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 November 30, 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 changes 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:
November 30, 1997 - 4,207,379
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<CAPTION>
AIC International, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
(000 omitted except share data)
November 30, February 28,
1997 1997
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(Unaudited)
<S> <C> <C>
Assets
Current:
Cash $ 264 $ 454
Trade receivables, less allowances of $83 and $78
for possible losses 1,653 1,507
Merchandise inventories 3,361 3,243
Prepaid expenses and other current assets 502 95
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Total current assets 5,780 5,299
Property and equipment, at cost less accumulated
depreciation and amortization 1,076 91
Other assets 9 18
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$6,865 $5,408
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Liabilities and Stockholders' Equity
Current:
Bank loans 2,517 $1,319
Accounts payable - trade 143 108
Due to related party 1,369 1,353
Income taxes payable 443 309
Other taxes payable 321 198
Liability for product warranties 93 96
Accrued payroll, commissions and other liabilities 267 305
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Total current liabilities 5,153 3,688
Accrued pension costs 102 107
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Total liabilities 5,255 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 (6,115) (6,249)
Accumulated translation adjustment 693 830
Treasury stock, at cost - 37,500 shares (112) (112)
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Total stockholders' equity 1,610 1,613
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$6,865 $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)
Nine months ended November 30, Three months ended November 30,
-----------------------------------------------------------------------------------------
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net sales $10,511 $12,000 $3,711 $4,519
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Cost of goods sold 7,320 8,459 2,590 3,179
Selling, general and administrative
expenses 3,057 3,459 1,085 1,345
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Total costs and expenses 10,377 11,918 3,675 4,524
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Net income (loss) $ 134 82 36 (5)
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Net income (loss) per share $ .03 $ .02 $ .01 $ -
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Weighted average number of
shares 4,207 4,207 4,207 4,207
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See accompanying notes to condensed consolidated financial statements
3
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<CAPTION>
AIC International, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
(000 omitted)
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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 $6,270 $(6,249) $830 $(112)
Net income, for the nine months ended Novem-
ber 30, 1997 134 134
Aggregate adjustment for the nine months ended
November 30, 1997 resulting from the transla-
tion of foreign currency statements (137) (137)
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Balance, November 30, 1997 $1,610 $424 $6,270 $(6,115) $693 $(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)
Nine months ended November 30, 1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 134 $ 82
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Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 33 20
Increase in provision for possible losses on accounts receiv-
able 5 12
Other (137) (122)
Decrease (increase) in:
Trade receivable (151) (751)
Merchandise inventories (118) (172)
Prepaid expenses and other current assets (407) (391)
Other assets 9 -
Increase (decrease) in:
Accounts payable - trade 35 (60)
Due to related party 16 (26)
Taxes payable 257 339
Accrued expenses and other liabilities (46) 222
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Total adjustments (504) (929)
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Net cash used in operating activities (370) (847)
Cash flows from investing activities:
Capital expenditures (1,018) (25)
Cash flows from financing activities
Net borrowings from bank 1,198 732
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Net decrease in cash (190) (140)
Cash, beginning of period 454 471
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Cash, end of period $ 264 $ 331
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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 November
30, 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 28,
1997. Form 10-QSB should be read in conjunction
with such annual report (Form 10-KSB).
6
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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: Nine months ended November 30, 1997 compared with
nine months ended November 30, 1996:
Net Sales
For the nine months ended November 30, 1997 the Company's net sales
decreased by $1,489,000 to $10,511,000 from sales of $12,000,000 for the nine
months ended November 30, 1996. Sales by the Company's German subsidiary,
Soligor GmbH, Foto Optik Video Electronik ("Soligor GmbH"), increased by DM
276,000 which, when combined with changes in the exchange rate, resulted in a
decrease in sales of $1,489,000 after translation. The Company's sales increased
due to efforts of Soligor GmbH in promoting the sale of new products groups,
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, cost of goods sold was 69.6% for the nine months
ended November 30, 1997 as compared to 70.5% for the nine months ended November
30, 1996. The decrease in cost of goods sold as a percentage of sales was caused
by changes of exchange rate on Japanese Yen, Dutch Mark and U.S. Dollars.
Selling, General and Administrative Expenses
For the nine months ended November 30, 1997 and 1996, selling, general and
administrative ("SG & A") expenses were 29.1% and 28.8% of sales, respectively.
The increase in SG & A expenses as a percentage of sales was the result of
decreased net sales.
7
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AIC International, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations: Three months ended November 30, 1997 compared with
three months ended November 30, 1996:
Net Sales
Net sales for the three months ended November 30, 1997 were $3,711,000 as
compared to $4,519,000 for the three months ended November 30, 1996, a decrease
of $808,000, or 17.9%. Sales by Soligor GmbH for the three months ended November
30, 1997 decreased by DM 238,000, which when combined with changes in exchange
rate, resulted in a decrease in sales of $808,000 after translation. The
Company's sales decreased due to slow spending of the consumers in the whole
Europe after the vacation season.
Cost of Goods Sold
For the three months ended November 30, 1997 and 1996, cost of goods sold
as a percentage of sales was 69.8% and 70.3% of sales, respectively. The
decrease in cost of goods sold as a percentage of sales was caused by changes of
exchange rate on Japanese Yen, Dutch Mark and U.S. Dollars.
Selling, General and Administrative Expenses
For the three months ended November 30, 1997 and 1996 S G & A expenses were
29.2% and 29.8% of sales, respectively.
8
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AIC International, Inc. and Subsidiaries
Signatures
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
9
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<CIK> 0000002880
<NAME> AIC INTERNATIONAL, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 264,000
<SECURITIES> 0
<RECEIVABLES> 1,736,000
<ALLOWANCES> 83,000
<INVENTORY> 3,361,000
<CURRENT-ASSETS> 5,780,000
<PP&E> 1,375,000
<DEPRECIATION> 299,000
<TOTAL-ASSETS> 6,865,000
<CURRENT-LIABILITIES> 5,153,000
<BONDS> 0
0
0
<COMMON> 424,000
<OTHER-SE> 1,186,000
<TOTAL-LIABILITY-AND-EQUITY> 6,865,000
<SALES> 10,511,000
<TOTAL-REVENUES> 10,511,000
<CGS> 7,320,000
<TOTAL-COSTS> 10,377,000
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<INCOME-CONTINUING> 134,000
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