UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: August 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT
For the transition period from ___________ to _____________
Commission file number: 000-17058
PHOENIX INTERNATIONAL INDUSTRIES, INC.
-----------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 592564162
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
1750 OSCEOLA DRIVE, WEST PALM BEACH, FLORIDA, 33409
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(Address of principal executive offices)
(561) 688-0440
--------------
(Issuer's telephone number)
--------------------------------------
(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 report (s), and (2)
has been subject to such filing requirements for the past 90 days. Yes [ ]
No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: Common Stock, $.001 par
value 9,278,847 shares outstanding as of January 28, 1999
Transitional Small Business Disclosure Format: Yes __ No X
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31,
1998 AND AUGUST 31, 1997
CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED AUGUST 31, 1998 AND
AUGUST 31, 1997
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE THREE MONTHS ENDED AUGUST 31, 1998 AND
AUGUST 31, 1997
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
PART II: OTHER INFORMATION
SIGNATURE
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<TABLE>
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PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
August 31, 1998 and August 31, 1997
(UNAUDITED)
ASSETS
(000's omitted)
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1 $ 88
Accounts receivable net of allowance for
doubtful accounts of $12,000 at August 31, 1998 4 172
Inventory - 18
Other current assets 4 320
------- -------
TOTAL CURRENT ASSETS 9 598
Property and equipment, net 19 113
Goodwill, net 179 -
Patents and trademards - 1
Net deferred tax asset - 1,094
Other assets - 2
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TOTAL ASSETS $ 207 $ 1,808
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 27 $ 274
Accrued expenses 55 529
Notes payable - 93
------- -------
TOTAL CURRENT LIABILITIES 82 896
Loan payable, related party 570 -
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TOTAL LIABILITIES 652 896
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STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value: 5,000
shares authorized: no shares outstanding - -
Common stock, $0.001 par value; 20,000,000
shares authorized: 7,259,028 shares issued
and outstanding (7,760 1997) 7 8
Additional paid-in-capital 4,718 4,586
Less stock subscription receivable - (458)
Accumulated deficit (5,170) (3,224)
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TOTAL STOCKHOLDERS' DEFICIENCY (445) 912
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 207 $ 1,808
======= =======
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See notes to consolidated financial statements.
Page 2
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PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended August 31, 1998 and August 31, 1997
(UNAUDITED)
(000's omitted)
THREE MONTHS ENDED
------------------------------------
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
REVENUES $ 30 $ 367
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OPERATING EXPENSES
Selling, general and administrative 135 605
Depreciation and amortization 12 -
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TOTAL OPERATING EXPENSES 147 605
OPERATING LOSS (117) (238)
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INCOME TAX BENEFIT (PROVISION) - 60
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LOSS FROM CONTINUING OPERATIONS (117) (178)
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DISCONTINUED OPERATIONS
Income from discontinued operations 60 -
------ ------
NET LOSS $ (57) $ (178)
====== ======
LOSS PER SHARE
Loss from continuing operations $(0.02) $(0.03)
====== ======
Net loss $(0.01) $(0.03)
====== ======
Weighted average common shares 7,269 6,360
====== ======
See notes to consolidated financial statements.
Page 3
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PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
For the three months ended August 31, 1998 and August 31, 1997
(UNAUDITED)
(000's omitted)
<S> <C> <C> <C> <C> <C>
Balance, May 31, 1998 8,622 $ 8 $ 4,988 $ (5,114) $ (117)
Recesion of ITC acquisition (1,413) (1) (302) - (303)
Issuance of stock for
consulting services 50 - 32 - 32
Net Loss - - - (57) (57)
------ --- ------- -------- ------
Balance August 31, 1998 7,259 $ 7 $ 4,718 $ (5,171) $ (445)
====== === ======= ======== ======
</TABLE>
See notes to consolidated financial statements.
