SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________________
Commission File No. 0-15260
BRL Holdings, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 88-0218411
(State or other jurisdiction of (Internal Revenue Service
Incorporation or organization) Employer Identification No.)
200 Perimeter Road, Manchester, NH 03103
(Address of principal Executive offices Zip Code)
(603) 641-8443
Issuer's telephone number, including area code
Former name, former address and formal fiscal year if changed since last
report.
Indicate, by check mark, whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 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 X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date, 47,906,220 shares of
common stock, par value $.01 per share as of May 14, 2003.
_________________________________________________________________
Transitional Small Business Disclosure Format (Check One) Yes No X
BRL HOLDINGS, INC.
INDEX
PART I. FINANCIAL INFORMATION Page
Number
Item 1 Financial Statements . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet as of March 31, 2003 (unaudited) and
Balance Sheet at June 30, 2002 . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 2003 and Statement of Operations for the nine
months ended March 31, 2003 and from inception of development
stage (October 4, 2002) until March 31, 2003 (unaudited) . . . 4
Consolidated Statements of Cash Flows for the Nine Months
Ended March 31, 2003 and from inception of development stage
(October 4, 2002) until March 31, 2003.. . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . 7
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operation. . . . . . . . . . . . . . . . . . . 8
PART II.OTHER INFORMATION
Item 1.Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .10
Item 2.Changes in Securities . . . . . . . . . . . . . . . . . . . .10
Item 3.Defaults Upon Senior Securities . . . . . . . . . . . . . . .10
Item 4.Submission of Matters to a Vote of Security Holders . . . . .10
Item 5.Other Information . . . . . . . . . . . . . . . . . . . . . .10
Item 6.Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . .10
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statement
BRL HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
March 31, 2003 and June 30, 2002
March 31, June 30,
(Consolidated)
2003 2002
(Unaudited)
--------- ----------
ASSETS
Current Assets:
Cash $ 606 $ 1,148
Other receivables 19,088 -
Prepaid expenses and other current assets 1,575 1,050
--------- ----------
Total current assets 21,269 2,198
--------- ----------
Other assets:
Investments in related party securities 2,717 -
--------- ----------
Total assets $ 23,986 $ 2,198
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCIES)
Current liabilities:
Accounts payable $ 203,969 $ 8,814
Accounts payable related party 20,687 20,687
Accrued expenses 379,721 5,000
--------- ----------
Total current liabilities 604,377 34,501
--------- ----------
Stockholders' equity (Deficiency):
Preferred Stock of $.10 per share value,
authorized 5,000,000 shares, no shares
outstanding at December 31, 2002 and
June 30, 2002, respectively - -
Common stock of $.01 par value,
50,000,000 shares authorized, 47,906,220
and 5,433,800 issued and outstanding at
March 31, 2003 and June 30, 2002 479,062 54,338
Additional paid-in capital 7,743,720 7,956,081
Accumulated deficit prior to development stage
activities (7,981,338) (8,042,772)
Development stage accumulated earnings (deficit) (821,835) -
---------- ----------
Total Stockholder's Equity (deficit) (580,391) (32,303)
---------- ----------
Total liabilities and stockholders' equity
(deficit) $ 23,986 $ 2,198
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
3
BRL HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended March 31, 2003 and the
Cumulative Period (October 4, 2002) to March 31, 2003
(Unaudited)
Inception
(October 4,
Three Months Ended Six Months Ended 2002) to
March 31, March 31, March 31,
2003 2002 2003 2002 2003
(Unaudited) (Unaudited) (Unaudited)
------------------ ----------------- -----------
Revenues $ - $ - $ - $ - $ -
Cost of goods sold - - - - -
--------- -------- --------- -------- ---------
Gross profit - - - - -
Costs and expenses:
Research and development - (169,501) - (262,879) -
Purchased technologies
cost - - (2,445) - (2,445)
General and
administrative income
(expense) (109,017) (186,736) (659,812) - (620,990)
--------- -------- --------- --------- --------
Total costs and
expenses (109,017) (356,237) (662,257) (688,797) (623,435)
--------- -------- --------- --------- --------
(Loss)/Gain from
operations (109,017) (356,237) (662,257) (688,797) (623,435)
--------- -------- --------- --------- --------
Other Income (Costs):
Loss from investments - - (288,585) - (288,585)
Other income (cost) - 3,000 90,017 13,000 90,017
--------- -------- --------- --------- --------
Total other income (cost) - 3,000 (198,568) 13,000 (198,568)
--------- -------- --------- --------- --------
Gain (loss) before
provision for (benefit
from) income taxes - (353,237) (860,825) (675,797) (822,003)
Provision for income taxes - - - - -
--------- -------- --------- --------- --------
Net gain (loss) $ (109,017)$(353,237)$(860,825)$(675,797)$(822,003)
========= ======== ========= ========= ========
Weighted average shares 47,906,220 5,401,756 31,389,168 3,577,878 16,926,724
Basic and fully diluted
loss per share $ (0.00) $ (0.07)$ (0.03)$ (0.19)$ (0.05)
The accompanying notes are an integral part of the consolidated financial
statements.
