<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, 2000
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 Irvine, CA 92618 (IRS Employer Identification No.)
of 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 11, 2000.
Page 1 of 14 pages
Exhibit Index on Sequentially Numbered Page 14
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1
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PROLONG INTERNATIONAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS
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<CAPTION>
PART 1 FINANCIAL INFORMATION Page
<S> <C>
Item 1: Financial Information
Consolidated Condensed Balance Sheets -
March 31, 2000 and December 31, 1999............................ 3
Consolidated Condensed Statements of Operations - Three months
ended March 31, 2000 and 1999................................... 4
Consolidated Condensed Statements of Cash Flows -
Three months ended March 31, 2000 and 1999...................... 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...... 12
PART II OTHER INFORMATION
Item 1: Legal Proceedings............................................... 14
Item 6: Exhibits and Reports on Form 8-K................................ 14
Signatures...................................................... 14
</TABLE>
2
<PAGE>
Item 1. Financial Information
PROLONG INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 752,120 $ 1,094,779
Accounts receivable, net 5,308,212 2,747,459
Inventories 2,407,629 2,171,728
Prepaid expenses 312,953 182,646
Income taxes receivable - 94,275
Prepaid television time 226,868 -
Advances to employees 215,450 218,523
Deferred tax asset 1,708,096 1,617,442
-------------- -------------
Total current assets 10,931,328 8,126,852
Property and equipment, net 3,458,718 3,554,176
Intangible assets, net 6,909,999 7,036,670
Deferred tax asset, noncurrent 375,637 2,545,238
Other assets 154,469 116,712
-------------- -------------
TOTAL ASSETS $ 21,830,151 $ 21,379,648
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,127,102 $ 2,843,843
Accrued expenses 1,447,181 1,210,126
Line of credit 3,100,000 3,985,000
Income taxes payable 162,156 -
Notes payable, current 33,149 46,446
------------- -------------
Total current liabilities 7,869,588 8,085,415
Notes payable, noncurrent 2,329,559 2,327,048
------------- -------------
Total liabilities 10,199,147 10,412,463
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 14,832,348 14,809,349
Retained earnings (3,229,790) (3,870,610)
------------- -------------
Total stockholders' equity 11,631,004 10,967,185
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,830,151 $ 21,379,648
============= =============
</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,
- --------------------------------------------------------------------------------------------------------------------------
2000 1999
---- ----
<S> <C> <C>
NET REVENUES $ 7,757,199 $9,749,872
COST OF GOODS SOLD 1,726,911 2,657,939
----------- -----------
GROSS PROFIT 6,030,288 7,091,933
OPERATING EXPENSES:
Selling and marketing expenses 3,312,551 5,573,895
General and administrative expenses 1,428,153 1,665,015
----------- -----------
Total operating expenses 4,740,704 7,238,910
----------- -----------
OPERATING INCOME (LOSS) 1,289,584 (146,977)
OTHER INCOME (EXPENSE), net:
Interest (expense) (154,256) (53,618)
Interest income 2,335 4,704
----------- -----------
Total other (expense), net (151,921) (48,914)
----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 1,137,663 (195,891)
PROVISION (BENEFIT) FOR INCOME TAXES 496,843 (68,000)
----------- -----------
NET INCOME (LOSS) $ 640,820 $ (127,891)
=========== ===========
NET INCOME (LOSS) PER SHARE:
Basic $ 0.02 ($ 0.00)
=========== ===========
Diluted $ 0.02 ($ 0.00)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES:
Basic 28,445,835 28,445,835
Diluted options outstanding 128,219 0
----------- -----------
Diluted 28,574,054 28,445,835
=========== ===========
</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,
- -------------------------------------------------------------------------------------------------------------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 640,820 $ (127,891)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 225,004 193,596
Provision for doubtful accounts 30,000 (349,875)
Deferred taxes 2,078,947 (68,000)
Reserve for obsolesence (100,002) 16,000
Compensation costs related to options 22,999 22,001
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable (2,590,753) (1,971,816)
Inventories (135,899) (705,675)
Prepaid expenses (130,307) 22,009
Prepaid television time (226,868) (304,406)
Deposits (40,632) (20,439)
Accounts payable 283,259 1,127,715
Accrued expenses 237,055 4,647
Income taxes payable 256,431 2
------------- -----------
Net cash provided by (used in) operating activities 550,054 (2,162,132)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment - (202,353)
Prepaid advances 3,073 37,788
------------- -----------
Net cash provided by (used in) investing activities 3,073 (164,565)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (10,786) (11,450)
Proceeds (payments) on line of credit, net (885,000) 1,500,000
------------- -----------
Net cash provided by (used in) financing activities (895,786) 1,488,550
NET DECREASE IN CASH AND CASH EQUIVALENTS (342,659) (838,147)
CASH AND CASH EQUIVALENTS, beginning of period 1,094,779 1,127,861
------------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 752,120 $ 289,714
============= ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid $ - $ -
============= ===========
Interest paid $ 154,256 $ 53,618
============= ===========
</TABLE>
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
During the first quarter of 2000, the Company completed the following
transactions: Recorded $22,999 to additional paid-in capital for compensation
costs related to options.
