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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
/ / 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 33-88270
SCHUYLKILL ENTERPRISES, INC.
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(Exact name of Small Business Issuer as Specified in its Charter)
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<S> <C>
Delaware 23-2751054
- --------------------------------------------- -------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
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Two Penn Center, Suite 605, Philadelphia, Pennsylvania 19102
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(Address of principal executive offices)
(215) 564-3131
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) 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 No X
----- -----
As of January 31, 1998, the registrant had outstanding 450,000 shares of
Common Stock, par value $.001 per share.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
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SCHUYLKILL ENTERPRISES, INC.
QUARTERLY REPORT ON FORM 10-QSB FOR THE INTERIM PERIOD ENDED
DECEMBER 31, 1997
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Balance Sheets as of September 30, 1997 and
December 31, 1997 (unaudited)............................................ 3
Statements of Operations for the three months
ended December 31, 1996 and December 31, 1997;
and from November 22, 1993 (Inception Date) to
December 31, 1997 (unaudited)............................................ 4
Statement of Shareholders' Equity from November 22, 1993
(Inception Date) to December 31, 1997 (unaudited)........................ 5
Statements of Cash Flows for the three months ended
December 31, 1996 and December 31, 1997;
and from November 22, 1993 (Inception Date) to
December 3, 1997 (unaudited)............................................. 6
Notes to Financial Statements (unaudited).................................. 7
ITEM 2. Plan of Operation.................................................. 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................... 11
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
SCHUYLKILL ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
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<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1997
------------------ -----------------
(Audited) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash..................................................................... $ 4,017 $ 3,962
Accrued interest receivable.............................................. 2,263 2,420
Receivable from affiliated company....................................... 6,957 6,957
Deferred offering costs.................................................. 20,750 20,750
------- -------
TOTAL ASSETS............................................................... $ 33,987 $ 34,089
------- -------
------- -------
LIABILITIES
CURRENT LIABILITIES
Accrued expenses......................................................... $ 19,705 $ 19,650
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SHAREHOLDERS' EQUITY
PREFERRED STOCK--$.001 par value, authorized
2,000,000 shares, none issued............................................ -- --
COMMON STOCK--$.001 par value, authorized
10,000,000 shares, issued and outstanding
450,000 shares........................................................... 450 450
ADDITIONAL PAID-IN CAPITAL................................................. 49,550 49,550
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE........................................................ (35,718) (35,561)
------- -------
TOTAL SHAREHOLDERS' EQUITY................................................. 14,282 14,439
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 33,987 $ 34,089
------- -------
------- -------
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The accompanying notes are an integral part of these financial statements.
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SCHUYLKILL ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, NOVEMBER 22, 1993
-------------------- (INCEPTION DATE) TO
1996 1997 DECEMBER 31, 1997
--------- --------- -----------------
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INTEREST INCOME......................................................... $ 157 $ 157 $ 2,608
--------- --------- --------
COSTS AND EXPENSES
Aborted offering costs................................................ -- -- 26,487
Legal fees............................................................ -- -- 6,000
Accounting fees....................................................... -- -- 1,533
Franchise tax......................................................... -- -- 3,962
Other................................................................. -- -- 187
--------- --------- --------
-- -- 38,169
--------- --------- --------
NET INCOME (LOSS)....................................................... $ 157 $ 157 $ (35,561)
--------- --------- --------
--------- --------- --------
INCOME (LOSS) PER SHARE................................................. $ -- $ --
--------- ---------
--------- ---------
WEIGHTED AVERAGE NUMBER OF SHARES....................................... 450,000 450,000
--------- ---------
--------- ---------
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The accompanying notes are an integral part to these financial statements.
