UNITED STATES 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 March 31, 1996
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from
____________________ to _____________________
Commission file number: Q-2549
BRIA COMMUNICATIONS CORPORATION
(Name of Small Business Issuer in Its Charter)
New Jersey 22-1644111
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 575-8073
(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 XX
The number of shares outstanding of the issuer's common stock ($0.01 par value),
as of October 23, 1996 was 13,649,256.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............ 4
PART II
ITEM 5. OTHER INFORMATION.....................................................5
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................5
SIGNATURES............................................................6
INDEX TO EXHIBITS ....................................................7
PART I
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" refers to BRIA
Communications Corporation and its predecessors. Interim financial statements
including a balance sheet for the Company as of the fiscal quarter ended March
31, 1996 and statements of operations for the interim period up to the date of
such balance sheet and the comparable period of the preceding fiscal year are
attached hereto on Pages F-1 through F-5 and incorporated herein by this
reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK.]
BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
CONDENSED BALANCE SHEETS
Unaudited
March 31 December 31
1996 1995
------------ ---------
ASSETS
CURRENT ASSETS:
Cash ............................................. $ 235 $ 82,398
Accounts receivable - related party .............. 4,000 239
Inventory ........................................ -- --
-------- --------
TOTAL CURRENT ASSETS ............. 4,235 82,637
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment .......................... -- --
Leasehold improvements and other equipment ....... -- --
-------- --------
Total Property and Equipment ................. -- --
Less accumulated depreciation .................... -- --
-------- --------
NET PROPERTY AND EQUIPMENT ............. -- --
-------- --------
OTHER ASSETS
Investments ...................................... 404,445 344,445
Media Credits .................................... 173,466 173,466
-------- --------
TOTAL OTHER ASSETS ............. 577,911 517,911
-------- --------
$582,146 $600,548
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable - officers and directors ........ $ 63,465 $ 63,465
Accounts payable .............................. 726,735 757,202
Other current liabilities ..................... 141,412 135,506
----------- -----------
TOTAL CURRENT LIABILITIES .......... 931,612 956,173
----------- -----------
LONG-TERM DEBT - NET OF CURRENT PORTION
Long-term capital leases ...................... -- --
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock:
Class A, $.001 par value, shares issued and
outstanding, 6,936,954 and 6,798,186 .... $ 6,937 $ 6,798
Class B $.001 par value, shares issued and
outstanding, 213,440 (convertible into
Class A shares) ........................ 213 213
Capital in excess of par value ................ 7,117,464 7,054,544
Accumulated deficit ........................... (7,474,080) (7,417,180)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT ...... (349,466) (355,625)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ....... $ 582,146 $ 600,548
=========== ===========
See accompanying notes to unaudited condensed finnacial statements.
F-1
BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
-----------------------------
March 31 March 31
1996 1995
------------ ------------
REVENUE ..................................... $ -- $ --
----------- ------------
COSTS AND EXPENSES:
Cost of sales .......................... -- --
Selling, general and administrative .... 56,900 135,261
Interest ............................... -- --
----------- ------------
56,900 135,261
----------- ------------
LOSS BEFORE EXTRAORDINARY ITEMS:
NET LOSS .................................... $ (56,900 $ (135,261)
=========== ============
NET LOSS PER SHARE: ......................... $ (0.02) (0.05)
AVERAGE COMMON SHARES OUTSTANDING ........... 6,878,606 5,422,731
See accompanying notes to unaudited condensed financial statements.
F-2
BRIA COMMUNICATIONS CORPORATION
FORMERLY KNOWN AS METALLURGICAL INDUSTRIES INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended
March 31 March 31
1996 1995
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................... $ (56,900) $ (135,261)
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Common stock issued for services and debt ........................... 63,059 --
(Increase) decrease in accounts receivable .......................... (3,761) --
Increase (decrease) in accounts payable ............................. (30,467) --
Increase (decrease) in accrued liabilities .......................... 5,906 135,202
--------- ---------
Total adjustments ...................... 34,737 135,202
--------- ---------
Net cash provided (used) by operating activities ...................... $ (22,163) $ (59)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of investment securities ................ (60,000) --
Cash proceeds from the sale of property ................................ -- --
--------- ---------
Net cash provided (used) by investing activities ...................... $ (60,000) $ --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and
issuance of additional shares ........................................ -- --
Repayment of debt ...................................................... -- --
--------- ---------
Net cash provided (used) by financing activities ...................... $ -- $ --
--------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash, beginning ........................................................ 82,398 166
--------- ---------
Cash, ending ........................................................... $ 235 $ 107
========= =========
See accompanying notes to unaudited condensed financial statements.
