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| BRCI.OB > SEC Filings for BRCI.OB > Form 10-Q on 14-Nov-2008 | All Recent SEC Filings |
14-Nov-2008
Quarterly Report
Management's Discussion and Analysis contains various "forward looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to "anticipates", "believes", "plans", "expects", "future" and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company's business, including but not limited to, reliance on customers and competition in its markets, market demand, product performance, maintenance of relationships with key suppliers, difficulties of contracting or retaining independent contractors and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.
Management's Discussion and Analysis of Results of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the consolidated condensed financial statements included herein. Further, this quarterly report on Form 10-Q should be read in conjunction with the Company's Financial Statements and Notes to Financial Statements included in Report on Form 10-KSB for the year ended December 31, 2007.
Overview
Brampton Crest International, Inc. ("the Company"), a Nevada corporation, was originally organized as Selvac Corporation, a Delaware corporation. On September 28, 1982, the Selvac Corporation restated its Certificate of Incorporation and changed its name to Mehl/Biophile International Corporation. On March 22, 2000, the Company reorganized as Hamilton-Biophile Companies. On November 26, 2001, the Company re-domiciled to Nevada. Hamilton Biophile Companies changed their name to Brampton Crest International, Inc., effective on November 9, 2004.
The Company filed a Form 10-SB on December 16, 2004, and on May 17, 2005 became a reporting company pursuant to the Securities Exchange Act of 1934.
The Company's 15c-211 filed on October 3, 2005 to list its securities on the Bulletin Board Exchange was approved on November 30, 2005 and the stock now trades under the ticker symbol BRCI.OB.
On March 19, 2008, the Board of Directors appointed Robert Adams as Chairman of the Board, Bryan Norcross as President and Chief Executive Officer, Robert Wineberg as Secretary and Treasurer, Max Mayfield as Senior Executive Vice President of Government Relations, and Matthew Straeb as Senior Executive Vice President of Marketing.
On March 24, 2008, the Company accepted subscriptions for 10,000,000 shares of common stock, at a price of $.10 per share, resulting in gross proceeds of One Million Dollars ($1,000,000). After legal costs and commissions the net proceeds to the Company were approximately $915,000. No other warrants or options are associated with the stock purchase. The common stock issued to U.S. investors was sold based on an exemption from registration pursuant to Section 4(2) and Rule 506 of the Securities Act of 1933 and the common stock issued to non-U.S. investors was sold based on an exemption from registration pursuant to Regulation S of the Securities Act of 1933.
During the second and third quarter of 2008, the Company accepted subscriptions for 9,915,943 shares of common stock, at a price of $.17 per share, resulting in gross proceeds of One Million six hundred seventy-one thousand seven hundred and ten Dollars ($1,671,710). After legal costs and commissions the net proceeds to the Company were approximately $1,559,000. No other warrants or options are associated with the stock purchase. The common stock issued to U.S. investors was sold based on an exemption from registration pursuant to Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 and the common stock issued to non-U.S. investors was sold based on an exemption from registration pursuant to Regulation S of the Securities Act of 1933.
Effective March 2, 2007, the Company announced that it had formed a wholly owned subsidiary, White Peak Capital Group, Inc., a Florida corporation ("White Peak") that will focus on making secured short and medium term loans. Effective July 2007, White Peak changed its name to Laurentian Peak Capital Group ("Laurentian").
Laurentian generates business through an established network of finance industry contacts developed by its management and by seeking the participation by other originators known to the company management. Laurentian loans will be both short and medium term, secured by accounts and trade receivables, real estate, credit card receivables, equipment letters of credit and shares of stock. The originators from whom Laurentian will purchase participations are established companies known to Laurentian management.
Laurentian obtained a license as a mortgage lender and is now able to begin to implement its marketing plan.
Laurentian was initially funded by capital from BRCI. BRCI intends to raise additional capital, and will attempt to secure bank lines of credit to further its lending activities. However, there are no assurances or guarantees that the lines of credit or additional capital will be achieved.
On September 20, 2007 the Company's subsidiary, Laurentian loaned $200,000 to America's Emergency Network, LLC ("AEN") at an interest rate of 12%. During the course of the due diligence for the loan the Company determined that a merger with AEN was in the best interest of both parties. The loan was consolidated as part of the acquisition of AEN.
Effective March 19, 2008 the Company and a subsidiary acquired all the stock of America's Emergency Network, LLC from its four shareholders.
