<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 06425
SPIRE INTERNATIONAL CORP.
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(Exact name of registrant as specified in its charter)
UTAH 87-0284979
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
311 North State Street
Orem, Utah 84058
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
Registrant's telephone number, including area code: (801)226-3355
-----------------------------------------------------------------
Amacan Resources Corporation
1399 South Seventh East, No. 9
Salt Lake City, Utah 84105
April 30, 1996
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(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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 29, 1996
--------------------- ----------------------------
Common capital stock, 4,337,373
$.25 par value
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
1
<PAGE>
FORM 10-QSB
For the Quarter Ended June 30, 1996
(Index)
Part I.
Financial Information
Balance Sheets
at June 30, 1996 and April 30, 1996 3
Statements of Operations
One Month Ended April 30, 1996 and
Two Months Ended June 30, 1996 and
Three Months Ended June 30, 1996 and 1995 4
Statements of Cash Flows
One Month Ended April 30, 1996 and
Two Months Ended June 30, 1996 and
Three Months Ended June 30, 1996 and 1995 5
Notes To Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II.
Other Information 9
2
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SPIRE INTERNATIONAL CORP.
Balance Sheets
June 30, 1996 and April 30, 1996
<TABLE>
June 30, April 30,
1996 1996
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ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash $ 2,459,938 $ 1,552,806
Accounts receivable, net of allowances (Note B) 3,523,222 2,176,642
Other current assets 92,248 7,806
Deferred tax asset 42,724 42,723
----------- -----------
Total current assets 6,118,131 3,779,977
Fixed assets
Land 36,021 36,021
Buildings 250,489 250,489
Furniture and equipment 608,483 526,005
Transportation equipment 11,516 11,516
Accumulated depreciation (269,633) (256,183)
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Net fixed assets 636,876 567,848
Interest in oil and gas properties (Note D) 0 197,000
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$ 6,755,007 $ 4,544,825
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----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 7,775 $ 7,721
Accounts payable 1,871,909 1,050,535
Accrued liabilities 198,582 488,660
Income taxes payable 135,599 52,715
Deferred maintenance revenue 1,018,208 1,017,364
Other deferred revenue 193,468 219,650
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Total current liabilities 3,425,541 2,836,645
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Long-term liabilities:
Long-term debt, excluding current portion 214,394 215,691
Deferred tax liability 11,582 11,582
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Total long-term liabilities 225,976 227,273
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Stockholders' equity:
Common stock, $.25 par value. Authorized 8,000,000 shares;
issued and outstanding 4,337,373 at June 30, 1996 and
3,891,325 shares at April 30, 1996 (Note F) 1,084,343 972,832
Additional paid-in capital 1,449,656
Retained earnings 569,491 508,075
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Total stockholders' equity 3,103,490 1,480,907
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$ 6,755,007 $ 4,544,825
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</TABLE>
See accompanying notes to financial statements.
3
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SPIRE INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
One Month Ended April 30, 1996 and Two Months Ended June 30, 1996
and Three Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
TOTAL
ONE MONTH TWO MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
APRIL 30, JUNE 30, JUNE 30, JUNE 30,
1996 1996 1996 1995
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $1,163,723 $3,354,716 $4,518,439 $3,302,858
COST OF GOODS SOLD 730,793 2,218,812 2,949,605 1,917,115
---------- ---------- ---------- ----------
GROSS PROFIT 432,930 1,135,904 1,568,834 1,385,743
EXPENSES:
Selling, General, and Admin Exp 449,525 911,790 1,361,315 1,134,763
Research and Development 53,403 90,096 143,499 64,952
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (69,998) 134,018 64,020 250,980
OTHER REVENUE AND (EXPENSES) 557 10,282 10,839 (3,460)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (69,441) 144,300 74,859 247,519
PROVISION FOR INCOME TAXES (60,000) 82,884 22,884 94,057
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (9,441) $ 61,416 $ 51,975 $ 153,462
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME PER SHARE $ .01 $ .04
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 4,269,140 3,949,750
</TABLE>
4
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SPIRE INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
One Month Ended April 30, 1996 and Two Months Ended June 30, 1996
and Three Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
TOTAL
ONE MONTH TWO MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
APRIL 30, JUNE 30, JUNE 30, JUNE 30,
1996 1996 1996 1995
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ (9,441) $ 61,416 $ 51,975 $ 153,462
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 5,451 13,450 18,901 31,758
(Increase) decrease in:
Accounts receivable (net) 394,313 (1,346,580) (952,267) (299,285)
Other current assets (13,374) (84,443) (97,817) (21,451)
Increase (decrease) in:
Accounts payable (533,638) 821,374 287,736 260,363
Accrued liabilities 410,949 (195,997) 214,952 (3,552)
Accrued income taxes (142,481) 82,884 (59,597) 82,116
Deferred revenue 82,230 (119,419) (37,189) 330,816
---------- ----------- ----------- ----------
Net cash provided by
operating activities 194,009 (767,315) (573,306) 533,933
---------- ----------- ----------- ----------
INVESTING ACTIVITIES:
Sale of interest in oil
and gas properties - 197,000 197,000 -
Purchase of furniture and
equipment (21,607) (82,478) (104,085) (21,779)
---------- ----------- ----------- ----------
Net cash provided by
investing activities (21,607) 114,522 92,915 (21,779)
---------- ----------- ----------- ----------
FINANCING ACTIVITIES:
Principal payments on notes
payable and capital leases (614) (1,243) (1,857) (1,707)
Net proceeds from issuance
of common stock - 1,561,168 1,561,168 -
---------- ----------- ----------- ----------
Net cash provided by
financing activities (614) 1,559,925 1,559,311 (1,707)
---------- ----------- ----------- ----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 171,787 907,132 1,078,919 510,447
CASH AND EQUIVALENTS, BEGINNING
OF PERIOD 1,381,019 1,552,806 1,381,019 1,652,769
---------- ----------- ----------- ----------
CASH AND EQUIVALENTS, END
OF PERIOD $1,552,806 $ 2,459,938 $ 2,459,938 $1,142,322
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>
5
<PAGE>
SPIRE INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
A. BASIS OF PRESENTATION
The balance sheet as of June 30, 1996, the statements of operations for
the three month periods ended June 30, 1996 and June 30, 1995, and the
statements of cash flows for the three month periods ended June 30, 1996
and June 30, 1995 have been prepared by the Company without audit.