F-3
BRIA COMMUNICATIONS CORPORATION
(FORMERLY METALLURGICAL INDUSTRIES INC)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions in Form
10-QSB and, therefore, do not include all information and footnotes required by
generally accepted accounting principles and should, therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
the fiscal year ended December 31, 1995. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended December 31, 1996.
2. Changes in Common Stock
During the first quarter of 1996, the Company continued to rely on the
consulting services provided by Canton Financial Services Corporation ("CFS"),
who billed the Company $31,573 for services rendered in the same period. The
Company issued 116,863 restricted shares of its Class A Common Stock to settle
December 1995 - February 1996 consulting fees owed to CFS totaling $58,432. As
of March 31, 1996, the Company was indebted to CFS for services rendered in the
amount of $5,907. In addition, the Company issued 21,905 restricted shares of
its Class A Common Stock valued at $4,627 to two consultants for services
rendered.
3. Changes in Investment Securities
During January and February 1996, the Company acquired 17,584
restricted shares of the common stock in OMAP Holdings Incorporated, a Nevada
Corporation, through three separate transactions. The Company paid $60,000 in
cash for the OMAP shares.
4. Subsequent events
On April 1, 1996, the Company renewed its Consulting Agreement with
CFS. CFS assists the Company in preparing the necessary documentation to raise
capital, finding new business operations, and conducting public and investor
relations. According to the Consulting Agreement, the Company pays CFS a monthly
fee of $20,000 or, if higher, the fee for services actually rendered to the
Company during the month. The Company can pay the consulting fee either in cash
or through the issuance of restricted shares of its Class A Common Stock.
On May 6, 1996, the Company rescinded the December 8, 1995 Stock
Exchange Agreement between the Company and AltaChem Group, Inc. ab initio, or
from the beginning. This rescission was accomplished pursuant to a Rescission of
Stock Exchange Agreement and Release of all Claims signed that day. Pursuant to
the Rescission Agreement, the Parties released one another from all claims
potentially stemming from the Stock Exchange Agreement. The primary reason for
the rescission was AltaChem's failure to deliver to the Company audited
financial statements and a schedule of assets within 180 days, as required by
the Stock Exchange Agreement. This delinquency constituted a material breach of
the Stock Exchange Agreement and made it impossible for the Company to stay
current in its SEC filings.
On May 31, 1996, Aster De Schrijver resigned as chairman of the board
of directors and Jane Zheng resigned as secretary, treasurer and director. On
June 24, 1996, James Tilton resigned as chief executive officer and director.
None of the directors had any disagreements with the Company or its management
at the time of their respective resignations.
On June 7, 1996, the board of directors appointed Harry Tilton, Matthew
Veal and Shirley Tarantino as directors. These three individuals were appointed
to help the Company organize its management and restructure its Bylaws. After
accomplishing these goals, they resigned as directors of the Company on June 19,
1996. On June 27, 1996, Isaac Lifschutz and Wendall Hall were appointed as
directors of the Company.
On July 11, 1996, the Company entered into an agreement with
CyberMalls, Inc. ("CyberMalls"), a wholly-owned subsidiary of CFS. Pursuant to
the agreement, the Company purchased Cyber Football Inc., a Nevada Corporation
("CFI"). With the assistance of CyberMalls, CFI will design and build a virtual
mall, CyberFootball, which will be focused on the sport of football. CFI will
also continue to provide the Company with ongoing maintenance of the virtual
mall. The Company acquired CFI by issuing 1,875,000 shares of its Class A Common
Stock valued at $0.375 per share to CyberMalls and agreeing to pay additional
future consideration which is contigent on the success of CyberFootball. In
exchange, CFI will issue 9,101,019 shares of its restricted common stock to the
Company which amounts to 90.1% of the issued and outstanding shares of CFI.
