<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
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 0-22803
-----------
PROLONG INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nevada 6 Thomas 74-2234246
(State or other jurisdiction of Irvine, CA 92618 (IRS Employer Identification No.)
incorporation or organization) (Address of principal executive offices) (Zip Code)
</TABLE>
(949) 587-2700
(Registrant's telephone number,
including area code)
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.
(1) Yes [X] No [_]
(2) Yes [X] No [_]
There were 28,445,835 shares of the registrant's common stock ($0.001 par value)
outstanding as of May 13, 1999.
Page 1 of 14 pages
Exhibit Index on Sequentially Numbered Page 14
================================================================================
<PAGE>
PROLONG INTERNATIONAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION Page
Item 1: Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1999 and December 31, 1998.............................. 3
Consolidated Condensed Statements of Operations - Three months
ended March 31, 1999 and 1998..................................... 4
Consolidated Condensed Statements of Cash Flows -
Three months ended March 31, 1999 and 1998........................ 5
Notes to Consolidated Condensed Financial Statements.............. 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 10
Item 3: Quantitative and Qualitative Disclosures About Market Risk........ 13
PART II OTHER INFORMATION
Item 1: Legal Proceedings................................................. 14
Item 6: Exhibits and Reports on Form 8-K.................................. 14
Signatures........................................................ 14
2
<PAGE>
Item 1. Financial Information
PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 289,714 $ 1,127,861
Accounts receivable, net 7,271,746 4,950,055
Inventories 3,604,924 2,915,249
Prepaid expenses 1,294,434 1,316,443
Income taxes receivable 444,369 444,371
Prepaid television time 931,456 627,050
Advances to employees 270,842 308,630
Deferred tax asset 131,645 63,645
----------- -----------
Total current assets 14,239,130 11,753,304
Property and equipment, net 3,510,812 3,372,509
Intangible assets, net 7,416,683 7,543,354
Deferred tax asset, noncurrent 439,791 439,791
Other assets 119,478 101,914
----------- -----------
TOTAL ASSETS $25,725,894 $23,210,872
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,006,133 $ 1,878,418
Accrued expenses 1,464,810 1,460,163
Loans payable to bank 1,500,000 -
Notes payable, current 42,325 41,951
----------- -----------
Total current liabilities 6,013,268 3,380,532
Notes payable, noncurrent 2,364,181 2,376,005
----------- -----------
Total liabilities 8,377,449 5,756,537
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 50,000,000 shares authorized;
no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized;
28,445,835 shares issued and outstanding 28,446 28,446
Additional paid-in capital 14,738,439 14,716,438
Retained earnings 2,581,560 2,709,451
----------- -----------
Total stockholders' equity 17,348,445 17,454,335
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,725,894 $23,210,872
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE>
PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- -------------------------------------------------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
NET REVENUES $ 9,749,872 $10,848,742
COST OF GOODS SOLD 2,657,939 2,005,414
----------- -----------
GROSS PROFIT 7,091,933 8,843,328
OPERATING EXPENSES:
Selling expenses 5,573,895 4,740,601
General and administrative expenses 1,665,015 1,342,704
----------- -----------
Total operating expenses 7,238,910 6,083,305
----------- -----------
OPERATING INCOME (LOSS) (146,977) 2,760,023
OTHER INCOME (EXPENSE), net:
Interest (expense) (53,618) (977)
Interest income 4,704 60,522
----------- -----------
Total other income (expense), net (48,914) 59,545
----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (195,891) 2,819,568
PROVISION (BENEFIT) FOR INCOME TAXES (68,000) 1,213,000
----------- -----------
NET INCOME (LOSS) $ (127,891) $ 1,606,568
=========== ===========
NET INCOME (LOSS) PER SHARE:
Basic ($0.00) $ 0.06
=========== ===========
Diluted ($0.00) $ 0.06
=========== ===========
WEIGHTED AVERAGE COMMON SHARES:
Basic 28,445,835 25,464,500
=========== ===========
Diluted options outstanding 0 425,755
----------- -----------
Diluted 28,445,835 25,890,255
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE>
PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (127,891) $ 1,606,568
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 193,596 20,535
Provision for doubtful accounts (349,875) 88,571
Deferred taxes (68,000) -
Reserve for obsolesence 16,000 22,500
Compensation costs related to options 22,001 -
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable (1,971,816) (4,135,142)
Inventories (705,675) (1,432,994)
