<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB/A
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended March 31, 1997.
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the transition period from to
Commission File Number: 0-7693
INTERNATIONAL MERCANTILE CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
MISSOURI 43-0970243
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
7979 Old Georgetown Road, Bethesda MD
-------------------------------------------
(Address of principal executive offices)
301-654-1980
---------------------------
(Issuer's telephone number)
(Not Applicable)
----------------------------------------------------
(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 [ ] No [x]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
3,133,151 Common Shares as of March 31, 1997
Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements for the period ended March 31, 1997
included herein have been prepared by International Mercantile Corporation, (the
"Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of March 31, 1997, and the results of
operations and cash flows for the three month periods ended March 31, 1996 and
1997.
2
<PAGE> 3
INTERNATIONAL MERCANTILE CORPORATION
(A development stage company)
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
(Unaudited)
------------- -------------
Assets
<S> <C> <C>
Current assets
Cash and cash equivalents $ -0- $ -0-
---- -----
Current assets -0- -0-
Total assets $ -0- $ -0-
==== ====
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 57,494 $ 57,494
Due to related parties 180,263 180,263
Accrued expenses 75,638 275,638
----------- ----------
Total current liabilities 313,395 513,395
Capital stock
Common stock
-authorized 5,000,000
common shares, par value
$1.00 per share, at December 31,
1996 and March 31, 1997
the common shares outstanding
were 3,133,151 and 3,133,151
respectively. 3,133,151 3,133,151
Additional paid in capital 5,326,394 5,326,394
Deficit (7,958,757) (8,158,757)
---------- ----------
Total stockholders' equity 500,788 300,788
Less: Treasury stock at cost (814,183) (814,183)
---------- ----------
Total stockholders' equity 313,395 513,395
---------- ----------
Total liabilities
and stockholders' equity $ -0- $ -0-
========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
INTERNATIONAL MERCANTILE CORPORATION
(A development stage company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
March 31, March 31,
1996 1997
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Revenue $ -0- $ -0-
Less cost of
goods sold -0- -0-
------------ ------------
Gross profit -0- -0-
Operations:
General and
administrative -0- 200,000
Depreciation and
amortization -0- -0-
------------ ------------
Total expenses -0- 200,000
Net income (loss) -0- (200,000)
Net income (loss)
per share $.00 ($.06)
============ ============
Total number of
shares outstanding 3,133,151 3,133,151
============ ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
INTERNATIONAL MERCANTILE CORPORATION
(A development stage company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
March 31, March 31,
1996 1997
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $ -0- $ (200,000)
Amortization and
depreciation -0- -0-
Adjustments to
reconcile net
income to net
Accrued expenses -0- 200,000
------------ ------------
TOTAL CASH FLOWS
FROM OPERATIONS -0- -0-
NET INCREASE
(DECREASE) IN CASH -0- -0-
CASH BALANCE
BEGINNING OF PERIOD -0- -0-
------------ ------------
CASH BALANCE END
OF PERIOD $ -0- $ -0-
============ =============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 6
INTERNATIONAL MERCANTILE CORPORATION
(A development stage company)
<TABLE>
<CAPTION>
Additional
Common Common Paid-in Retained Treasury
Stock Stock capital Earnings Stock Total
---------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
01-01-1996 3,133,151 $3,133,151 $5,326,394 $(7,958,757)$(814,183) $(313,395)
-------- --------- --------- ---------- -------- --------
12-31-1996 3,133,151 $3,133,151 $5,326,394 $(7,958,757)$(814,183) $(313,395)
03-31-1997 Net loss (200,000) (200,000)
-------- --------- --------- ---------- -------- --------
03-31-1997 3,133,151 $3,133,151 $5,326,394 $(8,158,757)$(814,183) $(513,395)
</TABLE>
7
<PAGE> 7
INTERNATIONAL MERCANTILE CORPORATION
(A development stage company
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of International Mercantile
Corporation, (the "Company"), reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results of the interim
periods presented. All such adjustments are of a normal recurring nature. The
financial statements should be read in conjunction with the notes to financial
statements contained in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
2. NET INCOME PER SHARE
Primary earnings per share are based on the weighted average total number
of common and dilutive common equivalent shares outstanding during each quarter.
The weighted average shares for computing primary earnings per share were
3,133,151 and 3,133,151 for the quarters ended March 31, 1996 and 1997,
respectively
4. ACCOUNTING FOR INCOME TAXES
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires an asset and liability
approach of accounting for income taxes. Deferred tax assets and liabilities are
computed annually for differences between financial statement basis and tax
basis of assets, liabilities and available general business tax credit
carry-forwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
9
<PAGE> 8
5. MARKETABLE SECURITIES
The Company adopted Financial Accounting Standards Board ("FASB") Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (the
"Statement") which requires that investments in equity securities that have
readily determinable fair values and investments in debt securities be
classified in three categories: held-to-maturity, trading and available-
for-sale. Based on the nature of the assets held by the Company and management's
investment strategy, the Company's investments have been classified as
available-for-sale. Management determines the appropriate classification of debt
securities at the time of purchase and reevaluates such designation as of each
balance sheet date.