America's Emergency Network will link Emergency Operations Centers (EOC's) in cities, towns, counties, school boards, and other government entities with the general public, media outlets, first responders, and other government agencies. The satellite-based system will send video feeds of news briefings by emergency officials and critical text bulletins issued at any EOC in any location to all users instantly. The satellite-based system is designed to operate before and after disasters, even when telephone, cell phone, and terrestrial internet systems have failed. In addition, during short-fuse emergencies (tanker accidents, bio-hazards, etc.), America's Emergency Network will provide an instant communications link directly to all subscribing media outlets. Critical information will reach the public much sooner since all subscribing media outlets will receive the text and video feeds at once.
Aside from AEN, there is no standardized, dedicated and secure distribution infrastructure for disseminating critical information and instructions issued by local, state and federal emergency management agencies that overcomes the delays and incomplete-distribution limitations of the everyday news-coverage system. Local municipalities are especially handicapped by the current system because of the practical and physical limitations intrinsic to covering news. For example, even major television stations do not have enough crews to cover the news briefings that would be held in every municipality in their coverage area after a regional disaster. However, during an emergency, each mayor or emergency manager has valuable information to dispense - information that could be critical to the health and safety of the residents in his/her area of responsibility - and the volume of information that needs to be effectively communicated has no relation to the number of reporters or crews the local television stations has available. (This is particularly true given the aggressive staffing cuts made at the local television level and at newspapers and their websites in recent years.) AEN fills this large and growing gap in the system. All municipalities, regardless of their size, will be able to participate in the AEN emergency-information distribution system, and feeds will be accessible by media outlets without regard to the availability of reporters, crews or field resources.
With AEN, for the first time emergency managers will have a direct, always-on satellite connections to the media and the public. With AEN, broadcast television stations, online newspapers, cellular carriers and other key media partners will have the ability to receive live video feeds of news briefings from government agencies - as they occur - in broadcast quality and all without the need to deploy reporters, camera crews or satellite equipment. The general public will receive the same briefings along with emergency bulletins via the internet and, eventually, on dedicated cable, satellite and broadcast television channels (AEN-TV). Additionally, the same distribution backbone is being used to develop a for-profit, parallel system to distribute emergency information for non-governmental organizations (such as universities and health-care organizations) and for private businesses.
Beta deployments of the AEN Network already are installed and operating in ten
(10) Florida governmental agencies, and one additional installation is planned
for the fourth quarter of 2008. During Tropical Storm Fay and Hurricanes Gustav,
Hanna and Ike, governmental emergency management personnel successfully used AEN
to broadcast messages from the governor of Florida and other public officials.
This included storm forecasts, evacuation plans, school closings, shelter
locations and other critical information. Applicable localized information was
carried live by the South Florida Sun-Sentinel (www.sunsentinel.com), the
Florida Times-Union (www.jacksonville.com), the Miami Herald
(www.miamiherald.com), and the Fort Myers News-Press (www.news-press.com).
Though neither AEN nor any of these news sites actively promoted or advertised
AEN's feeds to the public, except on the AEN's and the news-sites' home pages,
the information nonetheless was widely viewed. Initial feedback throughout the
beta has been very positive from our governmental and media partners, and we
have received several inquiries from additional governmental agencies, media
outlets and private companies interested in utilizing our service - both in and
out of Florida. In spite of the favorable response to our beta program, our
projected rate of revenue growth may be adversely affected by the current
downturn in the overall economy; however, management remains optimistic and
believes that overall future anticipated demand for our services will continue
to be robust. The management acknowledges that the economic downturn has created
uncertainty in both the size and administration of governmental budgets. To that
end, the Company is working with governmental entities whose budgets have been
affected to identify and acquire additional sources of funding, as necessary, to
install and maintain the AEN system.
In addition to the continued development of its network and the successful conduct of its initial beta testing, significant progress also was achieved in other areas during the quarter ended September 30, 2008, both strategically and operationally.
AEN signed a strategic agreement with Peacock Productions, a division of NBC News, which in turn is a division of NBC Universal, Inc. (NBCU), pursuant to which AEN is to provide to Peacock its expertise and experience on engineering and meteorological issues. In return, AEN is provided with a revenue stream and an opportunity to actively explore new potential uses and deployments of the AEN network with industry leading, world-class brands. The agreement, which commenced on July 21, 2008 and continues through February 28, 2009, contemplates close and regular interaction between AEN and NBCU, and seeks AEN's advice with respect to matters such as growth opportunities in programming and technology. In addition, the agreement explicitly acknowledges the parties' intent to enter into good faith negotiations concerning the possible integration of AEN technology into the NBC and/or its affiliated companies, though neither party is under any firm commitment to do so.