Prepaid expenses 22,009 (279,884)
Prepaid television time (304,406) 655,105
Deposits (20,439) (32,071)
Accounts payable 1,127,715 794,838
Accrued expenses 4,647 64,414
Income taxes payable 2 19,000
----------- -----------
Net cash used in operating activities (2,162,132) (2,608,560)
CASH FLOWS FROM INVESTING ACTIVITIES :
Purchases of property and equipment (202,353) (225,672)
Prepaid advances 37,788 (17,674)
----------- -----------
Net cash used in investing activities (164,565) (243,346)
CASH FLOWS FROM FINANCING ACTIVITIES :
Payments on notes payable (11,450) -
Proceeds from bank loans 1,500,000 -
----------- -----------
Net cash provided by financing activities 1,488,550 -
NET DECREASE IN CASH AND CASH EQUIVALENTS (838,147) (2,851,906)
CASH AND CASH EQUIVALENTS, beginning of period 1,127,861 6,180,983
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 289,714 $ 3,329,077
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid $ - $ 1,194,000
=========== ===========
Interest paid $ 53,618 $ 977
=========== ===========
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
During the first quarter of 1999, the Company completed the following transactions:
Recorded $22,001 to additional paid-in capital for compensation costs related to options.
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE>
PROLONG INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS
Prolong International Corporation (PIC) is a Nevada corporation originally
organized on August 24, 1981. In June 1995, PIC acquired 100% of the
outstanding stock of Prolong Super Lubricants, Inc. (PSL), a Nevada
corporation. In 1997, Prolong Foreign Sales Corporation was formed as a
wholly-owned subsidiary of PIC. In 1998, Prolong International Holdings
Ltd. was formed as a wholly-owned subsidiary of PIC. At the same time,
Prolong International Ltd. was formed as a wholly-owned subsidiary of
Prolong International Holdings Ltd. PIC, through its subsidiaries, is
engaged in the manufacture, sale and worldwide distribution of a patented
complete line of high-performance and high-quality lubricants and
appearance products.
2. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
include the accounts of PIC and its wholly-owned subsidiaries, PSL, Prolong
Foreign Sales Corporation, Prolong International Holdings Ltd. and its
wholly-owned subsidiary, Prolong International Ltd. (collectively, the
Company or Prolong). All significant intercompany accounts have been
eliminated in consolidation. These financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 or
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments, including normal recurring accruals, considered necessary for
a fair presentation have been included. Operating results for the three
months ended March 31, 1999 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1999. For further
information, refer to the Form 10-K for the year ended December 31, 1998
filed by the Company with the Securities and Exchange Commission.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31 December 31,
1999 1998
---------- -----------
(Unaudited)
<S> <C> <C>
Raw Materials $ 729,887 $ 936,451
Finished goods 2,092,105 1,430,797
Promotional Items 782,932 548,001
---------- ----------
$3,604,924 $2,915,249
========== ==========
</TABLE>
6
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Building $2,273,907 $2,268,559
Computer equipment 265,647 230,264
Office equipment 55,752 54,073
Furniture and fixtures 400,093 255,669
Automotive equipment 35,925 35,925
Exhibit equipment 115,143 115,143
Machinery and equipment 13,349 12,174
Molds and dies 77,537 63,193
---------- ----------
3,237,353 3,035,000
Less accumulated depreciation (264,541) (200,491)
---------- ----------
2,972,812 2,834,509
Land 538,000 538,000
---------- ----------
$3,510,812 $3,372,509
========== ==========
</TABLE>
5. NOTES PAYABLE
Notes payable consist of the following as of March 31, 1999:
<TABLE>
<S> <C>
a) Note payable to a bank bearing interest at 7.875% per
annum to be repaid in monthly principal and interest
payments of $13,050 with a final payment of all
remaining unpaid principal and interest due on May 1, 2008. $1,671,454
b) Loan from CDC Small Business Finance Corporation
bearing interest at 7.65% per annum to be repaid in
monthly principal and interest payments of $6,376 each
through July 1, 2018. 735,052
----------
2,406,506
Less current maturities (42,325)
----------
$2,364,181
==========
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Year ending December 31,
1999 $ 42,325
2000 48,667
2001 52,264
2002 56,133
2003 57,969
Thereafter 2,149,148
----------
$2,406,506
==========
</TABLE>
6. CONTINGENCIES
On or about November 17, 1998, Michael Walczak et al, on behalf of himself
and other similarly situated shareholders of EPL filed a class action in
the U.S. District Court (the "Court") in San Diego, California against PIC,
PSL, EPL and their respective former and current officers and directors.
