U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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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, 2002.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ___________
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)
5215 North O'Connor Boulevard, Suite 200, Irving, Texas 75039
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (972) 443-9800
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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 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 issuers classes
of common equity as of the latest practicable date.
Approximately 5,490,473 Shares as of the date of this report.
Transitional Small Business
Disclosure Format (check one): [ ] Yes [ X ] No
C
BEVERLY HOLDINGS, INC.
Form 10-QSB for the Quarter ended March 31, 2002
Table of Contents
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Page
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Condensed Balance Sheets (Unaudited) - March 31, 2002 and
June 30, 2001 1
Condensed Statements of Operations (Unaudited) for the Three Months
Ended March 31, 2002 and 2001, for the Nine Months Ended March 31,
2002, and for the Periods from August 30, 2000 (Date of Reorganization)
through March 31, 2001
and 2002 2
Condensed Statements of Cash Flows (Unaudited) for the Nine Months
Ended March 31, 2002 and for the Periods from August 30, 2000 (Date of
Reorganization) through March 31,
2001 and 2002 3
Notes to Condensed Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II - OTHER INFORMATION 9
ITEM 1 - LEGAL PROCEEDINGS
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS 9
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 9
ITEM 5 - OTHER INFORMATION 9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURE 10
Item 1. Condensed Financial Statements
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS
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March 31, June 30
2002 2001
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Current Assets
Cash $ 568 $ 3,102
Prepaid expenses and other current asset 2,000 --
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Total Current Assets 2,568 3,102
Investments in Non-Marketable Securities 310,000 --
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Total Assets $ 312,568 $ 3,102
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LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
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Current Liabilities
Accounts payable $ 67,644 $ 32,958
Advances from related party 3,300 --
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Total Current Liabilities 70,944 32,958
Stockholders' Equity (Deficit)
Common stock, $0.001 par value; 50,000,000 shares authorized
5,490,473 and 3,140,473 shares issued and outstanding,
respectively 5,490 3,140
Additional paid-in capital 463,015 35,365
Deficit accumulated during the development stage (226,881) (68,361)
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Total Stockholders' Equity (Deficit) 241,624 (29,856)
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Total Liabilities and Stockholders' Equity (Deficit) $ 312,568 $ 3,102
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1
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the
Period From
August 30, 2000
For the For the For the Period From For the (Date of
Three Months Nine Months August 30, 2000 (Date of Six Months Reorganization)
Ended Ended Reorganization) Through Ended Through
March 31, March 31, March 31, March 31, December 31,
2002 2001 2002 2001 2002 2001 2001
=========== =========== =========== =========== =========== ========== ===========
Sales $ -- $ -- $ -- $ -- $ -- $ -- $ --
Cost of Sales -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross Profit -- -- -- -- -- -- --
General and Administrative Expenses 51,084 20,079 158,520 20,234 226,881 107,436 175,797
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Loss $ (51,084) $ (20,079) $ (158,520) $ (20,234) $ (226,881) $ (107,436) $ (175,797)
=========== =========== =========== =========== =========== =========== ===========
Basic and Diluted Loss Per Share $ (0.01) $ (0.14) $ (0.03) $ (0.14)
=========== =========== =========== ===========
Weighted Average Number of Shares
Outstanding 5,490,473 140,473 5,027,791 140,473
=========== =========== =========== ===========
2
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the For the Period From
Nine Months August 30, 2000 (Date of
Ended Reorganization) Through
March 31, March 31,
2002 2001 2002
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Cash Flows From Operating Activities
Net loss $(158,520) $ (20,234) $(226,881)
Changes in current assets and liabilities:
Prepaid expenses and other current assets (2,000) (2,000)
Accounts payable 34,686 25,255 (13,851)
Advances from related party 3,300 (4,933) 3,300
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Net Cash Provided by (Used) in Operating Activities (122,534) 88 (239,432)
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Cash Flows From Investing Activities
Investments in non-marketable securities (310,000) -- (310,000)
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Net Cash Used in Investing Activities (310,000) -- (310,000)
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Cash Flows From Financing Activities
Proceeds from issuance of common stock 430,000 -- 550,000
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Net Cash Provided by Financing Activities 430,000 -- 550,000
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Net Change In Cash (2,534) 88 568
Cash at Beginning of Period 3,102 -- --
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Cash at End of Period $ 568 $ 88 $ 568
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3
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 --SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements--The accompanying condensed 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. It is suggested that these condensed financial
statements be read in conjunction with the Company's financial statements and
notes thereto included in the Form 10-KSB dated June 30, 2001. The results of
operations for the period ended March 31, 2002 is not necessarily indicative of
the operating results to be expected for the full year.