From an operational perspective, during the quarter ended September 30, 2008 AEN leased additional space within which it will house its headquarters through December 1, 2009. The management believes the new space is both cost-effective and operationally conducive to the Company's planned growth and expansion. Located in Miami, Florida, the new space will replace the Company's existing arrangement pursuant to which it shares office space with an unrelated, third-party law firm.
In addition, during the quarter ended September 30, 2008 AEN made two strategic hires, adding over 40 years of additional experience to AEN's management team. The new hires each bring a significant amount of experience in scaling growth oriented companies, generally, and in the creation, development, licensing, distribution and protection of digital content, specifically. With these additions to the management team, the management will be able to more effectively delegate day-to-day managerial responsibilities and focus on matters more directly related to the expansion of the Company's business and the achievement of the Company's strategic goals and vision. Subject to resource availability and general business conditions, AEN plans on continuing to build its team as it works toward emerging from a developmental stage beta to a revenue-generating platform, particularly in the areas of sales, marketing and engineering, with a focus on content acquisition and content distribution.
As previously noted, we phased out its former operations (consisting of the marketing and sale of consumer personal care products) during the second quarter of 2008. We have completely re-focused our energies and resources into the development of the businesses of its two operating subsidiary corporations, Laurentian and AEN.
There was consulting income of $75,000 from the previously mentioned Peacock Productions agreement for the nine months ended September 30, 2008 and cost of sales of $6,166. For the same nine months ended September 30, 2007 the Company had no revenue or cost of sales. There was no other sales or costs of sales of cosmetics for the nine month period ended September, 2008 and 2007 primarily as a result of re-focusing its energies and resources into the development and implementation of AEN's and Laurentian's operations.
Selling, general and administrative expenses increased from $240,802 for the nine month period ended September 30, 2007 to $731,230 for the nine month period ended September 30, 2008 due to costs associated with the AEN operations.
Other income (expenses) for the nine months ended September 30, 2008 decreased to $19,893 from $30,958 for the nine month period ended September 30, 2007. The change was due to lower returns from interest and dividends as compared to last year.
Net loss increased from $209,306 for the nine month period ended September 30, 2007 to $642,503 for the nine month period ended September 30, 2008, due to the above analysis of Income and Expenses.
Current Assets
Cash increased from $381,479 at December 31, 2007 to $1,784,116 at September 30, 2008, primarily as a result of the private placements transacted in March 2008 and September 2008.
Total assets increased from $598,258 at December 31, 2007 to $2,659,883 at September 30, 2008, primarily as a result of the $2.5 million private placements transacted with the AEN merger and goodwill related to the AEN merger.
Current liabilities increased from $4,061 at December 31, 2007 to $133,956 at September 30, 2008, due to additional accounts payable and related party note with the president of the Company primarily as a result of the costs incurred while developing the AEN product.
Liquidity and Capital Resources
We are financing our operations and other working capital requirements principally from the receipt of proceeds in the amount of approximately $2.5 million from private placements of our securities received, as of September 30, 2008. Management intends to use the proceeds from the offerings towards the implementation of the business plan including the AEN products and to provide working capital for future expansion of the Company's operations.
A significant portion of our business plan relies upon our ability to successfully charge licensing and other fees to governmental agencies for our services. The recent worldwide financial crisis, coupled with dramatic reductions in state revenues due to reduced property values and the economic downturn, creates substantial additional uncertainty in both the size and administration of governmental budgets. In turn, our business plan may be adversely affected if governmental budgets are reduced, if any limitations or restrictions are placed upon the acquisition of new products or services like ours or if expenditure priorities are changed, particularly if budgets available for emergency management services are reduced.
Should such uncertainties otherwise adversely affect the execution of our business plan; we will make appropriate adjustments to our plan, generally, and/or the execution of plan, specifically, in light of the then-available resources, existing prospects, and rapidly changing conditions.
There was consulting income of $75,000 from the previously mentioned Peacock Productions agreement for the three months ended September 30, 2008 and cost of sales of $6,166. For the same three months ended September 30, 2007 the Company had no revenue or cost of sales. There was no other sales or costs of sales of cosmetics for the nine month period ended September, 2008 and 2007 primarily as a result of re-focusing its energies and resources into the development and implementation of AEN's and Laurentian's operations.
Selling, general and administrative expenses increased from $160,284 for the three-month period ended September 30, 2007 to $319,692 for the three-month period ended September 30, 2008 due to costs associated with the AEN operations.
Other income (expenses) for the three months ended September 30, 2008 decreased to $7,256 from $9,168 for the three month period ended September 30, 2007. The change was due to lower returns in interest and dividends as compared to last year.
Net loss increased from $151,043 for the three month period ended September 30, 2007 to $243,602 for the three month period ended September 30, 2008, due to the above analysis of Income and Expenses.
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