See notes to consolidated 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 of
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, 2000 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2000. For further information,
refer to the Form 10-K for the year ended December 31, 1999 filed by the
Company with the Securities and Exchange Commission.
3. INVENTORIES
Inventories consist of the following:
March 31, December 31,
2000 1999
---- ----
(Unaudited)
Raw materials $ 778,932 $ 985,785
Finished goods 1,628,697 1,185,943
---------- ----------
$2,407,629 $2,171,728
========== ==========
6
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4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31, December 31,
2000 1999
---- ----
(Unaudited)
Building and improvements $2,280,783 $2,280,783
Computer equipment 276,729 276,729
Office equipment 55,753 55,753
Furniture and fixtures 581,324 581,324
Automotive equipment 35,925 35,925
Exhibit equipment 115,143 115,143
Machinery and equipment 17,953 17,953
Molds and dies 206,961 206,961
---------- ----------
3,570,571 3,570,571
Less accumulated depreciation (649,853) (554,395)
---------- ----------
2,920,718 3,016,176
Land 538,000 538,000
---------- ----------
$3,458,718 $3,554,176
========== ==========
5. LINE OF CREDIT
In July 1997, the Company entered into a $4,000,000 line of credit
arrangement, as amended, with a bank. Such line is collateralized by
accounts receivable and inventories. The line contains certain financial
covenants including a minimum quick ratio and tangible net worth. As of
March 31, 2000, $3,100,000 was outstanding which was the maximum available
under the then current amendment to the line of credit. As of March 31,
2000, the Company was in compliance or had received waivers for all
financial covenants. The effective interest rate was 10% at March 31, 2000.
The line expired on April 30, 2000, but the bank agreed to an extension
through May 10, 2000, at which time the obligation was settled in full with
proceeds from a new credit facility. As of May 8, 2000, the Company entered
into a new $6,000,000 credit facility with a financial institution,
expiring in May 2003. Such facility is collateralized by eligible accounts
receivable and inventories. Interest is payable monthly at the rate of the
financial institution's prime rate plus 1% subject to a minimum interest
charge of $50,000 per quarter. The credit facility contains certain defined
net income and tangible net worth financial covenants. Additionally, the
Company is currently seeking new financing arrangements through
subordinated debt and/or equity providers.
7
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6. NOTES PAYABLE
Notes payable consist of the following as of March 31, 2000:
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. $1,648,234
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 $6,376 714,474
----------
each through July 1, 2018. 2,362,708
Less current maturities (33,149)
----------
$2,329,559
==========
Year ending December 31,
2000 $ 33,149
2001 50,256
2002 53,974
2003 57,969
2004 61,909
Thereafter 2,105,451
----------
$2,362,708
==========
7. CONTINGENCIES
On or about November 17, 1998, Michael Walczak et al, on behalf of himself
and other similarly situated shareholders of EPL filed a purported class
action and derivative suit 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
8
<PAGE>
injunction is otherwise dismissed. The Court ordered the Walczak plaintiffs
to post a bond in the amount of $100,000, which bond has been posted. PIC
appealed the Court's preliminary injunction ruling, which appeal was
subsequently denied.