In addition, the Company and CFI entered into a Financial Consulting
Agreement with CFS. Pursuant to the Agreement, CFS will provide its best efforts
to assist CFI in becoming a self sufficient, fully reporting public company
under the Securities and Exchange Act of 1934. In exchange, the Company will
issue $150,000 worth of its free trading Class A Common Stock to CFS on behalf
of CFI.
On September 10, 1996, the Company acquired Kingslawn Offset, Inc., a
New York corporation which owns and manages a printing business. In exchange for
acquiring all of Kingslawn's issued and outstanding capital stock, the Company
issued 2,000,000 restricted shares of its Class A Common Stock valued at $0.75
per share. Kingslawn's president and principal shareholder was also granted a
$500,000 lien on all equipment and fixtures in Kingslawn's possession as of
September 10, 1996. This lien is convertible at the holders' option into the
Company's Class A Common Stock at $0.75 per share.
5. Additional footnotes included by reference
Except as indicated in Notes 1-4 above, there have been no other
material changes in the information disclosed in the notes to the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995. Therefore, those footnotes are included herein by
reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
BRIA Communications Corporation, a New Jersey corporation hereafter
referred to as the "Company," was originally involved in the repair of aircraft
turbines and engine components and the purchasing, processing and selling of
special refractory metals. All active operations in such industries ceased in
June 1994, an event that significantly affected the Company's performance. The
Company then changed its focus to searching for suitable merger or acquisition
candidates.
The Company acquired AltaChem Group, Inc., a corporation formed under
the laws of the Republic of Ireland ("AltaChem"), as its subsidiary through a
Stock Exchange Agreement on December 8, 1995. AltaChem is a chemical company
which manufactures and markets a one-component polyurethane foam compound and
related products used to dispense that chemical. On May 8, 1996, the Stock
Exchange Agreement between the Company and AltaChem was rescinded ab initio or
from the beginning. AltaChem was the Company's only operating subsidiary during
the first fiscal quarter of 1996. For more information of the rescission of the
AltaChem acquisition, see the Company's Form 10-KSB for the fiscal year ended
December 31, 1995.
As a result of the rescission of the AltaChem Agreement, the Company
did not realize any revenue during the part of the fiscal year or the interim
period covered by this report.
Plan of Operations
After the rescission of the AltaChem Agreement and subsequent to the
end of the first fiscal quarter, the Company shifted its focus toward merging
with or acquiring suitable business entities.
On July 11, 1996, the Company entered into an agreement with
CyberMalls, Inc. ("CyberMalls"), a Utah corporation wholly owned by Canton
Financial Services Corporation ("CFS"). Pursuant to the agreement the Company
purchased CyberFootball, Inc., a Nevada corporation ("CFI") . CFI is a
developmental stage company whose business plan involves developing a virtual
mall on the Internet focused on the sport of football. The Company acquired CFI
by issuing 1,875,000 shares of its Class A Common Stock valued at .375(cent) per
share to CyberMalls. In exchange, CFI issued 9,101,019 restricted shares of its
Common Stock to the Company which reflects approximately 90.1% of the
authorized, issued and outstanding capital stock of CFI. CFI also issued a
Promissory Note in favor of CyberMalls in the amount of $11,500,000 bearing
interest of 9% per annum to be payable in three (3) years from the date of the
Agreement. The Note is secured by the CyberFootball trademark and domain rights.
The Company is guarantor of the Note with such guarantee secured only by 100% of
the Company's interest in CFI's Common Stock. The Company also agreed to pay
additional future consideration to CyberMalls, with such consideration being
contingent on the future revenues of CFI.
