U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended September 30, 1996
Commission File Number 33-93892-NY
THE BRIAN H. CORP.
(Name of Small Business Issuer in Its Charter)
Nevada 11-327-0747
(State of Incorporation) (IRS
Identification Number)
63 Wall Street, Suite 1801, New York, NY 10008
(Address of principal executive offices) (Zip Code)
(212) 344-1600
(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 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 No X
As of September 30, 1996 there were 132,500 shares of the issuer's common
stock, $.0001 par value per share, issued and outstanding.
<PAGE>
THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheet -
September 30, 1996
Statements of Operations
Three Months Ended September 30, 1996
Statements of Cash Flows
Three Months Ended September 30, 1996
Notes to Financial Statements
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION
<PAGE>
THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>THE BRIAN H. CORP.
(a development stage company)
BALANCE SHEET
September 30, 1996
Unaudited
ASSETS
Current Assets:
Cash (Note 4) $ 52,873.25
Other Assets:
Organization costs
(Note 2) 595.00
Total assets $ 53,468.25
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity (Notes
1, 2 and 4); 10,000,000
shares, common stock,
$.0001 par value.
Authorized; issued
and outstanding
132,500 $ 13.25
Additional paid-in
capital 53,455.00
Total stockholders'
equity 53,468.25
Total liabilities and
stockholders' equity $ 53,468.25
The accompanying notes are in integral part of these financial statements.
THE BRIAN H. CORP.
(a development stage company)
STATEMENT OF OPERATIONS
For the nine months ended September 30, 1996
Unaudited
Costs and Operating Expenses $ 0
Income from operations $ 0
Income before Income Taxes
and Extraordinary Items $ 0
Net Income $ 0
Net Income Per Share $ 0
Net Loss $ 0
Net Loss Per Share $ 0
Number of Common Shares Outstanding 132,500
The accompanying notes are an integral part of these financial statements.
THE BRIAN H. CORP.
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the nine months ended September 30, 1996
Unaudited
Shares Amount
Balance as of January 1, 1996 23,950 $33,800
800 shares sold January 11, 1996
at $4.00 per share for cash 800 3,200
1850 shares sold February 20, 1996
at $4.00 per share for cash 1,850 7,400
250 shares sold April 17, 1996
at $4.00 per share for cash 250 1,000
5650 shares sold April 24, 1996
at $4.00 per share for cash 5,650 22,600
Total outstanding as of
September 30, 1996 132,500 $68,000
The accompanying notes are in integral part of these financial statements.
<PAGE>
THE BRIAN H. CORP.
(a development stage company)
STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1996
Unaudited
Cash flows from Financing Activities:
Net Proceeds from Issuance of Common Stock $34,200
Net Cash Provided by Financing Activities $34,200
Net Increase in Cash and Cash Equivalents $34,200
Cash and Cash Equivalents at End of Year $52,873
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE BRIAN H. CORP.
(a development stage company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. ORGANIZATION OF THE COMPANY
The Company was incorporated in Nevada on January 23, 1995.
As of September 30, 1996, 12,500 shares were sold on different dates at $4.00
per share. The total amount of cash received by the Company from the sale of
all securities was $68,000 as of September 30, 1996.
The Company's business will be to seek potential business ventures which in
the opinion of management will provide a profit to the Company. Such
involvement can be in the terms of the acquisition of existing businesses
and/or the acquisition of assets to establish businesses for the Company.
Present management of the Company does not expect to become involved as
management in the aforementioned businesses and will hire presently unknown
and unidentified individuals as management for the aforementioned businesses.
The Company's only activities to date have been the acquisition of funds from
the sale of its Common Stock to its officers, directors, and other investors.
As of September 30, 1996 the Company had not yet commenced operations.
As a result of its limited resources, the Company will, in all likelihood,
have the ability to effect only a single Business Combination. Accordingly,
the prospects for the Company's success will be entirely dependent upon the
future performance of a single business.
