UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) Quarterly report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934, for the quarterly period ended March 31, 1998.
( ) Transition report pursuant to section 13 or 15 (d) of the
Securities Exchange Act of 1934, for the transition period from
to .
Commission file number 33-42408-NY
ROSECAP, INC.
(Exact name of small business issuer as specified in its charter)
New York #11-3023099
(State of Incorporation) (I.R.S. Employer ID No.)
750 Shames Drive, Westbury, New York 11590
(Address of Principal Executive Offices)
(516) 997-8333
(Issuer's Telephone Number)
N/A
(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 Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
There were 3,077,836 shares of the registrant's common stock outstanding as of
March 31, 1998.
<PAGE>
ROSECAP INC, AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
MARCH 31, JUNE 30,
1998 1997
--------------- -------------
ASSETS
------------
CURRENT ASSETS:
Cash $2,167,734 $7,502
Accounts receivable 127,167
Other receivables 302,215
Prepaid Expenses 354,371
--------------- -------------
Total Current Assets 2,951,487 7,502
--------------- -------------
PROPERTY PLANT AND EQUIPMENT:
Property and Equipment 501,331
Accumulated Depreciation (132,893)
--------------- -------------
Net Property Plant and Equipment 368,438 0
--------------- -------------
OTHER ASSETS:
Goodwill-net of accumulated amortization of $105,000 374,696
Organization costs-net of accumulated amortization of $420 780
Deposits 62,208
--------------- -------------
Total Other Assets 437,684 0
--------------- -------------
TOTAL ASSETS $3,757,609 $7,502
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------
CURRENT LIABILITIES:
Loans payable $62,783
Due to customers 619,393
Accounts payable and accrued expenses 266,428 $1,938
--------------- -------------
Total Current Liabilities 948,604 1,938
--------------- -------------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value 3,078 88
Capital in excess of par 2,907,218 42,241
Stock Subscription Receivable (100,000) 0
Accumulated earnings (deficit) (1,291) (36,765)
--------------- -------------
Total Stockholders' Equity 2,809,005 5,564
--------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,757,609 $7,502
=============== =============
</TABLE>
<PAGE>
ROSECAP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
For the Nine Months For the Three Months
Ended Ended
March 31, March 31,
1998 1997 1998 1997
------------------------- ------------------
Revenues $ 45,000 NONE $ 45,000 NONE
Administrative Expenses 9,739 3,883 4,651 1,833
------------------------- -------------------
Net Income (Loss) $ 35,261 $ (3,883) $40,349 $(1,833)
========================= ===================
Net Income (Loss) Per Common Share-Basic $ 0.20 $ (0.02) $ 0.22 $(0.01)
========================= ===================
Net Income (Loss) Per Common Share-Diluted $ 0.20 $(0.02) $ 0.22 $(0.01)
========================= ===================
Average Shares Outstanding - Basic 180,000 180,000 180,000 180,000
========================= ===================
Average Shares Outstanding - Diluted 180,000 180,000 180,000 180,000
========================= ===================
</TABLE>
<PAGE>
ROSECAP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
For The Nine
Months Ended
March 31,
1998 1997
---------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 34,881 $ (4,270)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities net
of assets and liabilities acquired in merger:
Increase (decrease) in accrued expenses 54,835 (1,807)
---------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 89,716 (6,077)
---------------------------------
FINANCING ACTIVITIES:
Issuance of common stock 2,016,632 -
---------------------------------
NET INCREASE (DECREASE) IN CASH 2,106,348 (6,077)
Cash from merged subsidiary 53,884
BEGINNING CASH BALANCE 7502 10683
---------------------------------
ENDING CASH BALANCE $ 2,167,734 $ 4,606
=================================
</TABLE>
<PAGE>
ROSECAP 10Q 3/31/98
Note 1 - General
The accompanying financial information should be read in conjunction with the
audited financial statements including the notes there to, as of and for the
year ended June 30, 1997.
The information furnished in this report reflects all adjustments (consisting of
only normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods.
Note 2 - Merger
On March 31, 1998 Rosecap, Inc. (the "Company") entered into a Merger (the
"Merger") between Westbury Acquisition Corp. ("WAC"), a wholly owned subsidiary
of the Company, and Westbury Alloys, Inc., ("Westbury") a Delaware Corporation,
the surviving entity. The Merger is a reverse merger whereby the principals of
Westbury became the principals of the Company the largest shareholders of the
Company. The Company commenced operating the business of Westbury after the
consummation of the Merger. Prior to the Merger, the Company, which was
incorporated in 1990, had not conducted any operations and reported as a
development stage enterprise.
Westbury provides a broad range of processing, refining and financial services
in connection with the reclamation of precious and specialty metals from scrap
materials. Westbury reclaims principally gold, silver, platinum and palladium
from scrap and residues from the electronics, jewelry, petroleum, dental,
chemical, automotive, mining and aerospace industries. After controlled
weighing, sampling, and assaying to determine values and to settle with the
customer, Westbury either purchases the precious metal or returns metal to the
customer.
For each service in the process, the Company receives an agreed upon fee.
Westbury also conducts precious metals transactions that rely on Westbury's
commercial credit and convenience capabilities.
Gold and silver comprise the major portion of the value of Westbury's precious
metal inventory which may be held under certain consignment agreements (see note
4). The prices of gold and silver are subject to fluctuations and are expected
to continue to be affected by world market conditions. Westbury maintains
inventories of precious metals in various stages of processing. Westbury also
maintains inventories at independent outside refineries. Such inventories are
carried on its books at current market value.
