U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 2002
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[ ] 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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Commission File No. 000-15260
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BRL HOLDINGS, INC.
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(Name of Small Business Issuer in its Charter)
DELAWARE 88-0218411
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
200 Perimeter Road
Manchester, NH 03130
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (603) 641-8443
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date:
Class Outstanding as of November 15, 2002
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Common stock, $0.01 47,906,220*
* We have effected a 2 for 1 stock split in the form of a stock
dividend on all of our outstanding shares that will also result in similar
adjustments to all of our shares underlying our outstanding options, with a
record date of October 4, 2002, a distribution date of November 8, 2002, and
an ex-dividend date as of the opening of business on November 12, 2002. As
adjusted, there are 6,622,800 shares underlying our outstanding options.
Except as otherwise indicated, all share and per share data reflected in this
Report on Form 10-QSB has been retroactively restated to reflect this
dividend.
Transitional Small Business Disclosure Format (Check One) Yes X No
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BRL Holdings, Inc.
INDEX
Page
Number
Item 1. Financial Statements 3
Balance sheets as of September 30, 2002 (unaudited) and
June 30, 2002 3
Statements of Operations for the Three Months Ended
September 30, 2002 and 2001 (unaudited) 4
Statements of Cash Flows for the three Months Ended
September 30, 2002 and 2001 (unaudited) 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
Item 3. Controls and Procedures 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K. 8
PART I. FINANCIAL INFORMATION
Item 1. Financial Statement
BRL HOLDINGS, INC.
BALANCE SHEETS
September 30, 2002 and June 30, 2002
September June 30,
30, 2002 2002
(Unaudited)
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ASSETS
Current Assets:
Cash $ 394 $ 1,148
Other receivables 764 -
Prepaid expenses and other current assets 525 1,050
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Total current assets 1,683 2,198
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Total assets $ 1,683 $ 2,198
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCIES)
Current liabilities:
Accounts payable $ 45,083 $ 8,814
Accounts payable related party 20,687 20,687
Accrued expenses 6,500 5,000
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Total current liabilities 72,270 34,501
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Total liabilities 72,270 34,501
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Stockholders' equity (Deficiency):
Common stock of $.01 par value,
50,000,000 shares authorized, 5,433,800
issued and outstanding at September 30,
2002 and June 30, 2002 54,338 54,338
Additional paid-in capital 7,956,081 7,956,081
Accumulated deficit (8,081,005) (8,042,772)
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Total Stockholder's Equity (Deficiencies) (70,587) (32,303)
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Total liabilities and stockholders' equity
(deficiencies) $ 1,683 $ 2,198
========== ==========
The accompanying notes are an integral part of the financial statements.
3
BRL HOLDINGS, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2002 and 2001
(Unaudited)
Three Months Ended
September 30,
(Unaudited)
2002 2001
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Revenues $ - $ -
Cost of goods sold - -
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Gross profit - -
Costs and expenses:
General and administrative (38,822) (9,788)
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Total costs and expenses (38,822) (9,788)
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Loss from operations (38,822) (9,788)
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Other Income (Expenses):
Loss from investee - -
Other income (expense) - -
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Total other income (cost) - -
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Net (loss)/gain $ (38,822) $(9,788)
========= =======
Weighted average shares 5,950,673 1,433,939
Basic and fully diluted loss per share $ (0.01) $ (0.00)
The accompanying notes are an integral part of the financial statements.
4
BRL HOLDINGS, INC.