Although CFI is not currently operational, the Company is actively
soliciting vendors to place shops in the virtual mall. Once vendors are located,
the Company will enter into individual lease contracts and design advertising
web pages to meet the needs of its vendors. The Company expects to begin leasing
the shops in the next two to three months. However, no assurances can be given
that vendors will be located or that if they are located that they will result
in a profitable venture for the Company. The Company is also considering
expanding the focus of its virtual mall to include other sports in addition to
football and changing the name of the mall to reflect its expanded focus.
On September 10, 1996, the Company acquired 100% of the issued and
outstanding capital stock of Kingslawn Offset, Inc., a New York corporation
engaged in the printing of full color catalogs, sales sheets, and other
publications ("Kingslawn"). In exchange for acquiring all of Kingslawn's stock,
the Company issued 2 million restricted shares of its Class A Common Stock
valued at $0.75 per share. Kingslawn's President and principal shareholder was
also granted a $500,000 lien on all equipment and fixtures in Kingslawn's
possession as of September 10, 1996. This lien is convertible at the holder's
option into the Company's Class A Common Stock at $0.75 per share. Accordingly,
Kingslawn became a wholly owned subsidiary of the Company.
The Company acquired Kingslawn with the intention of expanding
Kingslawn's current printing operations. The Company intends to raise capital on
behalf of Kingslawn to help it purchase additional equipment and increase
production. The Company can provide no assurances that it will be able to
profitably expand such operations. Additionally, the Company and Kingslawn are
considering the Company's possible acquisitions of other subsidiaries to
complement Kingslawn's business, although no such assurances can be given that
any of the acquisitions will be made, or if made that they will be successful or
profitable.
While maintaining its quest for suitable merger or acquisition
candidates the Company also actively pursued several investor transactions to
help increase its consolidated revenues. Toward that end, the Company entered
into three separate Agreements with OMAP Holdings, Inc., a Nevada corporation
("OMAP") between January 15, 1996 and February 9, 1996. At that time OMAP was
also an affiliate of the Company. Pursuant to the Agreements, the Company
purchased an aggregate of 17,584 shares of OMAP Common Stock for $60,000. At the
time such Agreements were entered, James Tilton, Aster De Schrijver and Jane
Zheng were officers and directors of the Company and OMAP. Accordingly, these
Agreements may be deemed to have been not negotiated at arm's length, although
the Company believes that they were valued and executed pursuant to acceptable
business practices.
The Company also entered into two separate Stock Exchange Agreements
with TAC, Inc., a Utah corporation, ("TAC") during September 1996. Pursuant to
the Agreements the Company acquired an aggregate of 500,000 restricted shares of
TAC's Common Stock in exchange for issuing 2.5 million shares of the Company's
Class A Common Stock, restricted pursuant to Rule 144 under the Securities Act
of 1933.
The Company continues to search for appropriate business opportunities,
including businesses which the Company can acquire as operating subsidiaries.
The Company's goal is to acquire assets which will increase the Company's
consolidated revenues and complement the Company's existing business. The
Company is conducting preliminary negotiations with various entities, all of
which are designed to lead to further acquisitions or mergers by the Company.
However, the Company has not entered into any agreements with these entities and
no assurances can be given that any current negotiation will result in any
material business opportunity. In addition, due to the Company's limited cash
position, it is likely the Company will have to tender shares of its Common
Stock as consideration for any acquisition or merger. Such an exchange of the
Company's Common Stock would dilute the existing ownership position of current
shareholders. The Company intends to satisfy its short term cash requirements
through the future revenues generated from its newly acquired subsidiaries.
Although, the Company can provide no assurances that it will be able to generate
revenues to meet such expenses.
To further help it find appropriate business opportunities, the
Company has employed the services of CFS. CFS provides business services to the
Company including administrative, accounting, and shareholder relations work.
