<PAGE> 1
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 12/31/95 Commission File No. 0-19499
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CHAMPION FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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)
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.
<PAGE> 2
CHAMPION FINANCIAL CORPORATION
INDEX
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets as of December 31, 1995 and March 31, 1995
Statements of Income for the Three Months and Nine Months Ended
December 31, 1995 and December 31, 1994
Statements of Cash Flows for the Nine Months Ended December 31, 1995 and
December 31, 1994
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: Other Information
<PAGE> 3
CHAMPION FINANCIAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1995
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,804 $ 356,755
Due from related parties (Note 4) 22,004 -0-
Prepaid expenses 682 -0-
----------- -----------
Total Current Assets 24,490 356,755
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PROPERTY AND EQUIPMENT (Note 2)
Office furniture and equipment 80,629 -0-
Less: Accumulated depreciation 6,846 -0-
----------- -----------
Net Property and Equipment 73,783 -0-
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OTHER ASSETS
Investment - Vectar Trading Company Limited 4,400 -0-
Pre-acquisition costs (Note 3) 32,501 -0-
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Total Other Assets 36,901 -0-
----------- -----------
TOTAL ASSETS $ 135,174 $ 356,755
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturity of long-term debt (Note 5) $ 4,702 $ -0-
Accounts payable 62,364 -0-
Other current liabilities 532 -0-
----------- -----------
Total Current Liabilities 67,598 -0-
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LONG-TERM DEBT
Note payable - related party (Note 5) 25,477 -0-
Less: Current maturity 4,702 -0-
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Net Long-Term Debt 20,775 -0-
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TOTAL LIABILITIES 88,373 -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) (2,540,469) (2,230,514)
----------- -----------
Total Stockholders' Equity 46,801 356,755
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 135,174 $ 356,755
=========== ===========
</TABLE>
<PAGE> 4
CHAMPION FINANCIAL CORPORATION
STATEMENTS OF INCOME
THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
1995 1994 1995 1994
--------- ------ --------- -------
<S> <C> <C> <C> <C>
REVENUES
Interest and dividends $ 15 $1,955 $ 967 $ 6,605
Miscellaneous -0- -0- -0- 410
--------- ------ --------- -------
Total Revenues 15 1,955 967 7,015
--------- ------ --------- -------
EXPENSES
Automotive expense 45 -0- 354 -0-
Bank charges 432 16 1,147 120
Charitable contributions -0- -0- 250 -0-
Consulting fees -0- -0- 35,691 3,995
Depreciation 2,282 (942) 6,846 -0-
Dues and subscriptions -0- -0- 2,991 -0-
Employee benefits 1,175 -0- 2,940 -0-
Interest expense 1,321 -0- 8,622 -0-
Investment fees 448 -0- 9,419 -0-
Meals and entertainment 722 -0- 6,061 -0-
Office expense 1,205 66 5,546 1,865
Postage and delivery expense 149 87 3,032 120
Professional fees 38,960 625 78,951 5,850
Rent 4,279 -0- 17,118 -0-
Repairs and maintenance -0- -0- 595 -0-
Salaries 5,213 -0- 13,031 -0-
Taxes - payroll 448 -0- 1,665 -0-
Taxes - other 682 -0- 682 100
Telephone 322 -0- 8,606 -0-
Travel 4,329 -0- 28,584 -0-
Net loss on sale of marketable
securities 72,739 -0- 78,791 -0-
Net change in unrealized (gain) loss
on marketable securities (Note 6) (17,826) -0- -0- -0-
--------- ------ --------- -------
Total Expenses 116,925 (148) 310,922 12,050
--------- ------ --------- -------
INCOME (LOSS) BEFORE INCOME TAXES (116,910) 2,103 (309,955) (5,035)
PROVISION FOR INCOME TAXES -0- -0- -0- -0-
--------- ------ --------- -------
NET INCOME (LOSS) $(116,910) 2,103 $(309,955) (5,035)
========= ====== ========= =======
EARNINGS (LOSS) PER COMMON SHARE (.189) .003 (.500) (.008)
========= ====== ========= =======
</TABLE>
<PAGE> 5
CHAMPION FINANCIAL CORPORATION
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(309,955) $ (5,035)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 6,846 -0-
Changes in operating assets and liabilities:
Accounts payable 62,364 -0-
Other (149) -0-
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Net Cash Used in Operating Activities (240,894) (5,035)