STATEMENT OF CASH FLOWS
For the three Months Ended September, 2002 and 2001
(Unaudited)
Three Months Ended
September 30,
(Unaudited)
2002 2001
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Cash flows from operating activities:
Net (loss)/Gain $ (38,822) $ (9,788)
Adjustments to reconcile net loss to net
cash used in development activities:
Depreciation and amortization - -
Loss from investee - -
(Increase) Decrease in current assets:
Accounts Receivable - -
Inventories - -
Other receivables (764) (995)
Prepaid expenses and other current assets 525 530
Increase (Decrease) in current liabilities:
Accounts payable 36,807 16,589
Accrued expenses 1,500 (4,164)
Other liabilities - -
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Net cash used in operating activities $ (754) $ 2,172
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Cash flows from investing activities:
Net cash used in investing activities $ - $ -
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Cash flows from financing activities:
Issuance of common stock, net - -
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Net cash provided by investing activities $ - $ -
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Net increase (decrease) in cash (754) 2,172
Cash at beginning of period 1,148 119
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Cash at end of period $ 394 $ 428
========= ========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
Supplemental Schedule of Non cash Investing and Financing Activities:
For the period ended September 30, 2002: None
For the period ended September 30, 2001 None
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
5
BRL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
Note 1 Basis of presentation
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The accompanying unaudited consolidated financial statements have been
prepared from the books and records of BRL Holdings, Inc., (the "Company" or
"BRL" formerly Biorelease Corp or Biorelease). As discussed in Notes 1 to the
consolidated financial statements of the Company included in its filing on
Form 10-KSB for the year ended June 30, 2002 and in Note 2 hereunder, as of
the consummation of the acquisition of Element 21 Golf Company, the reporting
entity will change from the Company to Element 21 Golf Company. These
statements have been prepared 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 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) considered
necessary for a fair presentation have been included. Operating results for
the three months ended September 30, 2002 are not necessarily indicative of
the results that may be expected for the year ended June 30, 2003.
As further discussed in Note 2, in October of 2002 of the Company declared a 2
for 1 stock split in the form of a stock dividend. This dividend has been
reflected retroactively in the accompanying financial statements and
accordingly all share and per share amounts have been restated
Note 2- Subsequent Events
-------------------------
In October of 2002, the Company acquired Element 21 Golf Company (Element 21)
under an Amended and Restated Agreement (the "Agreement") wherein BRL will
issue 42,472,420 shares of its common stock to shareholders of Element 21 and
assume Element 21 obligations under option agreements allowing for the
purchase of 6,432,000 additional shares of common stock. Element 21 is a
development stage company recently formed to design, develop and market
scandium alloy golf clubs. As of the date of the Agreement, Element 21 had
not yet commenced its principal operations. This acquisition will be accounted
for as a reverse acquisition using the purchase method of accounting, as the
shareholders of Element 21 will control the Company immediately following the
acquisition. The Company has not yet had an opportunity to determine the
value of the shares issued in this transaction or to determine an appropriate
basis for the allocation of the purchase price.
Dr. Reeves, his affiliates and the Company's Treasurer owned approximately 8%
of Element 21 prior to the Agreement.
Immediately following the closing of the Element 21 acquisition, the Company
declared: 1) a 2 for 1 split of its common stock effected in the form of a
dividend and 2) a dividend of 100% of its wholly-owned subsidiary Tech
Ventures, Inc. and Advanced Conductor Technology, Inc., which collectively
represented substantially all of the Company's assets prior to its acquisition
of Element 21 (the "Spin-Off") and the Officers and Directors immediately
prior to the acquisition resigned The stockholders who received common stock
in connection with the Element 21 acquisition will receive the stock
dividend, but have waived their rights to receive distributions associated
with the planned Spin-Off.
The Spin-Off will only occur after the compliance with Security and Exchange
Commission regulations.
As of the consummation of these transactions and events, the reporting entity
will consist of the operations of Element 21.
6
Item 2. Management's Discussion and Analysis or Plan of Operation.
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Plan of Operation.
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During the next 12 months, we plan to design, develop and market
scandium alloy golf clubs, based upon the technology we acquired in the
Element 21 Acquisition. We have not yet formulated our business plan in this
respect, so we are unable to determine what funds will be immediately
necessary to implement our planned operations; however, we will need
substantial funds, in either equity or debt investments, or partners, who can
fund our planned research and development once our business plan has been
formulated. There are no present arrangements or understandings with anyone
to provide this required funding
During the next 12 months, our only foreseeable cash requirements will
relate to maintaining our Company in good standing or the payment of expenses
associated with reviewing or investigating any potential business venture.
Our Company may be required to sell shares of our common stock to "accredited"
or "sophisticated" investors or borrow from members of management, as we have
done in the past for the payment of expenses related to these matters.
Results of Operations.