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SCHUYLKILL ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS EQUITY
NOVEMBER 22, 1993 (INCEPTION DATE) TO DECEMBER 31, 1997
(UNAUDITED)
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<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE TOTAL
COMMON PAID-IN DEVELOPMENT SHAREHOLDERS'
STOCK CAPITAL STAGE EQUITY
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Issuance of 900,000 shares of common stock.................... $ 900 $ 49,100 $ -- $ 50,000
One for two reverse stock split............................... (450) 450 -- --
Net loss from inception to September 30, 1994................. -- -- (160) (160)
----- ----------- ------------ -------------
Balance, September 30, 1994................................... 450 49,550 (160) 49,840
Net loss for the year ended September 30, 1995................ -- -- (34,370) (34,370)
----- ----------- ------------ -------------
Balance, September 30, 1995................................... 450 49,550 (34,530) 15,470
Net income for the year ended September 30, 1996.............. -- -- 200 200
----- ----------- ------------ -------------
Balance, September 30, 1996................................... 450 49,550 (34,330) 15,670
Net loss for the year ended September 30, 1997................ -- -- (1,388) (1,388)
----- ----------- ------------ -------------
Balance, September 30, 1997................................... 450 49,550 (35,718) 14,282
Net income for the three months ended
December 31, 1997 (unaudited)............................... -- -- 157 157
----- ----------- ------------ -------------
Balance, December 31, 1997 (unaudited)........................ $ 450 $ 49,550 $ (35,561) $ 14,439
----- ----------- ------------ -------------
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The accompanying notes are an integral part of these financial statements.
5
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SCHUYLKILL ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, NOVEMBER 22, 1993
-------------------- (INCEPTION DATE) TO
1996 1997 DECEMBER 31, 1997
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<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................................ $ 157 $ 157 $ (35,561)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Increase in accrued interest............................................. (157) (157) (2,420)
Increase (decrease) in accrued expenses.................................. -- (55) 19,650
--------- --------- --------
Net cash provided by (used in) operating activities...................... -- (55) (18,331)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
(Advance) repayment of receivable from affiliated companies.............. -- -- (6,957)
Proceeds from issuance of common stock................................... -- -- 50,000
Deferred offering costs.................................................. -- -- (20,750)
--------- --------- --------
Net cash provided by (used in) financing activities...................... -- -- 22,293
--------- --------- --------
NET INCREASE (DECREASE) IN CASH............................................ -- (55) 3,962
CASH--BEGINNING OF PERIOD.................................................. 7,588 4,017 --
--------- --------- --------
CASH--END OF PERIOD........................................................ $ 7,588 $ 3,962 $ 3,962
--------- --------- --------
--------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SCHUYLKILL ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1997 AND 1996
NOTE 1--INTERIM PERIODS
The unaudited information has been prepared on the same basis as the annual
financial statements and, in the opinion of the management of Schuylkill
Enterprises, Inc. (the Company ), reflects normal recurring adjustments
necessary for a fair presentation of the information for the periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company s special
report pursuant to Rule 15d-2 of the Securities Exchange Act of 1934, as
amended, bearing the cover page of Form 10-KSB for the fiscal year ended
September 30, 1997.
The results of operations for the three-month periods ended December 31,
1997 and 1996 are not necessarily indicative of operating results for the full
year.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Report contains "forward-looking" statements regarding potential future
events and developments affecting the business of the Company. Such statements
relate to, among other things, (i) the uncertainty of consummating potential
acquisitions; (ii) the availability of financing to fund working capital needs,
and (iii) the uncertainty of generating positive cash flow.
The Company's ability to predict results or the effect of any pending events
on the Company's operating results is inherently subject to various risks and
uncertainties, including those discussed under "Plan of Operation."
ITEM 2. PLAN OF OPERATION.
The Company was incorporated under the laws of the State of Delaware on
November 22, 1993 for the purpose of seeking to enter into business combinations
("Business Combinations") with other entities that in the opinion of management
would be in the best interests of the Company and its stockholders. Such
Business Combinations may be carried out in the form of the acquisition of an
existing business and/ or the acquisition of assets to establish a business for
the Company. The Company may acquire, be acquired, merge into, be merged with
(as an acquiring company or as a target company), invest in or participate in
any Business Combination with one or more corporations, partnerships, trust,
individuals or other entities. The Company will most likely seek to engage in a
Business Combination with a private enterprise that is seeking to develop a
public trading market for its securities, although there can be no assurance in
this regard. The Company has filed a Registration Statement on Form SB-2 (the
"Registration Statement") with the Securities and Exchange Commission
("Commission") in connection with the Company's proposed offer and sale of
securities under Rule 419 promulgated pursuant to the Securities Act of 1933, as
amended, (the "Offering"). The Registration Statement was declared effective by
the Securities and Exchange Commission on October 17, 1997.