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (80,629) -0-
Pre-acquisition costs (32,501) -0-
Net investment - Vectar Trading Company Limited (4,400) -0-
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Net Cash Provided by Investing Activities (117,530) -0-
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CASH FLOWS FROM FINANCING ACTIVITIES
Due from related parties (22,004) -0-
Note payable - related party 27,314 -0-
Reduction of note payable - related party (1,837) -0-
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Net Cash Provided by Financing Activities 3,473 -0-
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DECREASE IN CASH (354,951) (5,035)
CASH AT BEGINNING OF PERIOD 356,755 352,472
--------- --------
CASH AT END OF PERIOD $ 1,804 $347,437
========= ========
SUPPLEMENTAL INFORMATION:
Interest paid $ 8,622 $ -0-
========= ========
Income taxes paid $ -0- $ -0-
========= ========
</TABLE>
<PAGE> 6
CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1: INTERIM FINANCIAL STATEMENTS
The financial statements for the nine months ended December 31, 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: 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 3: PRE-ACQUISITION COSTS
The Company had incurred pre-acquisition costs of $49,149, consisting of
consulting fees and legal costs, relating to a possible acquisition of a life
insurance company. During the three month period ended December 31, 1995, the
company negotiated a reduction of certain legal fees due of $16,648 relating
to these costs.
<PAGE> 7
CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 4: DUE FROM RELATED PARTIES
As of December 31, 1995, advances for various expenses were made to Risk
Resolution Group, a partnership whose principal partner is also the principal
stockholder of the Company. The advances are unsecured, non-interest bearing,
and are expected to be repaid prior to March 31, 1996. The outstanding
balance as of December 31, 1995 was $8,522.
As of December 31, 1995, advances for various expenses were made to
Infoplan, Inc., a corporation whose sole stockholder is the husband of the
principal stockholder of the Company. The advances are unsecured, non-
interest bearing, and are expected to be repaid prior to March 31, 1996. The
outstanding balance as of December 31, 1995 was $13,482.
NOTE 5: 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
December 31, 1995 was $25,477.
NOTE 6: 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. Previously held securities by the
Company were classified as trading securities. No marketable securities were
held by the Company as of December 31, 1995.
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. During the three month period ended December 31, 1995,
the Company sold all its marketable securities resulting in the recovery of
prior recorded unrealized losses of $17,826.
<PAGE> 8
CHAMPION FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 7: CORPORATE ACQUISITION
On December 4, 1995, Champion Financial Corporation (the Company)
executed an acquisition agreement to acquire up to 75% of the issued and
outstanding stock of Winifred S. 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.
Immediately prior to the merger, the stockholders of Hayes will
contribute 51% of the outstanding common stock in exchange for 961 shares of
common stock of MPLC, Inc., a newly-formed Maryland corporation. The
stockholders of Hayes will also contribute 24% of the outstanding stock in an
escrow to be held by the attorneys for Hayes and the Company jointly, who will
be instructed to exchange up to an additional 453 shares of MPLC, Inc.
Simultaneously with the contribution of Hayes stock to MPLC, certain entities
and individuals having incurred costs associated with locating, evaluating and
investigating all acquisition opportunities for MPLC, Inc., will contribute
their right, title and interest in this acquisition agreement in exchange for
3,586 shares of MPLC, Inc.
Subsequent to the contributions to MPLC, Inc. as set forth above, MPLC,
Inc. will be merged with and into the Company. Pursuant to such merger, the
stockholders of Hayes will receive 731,000 shares of Company stock in exchange
for 961 shares of MPLC, Inc. common stock. The remaining stockholders of
MPLC, Inc. will receive 2,726,000 shares of Company stock in exchange for
their 3,586 shares of MPLC, Inc. common stock.