The Company's directors and officers are or may become, in their individual
capacities officers, directors, controlling shareholders in a variety of
businesses including other "blank check" companies. There exists potential
conflicts of interest including, among other things, time, effort and
corporate opportunity involved in participation with other business entities.
2. SIGNIFICANT ACCOUNTING POLICIES
Organization costs
Organization costs will be amortized on a straight line basis over a five year
period from the commencement of operations. The total organizational costs
were $ 595 as of September 30, 1996.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates
3. LEASES
The Company has no oral or written leases or freeholds of any kind on any
physical plant. The Company presently uses the offices of Joel Schonfeld at
63 Wall Street, New York, New York 10005, the attorney for the Company and one
of its shareholders, at no cost. Such arrangement is expected to continue
after completion of this offering.
4. RULE 419 REQUIREMENTS
Rule 419 requires that offering proceeds after deduction for underwriting
commissions, underwriting expenses and dealer allowances, if any, be deposited
into escrow or trust account (the "Deposited Funds" and "Deposited
Securities," respectively) governed by an agreement which contains certain
terms and provisions specified by the Rule. As of September 30, 1996 the
Company's cash balance of $52,873.25 is being held in escrow. Under Rule 419,
the Deposited Funds and Deposited Securities will be released to the Company
and to the investors, respectively, only after the Company has met the
following three basic conditions. First, the Company must execute an
agreement(s) for an acquisition(s) meeting certain prescribed criteria.
Second, the Company must file a post-effective amendment to the registration
statement which includes the terms of a reconfirmation offer that must contain
conditions prescribed by the rules. The post-effective amendment must also
contain information regarding the acquisition candidate(s) and its
business(es), including audited financial statements. The Agreement(s) must
include, as a condition precedent to their consumption, a requirement that the
number of investors representing 80% of the maximum proceeds must elect to
reconfirm their investments.
Third, the Company must conduct the reconfirmation offer and satisfy all of
the prescribed conditions, including the condition that a certain minimum
number of investors must elect to remain investors. The post-effective
amendment must also include the terms of the reconfirmation offer mandated by
Rule 419. The reconfirmation offer must include certain prescribed conditions
which must be satisfied before the Deposited Funds and Deposited Securities
can be released from escrow. After the Company submits a signed
representation to the Escrow Agent the requirements of Rule 419 have been met
and after the acquisition(s) is consummated, the Escrow Agent can release the
Deposited Funds and Deposited Securities.
Accordingly, the company has entered into an escrow agreement with Atlantic
Liberty Savings (the "Escrow Agent") which provides that:
(1) The net proceeds are to be deposited into an escrow
account maintained by the Trust Company of New York promptly
upon receipt. The deposited proceeds and interest or dividends thereon, if
any, are to be held for the sole benefit of the investors and can only be
invested in bank deposits, in money market mutual funds or federal government
securities or securities for which the principal or interest is guaranteed by
the federal government.
(2) All securities issued in connection with the offering
and any other securities issued with respect to such securities, including
securities issued with respect to stock splits, stock dividends or similar
rights are to be deposited directly into the Escrow Account promptly upon
issuance (the "Deposited Securities") and the identity of the investors are to
be included on the stock certificates or other documents evidencing the
Securities. The Deposited Securities held in the escrow account are to remain
as issued and are to be held for the sole benefit of the investors' who retain
the voting rights, if any, with respect to the securities held in their
names. The Deposited Securities held in the Escrow Account may not be
transferred, disposed of nor any interest created therein other than by will
or the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986 or Table 1 of
the Employee Retirement Income Security Act.
(3) Warrants, convertible securities or other derivative
securities relating to securities held in the Escrow Account may be exercised
or converted in accordance with their terms; provided that, however, the
securities received upon exercise or conversion together with any cash or
other consideration paid in connection with the exercise or conversion are to
be promptly deposited into the Escrow Account.