The named plaintiffs allege breach of contract, certain fraud claims, civil
RICO, breach of fiduciary duty and conversion and seek monetary damages.
The named plaintiffs in the action are allegedly current EPL shareholders
who hold less than two percent (2%) of the outstanding shares of EPL's
common stock, in the aggregate. The plaintiffs applied for a preliminary
injunction to halt the sale of the assets of EPL to PIC and to prevent the
dissolution of EPL.
On November 25, 1998, the Court granted a temporary restraining order
without a hearing and before opposition could be submitted. On December 30,
1998, the Court held a hearing on whether a preliminary injunction should be
issued in connection with such action. The Court entered a preliminary
injunction based on the plaintiffs' (a) alleged claim for fraudulent
conveyance in connection with PSL's license agreement with EPL and (b)
alleged claim for breach of fiduciary duty. The preliminary injunction
enjoins the further consummation of the asset purchase transaction and
prevents EPL from completing its liquidation and dissolution until further
notice from the Court. The preliminary injunction will last until the case
is tried on its merits or until the preliminary injunction is otherwise
dismissed. The Court ordered the plaintiffs to post a bond in the amount of
$100,000, which bond has been posted. PIC has appealed the Court's
preliminary injunction ruling.
PIC and PSL and their respective current officers and directors continue to
believe that there is no merit to the plaintiff's claims and plan to
vigorously defend against the claims. The defendants have each filed and
served motions to dismiss the complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. These motions are scheduled for
determination in the near future. The defendants successfully moved to
change venue and the case has been ordered transferred to the federal court
in Orange County, California, where PIC's principal office is located. The
parties have agreed to attempt to mediate the dispute. They are engaged in
settlement discussions in an effort to resolve the matter. However, it is
too early to tell whether an acceptable settlement can be reached.
8
<PAGE>
Neither PIC nor any of its subsidiaries is a party to any other pending or
threatened legal, governmental, administrative or judicial proceedings that
Prolong believes will have a material adverse effect upon PIC's or its
subsidiaries' business, operating results, financial condition or cash
flows.
9
<PAGE>
ITEM 2:
- -------
PROLONG INTERNATIONAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Percentage of Net Revenues
Three Months Ended
March 31,
------------------------------
1999 1998
------------------------------
<S> <C> <C>
Net revenues 100.0 100.0
Cost of goods sold 27.3 18.5
------------------------------
Gross profit 72.7 81.5
Selling expenses 57.2 43.7
General and administrative expenses 17.0 12.4
------------------------------
Operating income (loss) (1.5) 25.4
Other income (expense) (0.5) 0.6
------------------------------
Income (loss) before income taxes (2.0) 26.0
Provision (benefit) for income taxes (0.7) 11.2
------------------------------
Net income (loss) (1.3) 14.8
------------------------------
</TABLE>
Three Months Ended March 31, 1999 vs. Three Months Ended March 31, 1998
Net revenues for the three months ended March 31, 1999 were approximately
$9,750,000 as compared to approximately $10,849,000 for the comparable period of
the prior year, a decrease of $1,099,000 or 10.1%. Revenues for the three month
period ended March 31, 1999 were derived from the following sources: Direct
response television sales of $1,054,000; retail sales of $8,012,000; industrial
sales of $199,000; and, international and other sales of $485,000. Revenues for
the three month period ended March 31, 1998 were derived from the following
sources: Direct response television sales of $1,957,000; retail sales of
$8,055,000; industrial sales of $316,000; and, international and other sales of
$521,000.
During the first quarter of 1999, retail sales were 82.2% of total revenues
while direct response television sales comprised 10.8% of total revenues.
During the first quarter of 1998, direct response television sales comprised
18.0% of total revenues while retail sales were 74.2%. This shift in the mix of
sales resulted from pursuit of sales to retail chain stores and mass
merchandisers. The lower retail sales for the period ended March 31, 1999
versus the same period a year ago, reflect a large initial stocking order from a
new retailer in the first quarter of 1998.
