE> 6
CHAMPION FINANCIAL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1996 1995
--------- ---------
<S> <C> <C>
REVENUES $ -0- $ -0-
--------- ---------
OPERATING EXPENSES
Consulting and professional 17,492 43,573
Depreciation 2,282 2,283
Occupancy and office expense 658 17,410
Travel and entertainment -0- 8,197
--------- ---------
Total Operating Expenses 20,432 71,463
--------- ---------
LOSS FROM OPERATIONS (20,432) (71,463)
--------- ---------
OTHER INCOME (EXPENSE)
Investment income -0- 3,716
Interest and other investment expense (713) (6,179)
Unrealized loss on marketable securities -0- (35,066)
--------- ---------
Net Other Expense (713) (37,529)
--------- ---------
LOSS BEFORE INCOME TAXES (21,145) (108,992)
PROVISION FOR INCOME TAXES -0- -0-
--------- ---------
NET LOSS $ (21,145) $(108,992)
========= =========
NET LOSS PER SHARE $ (.034) $ (.176)
========= =========
</TABLE>
See accompanying notes to unaudited financial statements.
-5-
<PAGE> 7
CHAMPION FINANCIAL CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (21,145) $ (108,992)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,282 2,283
Realized gain on sale of assets -0- (2,836)
Unrealized loss on marketable securities -0- 35,066
Changes in operating assets and liabilities:
Increase in accounts payable and accrued expenses 3,882 35,029
Decrease in prepaid expenses 348 -0-
Other -0- 10,730
----------- -----------
Net Cash Used in Operating Activities (14,633) (28,720)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities -0- (2,091,017)
Sale of marketable securities -0- 1,832,823
Purchase of property and equipment -0- (53,315)
Pre-acquisition costs -0- (49,149)
Loan receivable and investment -0- (100,000)
----------- -----------
Net Cash Used in Investing Activities -0- (460,658)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of margin account -0- 131,638
Net advances from related parties 12,342 -0-
Increase in cash overdraft 1,822 985
----------- -----------
Net Cash Provided by Financing Activities 14,164 132,623
----------- -----------
DECREASE IN CASH (469) (356,755)
CASH AT BEGINNING OF PERIOD 469 356,755
----------- -----------
CASH AT END OF PERIOD $ -0- $ -0-
=========== ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ -0- $ 4,198
=========== ===========
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.
-6-
<PAGE> 8
CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
NOTE 1: INTERIM FINANCIAL STATEMENTS
The financial statements for the three months ended June 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 consolidated 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 June 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 June 30, 1996 and 1995 were $192 and
$6,202, respectively.
As of June 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
June 30, 1996 was $18,352.
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.
-7-
<PAGE> 9
CHAMPION FINANCIAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
QUARTER ENDED JUNE 30, 1996 COMPARED TO QUARTER ENDED JUNE 30,
1995
No revenues were earned by the Company in either the quarter
ended June 30, 1996 or the quarter ended June 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 June 30, 1995, the Company
held and traded marketable equity securities, which resulted in
investment income earned totaling $3,716. The investments were
all disposed of before March 31, 1996. Therefore, the Company
earned no investment income during the quarter ended June 30,
1996.
Operating expenses decreased from $71,463 during the quarter
ended June 30, 1995 to $20,432 during the quarter ended June 30,
1996. This decrease results from the fact that, during the
quarter ended June 30, 1995, the Company incurred substantial
consulting and professional fees ($43,573) in an attempt to
purchase a life insurance company. The offer was withdrawn when
the acquisition was determined to be unfeasible.
The Company had a net loss of $21,145 in the quarter ended June
30, 1996 compared to a net loss of $108,992 in the quarter ended
June 30, 1995. The significant decrease in the quarterly loss
resulted from the following:
1) Acquisition costs for the purchase of Hayes 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."
2) Substantial unrealized losses on marketable equity
securities were incurred by the Company during the
quarter ended June 30, 1995.
-8-
<PAGE> 10
PART II: OTHER INFORMATION
<PAGE> 11
CHAMPION FINANCIAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had no cash and an overdraft of
$1,822. Also, the Company currently has 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 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.
-9-
<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.
-10-
<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: /s/ Marcy M. Engelbrecht
--------------------------------------------------
Marcy M. Engelbrecht
President
(Principal Executive and Financial Officer)
Date: August 14, 1996
------------------------------
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 80,629
<DEPRECIATION> 11,410
<TOTAL-ASSETS> 73,619
<CURRENT-LIABILITIES> 66,977
<BONDS> 0
0
0
<COMMON> 619
<OTHER-SE> (12,237)
<TOTAL-LIABILITY-AND-EQUITY> 73,619
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 20,432
<OTHER-EXPENSES> 713
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 713
<INCOME-PRETAX> (21,145)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,145)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,145)
<EPS-PRIMARY> (.034)
<EPS-DILUTED> (.034)
</TABLE>