Prescribed Acquisition Criteria
Rule 419 requires that before the Deposited Funds and the Deposited
Securities can be released, the Company must first execute an agreement to
acquire an acquisition candidate(s) meeting certain specified criteria. The
agreement(s) must provide for the acquisition(s) of a business(es) or assets
for which the fair value of the business represents at least 80% of the
maximum offering proceeds. For purposes of the offering, the fair value of
the business(es) or assets to be acquired must be at least $40,000.
Post-Effective Amendment
Once the agreement(s) governing the acquisition(s) of a business(es)
meeting the above criteria has been executed, Rule 419 requires the Company to
update the registration statement with a post-effective amendment. The
post-effective amendment must contain information about: the proposed
acquisition candidate(s) and its business(es), including audited financial
statements; the results of this offering; and, the use of the funds disbursed
from the Escrow Account. The post-effective amendment must also include the
terms of the reconfirmation offer mandated by Rule 419. The reconfirmation
offer must include certain prescribed conditions which must be satisfied
before the Deposited Funds and Deposited Securities can be released from
escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Pursuant to Rule 419, the terms of the
reconfirmation offer must include the following conditions;
(1) The prospectus contained in the post-effective
amendment will be sent to each investor whose securities
are held in the Escrow Account within 5 business days after the effective date
of the post-effective amendment.
(2) Each investor will have no fewer than 20 and no
more than 45 business days from the effective date of the post-effective
amendment to notify the Company in writing that the investor elects to remain
an investor.
(3) If the Company does not receive written notification
from any investor within 45 business days following the effective date, the
pro rata portion of the Deposited Funds (and any related interest or
dividends) held in the Escrow Account on such investor's behalf will be
returned to the investor within 5 business days by first class mail or other
equally prompt means.
(4) The acquisition(s) will be consummated only if a
minimum number of investors representing 80% of the maximum offering proceeds
($40,000) elect to reconfirm their investment.
(5) If a consummated acquisition(s) has not incurred by
April 23, 1997, the Deposited Funds held in the Escrow Account shall be
returned to all investors on a pro rata basis within 5 business days by first
class mail or other equally prompt means.
Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released to the
Company and the investors, respectively, after;
(1) The Escrow Agent has received a signed representation from the
Company and any other evidence acceptable by the Escrow Agent that:
(a) The Company has executed an agreement for the acquisition(s) of
a Business(es) for which the par value of the business represent at least 80%
of the maximum offering proceeds and has filed the required post-effective
amendment.
(b) The post-effective amendment has been declared effective, that
the mandated reconfirmation offer having the conditions prescribed by Rule 419
has been completed and that the Company has satisfied all of the prescribed
conditions of the reconfirmation offer.
(2) The acquisition(s) of the business(es) with the fair value of at
least 80% of the maximum proceeds is consummated.
5. RELATED PARTY TRANSACTIONS
Joel Schonfeld, Esq. and his associate, Andrea Weinstein, Esq., are principal
shareholders of the Company. Joel Schonfeld's fee for legal services rendered
in the organization of the Company and for the sale of its stock was $12,000,
all of which has been paid to Mr. Schonfeld prior to this offering. Mr.
Schonfeld was also reimbursed $595 for incorporation and filing fees prior to
this offering.
THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
Item 2. Management's Discussion and Analysis and Plan of Operation
The Company does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and analyzing
Business Combinations will be paid with money in the Company's treasury, and
not with proceeds received from the Company's initial public offering.
The Company may seek a Business Combination in the form of firms which
have recently commenced operations, are developing companies in need of
additional funds for expansion into new products or markets, are seeking to
develop a new product or service, or are established businesses which may be
experiencing financial or operating difficulties and are in need of additional
capital. A Business Combination may involve the acquisition of, or merger
with, a Company which does not need substantial additional capital but which
desires to establish a public trading market for its shares, while avoiding
what it may deem to be adverse consequences of undertaking a public offering
itself, such as time delays, significant expense, loss of voting control and
compliance with various Federal and State securities laws.