The Prolong defendants successfully moved to change venue and the case was
ordered transferred to the federal court in Orange County, California,
where PIC's principal office is located. In December 1999, plaintiffs'
counsel was disqualified from the matter on the grounds of unwaivable
conflict of interest. It is still unclear who the plaintiffs have selected
as new counsel. At this time, due to plaintiffs lack of counsel, there are
no mediation conferences scheduled. Therefore, final resolution of the
matter cannot presently be determined. The Prolong defendants have each
filed and served motions to dismiss the complaint pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. There has been no ruling to date
on the Walczak plaintiffs' request to certify the class as a class action.
PIC and PSL and their respective current officers and directors continue to
believe that there is no merit to the plaintiffs' claims and plan to
vigorously defend against the claims.
PIC and its subsidiaries are subject to legal proceedings, claims and
litigation arising in the ordinary course of business. PIC's management
does not expect that the ultimate costs to resolve these matters will have
a material adverse effect on PIC's consolidated financial position, results
of operations or cash flows.
8. COMMITMENTS
The Company has outstanding noncancelable inventory purchase commitments
with a contract packager of approximately $930,000 as of March 31, 2000.
Under the terms of the agreement, the packager purchases components,
manufactures, warehouses and distributes certain car care products for the
Company. When inventories held by the packager exceed approximately 75 days
from the date of production, the Company may be obligated to pay a storage
handling fee of 1 1/2% per month, and/or purchase these inventories at the
option of the packager.
9
<PAGE>
ITEM 2:
- -------
PROLONG INTERNATIONAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Percentage of Net
Revenues
Three Months Ended
March 31,
-------------------------
2000 1999
-------------------------
Net revenues 100.0 100.0
Cost of goods sold 22.3 27.3
------------------------
Gross profit 77.7 72.7
Selling and marketing expenses 42.7 57.2
General and administrative expenses 18.4 17.0
------------------------
Operating income (loss) 16.6 (1.5)
Other income (expense) (1.9) (0.5)
------------------------
Income (loss) before income taxes 14.7 (2.0)
Provision (benefit) for income taxes 6.4 (0.7)
------------------------
Net income (loss) 8.3 (1.3)
------------------------
Three Months Ended March 31, 2000 vs. Three Months Ended March 31, 1999
Net revenues for the three months ended March 31, 2000 were approximately
$7,760,000 as compared to approximately $9,750,000 for the comparable period of
the prior year, a decrease of $1,990,000 or 20.4%. Revenues for the three month
period ended March 31, 2000 were derived from the following sources: Retail
sales of $6,900,000 ($6,393,000 of lubricant products and $507,000 of
appearance); direct response television sales of $168,000 ($82,700 of lubricant
products and $85,300 of appearance); industrial sales of $73,000; and,
international and other sales of $619,000. Revenues for the three month period
ended March 31, 1999 were derived from the following sources: Retail sales of
$8,012,000 ($5,849,000 of lubricant products and $2,163,000 of appearance);
direct response television sales of $1,054,000 ($719,000 of lubricant products
and $335,000 of appearance); industrial sales of $199,000; and, international
and other sales of $485,000.
During the first quarter of 2000, retail sales were 88.9% of total revenues
direct response television sales comprised 2.2% of total revenues. 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. This shift in the
mix of sales resulted from a continuing pursuit of sales to retail stores and
mass merchandisers. The lower retail sales for the period ended March 31, 2000
versus the same period a year ago are mainly attributable to a decrease in
appearance sales of
10
<PAGE>
approximately $1,656,000. The appearance products were launched in the first
quarter of 1999 when initial stocking orders were filled at several major
retailers. In the first quarter of 2000, the demand for the appearance products
declined, while retail lubricant sales rebounded slightly. The decrease in the
direct response sales of approximately $886,000 is a direct result of a
strategic decision to evaluate other cost effective advertising programs. These
new programs will be rolled out in the second and third quarters of 2000.
Cost of goods sold for the three months ended March 31, 2000 was approximately
$1,727,000 as compared to $2,658,000 for the comparable period of the prior
year, a decrease of $931,000 or 35.0%. As a percentage of sales, cost of goods
sold decreased from 27.3% for the three months ended March 31, 1999 to 22.3% for
the three months ended March 31, 2000. This decrease was mainly attributable to
the shift in product mix with the lubricant products yielding higher gross
margins than the appearance products.