CFS also leases office space to the Company. Originally retained in May 1995,
CFS is currently rendering services to the Company pursuant to an April 1, 1996
Consulting Agreement (the "Consulting Agreement"). According to the Consulting
Agreement, the Company is obligated to pay CFS a monthly consulting fee equaling
$20,000 or the actual cost of services rendered by CFS if such cost exceeds
$20,000. The fee is payable either in cash or in restricted shares of the
Company's Common Stock valued at the lower of one-half (1/2) the closing bid
price on the last day of the month in which services are rendered to the Company
or on the day the Common Stock is actually issued to CFS. CFS is an affiliate of
CyberMalls. During the first quarter of 1996, the Company issued 116,836
restricted shares of Common Stock to CFS in consideration for consulting
services rendered. CFI has entered into a separate Consulting Agreement with CFS
by which CFS will provide its best efforts to assist CFI in becoming a viable
public entity.
The Company has also retained another consultant to help the Company
discover potential business opportunities in Europe. Pursuant to a June 25,
1996, Consulting Agreement, the Company issued 1,000,000 shares of the Company's
Class A Common Stock to the consultant Wilfried Martens for past consulting
services and additional consulting services to be performed in the future. The
term of the Consulting Agreement is one year.
The Company has no full time employees and has no current plans to
increase or decrease its current staff. However, pursuant to its Consulting
Agreements with CFS and CyberMalls, it receives consulting, administrative and
other services as needed for its development. CFS employs approximately 40
full-time employees and independent consultants, many of whom have rendered
services to the Company. CyberMalls' staff includes 23 employees and Kingslawn
Offset has a staff of 5 employees. The Company does not currently own an
operations plant or equipment and does not have plans to purchase same.
PART II
ITEM 5. OTHER INFORMATION
As a result of the the AltaChem rescission, the Company experienced
several changes in control. On May 31, 1996, Aster De Schrijver resigned as
chairman of the board of directors and Jane Zheng resigned as secretary,
treasurer and director. On June 24, 1996, James Tilton resigned as chief
executive officer and director. None of the directors had any disagreements with
the Company or its management at the time of their respective resignations.
On June 7, 1996, the board of directors appointed Harry Tilton, Matthew
Veal and Shirley Tarantino as directors. These three individuals were appointed
to help the Company organize its management and restructure its Bylaws. After
accomplishing these goals, they resigned as directors of the Company on June 19,
1996. On June 27, 1996, Isaac Lifschutz and Wendell Hall were appointed as
directors of the Company. However, on October 17, 1996, Wendell Hall resigned as
a director of the Company. Mr. Hall's resignation does not reflect any
disagreements with the Company or its management and the Company has not
appointed another director in his place.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits. Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits beginning on page 8
of this Form 10-QSB, which is herein incorporated by reference.
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the period for which this report is being filed:
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this TH day of October 1996.
BRIA Communications
/s/ Richard Lifschutz
---------------------
Richard Lifschutz
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/ Richard Lifschutz
- -------------------- President and Director October 22, 1996
Richard Lifschutz
/s/ Isaac Lifschutz Treasurer, Secretary and Director October 22, 1996
- ---------------
Isaac Lifschutz
INDEX TO EXHIBITS
EXHIBIT PAGE
NUMBER NUMBER DESCRIPTION
3(a) * Articles of Incorporation of the Company, filed as
Exhibit 3(i) to Registrant's Registration Statement on
Form S-4 filed June 2, 1990, as amended.
3(b) * Bylaws of the Company, filed as Exhibit 3(ii) to
Registrant's Registration Statement on Form S-4 filed
June 2, 1990, as amended.
10(i)(a) ** Purchase Agreement between the Company and Turner,
Turner & Associates, Richard H. Turner, Robert E.
Turner and Sherry Ruxer effective June 30, 1995, filed
as Exhibit 10 to Registrant's Form 8-K Current Report
dated September 26, 1995.
10(i)(b) *** Rescission Agreement between the Company, Robert E.
Turner, Richard H. Turner, and Sherry L. Ruxer signed
February 21, 1996 attached hereto.
* Incorporated herein by reference from the Company's
Form 10-KSB filed with the Commission on August 23,
1994.
** Incorporated herein by reference from the Company's
Form 8-K Current Report dated September 26, 1995.
*** Incorporated herein by reference from the Company's
Form 10-KSB for period ended June 30, 1995, filed with
the Commission on June 15, 1996.