The Company will not acquire a Target Business unless the fair value of
the Target Business represents 80% of the maximum offering proceeds (including
funds to be received upon exercise of the Warrants, the sale of the Secondary
Securities and the exercise of the Warrants contained therein) (the "Fair
Market Value Test.") To determine the fair market value of a Target Business,
the Company's management will examine the certified financial statements
(including balance sheets and statements of cash flow and stockholders'
equity) of any candidate and will participate in a personal inspection of any
potential Target Business. If the Company determines that the financial
statements of a proposed Target Business does not clearly indicate that the
Fair Market Value Test has been satisfied, the Company will obtain an opinion
from an investment banking firm (which is a member of National Association of
Securities Dealers, Inc., (the "NASD") with respect to the satisfaction of
such criteria.
<PAGE>THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
Based upon management's experience with and knowledge of blank check
companies, the probable desire on the part of the owners of target businesses
to assume voting control over the Company (to avoid tax consequences or to
have complete authority to manage the business) will almost assure that the
Company will combine with just one target business. Management also
anticipates that upon consummation of a Business Combination, there will be a
change in control in the Company which will most likely result in the
resignation or removal of the Company's present officers and directors.
None of the Company's officers or directors have had any preliminary contact
or discussions with any representative of any other entity regarding a
Business Combination. Accordingly, any Target Business that is selected may
be a financially unstable Company or an entity in its early stage of
development or growth (including entities without established records of sales
or earnings), the Company will become subjected to numerous risks inherent in
the business and operations of financially unstable and early stage or
potential emerging growth companies. In addition, the Company may affect a
Business Combination with an entity in an industry characterized by a high
level of risk, and although management will endeavor to evaluate the risks
inherent in a particular industry or Target Business, there can be no
assurance that the Company will properly ascertain or assess all significant
risks.
Management anticipates that it may be able to effect only one potential
Business Combination, due primarily to the Company's limited financing. As a
result, the Company will not be able to offset potential losses from one
venture against gains from another.
<PAGE>THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
The Company anticipates that the selection of a Business Combination will
be complex and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries, and shortages of
available capital, management believes that there are numerous firms seeking
even the limited additional capital which the Company will have and/or the
benefits of a publicly traded corporation. Such perceived benefits of a
publicly traded corporation may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for the
principals of a business, creating a means for providing incentive stock
options or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for all shareholders, and other factors.
Potentially available Business Combinations may occur in many different
industries and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The analysis of Business Combinations will be undertaken by or under the
supervision of the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on
identifying preliminary prospective Business Combinations which may be brought
to its attention through present associations. In analyzing prospective
Business Combinations, management will consider such matters as the available
technical, financial, and managerial resources; working capital and other
financial requirements; history of operation, if any; prospects for the
future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that
management; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance or products, services, or trades; name identification; and other
relevant factors. Officers and directors of the Company will meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors.
<PAGE>THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
Since the Company will be subject to Section 13 or 15 (d) of the
Securities Exchange Act of 1934, it will be required to furnish certain
information about significant acquisitions, including audited financial
statements for the Company(s) acquired, covering one, two or three years
depending upon the relative size of the acquisition. Consequently,
acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. In the event the
Company's obligation to file periodic reports is suspended under Section
15(d), the Company intends on voluntarily filing such reports.
It may be anticipated that any Business Combination will present certain
risks. Many of these risks cannot be adequately identified prior to
selection, and investors herein must, therefore, depend on the ability of
management to identify and evaluate such risks. In the case of some of the
potential combinations available to the Company, it may be anticipated that
the promoters thereof have been unable to develop a going concern or that such
business is in its development stage in that it has not generated significant
revenues from its principal business activity prior to the Company's merger or
acquisition, and there is a risk, even after the consummation of such Business
Combinations and the related expenditure of the Company's funds, that the
combined enterprises will still be unable to become a going concern or advance
beyond the development stage. Many of the Combinations may involve new and
untested products, processes, or market strategies which may not succeed.
