U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB SEC File No:
33-14982-LA
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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BEVERLY HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 33-14982-LA 77-0530472
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
657 Third Street, San Francisco, California 94107
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(Address of principal executive offices) Zip Code)
Company's telephone number, including area code: (415) 597-8877
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DIGITAL D.J. HOLDINGS, INC.
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(Former name or former address, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the
1
Exchange Act during the past 12 months (or 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.
[ X ] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Approximately 11,060,701 Shares as of the date of this report.
Transitional Small Business Disclosure Format (check one): [ ] Yes [ X ] No
2
BEVERLY HOLDINGS, INC.
Form 10-QSB for the Quarter ended March 31, 2001
Table of Contents
Page
----
PART 1 - ITEM 2...................................................................................................4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR BEVERLY HOLDINGS, INC..........................................................4
CAUTION REGARDING FORWARD-LOOKING INFORMATION................................................................4
OVERVIEW OF THE COMPANY......................................................................................4
PART II - OTHER INFORMATION.......................................................................................7
ITEM 1 - LEGAL PROCEEDINGS...................................................................................7
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS...........................................................7
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES.....................................................................7
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................7
ITEM 5 - OTHER INFORMATION...................................................................................7
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K....................................................................8
SIGNATURE....................................................................................................8
3
PART 1 - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR BEVERLY HOLDINGS, INC.
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheet - March 31, 2001 (Unaudited) F-1
Statements of Operations (Unaudited) for the Three Months Ended March
31, 2001 and for the Period from August 30,
2000 (Date of Reorganization) through March 31, 2001 F-2
Statements of Cash Flows (Unaudited) for the Three Months Ended March
31, 2001 and for the Period from August 30,
2000 (Date of Reorganization) through March 31, 2001 F-3
Notes to Financial Statements (Unaudited) F-4
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
BALANCE SHEET
(UNAUDITED)
March 31, 2001
ASSETS
------
Current Assets $ 88
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Total Assets $ 88
====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current Liabilities
Accrued expenses $ 76,562
Advances payable 25,255
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Total Current Liabilities 101,817
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Stockholders' Deficit
Preferred Stock, no par value
6,000,000 shares authorized
no shares issued and outstanding --
Common stock, $0.001 par value
50,000,000 shares authorized
560,701shares issued and outstanding 561
Deficit paid-in capital (82,056)
Deficit accumulated during the development stage (20,234)
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Total Stockholders' Deficit (101,729)
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Total Liabilities and Stockholders' Deficit $ 88
=============
The accompanying notes are an integral part of these financial statements.
F-1
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative From
August 30, 2000
(Date of
For the Three Reorganization)
Months Ended Through
March 31, 2001 March 31, 2001
--------------- ---------------
Sales $ -- $ --
Cost of Sales -- --
Gross Profit -- --
General and Administrative Expenses 20,079 20,234
--------------- ---------------
Net Loss $ 20,079 $ 20,234
=============== ===============
The accompanying notes are an integral part of these financial statements.
F-2
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative From
August 30, 2000
(Date of
For the Three Reorganization)
Months Ended Through
March 31, 2001 March 31, 2001
--------------- ---------------
Cash Flows From Operating Activities
Net Loss $ (20,079) $ (20,234)
Adjustments to reconcile net loss to
net cash used in operating activities:
Accrued expenses 19,982 (4,933)
Advances payable 185 25,255
--------------- ---------------
Net Cash Provided By Operating Activities 88 88
--------------- ---------------
Net Increase (Decrease) in Cash and
Cash Equivalents 88 88
Cash and Cash Equivalents at Beginning of Period -- --
--------------- ---------------
Cash and Cash Equivalents at End of Period $ 88 $ 88
================ ===============
The accompanying notes are an integral part of these financial statements.
F-3
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization-- Beverly Holdings, Inc. (the "Company") was
incorporated as "Golden Queens Mining Company" on July 31, 1986 under the law of
the State of Nevada, primarily for the purpose of exploration, development and
production of certain mining properties located in Esmeralda County, Nevada. In
July, 1987, the Company changed its name to "Breakthrough Electronics, Inc.",
terminated its activities in the mining business, and began efforts to develop
and market electronic product. This business was terminated several years ago.
On November 22, 1999, the Company acquired Digital DJ, Inc., pursuant to a
reverse triangle merger . This merger resulted in control of the Company
transferring from the former shareholders to the former shareholders of Digital
DJ Inc. Digital DJ Inc. was incorporated in December 1991. Its primary business
activity was the development and marketing of a digital data system that
provides a variety of information services to radio listeners using FM
subcarrier technology.