Page 4
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<TABLE>
<CAPTION>
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended August 31, 1998 and August 31, 1997
(UNAUDITED)
(000's omitted)
THREE MONTHS ENDED
------------------------------------
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (57) $ (178)
Adjustments to reconcile net loss to net
cash used by operating activities
Charge for stock issued to ITC and not returned (36) -
Depreciation and amortization 13 -
Increase in inventory - (18)
(Increase) decrease in accounts receivable, net 40 (172)
Decrease in notes receivable - 7
(Increase) in other assets (1) (302)
Increase in deferred tax asset - (60)
Increase (decrease) in accounts payable (42) 269
Increase in other accrued liabilities 50 63
Increase in payroll taxes payable - 133
Stock issued for compensation 32 -
(Decrease) in notes payable - (13)
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NET CASH USED BY OPERATING ACTIVITIES (1) (271)
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment - (103)
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CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loan payable - related party (3) -
Proceeds from loan payable - related party 2 -
Issuance of common stock - 896
Less: stock subscriptions receivable - (435)
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NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1) 461
----- ------
Net Increase (Decrease) in Cash (2) 87
Cash at Beginning of Year 3 1
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Cash at End of Year $ 1 $ 88
===== ======
</TABLE>
See notes to consolidated financial statements.
Page 5
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PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
Three months ended August 31, 1998 and August 31, 1997
(UNAUDITED)
(000's omitted)
THREE MONTHS ENDED
---------------------------------
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
SUPPLEMENTAL DISCLOSURES
Noncash Investing and Financing Activities
Accrued liabilities converted to equity $ - $ -
Loan payable converted to equity - -
Stocks issued for consulting services 32 -
Stock issued to acquire assets - -
Recision of ITC acquisition 36 -
Cash Paid during the Year for
Interest - -
Income taxes - -
See notes to consolidated financial statements.
Page 6
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PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
UNAUDITED
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
NOTE 1 - THE COMPANY
ORGANIZATION - During the year ended May 31, 1998, Phoenix International
Industries, Inc. and Subsidiaries (the Company) provided, to entities located
primarily in the southeastern United States, computer consulting and certain
telecommunication services through its wholly-owned subsidiaries: HDX 9000, Inc.
(HDX), Mic Mac Investments, Inc. (MIC MAC) and Intuitive Technology Consultants,
Inc. (ITC). Previously, the Company sold products and systems for use in the
environmental clean-up industry. HDX, MIC MAC and ITC were acquired during the
year ended May 31, 1998. On June 1, 1998, the Company discontinued substantially
all of its computer consulting operations and disposed of ITC in a transaction
accounted for as a recession on the business combination.
CONSOLIDATION - The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
transactions and balances have been eliminated in consolidation.
NOTE 2 - BASIS OF PRESENTATION
The company unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
pursuant to the instructions to form 10-Q and Article 10 of Regulation S-X.
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
accrual adjustments, considered necessary for a fair presentation have been
included. Operating results for the three-month period ended August 31, 1998 are
not necessarily indicative of the results that may be expected for the year
ended May 31, 1999.
These financial statements and notes should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended May 31, 1998.
NOTE 3 - FINANCIAL RESULTS
The accompanying unaudited financial statements have been prepared assuming the
Company will continue as a going concern. The Company has accumulated losses of
approximately $1,600,000 in the last 27 months and has insufficient working
capital. In connection with a proposed acquisition of two additional
subsidiaries, the company will continue to incur selling, general and
administrative expenses. Realization of certain assets is dependent upon the
Company's ability to meet its future financing requirements, the success of
future operations and the continued funding of the parent Company's operations
by its chief executive officer. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. While the Company believes
that these acquisitions will become profitable in the future and that, with its
prospective acquisitions, it will generate future cash flows and return to
profitability, there can be no assurance that this will occur. Also, the Company
believes it will be able to raise the funds necessary to complete the
aforementioned acquisition in the foreign equity markets. In addition, the
Company's chief executive officer has committed to continue to provide working
capital to fund the selling, general and administrative expenses of the parent
company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
PHOENIX INTERNATIONAL INDUSTRIES, Inc. (the "Company") is a development
stage company. During the Company's three month period ended August 31, 1998,
the Company incurred a net loss of $($57,000)($.01 per Share) compared to a loss
of $178,000 ($0.03 per Share) for the comparable three month period for the
prior fiscal year. The Company reported an adjusted net accounts receivable of
$4,000 for the three month period ended August 31, 1998, compared to $172,000 in
accounts receivable for the comparable period of the prior year.