4
BRL HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended March 31, 2003 and 2002 and
the Cumulative Period from Inception to March 31, 2003
(Unaudited)
Inception
Nine Months Ended (October 4, 2002)
March 31, To March 31,
2003 2002 2003
------------------ ----------------
Cash flows from operating
activities:
Net (loss) $(860,825) $(675,797) $(822,003)
Adjustments to reconcile net
loss to net cash used in
development activities:
Depreciation and amortization - 110,813 -
Common stock issued in exchange
for purchased technology 2,445 52,500 2,445
Net effect of subsidiary
transactions 97,930 97,392
Common stock issued in
exchange for common stock
of subsidiary 212,362 - 212,362
Common stock issued in
exchange for services
rendered - 156,422 -
(Increase) Decrease in current
assets:
Notes receivable - 13,624 -
Accounts receivable (19,088) - (19,088)
Other receivables - (995) 764
Prepaid expenses and other
current assets (525) (595) (1,050)
Related party securities (2,717) - (2,717)
Other non-current assets - - -
Increase (Decrease) in current
liabilities:
Notes payable, stockholders
for service - 83,755 -
Accounts payable 195,155 199,601 158,886
Accrued expenses 374,721 23,516 373,221
Other liabilities - (10,124) -
--------- -------- ---------
Net cash used in
operating activities $ (542) $(47,280) $ 212
--------- -------- ---------
The accompanying notes are an integral part of the consolidated financial
statements.
5
BRL HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended March 31, 2003 and 2002 and
the Cumulative Period from Inception to March 31, 2003
(Unaudited)
Inception
Nine Months Ended (October 4, 2002)
March 31, To March 31,
2003 2002 2003
------------------ ----------------
Cash flows from investing activities:
Purchase of fixed assets $ - $ (6,015) $ -
Purchase of intangible assets - (661) -
Proceeds from sale of assets - - -
-------- ---------- ------------
Net cash used in investing
activities - (6,676) -
-------- ---------- ------------
Cash flows from financing activities:
Notes receivable - - -
Notes payable - 57,000 -
Issuance of common stock, net - - -
Payment of deferred offering costs - - -
-------- --------- ------------
Net cash provided by
investing activities $ - $ 57,000 $ -
-------- --------- ------------
Net increase (decrease) in cash (542) 3,044 212
Cash at beginning of period 1,148 119 394
-------- --------- ------------
Cash at end of period $ 606 $ 3,163 $ 606
======== ========= ============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non cash Investing and Financing Activities:
Cash paid for interest - - -
Stock issued for acquisition of
subsidiary 212,362 490,000 212,362
Liabilities repaid through
issuance of common stock 2,445 - 2,445
The accompanying notes are an integral part of these consolidated financial
statements.
6
BRL HOLDING, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)
Note 1 Basis of presentation
The accompanying unaudited consolidated financial statements have been
prepared from the books and records of BRL Holdings, Inc. (the "Company") or
"BRL") in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements and should be read in conjunction with the
Company's audited consolidated financial statements at and for the fiscal year
ended June 30, 2002. In the opinion of management, all adjustments
(consisting only of normal recurring accruals and adjustments associated with
the Element 21 acquisition in the current fiscal year) considered necessary
for a fair presentation have been included. Operating results for the nine
months ended March 31, 2003 are not necessarily indicative of the results that
may be expected for the year ended June 30, 2003.
Note 2 Investment in related parted securities
On April 1, 2002 we divested our majority interest in the AssureTec
Systems subsidiary by exchanging with AssureTec founders and consultants
shares in AssureTec held by the Company. After divesting these shares
previously held, the Company currently holds as an investment through its Tech
Ventures, Inc. subsidiary a minority interest consisting of 2,716,900 shares
of AssureTec stock carried at a nominal value equal to the par value of the
stock. (See our 8-K Current Report dated April 1, 2002, which has been
previously filed with the Securities and Exchange Commission and which is
incorporated herein by reference.)
Note 3 Consolidation of financial statements
Since June 30, 2002 the Company has been consolidated with Advanced
Conductor Technologies, Inc., Tech Ventures, Inc. and Tech Venture's wholly
owned subsidiaries IJAM Entertainment, Inc. For the period of October 4, 2002
to March 31, 2003 the Company was also consolidated with Element 21 Golf
Company, a development stage enterprise. For the nine month period ended March
31, 2003 and prior to the formation of Tech Ventures, the Company was
consolidated with AssureTec Systems, Inc., from November 9, 2001 to March 31,
2002. Prior to November 9, 2001 and from April 1, 2002 through October 4,
2002 the Company had no business activities other than administrative costs
necessary for remaining a publicly reporting entity. On April 1, 2002 the
Company divested itself of its controlling interest in AssureTec Systems, Inc.
retaining an investment interest carried at nominal value (see Item 2). On
October 4, 2002 the Company acquired 100% of Element 21 Golf Company in a
stock for stock transaction issuing 21,236,210 shares of the Company's common
stock in exchange for a like number of shares of Element 21 Golf Company.
