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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[x] Quarterly Report Pursuant to Section 13 or 15(d)
Securities Exchange Act of 1934
for Quarterly Period Ended March 31, 1997
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities And Exchange Act of 1934
for the transaction period from _________ to________
Commission File Number 0-14646
Airship International Ltd.
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(Exact name of registrant as specified in its charter)
New York 06-1113228
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(State of other jurisdiction of I.R.S. Employer *Identification Number)
incorporation or organization)
7380 Sand Lake Road, Suite 350, Orlando, FL 32819
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(Address of principal executive offices, Zip Code)
(407) 351-0011
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(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.
Yes No X
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PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
AIRSHIP INTERNATIONAL LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
(NOTE 1) (NOTE 1)
<S> <C> <C>
ASSETS
Airships and related equipment, net $ 4,171,000 $ 4,207,000
Cash and cash equivalents 0 2,000
Due from affiliated entities 304,000 275,000
Prepaid insurance 11,000 0
Other assets 4,000 12,000
------------ ------------
$ 4,490,000 $ 4,496,000
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Accounts payable 1,608,000 1,615,000
Customer payments on future services 474,000 553,000
Insurance financing 35,000 38,000
Accrued expenses and other liabilities 4,891,000 4,536,000
Loans payable 4,618,000 3,016,000
Obligation under Capital lease 3,017,000 3,158,000
Deferred gain on sale of airship 799,000 810,000
Loans payable to related parties 3,979,000 4,608,000
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Total Liabilities 19,421,000 18,334,000
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STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value:
Authorized -- 10,000,000 shares,
Issued and outstanding -- 2,594,000
and 2,712,000 shares 26,000 27,000
Common stock, $.01 par value:
Authorized -- 80,000,000 shares
Issued and outstanding -- 41,708,000
and 41,002,000 shares 417,000 410,000
Capital in excess of par value -- Preferred Stock 14,445,000 14,444,000
Capital in excess of par value -- Common Stock 22,074,000 22,081,000
Accumulated deficit (51,893,000) (50,800,000)
------------ ------------
Total Stockholders' Deficit (14,931,000) (13,838,000)
------------ ------------
$ 4,490,000 $ 4,496,000
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</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
2
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AIRSHIP INTERNATIONAL LTD.
CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
--------
1997 1996
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AIRSHIP REVENUES: $ 0 $ 0
COSTS AND EXPENSES:
Operating costs 0 258,000
Selling, general & administrative 458,000 297,000
458,000 555,000
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OPERATING INCOME (LOSS) (458,000) (555,000)
OTHER INCOME (EXPENSE):
Interest expense (255,000) (150,000)
Other income 51,000 22,000
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(204,000) (128,000)
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NET INCOME (LOSS) $ (662,000) $ (683,000)
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WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 41,483,000 40,510,000
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NET LOSS APPLICABLE TO COMMON STOCK:
NET LOSS $ (662,000) $ (683,000)
PREFERRED STOCK DIVIDEND (431,000) (420,000)
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NET LOSS APPLICABLE TO COMMON STOCK $(1,093,000) $(1,103,000)
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NET LOSS PER SHARE $ (0.03) $ (0.03)
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Unaudited -- See accompanying notes to condensed financial statements.
3
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AIRSHIP INTERNATIONAL LTD.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL EXCESS
PREFERRED STOCK COMMON STOCK OF PAR VALUE
--------------- ------------ ------------ ACCUMULATED
SHARES AMOUNT SHARES AMOUNT PREFERRED COMMON DEFICIT
------ ------ ------ ------ --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT
DECEMBER 31,
1996 2,712,000 $27,000 41,002,000 $410,000 $14,444,000 $22,081,000 $(50,800,000)
THREE MONTHS
ENDED MARCH 31,
1997:
Dividends accrued
on preferred
stock 0 0 0 0 0 0 (431,000)
Common stock
issued in
connection with
conversion
of
preferred
stock (118,000) (1,000) 706,000 7,000 1,000 (7,000) 0
Net Loss 0 0 0 0 0 0 (662,000)
--------- ------- ---------- -------- ----------- ----------- ------------
BALANCES AT
MARCH 31,
1997 2,594,000 $26,000 41,708,000 $417,000 $14,445,000 $22,074,000 $(51,893,000)
========= ======= ========== ======== =========== =========== ============
</TABLE>
Unaudited--See accompanying notes to condensed financial statements.
4
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AIRSHIP INTERNATIONAL LTD.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (662,000) $(683,000)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Realized gain on sale leaseback (11,000) 0
Gain on sale of equipment (39,000) 0
Changes in operating assets and liabilities (168,000) 63,000
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Net cash flows from operating activities (880,000) (620,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of airship components and vehicles 75,000 14,000
Net advances to affiliates (29,000) (16,000)
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Net cash flows from investing activities 46,000 (2,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale leaseback financing 4,709,000 0
Principal payments on capital leases and
loans payable (141,000) (102,000)
Net (payments to) and loans from related parties (629,000) 866,000
Payment of note payable (3,107,000) (112,000)
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Net cash flows from financing activities 832,000 652,000
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NET CHANGE IN CASH AND CASH EQUIVALENTS (2,000) 30,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,000 26,000
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 0 $ 56,000
=========== =========
SUPPLEMENTAL INFORMATION:
Interest Paid $ 155,000 $ 78,000
=========== =========
</TABLE>
Unaudited-See accompanying notes to condensed financial statements.