The Offering is a blind pool or blank check offering, as defined in Rule
419, in that neither the Company's business nor the specific use of the proceeds
of the Offering have been identified (other than, generally, to enter into a
Business Combination). The Company has no operating history and does not intend
to commence any business activities until the consummation of the Offering and
the identification of a Business Combination. The Company s current management
may manage any business developed or acquired by the Company or may employ
qualified, but as yet unidentified, individuals to manage such business. In the
event that management determines that the Company is unable to effect a Business
Combination or to conduct any business whatsoever, management, in its sole
discretion but subject to the requirements of Rule 419, may seek shareholder
approval to liquidate the Company. In the event such a liquidation were to occur
prior to the consummation of a Business Combination, Rule 419 requires that each
investor s investment be returned on a pro rata basis. In the event such a
liquidation were to occur following the Company s compliance with Rule 419, all
shareholders of the Company (including the holders of 450,000 shares issued
prior to the Offering), will receive the liquidated assets on a pro rata basis.
While management has not established any guidelines for determining when it
might elect to discontinue its efforts to engage in a Business Combination and
seek shareholder approval to liquidate the Company, the Company is subject to
the 18 month limitation set forth in Rule 419 in which to effect an acquisition.
Rule 419 requires that an agreement with respect to a Business Combination
must provide for the acquisition of a business or the assets of a business for
which the fair value of such business or assets represents at least 80% of the
maximum Offering proceeds. For this purpose, Offering proceeds includes
8
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funds received or to be received from the exercise of the warrants but excludes
underwriting commissions, underwriting expenses and dealer allowances payable to
non-affiliates.
Once an agreement with respect to a Business Combination meeting the above
criteria has been executed, the Company will update the Registration Statement
with a post effective amendment in accordance with the requirements of Rule 419.
The post effective amendment will contain information about (i) the proposed
Business Combination (including audited financial statements of the acquisition
candidate), (ii) the results of the Offering and (iii) the use of the funds
disbursed from the escrow account maintained by the Company pursuant to the
requirements of Rule 419 (the "Escrow Account"). The post effective amendment
will also include the terms of the Reconfirmation Offer required by Rule 419.
The Company then intends to commence a Reconfirmation Offer and send the
prospectus contained in the post effective amendment to each investor within
five business days after the date that the post effective amendment is declared
effective by the Securities and Exchange Commission. Each investor will have not
less than 20, and not more than 45, business days to notify the Company in
writing that the investor elects to remain as an investor. If the Company does
not receive written notification from an investor within 45 business days, such
investor's pro rata portion of the Deposited Funds (and any related interest or
dividends) held in the Escrow Account will be returned to the investor within
five business days by first class mail or other equally prompt means. The
affirmative election of investors representing 80% of the maximum Offering
proceeds (including funds received or to be received from the exercise of
warrants) is required. In the event that the Reconfirmation Offering is
successfully completed but a Business Combination has not been consummated by
April 17, 1999 (18 months from the effective date of the post effective
amendment), the Company will return the the funds maintained in the Escrow
Account to all investors on a pro rata basis.
Pursuant to Rule 419, the Company intends to utilize up to 10% percent of
the Offering proceeds ($10,000) for the payment of operating expenses. The
remainder of the Offering proceeds will be held in the Escrow Account until a
suitable Business Combination is undertaken.
The Company's expenses are expected to be limited to the following: (i)
legal and accounting fees necessary to prepare the Company's periodic reports
under the Exchange Act; (ii) office and administrative expenses incurred in the
operation of the Company; and (iii) direct expenses incurred in the
identification and consummation of a Business Combination. The Company will not
incur any obligation for the payment of rent, secretarial or administrative
personnel, or for any executive or non-executive salaries or directors' fees.