----------------------
The Company had no operations other than those associated with
formulating a strategic plan to design, develop and market scandium alloy golf
clubs, based upon the technology we acquired in the Element 21 Acquisition.
We have not yet formalized this plan and accordingly we have not yet
determined the amount of capital that will be required to implement.
Three Months Ended, September 30, 2002 and 2001.
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For the three months ended September 30, 2002, the Company had no
revenues and incurred general and administrative expenses of $38,882 resulting
in a net loss of $38,882 as compared with the three months ended September 30,
2001 wherein the Company had no revenues and incurred administrative expenses
of $9,788 resulting in a net loss of $9,788.
Liquidity.
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At September 30, 2002, our current assets were $1,683 and we had total
current liabilities of $72,270 resulting in a stockholder's deficit of
$70,587. In order to meet its expenses during the next 12 months, management
expects that we may be required to sell shares of our common stock to
"accredited" or "sophisticated" investors or borrow from members of our
management, as we have done in the past, to pay required expenses.
Item 3. Controls and Procedures.
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(a) Evaluation of Disclosure Controls and Procedures.
Our President and Secretary/Treasurer have evaluated our Company's
disclosure controls and procedures as of November 14, 2002, and they concluded
that these controls and procedures are effective.
(b) Changes in Internal Controls.
There are no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to November
14, 2002.
7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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None; not applicable.
Item 2. Changes in Securities.
--------------------------------
We have effected a 2 for 1 stock split in the form of a stock dividend
on all of our outstanding shares that will also result in similar adjustments
to all of our shares underlying our outstanding options, with a record date of
October 4, 2002, a distribution date of November 8, 2002, and an ex-dividend
date as of the opening of business on November 12, 2002.
Item 3. Defaults Upon Senior Securities.
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None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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None; not applicable.
Item 5. Other Information.
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Effective October 3, 2002, we acquired 100% of the outstanding common
stock of Element 21 Golf Company, a recently formed Delaware corporation
("Element 21"), in a stock for stock transaction ("the Acquisition"). To
complete the Acquisition, we agreed to issue up to 48,904,420 shares of our
common stock consisting of the issuance of 42,472,420 shares of "restricted
securities" (common stock) and the assumption of Element 21's obligations
under options granted by Element 21 to its officers, directors and consultants
to purchase 6,432,000 shares of our common stock, in recognition of options to
purchase a like amount of shares of Element 21 held by these individuals.
This Acquisition will be accounted for as a "reverse" acquisition using the
purchase method of accounting, as the shareholders of Element 21 controlled
our Company immediately following the Acquisition. We have not yet had an
opportunity to determine the value of the shares issued in this transaction or
to determine an appropriate basis for the allocation of the purchase price.
For further information regarding this Acquisition, see our 8-KA Current
Report dated October 2, 2002, that was filed with the Securities and Exchange
Commission on November 5, 2002, and which included a copy of the Restated
Agreement and Plan of Reorganization, together with all schedules and
exhibits, and which is incorporated herein by reference. See the Exhibit
Index, Part II, Item 6.
Item 6. Exhibits and Reports on Form 8-K.
-------------------------------------------
(a) Exhibits.
None.
(b) Reports on Form 8-K.
8-K Current Report dated October 2, 2002, as amended*
8-K Current Report dated April 1, 2002*
8-K Current Report dated November 19, 2002*
* As previously filed with the Securities and Exchange Commission.
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
BRL Holdings, INC
Date: 11/19/02 By/S/ Nataliya Hearn, Ph.D.
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Nataliya Hearn, Ph.D.
President and Director
Date: 11/19/02 By/S/ Jim Morin
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Jim Morin
Secretary/Treasurer,
CFO and Director
9
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Nataliya Hearn, Ph.D., President and Chief Executive 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
untrue 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);
10
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: 11/19/02 By/s/Nataliya Hearn, Ph.D.
President 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
untrue 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);
12
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: 11/19/02 By/s/Jim Morin
Secretary/Treasurer,
CFO and Director
13
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 September 30, 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: 11/19/02 By/s/Nataliya Hearn, Ph.D.
President and Director
Date: 11/19/02 By/s/Jim Morin
Secretary/Treasurer,
CFO and Director
14