-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UpkuWVpIrb+8bTIm3YZG6gpXquYtPvUTpSPJuJfKWfeiNEjMDPZ+rH5vKMG5hNzY 3GGVIsdnS7Kj85O2th22Hg== 0000950147-97-000072.txt : 19970222 0000950147-97-000072.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950147-97-000072 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FBR CAPITAL CORP /NV/ CENTRAL INDEX KEY: 0000836937 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 133465289 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-58694 FILM NUMBER: 97533525 BUSINESS ADDRESS: STREET 1: 15 EXECUTIVE BLVD CITY: ORANGE STATE: CT ZIP: 06477 BUSINESS PHONE: 2037994609 MAIL ADDRESS: STREET 1: 15 EXECUTIVE BLVD CITY: ORANGE STATE: CT ZIP: 06477 FORMER COMPANY: FORMER CONFORMED NAME: BARRIE RICHARD FRAGRANCES INC DATE OF NAME CHANGE: 19920703 10QSB 1 QUARTERLY REPORT U.S. 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 December 31, 1996 ------------------ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________ to _______________ Commission File number 1-10320 --------- FBR Capital Corporation ----------------------- (Exact Name of Small Business Issuer as Specified in its Charter) Nevada 13-3465289 - ------------------------------ ------------------- (State of Other Jurisdiction of (I.R.S. Employer Incorporation of Organization) Identification No.) 14988 North 78th Way, Suite 203, Scottsdale, Arizona 85260 ---------------------------------------------------------- (Address of Principal Executive Offices) (602)483-1466 ---------------------------------------------------------- (Issuer's Telephone Number Including Area Code - -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report Check whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At February 12, 1997, Issuer had outstanding 4,648,205 shares of Common Stock, par value $.005 per share. Transitional Small Business Disclosure Format: Yes No X ----- ----- Page 1 of 12 Total Pages Exhibit Index - None PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) BALANCE SHEETS DECEMBER 31, 1996
December 31 June 30 ASSETS 1996 1996 ---- ---- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 43,533 $ 61,871 Investment in U.S. Government Treasury Bills 399,559 - Investment in common stock of Parlux Fragrances, Inc. 1,526,250 3,746,250 Receivable from acquiror of discontinued operations - 750,000 Other current assets 15,229 6,991 ------------ ------------- TOTAL ASSETS $ 1,984,571 $ 4,565,112 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 6,577 $ 121,789 Accrued expenses 52,824 180,417 Convertible notes payable 19,500 117,000 ------------ ------------- Total current liabilities 78,901 419,206 ------------ ------------- SERIES A REDEEMABLE PREFERRED STOCK: $.01 par value; 529 shares authorized; 517 shares issued and outstanding; at liquidation value of $5,600 per share 2,895,200 2,895,200 ------------ ------------- STOCKHOLDERS' EQUITY (DEFICIT): Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares outstanding except 517 shares issued as Series A Redeemable Preferred Stock - - Common stock, $.005 par value; 16,777,667 shares authorized; 4,648,205 shares issued and outstanding 23,241 23,183 Additional paid-in capital 7,245,850 7,241,768 Accumulated deficit (6,038,621) (6,014,245) Unrealized loss on investment (2,220,000) - ------------ ------------- Total stockholders' equity (deficit) (989,530) 1,250,706 ------------ ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,984,571 $ 4,565,112 ============ =============
The accompanying notes are an integral part of these balance sheets. -2- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) STATEMENTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
1996 1995 ---- ---- Operating expenses $ (82,467) $ - ----------- ----------- Loss from operations (82,467) - ----------- ----------- Other income (expense): Interest expense (6,002) - Gain on extinguishment of debt 53,385 - Interest income 10,708 - ----------- ----------- Other income (expense), net 58,091 - Loss from discontinued operations - (737,007) ----------- ----------- Net loss $ (24,376) $ (737,007) =========== =========== Earnings per common share and common share equivalents: Loss per share from continuing operations $ (.01) $ - Loss per share from discontinued operations - (.17) ----------- ----------- Net loss per share $ (.01) $ (.17) =========== =========== Weighted average common share and common share equivalents outstanding 4,648,205 4,419,548 =========== ===========
The accompanying notes are an integral part of these statements. -3- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) STATEMENTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
1996 1995 ---- ---- Operating expenses $ (39,218) $ - ----------- ----------- Loss from operations (39,218) - ----------- ----------- Other income (expense): Interest expense (1,579) - Gain on extinguishment of debt 53,385 - Interest income 6,425 ----------- ----------- Other income (expense), net 58,231 - Loss from discontinued operations - (780,161) ----------- ----------- Net income (loss) $ 19,013 $ (780,161) =========== =========== Earnings per common share and common share equivalents: Income per share from continuing operations $ - $ - Loss per share from discontinued operations - (.18) ----------- ----------- Net income (loss) per share $ - $ (.18) =========== =========== Weighted average common share and common share equivalents outstanding 4,648,205 4,419,548 =========== ===========