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
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
Operating results for the three months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the
Company's fiscal year ending March 31, 1997. The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB/A for the year ended April 30,
1996.
Management has determined that commencing in fiscal year 1997, a new
fiscal year end of March 31 will be adopted to coincide with the
calendar quarter end. Form 8K was filed June 18, 1996, reporting this
change. The transition to a March 31 fiscal year end will be accomplished
via filing one 11-month year as allowed by SEC regulations. Thus, Form
10-QSB for quarter ended June 30, 1996 shows May and June, 1996 as the
actual period being reported, with April, 1996 which is included as a
separate column to facilitate comparison with the 1995 quarter ended
June 30.
B. ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts at June 30, 1996 and April 30, 1996
was $160,913 and $171,500 respectively.
C. FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is
computed on the straight-line method over the estimated useful lives of
individual classes of assets. The estimated useful lives of the
individual classes of assets are as follows:
Buildings 40 years
Furniture and equipment 3-10 years
Transportation equipment 5 years
D. INTEREST IN OIL AND GAS PROPERTIES
Oil and gas properties acquired in the business combination with Amacan
Resources Corp. were sold for $197,000, their fair market value
effective May 1, 1996.
E. NOTES PAYABLE
The Company established two lines of credit with a commercial bank
during the period ended June 30, 1996: one for $1,000,000, secured by
trade receivables, at prime plus two percent, expiring June 1, 1997;
the other for $350,000 secured by equipment, at prime plus two percent,
expiring May 1, 1999. No amounts were outstanding at June 30, 1996.
Long-term debt at June 30, 1996 consisted of the following:
8.25% first mortgage of $121,236 payable in monthly installments of
$1,173, including interest, with final payment of $107,417 due July
15, 1999, secured by the Company's land and building with a book
value of $255,831 at April 30, 1996
6
<PAGE>
8.70% SBA loan of $100,933 payable in monthly installments of
$1,078, including interest, secured by the Company's land and
building with a book value of $255,831 at April 30, 1996
F. COMMON STOCK
In June, 1996 the Company completed a private offering to sell
unregistered shares of its common stock to certain accredited investors.
The shares were offered in units, at $7.00 per unit, with each unit
consisting of two shares of common stock plus one warrant to buy one
share of common stock for $3.50 before April 30, 1998. A total of
223,024 units were sold from which $1,561,168 of cash proceeds were
received. The Company intends to use the proceeds to acquire additional
software licenses and technology, to fund additional research and
development, and for additional working capital.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Spire International Corp. (the "Company") develops and sells office
automation software products, acts as a "service and value-added reseller"
and distributor of software developed by third parties and develops and
implements client/server solutions for open computing environments. The
Company is also a "Value Added Reseller (VAR)" for Digital Equipment
Corporation ("Digital" or "DEC") network computer systems and components. The
Company offers a range of desktop, client/server and production systems and
related components, peripheral equipment, software and services used in a
wide variety of applications, industries and computing environments.
THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
RESULTS OF OPERATIONS
Net Sales for the three months ended June 30, 1996 were $4,518,439, an
increase of 37% over net sales for the three months ended June 30, 1995 of
$3,302,858. The increase in net revenues reflects increases in both software
product sales and hardware product sales. New versions of existing software
as well as software for new operating platforms were released, and have been
positively accepted in the market. The release of Digital's Alpha operating
platform hardware system contributed substantially to the increase in
hardware revenues.
Gross profit margin for the three months ended June 30, 1996 was 35% compared
to 42% for the three months ended June 30, 1995. Increased start-up costs
associated with expanding the Company's new UNIX product line together with
lower margins on several of the new products which have been added to the
line had a negative impact on gross profit margin for the quarter ended
June 30, 1996.