Basis of Presentation -- The accompanying condensed 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 nine months ended March 31, 2002, the Company incurred a net loss of
$128,520. As of March 31, 2002, the Company has had no revenues and the
accumulated deficit from reorganization totaled $196,881. These factors, among
others, indicate that the Company may be unable to 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 received $430,000 in
proceeds during the nine months ended March 31, 2002 from a private placement
offering and an agreement for the sale of up to 1,000,000 shares at $1.00 per
share. The Company is currently considered a development stage enterprise whose
purpose is to seek merger and acquisition candidates.
NOTE 2- INVESTMENT IN NON-MARKETABLE SECURITIES
During July of 2001, the Company entered into an agreement with Sonic Garden,
Inc. (SGI), a privately held California corporation in the business of online
music and traditional recordings, that gives the Company the right to purchase
up to 2,000,000 shares of SGI at $0.50 per share. The price per share was
determined as a result of an arms length negotiation between SGI and the
Company. Other than the option agreement, there are no shares being actively
traded. Were the entire 2,000,000 options to be exercised, the Company would own
approximately 22% of the outstanding equity securities of SGI. The Company
originally planned to exercise the Option in multiple traunches over a 12 month
period, however, the Company is not obligated to purchase any shares from SGI.
The Company considered this to be a long-term investment.
During the nine months ended March 31, 2002 the Company purchased 570,000 common
shares of SGI for $285,000. Because the present ownership of SGI by the Company
is only a minority ownership (less than 8%), the investment has been reported at
its market value as an investment in non-marketable securities. Because SGI is a
privately held corporation and because there are no comparable shares being
traded, the fair market value of the shares was determined to be the option
price of $0.50 per share.
4
BEVERLY HOLDINGS, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On January 24, 2002, the Company purchased 100,000 common shares of Corporate
Playbook Holdings, Inc., (Corporate Playbook) a privately held corporation in
the online human resources industry, for $25,000, or $0.25 per share. The
purchase price was determined as the result of an arms length negotiation
between the Company and Corporate Playbook. Because Corporate Playbook is a
privately held corporation, the purchase was recorded as an investment in
non-marketable securities at the purchase price of $0.25 per share.
NOTE 3- STOCKHOLDERS' EQUITY
On August 10, 2001, the Company authorized a 1-for-4 reverse stock split of the
Company's $0.001 par value common stock. All share and per share data have been
retroactively restated to reflect this reverse stock split.
On March 31, 2001, the Company's Board of Directors approved the terms of a
financial proposal from an institutional investor for the sale of up to
1,000,000 shares of common stock to the investor at $1.00 per share after the
Company conducted a $200,000 private placement offering (20,000,000 shares at
$0.01 per share) and a subsequent 4-to-1 reverse stock split. During April of
2001, the Company entered into a stock purchase agreement with various investors
in connection with the private placement offering spoken of above. As of June
30, 2001, $120,000 in proceeds had been received. During August of 2001, the
remaining $80,000 was collected. After the $200,000 had been received, the
5,000,000 common shares were issued on August 30, 2001. For financial reporting
purposes, the shares were considered issued upon the receipt of proceeds,
therefore, 2,000,000 shares were considered to have been issued during August of
2001. No underwriting discounts were experienced and no commissions or finder's
fees were paid. The proceeds were used for the Company's general operational
purposes and to invest in common shares of SGI.
During the nine months ended March 31, 2002, the Company sold 350,000 shares of
common stock for $350,000 in proceeds pursuant to the exercise of 350,000
options by an institutional investor. The options were issued in connection with
the financial proposal for the sale of up to 1,000,000 shares of common stock at
$1.00 per share. The proceeds were used for the Company's general operational
purposes and for further investment in SGI.
NOTE 4- RELATED PARTY TRANSACTIONS
During the nine months ended March 31, 2002 a consultant advanced the Company
$3,300 for operating expenses. As of March 31, 2002 amounts due to this
consultant is $30,000 which had been included in accounts payable.