On August 30, 2000, the Company's shareholders and its Board of Directors voted
to distribute the majority of the outstanding shares of each of the Company's
subsidiaries. Ninety-five percent (95%) of the outstanding shares of each of the
subsidiaries were distributed to the shareholders, ratably, based upon their
ownership interest. The Company elected a new Board of Directors and changed its
name to Digital Holdings, Inc. On March 6, 2001, the Board of Directors decided
to change the Company's name from Digital Holdings, Inc. to Beverly Holdings,
Inc.
For financial reporting purposes, the Beverly Holdings, Inc. was considered the
successor to the historical Digital DJ Holdings, Inc. and Subsidiaries and the
Company was considered a newly organized entity on August 30, 2000, the date
negotiations relating to the reorganization was approved by the shareholders.
The accompanying financial statements do not include any of the historical
operations related to the operations of the Digital DJ Holdings, Inc. and
Subsidiaries prior to August 30, 2000.
Interim Financial Statements--The accompanying financial statements are
unaudited. In the opinion of management, all necessary adjustments (which
include only normal recurring adjustments) have been made to present fairly the
financial position, results of operations and cash flows for the periods
presented. Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The results of operations for the three month
period ended March 31, 2001 are not necessarily indicative of the operating
results to be expected for the full year. There were no operations during the
period from August 20, 2000 through September 30, 2000. Therefore, the six month
results of operations for the period from October 1, 2000 through March 31, 2001
were the same as those from August 30, 2000 through March 31, 2001.
Basis of Presentation -- The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. During the
three months ended March 31, 2001, the Company incurred net losses of $20,079.
As of March 31, 2001, the accumulated deficit from reorganization totaled
$20,234. These factors, among others, indicate that the Company may be unable to
F-4
continue as a going concern. The accompanying financial statements do not
include any adjustments relating to the carrying amount and classification of
recorded assets or the amount and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company's ability to continue as a going concern is dependent upon its ability
to generate sufficient cash flows to meet its obligations on a timely basis, to
obtain additional financing and ultimately to attain successful operations. The
Company is currently considered a development stage enterprise whose purpose is
to seek merger and acquisition candidates.
NOTE 2- STOCKHOLDERS' EQUITY
On March 31, 2001, the Company's Board of Directors approved the terms of a
financial proposal from International Fiduciary Trust & Holdings, S.A., which
contemplates an initial private offering by the Company of 20,000,000 shares of
common stock for $0.01 per share, a subsequent 4 to 1 reverse stock split and a
second private offering of up to an additional 800,000 shares at $1.00 per
share.
NOTE 3 - CONSULTING AGREEMENT
On March 1, 2001, the Company entered into an agreement with Mackenzie Shea,
Inc.(MSI) to engage and retain MSI as a Business Consultant for a period of two
years unless otherwise terminated. The Company agreed to pay MSI a monthly
advisory fee of $15,000 plus other normal and reasonable out-of-pocket expenses.
NOTE 4 - SUBSEQUENT EVENTS
The Company sold 10,500,000 shares of common stock pursuant to the offering
proposal from a group of investors which was mentioned in NOTE 2. The total
offering price received is $105,000, however, the Company anticipates completing
the full $200,000 private placement. No underwriting discounts were experienced
and no commissions or finder's fees were paid. The proceeds will be used for the
Company's general operational purposes.
F-5
The following discussion of the financial conditions and results of
operations of the Company should be read in conjunction with the financial
statements, including notes thereto, for the Company.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
- ---------------------------------------------
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward- looking statements. Such statements reflect the current view
of the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks or uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumption prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
OVERVIEW OF THE COMPANY
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Beverly Holdings, Inc. (the "Company") was incorporated as "Golden
Queens Mining Company" on July 31, 1986 under the laws of the State of Nevada,
primarily for the purpose of exploration, development and production of certain
mining properties located in Esmeralda County, Nevada. In July, 1987, the
Company changed its name to "Breakthrough Electronics, Inc.," terminated its
activities in the mining business, and began efforts to develop and market
electronic products, including a telephone device designed to screen telephone
calls, acquired from its then President. This business was terminated several
years ago. On November 22, 1999, the Company acquired Digital D.J., Inc.,
pursuant to a reverse triangular merger in a transaction in which approximately
12,466,992 shares of the Company's common stock were issued to the shareholders
of Digital D.J., Inc. (the "Reorganization"). The Reorganization resulted in
control of the Company transferring from the former shareholders to the former
shareholders of Digital D.J., Inc. The terms and conditions of the
Reorganization are set forth in the Company's Form 8-K filed with the Commission
for the period beginning on November 22, 1999.
