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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 2000
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 000-30510
AVIATION HOLDINGS GROUP, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 22-2545898
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(State or other jurisdiction of) (I.R.S. Employer Identification Number)
(incorporation or organization)
15675 N.W. 15th Avenue, Miami, Florida 33169
--------------------------------------------
(Address of principal executive offices)
(305) 624-6700
--------------
(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 [ ] NO [X]
(2) YES [X] NO [ ]
Transitional Small Business Format: YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, $0.001 part value, outstanding on December 19, 2000:
4,219,315 shares
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
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<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2000 (unaudited)
and December 31,1999........................................................ 3
Condensed Consolidated Statements of Operations for the Three Months
and Nine Months Ended September 30, 2000 (unaudited) and 1999 (unaudited)... 5
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 (unaudited) and 1999 (unaudited)................... 6
Notes to Condensed Consolidated Financial Statements........................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................... 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................... 13
SIGNATURES
</TABLE>
2
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Item 1. Financial Statements
AVIATION HOLDINGS GROUP, INC.
Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---------------- -----------------
(Unaudited)
<S> <C> <C>
Current Assets
Cash $ 61,925 $ 426,688
Trade receivables, net 2,594,163 1,710,014
Inventory 8,082,257 4,700,636
Advances to stockholder - related party - 151,709
Other current assets 73,709 72,842
---------------- -----------------
Total Current Assets 10,812,054 7,061,889
---------------- -----------------
Property and Equipment, Net 269,538 324,188
---------------- -----------------
Other Assets
Investment in joint venture 813,150 710,189
Deposits 16,713 16,713
Interest receivable from stockholders - related
parties 63,992 47,627
Intangibles, net 645,246 672,859
Deferred offering costs - 749,342
---------------- -----------------
Total Other Assets 1,539,101 2,196,730
---------------- -----------------
Total Assets $ 12,620,693 $ 9,582,807
================ =================
</TABLE>
See notes to condensed consolidated financial statements.
3
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AVIATION HOLDINGS GROUP, INC.
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---------------- -----------------
(Unaudited)
<S> <C> <C>
Current Liabilities
Short-term borrowings and current portion of
long-term debt $ 2,567,231 $ 2,133,099
Accounts payable 6,172,855 2,620,343
Accrued expenses and other current liabilities 643,410 429,597
Advances from stockholders 551,000 1,000
---------------- -----------------
Total Current Liabilities 9,934,496 5,184,039
Long-term debt, net of current portion 8,671 24,489
---------------- -----------------
Total Liabilities 9,943,167 5,208,528
---------------- -----------------
Minority Interest 323,489 346,943
---------------- -----------------
Commitments and Contingencies
Stockholders' Equity
Preferred stock; no par value; authorized - 2,000,000
shares; issued - none. - -
Common stock; $.0001 par value; authorized -
18,000,000 shares; issued, issuable and
outstanding - 4,219,315 422 422
Additional paid-in capital 6,037,544 6,037,544
Less subsidiary stock subscription receivable -
related parties (280,000) (280,000)
Accumulated deficit (3,403,929) (1,730,630)
--------------- ----------------
Total Stockholders' Equity 2,354,037 4,027,336
--------------- ----------------
Total Liabilities and Stockholders' Equity $ 12,620,693 $ 9,582,807
=============== ================
</TABLE>
See notes to condensed consolidated financial statements.
4
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AVIATION HOLDINGS GROUP, INC.