The shareholders of Westbury received 1,850,000 shares of common stock of
Rosecap, Inc. in conjunction with the merger.
Note 3 - Private Placement
The Company entered into an agreement to offer up to 2,175,000 shares of common
stock to investors at an offering price of $3.00 per share. As of March 31, 1998
the Company sold 1,005,836 shares of common stock and received proceeds, net of
offering costs, of $2,016,632.
Prior to the Offering, certain investors provided Bridge Financing to Westbury
in the amount of $700,000 and received promissory notes (the "Notes"). The
investors in the Bridge Financing also received as additional consideration,
700,000 Class A Redeemable Warrants (the "Bridgeholders' Warrants") which permit
the Bridgeholders to purchase, 700,000 shares of the Company's Common Stock at
an exercise price of $2.25 per share for a period of two years commencing on
March 31, 1998. On March 31, 1998, the Notes automatically converted into
233,333 Shares of the Company's Common Stock as part of the 1,005,836 Shares of
Common Stock sold.
<PAGE>
Note 4 - Inventories
Inventories are stated at the lower of cost (first-in, first out basis) or
market value. Consistent with other companies that refine and produce precious
metal fabricated products, some of the Company's gold and silver requirements
are furnished by customers and suppliers on a consignment basis. Title to the
consigned gold and silver remains with the Consignor. The value of consigned
gold and silver held by the Company is not included in the Company's Balance
Sheet. At March 31, 1998 the company held $2,382,220 of Gold and Silver under a
consignment agreement with Republic National Bank. The Company's gold and silver
requirements are provided from a combination of owned inventories, precious
metals which have been purchased and sold for future delivery, and gold and
silver received from suppliers and customers on a consignment basis.
Note 5 - Net Income (Loss) per Common Share
Basic net income (loss) per common share is calculated using the weighted
average number of common shares outstanding during the period. Diluted income
(loss) per share is calculated by including all dilutive potential common shares
such as stock options and warrants. Potential common shares are not included for
the nine and three month periods ended March 31, 1997, included in the statement
of operations because they would be anti-dilutive and for the nine months ended
March 31, 1998 and 1997 pro-forma amounts in Note 6 because they would be
anti-dilutive.
Prior to the Merger and Private Placement the Company completed a 1.057142 for 1
stock dividend increasing the outstanding shares of the Company from 87,500
shares to 180,000 shares. The dividend is reflected in all periods presented.
<PAGE>
Note 6 - Pro-forma Results of Operations
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ROSECAP INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three For The Nine
Months Ended Months Ended
March 31, March 31,
1998 1997 1998 1997
------------------------------- ------------------------------
Net Sales $ 845,748 $ 474,340 $1,681,246 $1,084,740
Gain on revaluation of precious metals to market 20,979 25,819 20,979 44,465
Cost of goods sold, exclusive of depreciation (247,415) (173,244) (596,725) (428,187)
------------------------------- ------------------------------
Gross profit including fluctuation in value of precious metal 590,892 326,915 1,031,807 701,018
------------------------------- ------------------------------
Selling general and administrative expenses 517,573 230,387 1,014,294 623,216
Depreciation 36,026 26,087 107,399 93,814
Interest 32,506 24,627 88,292 55,540
------------------------------- ------------------------------
Total Operating Expenses 557,685 281,101 1,136,292 772,570
------------------------------- ------------------------------
Income (loss) from operations 33,207 45,814 (104,485) (71,552)
Other income (expenses) net 46,628 57,854
- -
------------------------------- ------------------------------
Income before income taxes 79,835 45,814 (46,631) (71,552)
Provision for income taxes (19,657) (19,657)
------------------------------- ------------------------------
Net Income (Loss) $ 60,178 $ 45,814 $ (66,288) $ (71,552)
=============================== ==============================
Net Income (Loss) Per Share - Basic $ $ $ $
0.02 0.01 (0.02) (0.02)
------------------------------- ------------------------------
Net Income (Loss) Per Share - Diluted $ $ $ $
0.02 0.01 (0.02) (0.02)
------------------------------- ------------------------------
Average Shares Outstanding - Basic 3,077,836 3,077,836 3,077,836 3,077,836
=============================== ==============================
Average Shares Outstanding - Diluted 3,077,836 3,077,836 3,077,836 3,077,836
=============================== ==============================
On March 30, 1998 Westbury acquired assets of a silver fabricating business for
$150,000. The above pro-forma results do not include the operations of this
business for March 31, 1998.
</TABLE>
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ROSECAP, INC.
By:
David Nadler
Chief Financial Officer
Date: May 15, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED INT HE COMPANY'S FORM 10-QSB AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> MAR-31-1998
<CASH> 2,167,734
<SECURITIES> 0
<RECEIVABLES> 127,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,951,487
<PP&E> 501,331
<DEPRECIATION> 132,893
<TOTAL-ASSETS> 3,757,609
<CURRENT-LIABILITIES> 948,604
<BONDS> 0
0
0
<COMMON> 3,078
<OTHER-SE> 2,805,927
<TOTAL-LIABILITY-AND-EQUITY> 3,757,609
<SALES> 0
<TOTAL-REVENUES> 45,000
<CGS> 0
<TOTAL-COSTS> 9,739
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,261
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,261
<EPS-BASIC> .20
<EPS-DILUTED> .20
</TABLE>