7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following discussion includes the business of Element 21 Golf
Company (the "Subsidiary"), since the Company, prior to its acquisition of
the Subsidiary, had recently divested its majority interest in AssureTec
Systems, Inc., retaining only an investment interest carried at a nominal
value through a newly formed subsidiary Tech Ventures, Inc. Otherwise the
Company had no operations other than raising capital and searching for an
acquisition candidate (i.e., the Subsidiary). Where relevant, all numbers
retroactively take into account the operations of the Company, Tech Ventures
and Element 21. The Company has announced its plans to spin off Tech Ventures
as an independent company, but such is still pending.
Three Months Ended March 31, 2003 and 2002
For the three months ended March 31, 2003 the Company, including the
Subsidiaries had no revenues, general and administrative costs of $109,017
resulting in a loss of $109,017 as compared with the three months ended March
31, 2002, the Company, including the Subsidiary AssureTec had no revenues,
research and development costs of $169,501, general and administrative
expenses of $186,736 and other income of $3,000 for a net loss of $353,237.
Nine Months Ended March 31, 2003 and 2002
For the nine months ended March 31, 2003 the Company, including the
subsidiaries had no revenues, $2,445 of purchased technology costs,
administrative costs of $659,812, loss on investment of $288,585, other income
of $90,017 resulting in a net loss of $860,825 as compared with the nine
months ended March 31, 2002 wherein the Company, including the subsidiary
AssureTec from November 9, 2001 through March 31, 2002, had research and
development costs of $262,879, general and administrative expenses of
$425,918, other income of $13,000 yielding a net loss of $675,797.
Inception to March 31, 2003
From inception of the consolidation of the Company with Element 21 Golf
Company, (October 4, 2002), through March 31, 2003, the Company, including the
Subsidiaries, had revenues of $0, purchased technology costs of $2,445,
administrative costs of $620,990, loss from investments of $288,585 and other
income of $90,017 yielding an accumulated net loss of $822,003.
Liquidity and Capital Resources
The Company including its subsidiary Element 21 Golf Company has a
negative working capital of $583,108 at March 31, 2003. It's liquidity from
inception until the closing of the Reorganization was primarily the funds of
the Company and from advances by stockholders of the Company. Absent
continued accruals by consultants retained by the Company to manage its
operations and further advances by stockholders of the Company, the Company
cannot continue operations without additional capital, the source of which, if
any cannot be certain at this time.
Dividend Policy
The Company has not declared or paid any cash dividends on its common
stock since its inception and does not anticipate the declaration or payment
of cash dividends in the foreseeable future. The Company intends to retain
earnings, if any, to finance the development and expansion of its subsidiary's
business. Future dividend policy will be subject to the discretion of the
Board of Directors and will be contingent upon future earnings, if any, the
Company's financial condition, capital requirements, general business
conditions and other factors. Therefore, there can be no assurance that
dividends of any kind will ever be paid.
8
Effect of Inflation
Management believes that inflation has not had a material effect on its
operations for the periods presented.
9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities.
None
Item 3. Default Upon Senior Securities.
None
Item 4. Submission of matters to a Vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None.
10
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BRL Holdings, Inc.
May 19, 2003 By: /s/ Nataliya Hearn
-----------------------------
Nataliya Hearn, Ph.D.
President and Director
By: /s/ Jim Morin
--------------------------
Secretary, Treasurer,
CFO and Director
11
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jim Morin, Secretary/Treasurer and Chief Financial Officer of BRL
Holdings, Inc. (the "Registrant"), certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of the
Registrant;
2. Based on my knowledge, this Quarterly Report does not contain any
un-true statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this Quarterly Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Quarterly Report, fairly present in
all material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
Quarterly Report;
4. The Registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
b) Evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c) Presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors (or persons performing the
equivalent function);
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in
this Quarterly Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 19, 2003 By/s/Jim Morin
Secretary/Treasurer,
CFO and Director
12
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BRL Holdings, Inc. (the
"Registrant") on Form 10-QSB for the quarter ended December 31, 2002, as filed
with the Securities and Exchange Commission on the date hereof, we, Nataliya
Hearn, Ph.D., President and Chief Executive Officer, and Jim Morin,
Secretary/Treasurer and Chief Financial Officer of the Registrant, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of our knowledge and belief:
(1) The Quarterly Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Quarterly Report fairly presents,
in all material respects, the financial condition and result of operations of
the Registrant.
Date: ________________________
By/s/Nataliya Hearn, Ph.D.
President and Director
Date: _______________________
By/s/Jim Morin
Secretary/Treasurer,
CFO and Director
13