Digital DJ Inc. was incorporated in December 1991. Its primary business
activity was the development and marketing of a digital data system that
provides a variety of information services to radio listeners using FM
subcarrier technology. On April 1, 1999, the Company established a wholly owned
subsidiary, FM Intelligent Transportation Systems, Inc. (FMITS), which provided
a traffic information service in the mobile market.
4
On August 30, 2000, the Company's shareholders and its Board of
Directors voted to distribute the majority of the outstanding shares of each of
the Company's subsidiaries, Digital D.J., Inc., a California corporation ("DDJ
California"), Latin American Subcarrier Services, a California corporation
("LASS"), European Licensing Group, a California corporation ("ELG") and
Domestic Transmission Technologies, a California corporation ("DTT"), to the
Company's shareholders. Ninety-five percent (95%) of the outstanding shares of
each of the subsidiaries were distributed to the shareholders, ratably, based
upon their ownership interest. Approximately 13,316,649 shares of DDJ California
and approximately 532,666 shares of each of DTT, LASS and ELG were distributed
to the Company's shareholders. The Company retained approximately 700,877 shares
of DDJ California and approximately 28,035 shares of each of ELG, LASS and DTT.
The shareholders and the Board of Directors also voted to amend the Company's
Articles of Incorporation to change the Company's name to Digital D.J. Holdings,
Inc., and to conduct a twenty-five for one reverse stock split of the Company's
common stock. After distributing out ninety-five percent (95%) of the core
businesses of the Company to its shareholders, the Company elected to seek other
acquisition candidates and to sell up to 1,000,000 shares of its common stock
for up to $.10 per share, to be paid in goods, services or cash. For financial
reporting purposes, the Company was considered the successor to the historical
Digital D.J. Holdings, Inc., and Subsidiaries and the Company was considered a
newly organized entity on August 30, 2000, the date negotiations relating to the
reorganization was approved by the shareholders. The accompanying Company's
financial statements do not include any of the historical operations related to
the operations of the Digital D.J. Holdings, Inc., and Subsidiaries prior to
August 30, 2000. The Company was unable to sell shares at $.10 per share since
the Company's stock was priced at $0.02 per share. Effective March 6, 2001, the
Company changed its name to Beverly Holdings, Inc.
On March 31, 2001, the Company's Board of Directors voted to approve a
proposed restructuring and financing plan proposed by International Fiduciary
Trust & Holdings, S.A., which contemplates an initial private offering by the
Company of 20,000,000 shares of common stock for $.01 per share, a subsequent 4
to 1 reverse stock split and a second private offering of up to an additional
800,000 shares thereafter at $1.00 per share. See Section II, Item 2, CHANGES IN
SECURITIES AND USE OF PROCEEDS.
Results of Operations
As of March 31, 2001, the Company is in the development stage. Until
August 30, 2000, the Company was primarily engaged in research and development
activities. On August 30, the Company elected to divest its operating subsidiary
and search for an acquisition candidate. Accordingly, the accompanying
statements of operations should not be regarded as typical for normal periods of
operation. The Company's development stage status, recurring net losses and
capital deficit raise substantial doubt about its ability to continue as a going
concern. Additional financing or restructuring of its liabilities will be
required in order for the Company to complete its development stage activities.
Management hopes that it will be able to 4btain such financing from new
investors, and restructure its liabilities.
5
The Company had no operations or revenues, or significant assets or
liabilities since it divested its operating subsidiaries prior to August 2000.
The Company had minimal activities at the operating subsidiary level from the
period between July 1, 2000 and August 30, 2000. Thereafter, the Company's
activities related only to the actions necessary to complete the divestiture of
the operating subsidiaries.
Three Months Ended March 31, 2001
Revenue. The Company had no revenues during the quarter ended March 31,
2001. The decrease in revenue is the result of the lack of new sales in the
quarter ended March 31, 2001 and the previous divestiture of its operating
subsidiaries.
Cost of Sales. The Company incurred no cost of sales for the quarter
ended March 31, 2001. This decrease is primarily due to the fact that the
Company did not sell any new products during the quarter ended March 31, 2001.
Gross Profit. The Company experienced no gross profit for the three
months ended March 31, 2001.
Operating Expenses. The Company had minimal operating expenses for the
three months ended March 31, 2001 of $20,079.
Liquidity and Capital Resources
Cash and cash equivalents and net working (deficit) totaled $88 and
($101,729), respectively, as of March 31, 2001. The primary source of cash has
been net proceeds generated from debt financings. The Company has relied upon
advances from shareholders to fund its operations during the periods discussed.
The Company received $105 in debt financing for the three months ended March 31,
2001.
The Company has only minimal existing cash and cash equivalents and no
cash flow from operations. The Company will have to rely upon cash raised
through private placements or loans from its shareholders or others to meet the
Company's presently anticipated working capital needs for the next 13 months.