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- -----------------------------------------
2000 1999 2000 1999
------------------------ ------------- -------------------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $2,224,817 $2,970,807 $6,821,522 $9,342,749
Cost of Goods Sold 1,550,456 1,794,816 4,617,761 6,048,375
------------------------ ------------- -------------------------- --------------
Gross Profit 674,361 1,175,991 2,203,761 3,294,374
------------------------ ------------- -------------------------- --------------
Operating Expenses
Salaries and wages 297,097 449,181 1,020,447 1,095,200
General and administrative 476,361 437,234 1,574,486 1,435,615
Professional fees 989,842 62,180 1,165,597 190,512
------------------------ ------------- -------------------------- --------------
Total Operating Expenses 1,763,300 948,595 3,760,530 2,721,327
------------------------ ------------- -------------------------- --------------
Income (Loss) from Operations (1,088,939) 227,396 (1,556,769) 573,047
Other Income (Expense)
Interest expense (66,158) (128,843) (186,894) (578,148)
Interest income 5,495 5,517 26,130 21,009
Income from joint venture 8,779 (15,480) 20,779 4,171
------------------------ ------------- -------------------------- --------------
Total Other Expense (51,884) (138,806) (139,985) (552,968)
------------------------ ------------- -------------------------- --------------
Income (Loss) Before Income Taxes
and Minority Interest (1,140,823) 88,590 (1,696,754) 20,079
Income Tax Expense - (7,125) - (56,125)
------------------------ ------------- -------------------------- --------------
Income (Loss) Before Minority
Interest (1,140,823) 81,465 (1,696,754) (36,046)
Minority Interest 8,760 (19,513) 23,455 (62,870)
------------------------ ------------- -------------------------- --------------
Net (Loss) Income $(1,132,063) $61,952 $(1,673,299) $(98,916)
======================== ============= ========================== ==============
Basic and Diluted Loss Per Common
Share $(0.27) $0.01 $(0.40) $(0.03)
======================== ============= ========================== ==============
Average Common Shares - Basic and
Diluted 4,219,315 4,214,152 4,219,315 3,954,459
======================== ============= ========================== ==============
</TABLE>
See notes to condensed consolidated financial statements.
5
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AVIATION HOLDINGS GROUP, INC.
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30
---------------------------------------
2000 1999
------------------- -------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $(1,673,299) $(98,916)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Compensatory common stock and options - 83,625
Minority interest (23,455) 62,871
Income from joint venture (20,779) (4,170)
Depreciation and amortization 98,605 86,690
Expensed deferred offering costs 746,069 -
Amortization of financial fees - 383,932
Provision for bad debts 53,900 30,000
Change in assets and liabilities
(Increase) decrease in assets (4,194,295) (1,123,338)
Increase (decrease) in liabilities 3,782,526 374,729
------------------- -------------------
Total Adjustments 442,571 (105,661)
------------------- -------------------
Net Cash Used in Operating Activities (1,230,728) (204,577)
------------------- -------------------
Cash Flows from Investing Activities
Employee advances (16,266) (52)
Purchases of equipment (13,069) (77,419)
Investment in joint venture (100,000) (200,000)
Distributions from joint venture 17,818 14,627
------------------- -------------------
Net Cash Used in Investing Activities (111,517) (262,844)
------------------- -------------------
Cash Flows from Financing Activities
Proceeds from bank line of credit 425,444 475,000
Repayments of short-term borrowings - (23,897)
Repayments on long-term debt (7,132) (2,664)
Payments of deferred offering costs - (79,623)
Proceeds from sale of EWS note - 43,880
Advances from (to) stockholders, net of repayments 559,170 (76,528)
Proceeds from sale of stock, net of offering costs paid - 265,000
------------------- -------------------
Net Cash Provided by Financing Activities 977,482 601,168
------------------- -------------------
Net Increase (Decrease) in Cash (364,763) 133,747
Cash, Beginning of Period 426,688 363,690
------------------- -------------------
Cash, End of Period $61,925 $497,437
=================== ===================
Supplemental Disclosure of Cash Flow Information
Cash paid for Interest and Income Taxes
Interest $182,894 $190,638
=================== ===================
Income Taxes $23,827 $31,825
=================== ===================
</TABLE>
See notes to condensed consolidated financial statements
6
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AVIATION HOLDINGS GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. These consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
In the opinion of the Company's management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting solely of
those adjustments, which are of a normal recurring nature, necessary to present
fairly its financial position as of September 30, 2000 and the results of its
operations and its cash flows for the three month and nine month periods ended
September 30, 2000 and 1999.
Interim results are not necessarily indicative of results for the full fiscal
year.
Basic and diluted loss per share was calculated based upon the net loss
available to common shareholders divided by the weighted average number of
shares of common stock outstanding during the period. Options and warrants to
purchase shares of common stock are to included in the computation of diluted
loss per share because the effect of these instruments would be anti-dilutive
for the loss periods presented.