The accompanying notes are an integral part of these statements. -4- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) STATEMENTS OF CASH FLOWS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited)
1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (24,376) $ - ----------- ----------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation - 248,385 Discontinued operations - (737,007) Gain on extinguishment of debt (53,385) - (Increase) decrease in: Accounts receivable - 249,041 Inventories - 415,991 Other assets (8,238) 154,071 Increase (decrease) in: Accounts payable and accrued expenses (220,280) (165,171) ----------- ----------- Total adjustments (281,903) 165,310 ----------- ----------- Net cash provided by (used in) continuing operations (306,279) 902,317 Net cash used in discontinued operations - (737,007) ----------- ----------- Net cash provided by (used in) operating activities (306,279) 165,310 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Receipt of amount due from acquiror of discontinued operations 750,000 - Investment in U.S. Government Treasury Bills (399,559) - Purchase of property and equipment - (39,011) ----------- ------------ Net cash provided by (used in) investing activities 350,441 (39,011) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of convertible notes payable (62,500) - ----------- ----------- Net cash used in financing activities (62,500) - ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (18,338) 126,299 CASH AND CASH EQUIVALENTS, beginning of period 61,871 339,715 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 43,533 $ 466,014 =========== ===========
Non-cash financing activities: On October 21, 1996, the Company completed extinguishment of $97,500 of Convertible Notes in exchange for an aggregate of $62,500 in cash, 11,500 shares of the Company's Common Stock, and five three-year Warrants (the Warrants) each to purchase up to 2,500 shares of the Company's Common Stock at $2 per share. The total amount of debt (including principal and accrued but unpaid interest of $22,525) extinguished pursuant to the exchange aggregated $120,025. This amount, less the cash paid, value of the common stock and the Warrants issued in the exchange offer, resulted in an extraordinary gain on the extinguishment of debt in the amount of $53,385. The accompanying notes are an integral part of these statements. -5- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB. Accordingly, they do not include all the information and footnotes required by Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results for the six month and three month periods ended December 31, 1996 may not be indicative of the results for the entire year. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996. Cash and Cash Equivalents and Investments The Company's policy is to invest cash in excess of expenditure requirements in income-producing investments. Temporary cash investments are all highly liquid investments with maturity of three months or less when purchased and are considered to be cash equivalents for cash flow purposes. Investments in the common stock of Parlux Fragrances, Inc. and U.S. Government Treasury Bills are accounted for in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Company's investment in common stock of Parlux Fragrances, Inc. is classified as "available for sale". Changes in the market value are reflected in the stockholders' equity section of the Company's balance sheet under the caption "Unrealized loss on investment". Earnings (Loss) Per Common Share Earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common share and common share equivalents outstanding during the period. Primary and fully diluted earnings per share are considered to be the same in all periods. The impact of outstanding warrants and stock options were not included in the calculation of net loss per share in 1996 and net income per share in 1995, as their inclusion would have an anti-dilutive effect on those results. -6- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) Income Taxes The Company has a net operating loss carryforward of approximately $6,300,000 at December 31, 1996. Historically, no federal tax benefit has been recorded due to the uncertainty of the Company's ability to realize benefits by generating taxable income in the future. These carryforwards expire through fiscal year 2011. Due to a greater than 50% change in the ownership of the Company, as defined in the Internal Revenue Code, resulting from various equity offerings, certain restrictions exist as to the use of net operating loss carryforwards to offset future taxable income. Although the Company has significant net operating loss carryforwards available to offset future taxable income, due to the uncertainty as to the Company's future earnings, a full valuation allowance has been provided to offset all deferred tax assets. No income taxes have been provided for either of the interim periods based on the Company's ability to utilize its net operating loss to offset taxable income, if any, during the periods. ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS Plan of Operations On July 28, 1996, the Company sold to Parlux Fragrances, Inc. (Parlux) virtually all of the assets, properties and rights owned by the Company in connection with its business (the "Asset Sale"). The Company has not conducted any operations since the Asset Sale. Accordingly, the results of its previous operations are not material. The reasons for the Asset Sale and the discontinuance of the Company's business were previously reported in the Company's Proxy Statement, dated April 22, 1996 and Form 10 KSB for the fiscal year ended June 30, 1996. Upon the consummation of the Asset Sale and Exchange Offer and payment of certain expenses, the Company had approximately $630,000 in cash. Of that amount, approximately $56,000 was applied to discharge certain accounts payable, including legal, accounting and consulting fees for the fiscal year ended June 30, 1996. On December 31, 1996, the Company had approximately $43,000 in cash and approximately $400,000 in U.S. Government Treasury Bills. The Company expects that it will earn approximately $20,000 from interest during the current fiscal year ending June 30, 1997. -7- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) Corporate and administrative expenses for the current fiscal year are expected to be approximately $130,000 including $82,000 in fees and expense reimbursement to the directors, $18,000 for accounting fees for audit and tax returns, $3,000 for office and telephone expenses, $17,000 for liability insurance, $6,000 for stock transfer services and approximately $4,000 for miscellaneous expenses. Expenditures for liability insurance are primarily to cover exposure that may arise from products previously sold by the Company that are still in the market. Administrative expense relates primarily to resolution of matters arising from the Company's prior business. Funds to pay the expenses are expected to be derived from interest income earned during the year and from the Company's cash on hand. The Company has been identifying and conducting discussions with respect to a possible business combination with one or more entities interested in acquiring or being acquired by the Company. The Company is free to investigate businesses of essentially any kind or nature including but not limited to, finance, technology, manufacturing, service, research and development, healthcare, communications, insurance or transportation. While the Company has not chosen any particular area of business in which it may propose to engage and has not conducted any market studies with respect to any business, property or industry, the directors of the Company have considered the strengths and weaknesses of the Company and established certain initial criteria for its search. The Company will first seek a business combination with a company having a business or line of products with good prospects for future profits and growth. In view of the Company's small size and book value, the appropriate candidate is expected to be an emerging or developing company. Other priority candidates may be those desiring to become a public company and those which have an interest in acquiring the company's cash and net operating loss carryforwards. A number of companies have been identified which appear to meet the criteria set forth above and discussions have been held with several of them. There is no assurance of the availability, viability or success of any acquisition or the results of operations of the Company in connection with any acquisition or business venture. Even if a suitable candidate for a business combination is found and negotiations are successfully completed, there is no assurance of successful operations after the combination has been effected or that existing stockholders of the Company will not suffer substantial dilution of their equity position, either upon the business combination itself or upon the completion of any additional financing which may be necessary. -8- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) The Company does not believe that it is an investment company required to register as such under the Investment Company Act of 1940, as amended. If the Company has not concluded a business combination before June 28, 1997, that is, one year after the Asset Sale, and if, because of its continued ownership of the Parlux Stock or other securities, it would be required to register or seek an exemption from such registration, the Company anticipates that it will sell, transfer or otherwise divest itself of its ownership thereof, redeem any outstanding Preferred Stock and make a determination as to whether to liquidate and distribute its assets or to continue to seek out viable business combinations. The Company continues to hold the Parlux Stock and on December 31, 1996, had approximately $43,000 in cash in banks and $400,000 in U.S. Government Treasury Bills maturing in February 1997. The Parlux Stock may be sold to the public pursuant to a currently effective Registration Statement under the Securities Act of 1933, covering those shares. Under the terms of the Company's outstanding Preferred Shares, however, no sale of the Company's assets having a fair market value of $250,000 or more, either alone or in the aggregate with all other sales of the Company assets, may be sold without the prior consent of the holders of a majority of the Preferred Stock unless the net proceeds of the sale are applied to the payment of the Redemption Price ($5,600 per share) of the Preferred Stock. The aggregate Redemption Price of the 517 shares of Preferred Stock outstanding is $2,895,200 and the holders of the Preferred Stock have a liquidation preference in that amount. The Company is obligated to redeem all of the Preferred Stock by June 27, 1997. If such redemption is not effected, the holders of the majority of the Preferred Stock have the right to demand the liquidation of the Company and the application of its assets to satisfy their liquidation preference. On June 28, 1996, the