5
PART 1 - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR BEVERLY HOLDINGS, INC.
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
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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. The Company licensed the use of its technology to its
subsidiaries for the territories of Europe, North America and Latin America.
6
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"), the primary operating company Latin American Subcarrier Services,
a California corporation ("LASS"), the Latin American licensee, European
Licensing Group, a California corporation ("ELG") and Domestic Transmission
Technologies, a California corporation ("DTT"), the North American licensee, 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. The Company retained approximately five percent
(5%) of the outstanding shares of DDJ California and 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 approximately ninety-five percent (95%) of
the ownership 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. The Company was unable to sell shares at $.10 per share since
the Company's stock was priced at $0.02 per share and had virtually no volume at
that price level. Effective March 6, 2001, the Company changed its name to
Beverly Holdings, Inc.
Acquisition of Interest in Sonic Garden
On July 19, 2001, the Company entered into an option agreement with Sonic
Garden, Inc. (the "Option"), to purchase up to 2,000,000 shares of common stock
of Sonic Garden for $0.50 per share for a total purchase price of $1,000,000,
which purchase represents approximately 22% of the outstanding equity securities
of Sonic Garden as of the date of the Option. The Company hopes to exercise the
Option in multiple traunches over the next 12 months, however, the Company is
not obligated to purchase any shares from Sonic Garden. The price per share for
the common stock was determined as a result of an arms length negotiation
between the Company and Sonic Garden. The Company has been informed that Sonic
Garden obtained title to certain proprietary intellectual property rights and
technology from The Phoenix Group International, LLC ("Phoenix"). The Company is
further informed that Phoenix obtained the digital music and web-based
intellectual property and technology from a third party that spent in excess of
$10,000,000 in developing the assets now owned by Sonic Garden. The Company was
unable to raise sufficient funds to purchase 2,000,000 shares of Sonic Garden
and ultimately only exercised options to purchase $285,000 worth of stock, or
570,000 shares since there was only a limited investment in Sonic Garden, the
Company determined that it would be more attractive to a merger candidate if it
divested its Sonic Garden shares and focused on a complete merger with an
7
operating company. As a result, the Company is in the process of distributing
the Sonic Garden shares to the Company's shareholders. On January 24, 2002, the
Company purchased 100,000 common shares of Corporate Playbook Holdings, Inc.,
(Corporate Playbook) a privately held corporation in the online human resources
industry, for $25,000, or $0.25 per share. The purchase price was determined as
the result of an arms length negotiation between the Company and Corporate
Playbook. Because Corporate Playbook is a privately held corporation, the
purchase was recorded as an investment in non-marketable securities at the
purchase price of $0.25 per share.
Results of Operations
Until August 30, 2000, the Company was primarily engaged in research
and development activities. On August 30, 2000, 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 obtain
such financing from new investors, and restructure its liabilities.
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. The Company has begun on a limited basis to initiate
its plan to acquire interests in operating business through the option to
acquire shares of Sonic Garden, but the Company has only purchased 570,000
shares of Sonic Garden and has not purchased interests in any other companies as
of the date of this report.
Three Months Ended March 31, 2002
Revenue. The Company had no revenues during the quarter ended March 31,
2002. The lack of revenue is the result of the lack of new sales in the quarter
ended March 31, 2002 and the previous divestiture of its operating subsidiaries.
Cost of Sales. The Company incurred no cost of sales for the quarter
ended March 31, 2002. This decrease is primarily due to the fact that the
Company did not sell any new products during the quarter ended March 31, 2002.
Gross Profit. The Company experienced no gross profit for the three
months ended March 31, 2002.
8
Operating Expenses. The Company had minimal operating expenses for the
three months ended March 31, 2002 of $51,084, primarily from consulting and
other professional services.
The preceding results are not compared with the same periods for the
preceding year due to the change in the Company's business.
Liquidity and Capital Resources
Cash and cash equivalents and net working (deficit) totaled $568 and
$38,376, respectively, as of March 31, 2002. The Company has relied upon sales
of common stock to fund its operations during the periods discussed. The Company
received $0 in debt financing for the three months ended March 31, 2002.
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, 2002.
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
None.
9
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
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
The Company's financial statements for the periods described herein are
attached.
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, 2002 BEVERLY HOLDINGS, INC.
By: /s/Vincent Train
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Vincent Traina, President
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