UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended May 31, 1997 Commission file number 1-7948
AIC INTERNATIONAL, INC,
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
11-2192898
(I.R.S. Employer Identification No.)
117 East 57th Street, Room 21-H New York, NY
10022 (Address of principal executive offices -
Zip code)
Issuer's telephone number, including area code (212) 838-3220
Former name, former address and former fiscal year, if changed since last
report.
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Number of shares of each class of common stock
outstanding as of:
May 31, 1997 - 4,207,379
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<CAPTION>
AIC International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(000 omitted except share data)
May 31, February 28,
1997 1997
<S> <C> <C>
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Assets (Unaudited)
Current:
Cash $ 360 $ 454
Trade receivables, less allowances of $82 and $78
for possible losses 1,460 1,507
Merchandise inventories 3,859 3,243
Prepaid expenses and other current assets 702 95
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Total current assets 6,381 5,299
Property and equipment, at cost less accumulated
depreciation and amortization 96 91
Other assets 17 18
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$6,494 $5,408
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Liabilities and Stockholders' Equity
Current:
Bank loans 1,691 $1,319
Accounts payable - trade 116 108
Due to related party 1,682 1,353
Income taxes payable 374 309
Other taxes payable 604 198
Liability for product warranties 41 96
Accrued payroll, commissions and other liabilities 284 305
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Total current liabilities 4,792 3,688
Accrued pension costs 106 107
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Total liabilities 4,898 3,795
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Commitments and Contingencies
Stockholders' equity:
Common stock, $.10 par - shares authorized, 10,000,000;
issued, 4,244,879 424 424
Additional paid-in capital 6,720 6,720
Deficit (6,226) (6,249)
Accumulated translation adjustment 790 830
Treasury stock, at cost - 37,500 shares (112) (112)
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Total stockholders' equity 1,596 1,613
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$6,494 $5,408
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See accompanying notes to condensed consolidated financial statements.
2
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<CAPTION>
AIC International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(000 omitted except per share data)
Three months ended May 31, 1997 1996
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<S> <C> <C>
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Net sales $3,297 $3,787
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Cost of goods sold 2,259 2,684
Selling, general and administrative expenses 1,015 1,036
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Total costs and expenses 3,274 3,720
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Net income $ 23 $ 67
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Net income per share $ .01 $ .02
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Weighted average number of shares 4,207 4,207
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See accompanying notesto condensed consolidated financial statements.
3
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<CAPTION>
AIC International, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
(000 omitted)
Accumulated
Additional Paid- Translation Treasury Stock,
Total Common Stock In Capital Deficit Adjustment at Cost
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<S> <C> <C> <C> <C> <C> <C>
Balance, March 1, 1997 $1,613 $424 $6,720 $(6,249) $830 $(112)
Net income for the three months ended May 31,
1997 23 - - 23 - -
Aggregate adjustment for the three months ended
May 31, 1997 resulting from the translation of
foreign currency statements (40) - - - (40) -
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Balance, May 31, 1997 $1,596 $424 $6,720 $(6,226) $790 $(112)
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See accompanying notes to condensed consolidated financial statements.
4
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<CAPTION>
AIC International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(000 omitted)
Three months ended May 31, 1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 23 $ 67
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Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation, amortization 8 6
Increase in provision for possible losses on accounts receiv-
able 4 13
Other (40) (97)
Decrease (increase) in:
Trade receivable 43 (429)
Merchandise inventories (616) (120)
Prepaid expenses and other current assets (607) (104)
Other assets 1 -
Increase (decrease) in:
Accounts payable - trade 8 10
Due to related party 329 (138)
Taxes payable 471 848
Accrued expenses and other liabilities (77) 221
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Total adjustments (476) 210
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Net cash provided by (used in) operating activities (453) 277
Cash flows from investing activities:
Capital expenditures, net of proceeds from sale of equipment (13) (3)
Cash flows from financing activities
Net borrowings from (repayments to) bank 372 (404)
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Net decrease in cash (94) (130)
Cash, beginning of period 454 471
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Cash, end of period $360 $ 341
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See accompanying notes to condensed consolidated financial statements.