The Company will be required to obtain additional funds, if available, through
borrowings or equity financings. There can be no assurance that such capital
will be available on acceptable terms. If the Company is unable to obtain
sufficient financing, it may be unable to continue to operate.
Material Changes in Operations
The Company has had no material change in operation during the quarter
ended March 31, 2001.
6
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is not a party to or aware of any legal proceeding,
involving the Company and the Company is not aware of any proceedings involving
any of the Company's directors, officers, agents, representatives or persons
that beneficially own 5% or more of the Company's voting securities.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 31, 2001, the Board of Directors of the Company approved the
terms of a proposal provided by International Fiduciary Trust & Holdings, S.A.,
pursuant to which the Company would enter into an overall financing plan
requiring two consecutive but differing private placements and a reverse stock
split. The plan calls for the Company to conduct a private placement of
20,000,000 shares of its common stock at $.01 per share, which was approximately
50% of the market value of the Company's publically traded shares as of the date
of the resolution. Upon completion of the first private placement, the Company
will conduct a 4 to 1 reverse stock split upon approval of the Company's
shareholders. Upon completion of the reverse stock split, International
Fiduciary Trust & Holdings, S.A. agreed to purchase up to 800,000 shares of the
Company's common stock for $1.00 per share. As of the date of this report, the
Company has completed and accepted subscriptions for 10,500,000 shares of common
stock and received aggregate subscription proceeds in the amount of $105,000 in
the first private placement, as more particularly described below:
a. The Company sold 10,500,000 shares of common stock pursuant
to this offering effective on May 3, 2001.
b. There were no principal underwriters. The shares were sold
on a private basis to accredited investors only that had a preexisting business
relationship with the Company, its financial consultants, legal advisors or
accounts.
c. The securities were sold for cash. The total offering price
received to date is $105,000, however, the Company anticipates completing the
full $200,000 private placement. No underwriting discounts were experienced and
no commissions or finder's fees were paid.
d. The securities were sold in reliance upon the exemptions
from registration afforded under Regulation D and Rule 506 promulgated
thereunder. Securities were offered only to accredited investors. Each investor
completed a Subscriber Questionnaire and a Subscription Agreement certifying
that they were accredited investors.
e. Proceeds of the offering were used for the Company's
general operational purposes and as follows.
7
Accounting and audit fees, retirement of debt, new transfer agency
fees, outstanding consulting fees and general working capital.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
Change In Registrant's Certifying Accountant
Effective February 15, 2001, the Company has engaged the accounting
firm of Hansen, Barnett & Maxwell as its principal accountants and the
accounting firm of Singer, Lewak, Greenbaum & Goldstein has been dismissed, as
of February 15, 2001.
The Singer, Lewak, Greenbaum & Goldstein previous reports contained a
qualification as to the Registrant's ability to continue as a going concern,
however, such qualifications were unrelated to the dismissal.
The decision to change accountants was recommended by the Company's
Board of Directors.
During the two most recent fiscal years and any interim period
preceding the former accountants' dismissal, there were no disagreements with
the former accountants on any matter of accounting principals or practices,
financial statements, the disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of the former accountants,
would have caused them to make a reference to the subject matter of the
disagreement in connection with their reports.
The Registrant has provided the former accountant with a copy of this
report that the former accountant received no later than the day that this
report is filed with the Commission. The Registrant has requested the former
accountants to furnish the Registrant with a letter addressed to the Commission
stating whether they agree with the statements made by the Registrant in
response to this Item and, if not, stating the respects in which they do not
agree. The Registrant shall request the former accountants to provide the letter
as promptly as possible so that the Registrant can file the letter with the
Commission within ten business days after the filing of this report.
Notwithstanding the ten business day period, the Registrant will file the letter
by amendment within two business days of receipt.
8
Consulting Agreement
On March 1, 2001, the Company entered into a Consulting Agreement with
Mackenzie Shea, Inc. ("MSI") to provide various business consulting and advisory
services for the Company. Pursuant to the Agreement, MSI is paid $15,000 per
month for such services and is reimbursed for normal business expenses incurred
in the course of its engagement. The Agreement is cancellable upon 30 days
written notice. MSI has also agreed to temporarily allow the Company to utilize
MSI's office as its primary business location.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
The Company's financial statements for the periods described herein are
attached.
3.1 Amended Articles of Incorporation of Digital D.J. Holdings, Inc.
10.1 Form of Stock Purchase Agreement in $0.01 private placement.
10.2 Form of Option Agreement
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.
May 15, 2001 BEVERLY HOLDINGS, INC.
By: /s/ Thomas Takahisa
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Thomas Takahisa, President
9