10
<PAGE>
Cost of goods sold for the three months ended March 31, 1999 was approximately
$2,658,000 as compared to $2,005,000 for the comparable period of the prior
year, an increase of $653,000 or 32.6%. As a percentage of sales, cost of goods
sold increased from 18.5% for the three months ended March 31, 1998 to 27.3% for
the three months ended March 31, 1999. This increase was mainly attributable to
the higher cost of new packaging (introduced in the second quarter of 1998) for
the super lubricants, one-time display costs associated with the launch of the
new automotive appearance products and a shift in product mix with the
appearance products yielding lower gross margins than the lubricant products.
Selling expenses of $5,574,000 for the three months ended March 31, 1999
represented an increase of $833,000 over the comparable period of the prior
year. This 17.6% increase was primarily the result of marketing allowances to
retail customers, increased endorsement and sponsorship payments, promotional
activities to promote product awareness, expenditures for media and print
advertising and increased television air-time purchases. Selling expenses as a
percentage of sales were 57.2% for the three months ended March 31, 1999 versus
43.7% for the comparable period of the previous year.
General and administrative expenses for the three months ended March 31, 1999
were approximately $1,665,000 as compared to $1,343,000 for the three months
ended March 31, 1998, an increase of $322,000 or 24.0%. This increase is
primarily attributable to additional salaries and benefits for new employees,
costs related to the design of the Company's new web site, and higher legal
expenses.
Interest expense of $54,000 for the three months ended March 31, 1999
represented an increase of $53,000 over the comparable period in 1998. The
increase is attributable to the financing related to the purchase of the
Company's new facility in April 1998 in Irvine, California.
For the three month period ended March 31, 1999, the Company generated net
interest income of $5,000 as compared to $61,000 for the comparable period in
1998. The decrease is attributable to the decrease of cash balances in interest
bearing accounts.
Net income (loss) for the three month period ended March 31, 1999 was
approximately $(128,000) as compared to approximately $1,607,000 for the
comparable period in the prior year, a decrease of $1,735,000. The decrease is
a result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company utilizes funds generated from operations and borrowings from an
existing credit facility to meet its working capital requirements, which consist
mainly of inventory purchases and to support the increasing receivables balance,
which is a result of the change in the mix of sales. At March 31, 1999, the
Company had net working capital of $8,226,000 as compared to $8,373,000 at
December 31, 1998 or a decrease of $147,000. The Company has a $4,000,000 line
of credit with a bank, which is renewable in July 1999 and is collateralized by
inventories
11
<PAGE>
and receivables. There were $1,500,000 borrowings outstanding against this line
of credit as of March 31, 1999.
During the three months ended March 31, 1999, the Company used $2,162,000 to
fund operations, which consisted primarily of increases in receivables,
inventories, prepaid television time, and payables and $165,000 to fund
investing activities, primarily purchases of property and equipment.
The Company does not anticipate the need for any material production-related
capital expenditures as it will continue with its strategy to subcontract all
future manufacturing, bypassing the need for any manufacturing infrastructure
investment. However, the Company does anticipate ongoing capital expenditures
for furniture and equipment associated with its office and warehouse facility
and additional computer related equipment. Additionally, the Company plans to
significantly increase its level of operations, and, in particular, plans to
increase its marketing activities to include additional markets in the United
States and abroad. The Company anticipates that all of these activities will be
funded by operations, working capital and existing credit facilities.
YEAR 2000 READINESS DISCLOSURE
PIC has developed and is well into implementing a company-wide Year 2000 plan
(the "Plan") with the intent to ensure that its computer equipment and
operations will become "Year 2000 compliant". PIC has formed a Year 2000
response team comprised of key members from various business areas to review and
respond quickly to Year 2000 issues as they occur. The response team is
expected to be on call during the millennium change to monitor and provide
solutions to any issues that arise. PIC's Year 2000 Plan is directed to four
major areas: products, internal systems (including information technology (IT)
and non-IT systems), suppliers and dealers. PIC's Year 2000 Plan includes a
series of initiatives to ensure that all of the computer hardware, software and
communications systems will function without incident at the turn of the
millennium and beyond. To date, the cost to identify, assess and remediate
PIC's Year 2000 issues is not expected to be material to PIC's financial
condition or impact business operations. None of PIC's other information
technology projects have been delayed or deferred as a result of Year 2000
assessment and remediation. PIC is progressing with replacement or enhancement
to internal IT systems and functions.