Such risks will be assumed by the Company and, therefore, its shareholders.
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business.
Investors should note that any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's then-shareholders, including
purchasers in this offering. On the consummation of a Business Combination,
the Target Business will have significantly more assets than the Company;
therefore, management plans to offer a controlling interest in the Company to
the Target Business. While the actual terms of a transaction to which the
Company may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it
<PAGE>THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
desirable to avoid the creation of a taxable event and thereby structure the
acquisition in a so-called "tax-free" reorganization under Sections 368(a)(1)
or 351 of the Internal Revenue Code of 1954, as amended (the "Code"). In
order to obtain tax-free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company, including
investors in this offering, would retain less than 2% of the issued and
outstanding shares of the surviving entity, which would be likely to result in
significant dilution in the equity of such shareholders. Management of the
Company may choose to avail the Company of these provisions. In addition, a
majority of all of the Company's directors and officers may, as part of the
terms of the acquisition transaction, resign as directors and officers.
Management will not actively negotiate or otherwise consent to the
purchase of any portion of their Common Stock as a condition to or in
connection with a proposed Business Combination unless such a purchase is
requested by a Target Company as a condition to a merger or acquisition. The
officers and directors of the Company who own Common Stock have agreed to
comply with this provision which is based on a written agreement among
management. Management is unaware of any circumstances under which such
policy through their own initiative may be changed.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's Common Stock may have a depressive effect on such
market.
As a part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key
personnel, and take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management expertise.
<PAGE>THE BRIAN H. CORP.
FORM 10-QSB
September 30, 1996
The manner of the Business Combination will depend on the nature of the
Target Business, the respective needs and desires of the Company and other
parties, the management of the Target Business opportunity, and the relative
negotiating strength of the Company and such other management.
The Company has no present policy as to whether the Company may acquire
or merge with a business in which the Company's management, promoters, their
affiliates or associates have a direct or indirect ownership interest. The
Company also lacks a policy with regard to related party transactions in
general. The Company's officers and directors have not approached and have
not been approached by any person or entity with regard to any proposed
business ventures with respect to the Company. The Company will evaluate all
possible Business Combinations brought to it. If at any time a Business
Combination is brought to the Company by any of the Company's promoters,
management, or their affiliates or associates, disclosure as to this fact will
be included in the post-effective amendment, thereby allowing the public
investors the opportunity to fully evaluate the Business Combination.
The Company has adopted a policy that it will not pay a finder's fee to
any member of management for locating a merger or acquisition candidate. No
member of management intends to or may seek and negotiate for the payment of
finder's fees. In the event there is a finder's fee, it will be paid at the
direction of the successor management after a change in management control
resulting from a Business Combination. The Company's policy regarding
finder's fees is based on a written agreement among management. Management is
unaware of any circumstances under which such policy through their own
initiative may be changed.
The Company does not intend to advertise or promote the Company.
Instead, the Company's management will actively search for potential Target
Businesses. In the event management decides to advertise (in the form of an
ad in a legal publication) to attract a Target Business, the cost of such
advertising will be assumed by management.
The Company is a blank check company. It has no business of its own, but
instead is attempting to engage in a business combination through the
acquisition of a target company. The Company has no current cash
requirements, save for the printing and filing of reports with the Securities
and Exchange Commission. The Company does not intend to raise any additional
monies within the next twelve months.<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE BRIAN H. CORP.
By: Daniel Wainick
Daniel Wainick, President
Dated: Feb. 7, 1997
Daniel Wainick
Daniel Wainick, President, Director
Dated:
Theresa DiDato, Secretary, Director
Dated: Feb. 7, 1997
Joel Schonfeld
Joel Schonfeld, Director
Dated: Feb. 7, 1997
Barry Horowitz
Barry Horowitz, Director