Securities classified as available-for-sale are carried at estimated fair
value, as determined by quoted market prices, with unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. At January
31, 1998, the Company had no investments that were classified as trading or
held-to-maturity as defined by the Statement.
The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at December 31, 1996:
<TABLE>
<CAPTION>
Estimated
Gross Gross Fair
Unrealized Unrealized Market
Cost Gains Losses Value
--------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Cash $ -0- $-0- $-0- $ -0-
----------- ------------- ----------- ------------
Total cash and cash
equivalents $ -0- $-0- $-0- $ -0-
=========== ============= =========== ============
</TABLE>
10
<PAGE> 9
The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at March 31, 1997:
<TABLE>
<CAPTION>
Estimated
Gross Gross Fair
Unrealized Unrealized Market
Cost Gains Losses Value
--------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Cash $ -0- $-0- $-0- $ -0-
----------- ------------- ----------- ------------
Total cash and cash
equivalents $ -0- $-0- $-0- $ -0-
=========== ============= =========== ============
</TABLE>
3. Commitments and Contingencies
a. Consulting agreements
On the Company entered into a consulting agreement with
As of March 31, 1997, the Company has accrued $ pursuant to this
agreement.
b. Lease of Office Space
The Company occupies office space rent free on a month to month basis at
7979 Old Georgetown Road, Bethesda Maryland.
12
<PAGE> 10
Item 2. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the three months ended March 31, 1996 and 1997
-------------------------------------------------
Except for the description of historical facts contained herein, this Form
10Q-SB contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Securities and Exchange Commission and elsewhere. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. These factors include,
among others, the Company's fluctuations in sales and operating results, risks
associated with international operations and regulatory, competitive and
contractual risks and product development.
Results of operations for the three months ended March 31, 1997 as compared
to the three months ended March 31, 1996.
- --------------------------------------------------------------------------------
Revenues were $0 for the three months ended March 31, 1997 as compared to
$0 for the three months ended March, 1996. Costs of goods sold for the three
months ended March 31, 1997, were $0 as compared to $0 for the three months
ended March 31, 1996 representing a cost of goods sold percentage of 0% for the
three months ended March 31, 1997 as compared to 0% for the three months ended
March 31, 1996. The cost of goods sold percentage during the first quarter of
fiscal 1998 remains approximately consistent with the percentage during the
first quarter of fiscal 1997.
General and administrative costs for the three months ended March 31, 1997
were $200,000, an increase of 100.0% over expenses of $0 for the three months
ended March 31, 1996.
Liquidity and capital resources as of the end of the three months ended
March 31, 1997.
- --------------------------------------------------------------------------------
The Company's cash balance was $-0- and working capital was a negative
$513,395 as at March 31, 1997.
The Company's primary short-term needs for capital, which are subject to
change, are for the search for an operating business to be acquired or developed
for the Company.
10
<PAGE> 11
Income tax: As of March 31, 1997, the Company has a tax loss carry-forward
of $2,773,977. The Company's ability to utilize its tax credit carry-forwards in
future years will be subject to an annual limitation pursuant to the "Change in
Ownership Rules" under Section 382 of the Internal Revenue Code of 1986, as
amended. However, any annual limitation is not expected to have a material
adverse effect on the Company's ability to utilize its tax credit
carry-forwards.
The Company currently plans to continue to accept funds from or accrue
expenses incurred officers, directors and other related parties to continue the
Company's existence and seek new business opportunities.
The Company expects its capital requirements to increase over the next
several years as it commences new search and development efforts, undertakes new
product development, increases sales and administration infrastructure and
embarks on developing in-house business capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's present management
can fund the continued capital requirements, the timing of regulatory
actions regarding the Company's potential acqusitions, the costs and timing of
expansion of sales, marketing activities, facilities expansion needs, and
competition in any business entered into.
The Company believes that its available cash and cash from management
contributions will be sufficient to satisfy its funding needs for at least the
next 12 months. Thereafter, if cash generated from any newly acquired or
developed business operations is insufficient to satisfy the Company's working
capital and capital expenditure requirements, the Company may be required to
sell additional equity or debt securities or obtain additional credit
facilities. There can be no assurance that such financing, if required, will be
available on satisfactory terms, if at all.
<PAGE> 12
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings were brought, are pending or are threatened during the
quarter.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
17
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL MERCANTILE CORPORATION
(Registrant)
By: /s/ MAX APPLE
------------------
MAX APPLE
PRESIDENT
Dated: MAY 29, 1998
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the three month period ended March 31, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 513,395
<BONDS> 0
0
0
<COMMON> 3,133,151
<OTHER-SE> (3,646,546)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 200,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (200,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (200,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (200,000)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