NOTE 2 - ADVANCES FROM STOCKHOLDERS
During the first quarter of 2000, the Company borrowed $550,000 from
stockholders to meet the working capital needs of the Company. These advances
are unsecured, bear interest at the rate of 10% per annum and are due on demand.
NOTE 3 - SHORT TERM BORROWING - BANK
On August 12, 1998, the Company's majority owned subsidiary Aviation Holdings
International, Inc. ("AHI") obtained a revolving working capital line of credit
from Comerica Bank. At September 30, 2000 and 1999, the amount outstanding on
the credit line was $2,550,444 and $1,975,000, respectively. The loan agreement
provides for a maximum aggregate borrowing limit of $3,500,000, subject to a
limitation amount of eighty-five percent of eligible Company receivables and
thirty-five percent of eligible Company inventory as defined in the loan
agreement. This revolving line of credit is secured by substantially all of
AHI's assets, and is due on demand. The line of credit bears interest at the
Bank's prime rate plus 1%. The loan agreement contains certain covenants, which
require AHI to maintain minimum thresholds on specific financial ratios. At
September 30, 2000, AHI failed to meet the tangible net worth covenant, as
defined by the loan agreement, and therefore was in default under the loan
agreement. This credit facility has been renewed on a month-to-month basis.
NOTE 4 - DEFERRED OFFERING COSTS
In the third quarter of 2000, the Company aborted its proposed public offering
of its equity securities. Consequently, the Company has expensed approximately
$746,000 of deferred offering costs as professional fees.
7
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AVIATION HOLDINGS GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 5 - SUBSEQUENT EVENT
On September 5, 2000, the Company and Silvertown International, Inc.
("Silvertown") entered into a share exchange agreement. Under the agreement, the
Company will transfer 85% of the issued and outstanding common stock of its sole
operating subsidiary, Aviation Holdings International, Inc. ("AHI"), to
Silvertown. The Company will retain an 11% interest in the outstanding common
stock of AHI. In exchange, for receiving the common stock of AHI from the
Company, Silvertown will issue a promissory note to the Company in the amount of
$750,000 and surrender 500,000 shares of the Company's common stock and warrants
to purchase 100,000 shares of the Company's common stock held by Silvertown
and/or its affiliates. The promissory note is to be secured by the stock of AHI.
AHI's guaranty will be secured by a security interest in all the assets of AHI.
The agreement is subject to various conditions including the due diligence by
Silvertown and approval by the Company's shareholders. The share exchange
agreement expires on December 31, 2000 if the transaction has not closed by that
time. Upon completion of this transaction the Company will have no further
operating subsidiaries.
8
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Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
This Management's Discussion and Analysis should be read in conjunction
with the Company's consolidated financial statements and accompanying notes. The
following discussion contains certain forward-looking information, which
involves risks and uncertainties. The actual results could differ from the
results we anticipate. See "Cautionary Statement Regarding Forward-Looking
Statements".
Overview
Our principal asset is our ownership of a controlling interest in
Aviation Holdings International. Accordingly, our results of operations are
highly dependent upon the results of operations of Aviation Holdings
International. On September 5, 2000, we entered into a share exchange agreement
with Silvertown International, Inc. ("Silvertown"). Under the agreement, we will
transfer 85% of the issued and outstanding shares of common stock of Aviation
Holdings International. We will retain an 11% interest in Aviation Holdings
International. In exchange for the common stock of Aviation Holdings
International, Silvertown will issue us a promissory note in the amount of
$750,000 and surrender to us 500,000 shares of our common stock and warrants to
purchase 100,000 shares of our common stock held by Silvertown. The agreement is
subject to various conditions prior to closing. The agreement expires on
December 31, 2000. If we close on the transaction, we will no longer have an
operating business.
Aviation Holdings International currently derives its revenues from
selling, leasing, exchanging and purchasing spare parts for fixed-wing
commercial jet transport aircraft, selling turbine jet engines and management
services.