Research and development expense for the three months ended June 30, 1996
was $143,499, an increase of approximately 122% over research and development
expense for the three months ended June 30, 1995 of $64,952. The increase was
due largely to the Company's assumption of the full development
responsibilities for several newly licensed software products. Prior to 1996
these expenses were minimal as the Company relied on its third-party
manufacturers for all product development activities.
Selling, general and administrative expenses increased 20% to $1,361,315 for
the three months ended June 30, 1996 as compared to $1,134,763 for the three
months ended June 30, 1995. This represents a decrease as a percent of sales
from 34% in 1995 to 30% in 1996.
Other income consists primarily of interest income and interest expense.
Interest income increased during the two months ended June 30, 1996 due to
interest earned on the cash infusion provided by the Company's sale of common
stock in private transactions completed in June, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased from $943,332 at April 30, 1996 to $2,692,590 at
June 30, 1996 primarily as a result of an increase in cash of $1,561,168
received from the Company's sale of common stock in private transactions
completed in June, 1996. The current ratio increased from 1.33 at April 30,
1996 to 1.79 at June 30, 1996.
Debt was 3% of liabilities and stockholders equity at June 30, 1996, down
from 5% at April 30, 1996.
Since inception, the Company has satisfied its liquidity and capital resource
requirements primarily through cash flow from operations. Based on
anticipated working capital requirements, management believes that existing
cash and cash equivalents, cash generated from operations, long-term debt
financing and borrowings under the Company's existing lines of credit will be
sufficient to finance the operations of the Company for the foreseeable
future.
8
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
a. None
Item 2. Changes in Securities
a. None
Item 3. Defaults on Senior Securities
a. None
Item 4. Submission of Matters to Vote of Security Holders
a. On April 18, 1996, a special meeting of the shareholders of
the Company (the "Special Meeting") was held for the purpose of
considering and acting upon a proposal to approve, authorize
and adopt (a) the Agreement and Plan of Reorganization (the
"Exchange Agreement") dated January 23, 1996, by and among the
Company, the Spire Companies and the Spire Stockholders, and
(b) the Share Exchange and its constituent transactions
contemplated by the Exchange Agreement, including, among other
things: (i) acquisition by the Company of all of the issued and
outstanding shares of the capital stock of each of the Spire
Companies in exchange for the issuance by the Company of an
aggregate of 3,501,883 shares of Common Stock to the Spire
Stockholders; (ii) a one-for-seven reverse split of the shares
of Common Stock issued and outstanding at the effective time
(the "Effective Time") of the Share Exchange; (iii) amendment of
the Articles of Incorporation of the Company to change the name
of the Company to Spire International Corp.; (iv) adoption of
the Amacan Resources Corporation Stock Incentive Plan (the
"Amacan Option Plan"); (v) substitution of options to purchase
shares of the common stock, par value $.01 per share, of Spire
Technologies issued pursuant to the Spire 1995 Stock Option and
Award Plan; and (vi) the resignation, subsequent to the
Effective Time, of the Company's officers and directors, and the
appointment of replacement officers and directors by the Spire
Stockholders.
Holders of the Common Stock cast 1,725,502 votes in favor of
the Exchange Agreement and the Share Exchange, representing
63.4% of the shares outstanding and entitled to vote thereon at
the Special Meeting. No shareholder cast a vote against the
Exchange Agreement and the Share Exchange, and no shareholder
abstained from voting on the Exchange Agreement and the Share
Exchange.
Item 5. Other Information
a. None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits - Exhibit No. 27 Financial Data Schedule (EDGAR)
(b) Current Report on Form 8K, dated April 18, 1996, filed
May 2, 1996 to report the consummation of the Share
Exchange.
(c) Current Report on Form 8K, as amended by an Amendment to
Current Report on Form 8-K, dated April 18, 1996, filed
July 29, 1996 to report a change in accountant.
(d) Current Report on Form 8K, filed on June 18, 1996 to report
a change of fiscal year end to March 31.
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.
SPIRE INTERNATIONAL CORP.
By: /s/ Robert K. Bench
-------------------------------------
Robert K. Bench
President, Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPIRE
INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF
OPERATIONS AS OF AND FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,459,938
<SECURITIES> 0
<RECEIVABLES> 3,684,135
<ALLOWANCES> (160,913)
<INVENTORY> 0
<CURRENT-ASSETS> 6,118,131
<PP&E> 906,509
<DEPRECIATION> (269,633)
<TOTAL-ASSETS> 6,755,007
<CURRENT-LIABILITIES> 3,425,541
<BONDS> 0
0
0
<COMMON> 1,084,343
<OTHER-SE> 2,019,147
<TOTAL-LIABILITY-AND-EQUITY> 6,755,007
<SALES> 3,354,716
<TOTAL-REVENUES> 3,354,716
<CGS> 2,218,812
<TOTAL-COSTS> 1,001,886
<OTHER-EXPENSES> 947
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,144
<INCOME-PRETAX> 144,300
<INCOME-TAX> 82,884
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,416
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