5
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AIC International, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Results for the periods shown are not
necessarily indicative of results for the
full year.
Note 2. The data herein reflects all the adjustments
which, in the opinion of management, are
necessary for a fair statement of the results
for the interim periods.
Note 3. There were no sales of unregistered
securities during the quarter ended May 31,
1997.
Note 4. The financial data are subject to year-end
audit. Note disclosures required under
generally accepted accounting principles are
included in the Company's annual report (Form
10-KSB) for the fiscal year ended February 29,
1997. Form 10-QSB should be read in conjunction
with such annual report (Form 10-KSB).
6
<PAGE>
AIC International, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
All statements contained herein that are not historical facts, including,
but not limited to, statements regarding the Company's current business
strategy, the Company's projected sources and uses of cash, and the Company's
plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance the Company's
business plans on terms satisfactory to the Company; competitive factors;
changes in labor, equipment and capital costs; changes in regulations affecting
the Company's business and economic conditions; and factors described from time
to time in the Company's reports filed with the Securities and Exchange
Commission. The Company cautions readers not to place undue reliance on any such
forward looking statements, which statements are made pursuant to the Private
Litigation Reform Act of 1995 and, as a result, speak only as of the date made.
Results of Operations: Three months ended May 31, 1997 compared with three
months ended May 31, 1996:
Net Sales
For the three months ended May 31, 1997, the Company's net sales decreased
by $490,000 to $3,297,000 from sales of $3,787,000 for the three months ended
May 31, 1996. Sales by the Company's German subsidiary, Soligor GmbH, Foto Optik
Video Electronik ("Soligor GmbH"), decreased by DM 126,000 for the three months
ended May 31, 1997 which, when combined with changes in the exchange rate,
resulted in a decrease in sales of $490,000 after translation. The Company's
sales increased due to efforts of Soligor GmbH in promoting the sale of new
products, such as electronic products and video equipment, an increasing number
of accessories, as well as video surveillance equipment.
Cost of Goods Sold
As a percentage of sales, the Company's cost of goods sold for the three
months ended May 31, 1997 and 1996 were 68.5% and 70.9% of sales, respectively.
The decrease in cost of goods sold as a percentage of sales was caused by
changes of exchange rates on Japanese Yen, Dutch Marks and U.S. Dollar.
Selling, General and Administrative Expenses
As a percentage of sales, selling, general and administrative ("SG&A")
expenses for the three months ended May 31, 1997 and 1996 were 30.8% and 27.4%
of sales, respectively. SG&A expenses decreased from $1,036,000 for the three
months ended May 31, 1996 to $1,015,000 for the three months ended May 31, 1997.
The increase in SG&A expenses as a percentage of sales was the result of
decreased net sales.
7
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIC INTERNATIONAL, INC.
Registrant
/s/ Stephen Lai
---------------------------
Chief Financial Officer and
Chief Accounting Officer
8
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<CIK> 0000002880
<NAME> AIC INTERNATIONAL, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> MAY-31-1997
<CASH> 360,000
<SECURITIES> 0
<RECEIVABLES> 1,542,000
<ALLOWANCES> 82,000
<INVENTORY> 3,859,000
<CURRENT-ASSETS> 6,381,000
<PP&E> 394,000
<DEPRECIATION> 298,000
<TOTAL-ASSETS> 6,494,000
<CURRENT-LIABILITIES> 4,792,000
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0
<COMMON> 424,000
<OTHER-SE> 1,172,000
<TOTAL-LIABILITY-AND-EQUITY> 6,494,000
<SALES> 3,297,000
<TOTAL-REVENUES> 3,297,000
<CGS> 2,259,000
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