We have only a limited operating history upon which you may base an
evaluation of our operations and prospects. We may experience significant
fluctuations in our gross margins and operating results in the future, both on
an annual and a quarterly basis. Various factors cause these fluctuations,
including general economic conditions, specific economic conditions in the
commercial aviation industry, the availability and price of surplus aviation
material, the size and timing of customer orders, returns by and allowances to
customers and our cost of capital.
Nine Months Ended September 30, 2000 v. Nine Months Ended September 30, 1999.
Results of Operations:
Net sales of aircraft and engine spare parts were $6,821,522 for the
nine months ended September 30, 2000 as compared to $9,342,749 for the nine
months ended September 30, 1999. The decrease in net sales of aircraft and
engine spare parts was due to a cyclical downturn in the industry caused in part
by reductions in demand brought on by higher fuel and borrowing costs for the
Aviation Industry. We are unable to predict when demand will return to higher
levels.
Cost of goods sold was $4,617,761 and our cost of sales percentage was
68% for the nine months ended September 30, 2000. Cost of goods sold was
$6,048,375 and our cost of sales percentage was 65% for the nine months ended
September 30, 1999. The increase in our cost of sales percentage in 2000 versus
1999 was due to our attempt to increase sales penetration by reducing prices on
certain parts. Our decrease in cost of goods sold was due to the decrease in
sales for the period.
Salary and wage expenses decreased to $1,020,447 in the nine months
ended September 30, 2000 from $1,095,200 in the nine months ended September 30,
1999, a decrease of $74,753. This decrease is primarily the result of a
reduction in employees and a 10% reduction in salaries and wages which was
implemented in the third quarter of 2000, as a result of the downturn in the
industry and resulting decrease in sales.
General and administrative expenses increased to $1,574,486 in the nine
months ended September 30, 2000 from $1,435,615 in the nine months ended
September 30, 1999, an increase of $138,871. The increase is primarily the
9
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result of an increase due to expenses associated with the increase in training
and consulting expense.
Professional fees increased to $1,165,597 in the nine months ended
September 30, 2000 from $190,512 in the nine months ended September 30, 1999.
The major increase was the write-off of the deferred offering costs of $746,069
related to our aborted public offering and the accounting and legal expenses
related to our efforts to acquire additional inventory and collection efforts on
our accounts receivables in the first nine months of 2000.
Interest expense was $186,894 in the nine months ended September 30,
2000 and $578,148 in the nine months ended September 30, 1999. The discount on
the notes payable to the John G. Jacobs Trust and Nancy Plotkin had been
recorded and amortized for stock issued as an inducement for making loans to
unrelated investors was expensed in the nine months ended September 30, 1999.
These loans were repaid in November 1999 and therefore interest expense related
to these loans ceased at that time.
Interest income was $26,130 in the nine months ended September 30, 2000
and $21,009 in the nine months ended September 30, 1999.
Income from the SYNOR-A joint venture was $20,779 in the nine months
ended September 30, 2000 compared to $4,171 in the nine months ended September
30, 1999. The increased income is a result of additional sales realized, since
SYNOR-A completed its FAA certifications in the quarter ended March 31, 2000.
Income tax expense was $0 in the nine months ended September 30, 2000
and income tax expense was $56,125 in the nine months ended September 30, 1999.
As of March 31, 1999, we qualified to file a consolidated income tax return
under the Internal Revenue Code. Therefore, as of April 1, 1999 we are able to
offset any earnings of Aviation Holdings International against our losses.
Minority interest was $23,455 in the nine months ended September 30,
2000 and $(62,870) in the nine months ended September 30, 1999. The decrease is
the result of losses incurred by Aviation Holdings International in the nine
months ended September 30, 2000 versus income in the nine months ended September
30, 1999.
As a result of the foregoing, our net loss was $1,673,299 for the nine
months ended September 30, 2000, which was an increase from a net loss of
$98,916 for the nine months ended September 30, 1999. Basic and diluted loss per
common share increased from $.03 for the nine months ended September 30, 1999 to
$.40 for the nine months ended September 30, 2000.
Liquidity and Capital Resources
In the third quarter of 2000, we acquired three lots of jet aircraft
parts for an aggregate purchase price of approximately $3.6 million. We intend
to quickly sell a significant portion of the avionics and aircraft components to
our customers.