Prior to the contributions of stock and the merger of MPLC and the
Company, Champion Financial Corporation will conduct a private placement
offering of its common stock with the intention of raising a minimum of
$700,000 and a maximum of $2,100,000, net of transactions costs. Upon the
initial closing of the private placement offering, the Company will contribute
$700,000 of the proceeds of the offering to the capital of Hayes. In the
event that the Company fails to raise the minimum amount of $700,000 within a
period of nine months from the date of the agreement, the original
stockholders of Hayes will have the right to reacquire 2% of the stock of
Hayes, thereby giving them control. In addition, the escrow holding shares of
Hayes will be terminated and the shares returned to the original stockholders
of Hayes. In the event that the Company is able to raise $2,000,000 within
nine months from the date of the agreement, the escrow will close and the
shares of Hayes stock, representing 24% of the outstanding stock, will be
delivered to the Company and 344,000 shares of Champion Financial Corporation
stock will be issued to the original stockholders of Hayes.
<PAGE> 9
CHAMPION FINANCIAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
QUARTER ENDED DECEMBER 31, 1995 COMPARED TO QUARTER ENDED DECEMBER
31, 1994
During the nine months ended December 31, 1995, the company purchased
office furniture and equipment, rented office space in Baltimore,
Maryland, and hired a secretary. All these activities were designed
to assist management to more actively search for a merger partner.
In addition, various professionals and consultants were utilized by
management to assist in the search. During the quarter ended
December 31, 1995, the Company entered into an agreement with a
potential merger partner and is currently taking steps to complete
the agreement. During the quarter ended December 31, 1994, the
Company was effectively inactive and incurred minimal expenses,
primarily professional fees incurred for reporting purposes.
Operating expenses increased to $116,925 in the quarter ended
December 31, 1995 compared with $(148) for the quarter ended December
31, 1994. The increase in operating expenses is primarily
attributable to the Company's active search for potential
acquisitions.
YEAR-TO-DATE DECEMBER 31, 1995 COMPARED TO YEAR-TO-DATE DECEMBER 31,
1994
Revenues for the nine month periods ended December 31, 1995 and 1994
were generated entirely by earnings on idle cash balances. Year-to-
date revenue decreased to $967 for the nine months ended December 31,
1995 from $6,605 for the nine months ended December 31, 1994 because
the Company has less idle cash during the nine months ended December
31, 1995 than it did during the comparable 1994 period. Operating
expenses for the nine months ended December 31, 1995 increased to
$310,922 from $122,050 for the same period the prior year. The
increase is primarily attributable to the Company's active search for
potential acquisitions. The Company's investment activities also
increased expenses, as compared to the nine months ended December 31,
1994, by $88,210.
<PAGE> 10
CHAMPION FINANCIAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had $1,804 in cash. The Company
currently has no credit facilities. The Company has executed an
agreement for the purchase of up to 75% of the outstanding common
stock of Winifred S. Hayes, Incorporated, and in connection with the
agreement, is required to raise certain specified amounts of capital.
No assurance can be given that the Company will be able to raise
capital sufficient to effect the acquisition of Winifred S. Hayes,
Incorporated, or other potential acquisition candidates. 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.
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
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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,804
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,490
<PP&E> 80,629
<DEPRECIATION> 6,846
<TOTAL-ASSETS> 135,174
<CURRENT-LIABILITIES> 67,598
<BONDS> 0
0
0
<COMMON> 619
<OTHER-SE> 46,182
<TOTAL-LIABILITY-AND-EQUITY> 135,174
<SALES> 0
<TOTAL-REVENUES> 967
<CGS> 0
<TOTAL-COSTS> 232,131
<OTHER-EXPENSES> 78,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,622
<INCOME-PRETAX> (309,955)
<INCOME-TAX> 0
<INCOME-CONTINUING> (309,955)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (309,955)
<EPS-PRIMARY> (.500)
<EPS-DILUTED> (.500)
</TABLE>