The Company may, however, pay a finder's, investment banking or consulting fee
to a third party in connection with identifying or completing a Business
Combination. The Company has the discretion to pay these fees, if any, from
revenues or other funds of an acquisition or merger candidate or by the issuance
of debt or equity securities of such an entity. These fees may be paid to a
director, officer or principal stockholder of the Company if that person was
responsible for identifying and assisting in the completion of the Business
Combination. The Company intends that any consultants or advisers retained by
the Company will have significant experience in investigating, analyzing and
establishing the value of businesses as potential acquisition candidates. The
Company currently has no agreements or understanding with respect to the
retention of any consultants or advisers.
The expenses that will be incurred by the Company while the principal
portion of the Offering proceeds remains in escrow may exceed the Company's
existing resources as well as the 10% percent portion of such proceeds permitted
to be withdrawn from the Escrow Account. Management intends to secure financing
sufficient to satisfy its costs of operation either through: (i) the sale of
additional securities in one or more private placement transactions; (ii)
short-term loans provided by directors, officers or principal stockholders; or
(iii) debt financing provided by third parties. There are currently no plans,
proposals, arrangements or understandings with respect to the sale or issuance
of any such additional securities. The extent of the Company's expenses will
depend principally upon: (i) the amount of time that elapses until a Business
Combination is located and completed; (ii) the relative ease or difficulty in
completing a Business
9
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Combination; and (iii) the number of target opportunities that must be reviewed
by management until an appropriate Business Combination is located.
10
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
3.1* Certificate of Incorporation
3.1A Certificate of Amendment of Certificate of Incorporation
3.2* By-laws
27.1 Financial Data Schedule
- ------------------------
* Incorporated herein by reference to the Company s Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on January 5,
1995.
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SIGNATURES
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, this 17th day of February, 1998.
SCHUYLKILL ENTERPRISES, INC.
By: /S/ Leonard Linsker
-----------------------------------------
Leonard Linsker
Chairman, Chief Executive Officer and
Director
[Principal Executive Officer]
By: /S/ David Alperin
-----------------------------------------
David Alperin
Treasurer, Secretary and Director
[Principal Accounting Officer and
Principal Financial Officer]
12
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT NO. DESCRIPTION
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3.1A Certificate of Amendment to
Certificate of Incorporation
27.1 Financial Data Schedule
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EXHIBIT 3.1A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SCHUYLKILL ENTERPRISES, INC.
Schuylkill Enterprises, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: Pursuant to Section 141 of the Delaware General Corporation Law (the
"General Corporation Law"), by unanimous written consent dated as of January 21,
1997, the Corporation's Board of Directors duly adopted resolutions proposing
and declaring advisable the following amendment to the Corporation's Certificate
of Incorporation:
That the first paragraph of Article IV of the Corporation's
Certificate of Incorporation be amended to read in its entirety
as follows:
"The total number of shares of stock which the
Corporation shall have the authority to issue is
12,000,000 shares, consisting of 10,000,000 shares
of Common Stock having a par value of .001 per share,
and 2,000,000 shares of Preferred Stock having a par
value of .001 per share."
SECOND: Pursuant to Section 228 of the General Corporation Law, by unanimous
written consent dated as of January 21, 1997, the stockholders of the
Corporation have approved the aforesaid amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with
applicable provisions of Section 242 of the General Corporation Law.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by Leonard Linsker, its Chairman and Chief Executive Officer, and attested by
David Alperin, its Secretary, this 21st day of January, 1997.
SCHUYLKILL ENTERPRISES, INC.
BY: /S/ LEONARD LINSKER
-----------------------------------------
Leonard Linsker
CHAIRMAN,
AND CHIEF EXECUTIVE OFFICER
ATTEST:
/S/ DAVID ALPERIN
- ------------------------------
David Alperin
SECRETARY
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,962
<SECURITIES> 0
<RECEIVABLES> 9,377
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,089
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,089
<CURRENT-LIABILITIES> 19,650
<BONDS> 0
0
0
<COMMON> 450
<OTHER-SE> 13,989
<TOTAL-LIABILITY-AND-EQUITY> 34,089
<SALES> 0
<TOTAL-REVENUES> 157
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 157
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