Payment for these lot purchases was due on or before November 30, 2000.
As of November 30, 2000 we owed approximately $2,836,300 for these lots. If we
are unable to quickly sell large portions of these aircraft lots we may be found
to be in material default of our contractual obligations, which could result in
litigation against us, require us to liquidate inventory at below market prices
to raise money or implement drastic cost cutting measures. The occurrence of any
or all of these events would have a material adverse effect on our business,
prospects, operating results and financial condition.
As of September 30, 2000 our principal source of liquidity included
cash and cash equivalents of $61,925 compared with cash and cash equivalents of
$426,688 as of December 31, 1999. As of September 30, 2000, total outstanding
debt was $2,575,902 compared to $2,157,588 as of December 31, 1999. Aviation
Holdings International renewed a revolving working capital line of credit from
Comerica Bank in September 1999. At September 30, 2000, the amount of principal
owed to the bank was $2,550,444. The credit agreement governing the revolving
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line of credit provides for a maximum aggregate borrowing limit of $3,500,000,
subject to certain borrowing restrictions and is secured by substantially all of
Aviation Holdings International's assets. The line of credit bears interest per
annum at Comerica Bank's prime rate plus 1%. As of September 30, 2000, Aviation
Holdings International did not meet the tangible net worth covenant of
$4,250,000 in the Comerica Bank credit agreement, which puts it in technical
default under the terms of the credit agreement. This credit facility has been
renewed on a month-to-month basis.
Cash used in operations for the nine months ended September 30, 2000
was $1,230,728 as compared to cash used in operations for the nine months ended
September 30, 1999 of $204,577. The increase in cash used in operations in 2000
was a result of an increase in net losses and larger increases in operating
assets and a reduction in accounts payable over 1999 levels. Cash used in
operations in 2000 was a result of larger operating losses and increases in
operating liabilities over 1999 levels.
Cash used in investing activities for the nine months ended September
30, 2000 was $111,517 compared to $262,844 of cash used for investing activities
in the nine months ended September 30, 1999. Cash used in the nine months ended
September 30, 2000 was related primarily to the purchases of equipment of
$13,069 and additional investment in SYNOR-A Joint Venture of $100,000, offset
by a distribution from the joint venture of 17,818, net of employee advances of
$16,266. Cash used for the nine months ended September 30, 1999 was for
purchases of equipment of $77,419 and an additional investment in SYNOR-A Joint
Venture of $200,000, offset by a distribution from the joint venture of $14,627.
Cash provided by financing activities for the nine months ended
September 30, 2000 was $977,482 compared to $601,168 for the nine months ended
September 30, 1999. The cash provided in 2000 primarily related to $425,444
borrowed on the bank line of credit and advances from stockholders of $559,170,
partially offset by repayments on long-term debt of $7,132. The primary sources
of cash provided by financing activities for the nine months ended September 30,
1999 were $265,000 of proceeds from the sale of stock and $475,000 borrowed on
the bank line of credit, less $79,192 advances to stockholders, and $79,623 of
payments for deferred offering costs.
We believe that existing cash balances, sales of existing inventory and
the credit agreement with Comerica will be sufficient to meet the capital
requirements of our current business for the next twelve months. We will,
however, require additional equity or debt financing in order to implement our
expansion plans and, in particular, the expansion of our business into turbine
engine and aircraft sales. Thereafter, if our capital requirements increase, we
could be required to secure additional sources of capital. There can be no
assurance we will be capable of securing additional capital or that the terms
upon which such capital will be available to us will be acceptable.
Inflation
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had or is likely in the
foreseeable future to have, a material effect on our results of operations or
financial condition. Increase in fuel costs due to inflation may adversely
affect demand for used aircraft that typically are less fuel efficient, thereby
decreasing demand for aircraft and engine components and spare parts for these
aircraft.