5
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AIRSHIP INTERNATIONAL LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1-BASIS OF PRESENTATION:
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete statements. Management believes that all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates. If such differences prove significant and material, the Company will
file an amendment to this report on Form 10-Q.
NOTE 2-TRANSACTIONS WITH RELATED PARTIES:
LOANS FROM TRANS CONTINENTAL. During the three months ended March 31, 1997 Trans
Continental Airlines, Inc. ("Trans Continental"), an affiliated company, loaned
the Company an additional $746,000. While the Company has repaid $1,476,000 to
Trans Continental from the proceeds of the Company's sale leaseback financing,
there can be no assurance that Trans Continental will continue to make such
loans to the Company.
500.04 AGREEMENT WITH TRANS CONTINENTAL LEASING. On January 15, 1997 the Company
entered into a sale agreement with Trans Continental Leasing (TCL), an
affiliated company, with respect to the Company's 500.04 airship (formerly the
"Bud One" airship) whereby the Company sold to TCL the airship and related
equipment. In consideration for said assets, TCL retired the Company's debt to
Senstar Capital Corp. in the amount of $3,014,000. Additionally, TCL procured
a new envelope from a third party and agreed to lease back the entire assembled
and operational airship to the Company. Pursuant to the agreement, the Company
further agreed that it would sell certain idle airship components to TCL
provided that TCL would undertake to pay the operational costs of the
500.04 airship for a minimum of eight months from the date of purchase. TCL
continues to assume the operational costs of the 500.04 airship for an
indefinite period.
NOTE 4. CUMULATIVE PREFERRED DIVIDENDS IN ARREARS:
The Company has accrued quarterly dividend payments with respect to its Class A
Cumulative Convertible Preferred Voting Stock (the "Preferred Stock") since
August 15, 1994 until a later payment date. Dividends on the Preferred Stock
accrue at the annual rate of $.60 per share payable in Common Stock. As of March
31, 1997, the Company had 2,594,203 shares of Preferred Stock outstanding.
6
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERALL FINANCIAL CONDITION
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. For the first three months of 1997, the Company
incurred a loss of $662,000 and had negative cash flows of $880,000 from
operations. The accompanying financial statements do not include any adjustments
that might result from the Company's current liquidity shortage. The Company
experienced a net loss of $662,000 for the three month period ended March 31,
1997, compared to a net loss of $683,000 for the same period during the prior
year. The change was due to an increase in interest expense and commissions paid
on a financing which were offset by a reduction in payroll and maintenance costs
associated with the 500.04 airship. The Company is also experiencing a liquidity
shortage (See Liquidity and Capital Resources).
The Company had a stockholder's deficit of $14,931,000 at March 31, 1997 as
compared to the stockholder's deficit of $13,838,000 at December 31,
1996 representing an increase of $1,093,000. The increase was partially due to
the accrual of common stock dividends in the amount of $431,000 for the three
months ended March 31, 1997. In addition, the Company sustained a loss in the
amount of $662,000 for the three months ended March 31, 1997.
RESULTS OF OPERATIONS
The Company had no revenue from operation of its airships during the first three
months of 1997 and 1996.
Operating costs for the three months ended March 31, 1997 decreased $258,000
(or 100%) from the comparable period in 1996. Cost decreases resulted from
discontinued payroll and maintenance costs related to the 500.04 airship.
Selling, general, and administrative costs for the three months ended March
31,1997 were $458,000 compared to $297,000 for the comparable period in 1996.
The increase was primarily due to commissions paid in connection with the
Norwest Financing.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to experience negative cash flows from operating
activities. Due to the continued negative cash flow and existing encumbrances on
its assets, the Company has relied on loans, cash advances, and guarantees from
Louis Pearlman, the Company's president and principal stockholder, and Trans
Continental. There can be no assurance that Mr. Pearlman or Trans Continental
will make additional loans, cash advances, and guarantees on an ongoing basis.
At March 31, 1997, the Company owed Mr. Pearlman $1,163,000, net of unamortized
discounts, and owed Trans Continental $2,816,000 (see Note 2). Mr. Pearlman and
Trans Continental have deferred repayment of such amounts for an indefinite
period.
Quarterly dividends on the Preferred Stock accrue at the annual rate of $0.60
per share payable in shares of Common Stock. The Company has accrued dividends
on the Preferred Stock since August 15, 1994 (see Note 3).
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SIGNATURES
Pursuant to the requirements of 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 thereunto duly authorized.
AIRSHIP INTERNATIONAL LTD.
Dated: December 19, 1997 By: /s/ Louis J. Pearlman
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Louis J. Pearlman
Chairman of the Board of
Directors, President and
Treasurer (Principal Executive
and Financial Officer)
Dated: December 19, 1997 By: /s/ Alan A. Siegel
--------------------
Alan A. Siegel
Secretary & Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in
thecapacities and on the dates indicated.
Dated: December 19, 1997
By: /s/ Marvin Palmquist
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Marvin Palmquist
Director
Dated: December 19, 1997 By: /s/ James J. Ryan
-------------------
James J. Ryan
Director
8
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 304,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 319,000
<PP&E> 6,355,000
<DEPRECIATION> 2,184,000
<TOTAL-ASSETS> 4,490,000
<CURRENT-LIABILITIES> 14,654,000
<BONDS> 0
<COMMON> 417,000
26,000
26,000
<OTHER-SE> (15,374,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,490,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 458,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 255,000
<INCOME-PRETAX> (662,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (662,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (662,000)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