Selling and marketing expenses of $3,313,000 for the three months ended March
31, 2000 represented a decrease of $2,261,000 over the comparable period of the
prior year. This 40.6% decrease was primarily the result of decreased expenses
for endorsement and sponsorship payments, promotional activities to promote
product awareness, expenditures for media and print advertising and television
air-time purchases. Selling and marketing expenses as a percentage of sales were
42.7% for the three months ended March 31, 2000 versus 57.2% for the comparable
period of the previous year.
General and administrative expenses for the three months ended March 31, 2000
were approximately $1,428,000 as compared to $1,665,000 for the three months
ended March 31, 1999, a decrease of $237,000 or 14.2%. This decrease is
primarily attributable to a decrease in legal expenses.
Net interest expense of $152,000 for the three months ended March 31, 2000
represented an increase of $103,000 over the comparable period in 1999. The
increase is attributable to the increase in borrowings against the line of
credit.
Net income for the three month period ended March 31, 2000 was approximately
$641,000 as compared to a net loss of approximately $128,000 for the comparable
period in the prior year, an increase of $769,000. The increase 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.
At March 31, 2000, the Company had net working capital of $3,062,000 as compared
to $41,000 at December 31, 1999 or an increase of $3,021,000.
During the three months ended March 31, 2000, the Company generated $550,000
from operations, which was provided by net income and a reduction in deferred
taxes and to fund increases in receivables, inventories, and prepaid television
time, and $895,000 used in financing activities primarily payments on bank
loans. In July 1997, the Company entered into a $4,000,000 line of credit
arrangement, as amended, with a bank. Such line is collateralized by
11
<PAGE>
accounts receivable and inventories. The line contains certain financial
covenants including a minimum quick ratio and tangible net worth. As of March
31, 2000, $3,100,000 was outstanding which was the maximum available under the
then current amendment to the line of credit. As of March 31, 2000, the Company
was in compliance or had received waivers for all financial covenants. The
effective interest rate was 10% at March 31, 2000. The line expired on April 30,
2000, but the bank agreed to an extension through May 10, 2000, at which time
the obligation was settled in full with proceeds from a new credit facility. As
of May 8, 2000, the Company entered into a new $6,000,000 credit facility with a
financial institution, expiring in May 2003. Such facility is collateralized by
eligible accounts receivable and inventories. Interest is payable monthly at the
rate of the financial institution's prime rate plus 1% subject to a minimum
interest charge of $50,000 per quarter. The credit facility contains certain
defined net income and tangible net worth financial covenants. The Company is
currently seeking additional new financing arrangements through subordinated
debt and/or equity providers. At March 31, 2000, the Company had an accumulated
deficit of approximately $3,230,000. As a result, the Company is continuing to
evaluate all expenditures and manpower requirements, improve its credit and
collection functions and revise vendor payment terms to the extent possible.
There are also continued efforts to convert certain assets to cash on an
accelerated basis. Management will also continue to vigorously defend the
litigation described in Note 7 of Notes to Consolidated Condensed Financial
Statements. Management believes that these plans will provide adequate financial
resources to sustain the Company's operations and enable the Company to continue
as a going concern.
ITEM 3:
- -------
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PIC's financial instruments include cash and long-term debt. At March 31, 2000
and December 31, 1999, the carrying values of PIC's financial instruments
approximated their fair values based
12
<PAGE>
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, 2000 and December 31, 1999.
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, 1999 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, 1999, 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 7 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
There were no Form 8-K's filed during the first quarter of 2000.
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 11, 2000 /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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 752,120
<SECURITIES> 0
<RECEIVABLES> 5,727,944
<ALLOWANCES> 419,732
<INVENTORY> 2,407,629
<CURRENT-ASSETS> 10,931,328
<PP&E> 4,108,571
<DEPRECIATION> 649,853
<TOTAL-ASSETS> 21,830,151
<CURRENT-LIABILITIES> 7,869,588
<BONDS> 0
0
0
<COMMON> 28,446
<OTHER-SE> 11,602,558
<TOTAL-LIABILITY-AND-EQUITY> 21,830,151
<SALES> 7,757,199
<TOTAL-REVENUES> 7,757,199
<CGS> 1,726,911
<TOTAL-COSTS> 1,726,911
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30,000
<INTEREST-EXPENSE> 154,256
<INCOME-PRETAX> 1,137,663
<INCOME-TAX> 496,843
<INCOME-CONTINUING> 640,820
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 640,820
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