Plan of Operation
As disclosed in Note 5 to our Condensed Consolidated Financial
Statements, in September 2000 we entered into a share exchange agreement with
Silvertown International, Inc. pursuant to which we agreed to transfer 85% of
the issued and outstanding common stock of our sole operating subsidiary,
Aviation Holdings International, Inc., to Silvertown International, Inc. in
exchange for a promissory note in the principal amount of $750,000 and the
surrender of 500,000 shares of our common stock and warrants to purchase 100,000
shares of our common stock held by Silvertown International, Inc. and/or its
affiliates. This agreement is subject to various conditions including a due
diligence review of our company by Silvertown International, Inc. and approval
of the transaction by our stockholders. Upon completion of this transaction, we
will no longer have any operating subsidiaries. If we are unable to complete
11
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this transaction, then, over the next twelve months, we intend to expand our
inventory of aircraft and engine spare parts and to acquire turbine jet engines
and/or aircraft. We also anticipate hiring additional employees, particularly in
the marketing area. If we are able to complete this transaction, then we expect
to commence efforts to acquire a new operating subsidiary. Either of these plans
will require us to raise additional capital. We expect to engage in either a
public or private offering of our securities or to obtain additional debt
financing in order to raise the funds necessary to execute either of these
plans. We are not certain that we will be able to secure additional capital on a
timely basis or at all. If we are unable to secure additional capital, then we
will not be able to implement these plans.
Aviation Holdings International owns a one-half interest in a DC10-30
flight simulator. Our management, and the co-owner of the DC10-30 flight
simulator, have determined that the flight simulator will be best utilized in
disassembled and sold as spare parts to current users of DC10 parts and
peripheral equipment. We anticipate this liquidation will be completed by
September 30, 2001.
We believe that anticipated cash flows from operations will meet our
anticipated short-term cash needs for working capital and will enable us to make
future inventory expenditures for the foreseeable future. On August 12, 1998,
Aviation Holdings International entered into a credit agreement with Comerica
Bank, whereby Comerica Bank agreed to extend a revolving line of credit to
Aviation Holdings International of up to $3,500,000. The revolving line of
credit is intended to fund working capital needs such as inventory purchases
and, subject to Comerica's approval, strategic acquisitions. The funds advanced
to Aviation Holdings International by Comerica are secured by the assets of
Aviation Holdings International. The outstanding balance my not at any time
exceed the sum of (a) 85% of Aviation Holdings International's eligible accounts
receivable and (b) 35% of Aviation Holdings International's eligible inventory.
This credit facility has been renewed on a month to month basis. As of September
30, 2000 the maximum amount available to Aviation Holdings International under
this formula was approximately $2,787,754, and the outstanding balance was
approximately $2,550,444.
We do not anticipate material capital expenditures for the coming
fiscal year.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements regarding, among other
things, the anticipated financial and operating results of Aviation Holdings
Group, Inc. For this purpose, forward looking statements are any statements
contained herein that are not statements of historical fact and include, but are
not limited to, those preceded by or that include the words, "believe", "may",
"will", "estimate", "continue", "intend", "plan", "expect", "anticipate" or
similar expressions. In connection with the "safe harbor" provisions in the
Private Securities Litigation Reform Act of 1995, we are including this
cautionary statement identifying important factors that could cause our actual
results to differ materially from those projected in forward looking statements
made by us, or on our behalf. Although we believe that the forward-looking
statements contained herein are reasonable, it can give no assurance that our
expectations will be met. All forward-looking statements are expressly qualified
in their entirety by this cautionary statement.
Important factors that may cause actual results to differ from
forward-looking statements may include, for example,
o The success or failure of our efforts to implement our business
strategy, including expanding our international operations;
o Our ability to raise sufficient capital to expand our business;
o The effect of changing economic conditions on the airline and
aircraft industries;
o Changes in government regulations, tax rates and similar matters;
o Our ability to attract and retain quality employees; and
o Other risks which may be described in our future filings with the
SEC.
12
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PART II
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) We did not file any reports on Form 8-K during the quarter for which
this report is filed.
13
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, hereunto duly authorized.
AVIATION HOLDINGS GROUP, INC.
Date: December 21, 2000 By:/s/ Joseph J. Nelson
Joseph J. Nelson
President and Chief Executive Officer
(Principal Executive Officer)
(Principal Financial and Accounting Officer)