market value of the Parlux Stock was $10.125 per share, and the aggregate value would have been sufficient to pay the aggregate Redemption Price. At that time, however, the Parlux Stock had not been registered for resale under the Securities Act if 1933 and, accordingly, transfer thereof was restricted. The Parlux Stock was registered on August 12, 1996, on which date the last sale price had declined to $7.625 per share. On December 31, 1996, the last sale price was $4.125 per share. On February 12, 1997, the last sale price was $3.50 per share. If, by June 27, 1997, the mandatory redemption date for the Preferred Shares, the market price of the Parlux Stock has not substantially recovered, or if some accommodation cannot be reached between the Company and the holders of the Preferred Stock, the Company will probably be required to pay substantially all of its cash, in addition to the proceeds of any sale of the Parlux Stock, to fulfill its obligation to pay the Redemption Price. Any significant reduction in the amount of its available cash will probably -9- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) reduce the Company's value as an acquisition candidate for other businesses and the Company's opportunities to effect a favorable acquisition transaction will be substantially reduced. The Company has cash available to fund current expenditures but will be required to raise additional capital for future acquisitions or other business opportunities. On January 13, 1994, the Company entered into a series of 10% convertible subordinated promissory notes due January 15, 1996 (the Convertible Notes), totalling $5,157,750. On June 30, 1996, simultaneously with the closing of the Asset Sale, the Company completed an exchange offer with certain holders of the Convertible Notes in the aggregate principal amount of $5,040,750. The remaining $117,000 of Convertible Notes, held by three note holders, were recorded as a current liability on the September 30, 1996 and June 30, 1996, balance sheets. On October 21, 1996, the Company completed extinguishment of $97,500 of Convertible Notes in exchange for an aggregate of $62,500 in cash, 11,500 shares of the Company's Common Stock (market value of $.36 per share), and five three-year Warrants (the Warrants) each to purchase up to 2,500 shares of the Company's Common Stock at $2 per share. The total amount of debt (including principal and accrued but unpaid interest of $22,525) extinguished pursuant to the exchange aggregated $120,025. This amount, less the cash paid, value of the common stock and the Warrants issued in the exchange offer, resulted in an extraordinary gain on the extinguishment of debt in the amount of $53,385. The Company believes that the remaining holder of the last Convertible Note, in the principal amount of $19,500, will also accept a settlement of the Company's obligations on terms not requiring the full cash payment of the amount due on the Convertible Note. Funds for this settlement are expected to come from the Company's cash on hand. During November 1996, the Company received a request for payment of claimed amounts totaling approximately $137,000 purported to be owed to Muelhens GMBH with whom the Company had a distribution agreement from December 1993 to June 30, 1995. As set forth in the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996, distribution agreements with Muelhens GMBH and affiliated parties were terminated effective June 30, 1995 on a basis that relieved the Company of obligations to Muelhens - affiliated companies. The Company is attempting to determine whether the claimed amounts were included in the numerous transactions resolved in the termination arrangements in June 1995. -10- FBR CAPITAL CORPORATION (Formerly Richard Barrie Fragrances, Inc.) NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) The Company is not presently able to determine whether this request for payment is valid and what amount, if any, may be due and owing thereon. Forward-Looking Statements Certain information contained in third Quarterly Report on Form 10-QSB, including, without limitation, information appearing under Part 1, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations", are forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Factors set forth in the Company's Annual Report on Form 10K for the fiscal year ended June 30, 1996, under Item 1, "Business" and Item 6 "Management's Discussion and Analysis of Financial Condition and Results of Operations" together with other factors that appear with the forward-looking statements, or in the Company's other Securities and Exchange Commission filings could affect the Company's actual results and could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company in this Quarterly Report on Form 10-QSB. PART 2. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES (c) See Management's Discussions and Analysis of Financial Condition and Plan of Operations with respect to issuance of common stock and warrants in exchange for certain convertible notes. -11- SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. FBR CAPITAL CORPORATION (Registrant) Dated: February 12, 1997 By: /s/ Charles D. Snead, Jr. ----------------------------- Charles D. Snead, Jr., President -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 1 43,533 1,925,809 0 0 0 1,984,571 0 0 1,984,571 78,901 0 2,895,200 0 23,241 (1,012,771) 1,984,571 0 0 0 0 82,467 0 6002 (24,376) 0 0 0 0 0 (24,376) (.01) (.01)
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