During the assessment and remediation phase of the Year 2000 Plan, PIC
identified and corrected problems involving calculations or data manipulation
based on date values. PIC upgraded to software products with proven versions of
Year 2000 compliant products. The use of Year 2000 certified software and
product upgrades has further strengthened PIC's Year 2000 transition position.
In addition, PIC has also assessed and remediated non-IT support systems such as
phone switches, copier/facsimile machines and facility security systems. With
regard to the outside supplier portion of the Plan, PIC is currently assessing
Year 2000 readiness of production and distribution suppliers based on projected
severity levels of Year 2000 outage issues. Suppliers have been asked to
respond to a compliance questionnaire and initial responses to these
questionnaires have been received. Based on the response thus far, PIC believes
that the worst case scenario with respect to Year 2000 issues is the failure of
a supplier to become Year
12
<PAGE>
2000 compliant in time. It is projected that such a failure by a supplier would
result in disruption of manufacturing and distribution functions and the
implementation of manual systems and processes until such time as the failure is
cured. At the present time, PIC expects to be fully Year 2000 compliant by the
third quarter of 1999.
The Company presently believes it has an effective Plan to anticipate and
resolve any potential internal Year 2000 issues in a timely manner. In
addition, the Company has reviewed potential Year 2000 failure points and
implemented corrective action to resolve any issues in addition to providing
manual systems and procedures to ensure business needs are being serviced until
such time as Year 2000 automated system failures can be remediated and
corrected. The Company plans to have its contingency plan in place by October
31, 1999.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PIC's financial instruments include cash and long-term debt. At March 31, 1999
and December 31, 1998, the carrying values of PIC's financial instruments
approximated their fair values based on current market prices and rates. It is
PIC's policy not to enter into derivative financial instruments. PIC does not
currently have any significant foreign currency exposure since it does not
transact business in foreign currencies. Due to this, PIC did not have
significant overall currency exposure at March 31, 1999 and December 31, 1998.
RISK FACTORS AND FORWARD LOOKING STATEMENTS
This report contains certain forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties. In addition, the Company may from time to time make oral forward
looking statements. Actual results are uncertain and may be impacted by the
factors discussed in more detail in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 filed with the Securities and Exchange
Commission. In particular, certain risks and uncertainties that may impact the
accuracy of the forward looking statements with respect to revenues, expenses
and operating results including without limitation, the risks set forth in the
risk factors section of the Annual Report on Form 10-K for the year ended
December 31, 1998, which risk factors are hereby incorporated into this report
by this reference. As a result, the actual results may differ materially from
those projected in the forward looking statements.
Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
13
<PAGE>
PROLONG INTERNATIONAL CORPORATION
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 6 of the notes to consolidated condensed financial
statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K
The following Form 8-K was filed during the first quarter of 1999:
On January 13, 1999, PIC filed a Form 8-K to disclose that the Court
entered a preliminary injunction in the class action filed on or about
November 17, 1998 by Michael Walczak, et al.
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.
PROLONG INTERNATIONAL CORPORATION
Date: May 13, 1999 /s/ Nicholas Rosier
---------------------------------
Nicholas Rosier
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 289,714
<SECURITIES> 0
<RECEIVABLES> 7,501,871
<ALLOWANCES> 230,125
<INVENTORY> 3,604,924
<CURRENT-ASSETS> 14,239,130
<PP&E> 3,775,353
<DEPRECIATION> 264,541
<TOTAL-ASSETS> 25,725,894
<CURRENT-LIABILITIES> 6,013,268
<BONDS> 0
0
0
<COMMON> 28,446
<OTHER-SE> 17,319,999
<TOTAL-LIABILITY-AND-EQUITY> 17,348,445
<SALES> 9,749,872
<TOTAL-REVENUES> 9,749,872
<CGS> 2,657,939
<TOTAL-COSTS> 2,657,939
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,618
<INCOME-PRETAX> (195,891)
<INCOME-TAX> (68,000)
<INCOME-CONTINUING> (127,891)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,891)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