The Company's net loss for the period ended August 31, 1998, was
principally the result of the limited sales revenues during the quarter, the
continued expenses associated with continuing to operate and maintain its
offices and expenses associated with being a reporting company, which include
professional, accounting and printing/EDGAR preparation and filing fees, and the
non-cash expenses associated with the issuance of shares to its consultants for
continued services to the Company in lieu of cash compensation during the
period. Such non-cash compensation expensed during the three month period ended
August 31,1998, was $32,000 compared to $0.00 during the same period in the
prior fiscal year. In order for the Company to pay its operating expenses,
including office rents, communication expenses, accounting and bookkeeping fees,
printing and EDGAR preparation costs, publication costs, and other general and
administrative expenses, the Company was dependent upon the funds provided by
non-interest bearing loans from the Company's executive officer as well as from
the private Placement of its securities to private investors.
RESULTS OF DISCONTINUED OPERATIONS
In June of 1998 the Company sold its wholly owned subsidiary Intuitive
Technology Consultants, Inc.(ITC) of Atlanta, Georgia, to an "acquisition group"
headed by Scott Schuster the President and CEO of ITC. The sale was reported in
the Company's most recent 10-KSB filing and is incorporated herein by reference.
The services of the Company's consultants, together with that of the
Company's management, have enabled the Company to reach its present stage of
development, which includes having purchased Cambridge Gas Transport
Corporation, owners of 58% of Navigator Gas Transportation, LLC.(Navigator).
Navigator is currently building the 5 largest simi-refrigerated, multi-cargo,
gas tankers in the world and entered into a letter of intent to purchase the
Telephone Company of Central Florida, Inc. (TCCF), a "CLEC" telephone company,
who last year generated more than $45 million in revenue.
It is the belief of the management of the Company that these companies
will be the foundation upon which Phoenix will grow and become successful. They
are both "high tech", and at the same time diversified. They give Phoenix a
foothold in both the international shipping business and in the
telecommunication industry.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company, at August 31, 1998, had current assets of approximately
$207,000 compared to $1,808,000 at the August 31, 1997. To assist the Company in
obtaining its cash flow requirements, the Company may determine to seek funding
via the sale of "restricted securities", as well as revenues from the sale of
telecommunications products and services.
Notwithstanding indications of interest from investors, there can be no
assurance that restricted offerings will be well received. The trading price of
shares of the Company's common stock during the three months ended August 31,
1998, has been in the range of $.46 to $.96. While the Company has been
successful in raising capital via the unit private placement in the past, there
can be no assurance that the Company will be able to continue to raise private
capital, whether or not the Company's shares continue to trade at the levels
that have prevailed during August 1998.
The Company's monthly operating expenses for the quarter ended August
31, 1998 and during the present quarter include rent for space in West Palm
Beach, Florida, professional/accounting fees, telephones and other "normal
operating fees, but do not reflect any salary to Gerard Haryman, or Thomas
Donaldson, the Company's sole executive officers. The Company is currently
negotiating salary contracts for both gentlemen, but does not contemplate
commencing payment to them unless and until it begins to generate a positive
cash flow from operations.
Statements in this Report on Form 10-Q, that are not statements of
historical fact, are to be regarded as forward-looking statements which are
based on information available to the Company as of the date hereof and involve
a number of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements are delays in product development, competitive
pressures, general economic conditions, risks of intellectual property and other
litigation, and the factors detailed below under "Certain Factors That May
Affect Future Results" or elsewhere herein or set forth from time to time in the
Company's periodic reports and registration statements filed with the Securities
and Exchange Commission.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
NONE
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
<PAGE>
Item 5. Other Information
Phoenix has been declared "Millennium Compliant" by a third party audit
of its potentially effected systems and hardware.
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET (UNAUDITED) AND THE OPERATIONS FOR THE THREE MONTHS ENDED AUGUST
31 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PHOENIX INTERNATIONAL INDUSTRIES, INC..
(Registrant)
February 9, 1999 By: /s/ Gerard Haryman
--------------------------------------
Gerard Haryman
President, Chief Executive Officer and
(acting) Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-30-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 4,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 90,000
<PP&E> 0
<DEPRECIATION> 12,000
<TOTAL-ASSETS> 207,000
<CURRENT-LIABILITIES> 82,000
<BONDS> 0
0
0
<COMMON> 7,300,000
<OTHER-SE> 4,700,000
<TOTAL-LIABILITY-AND-EQUITY> 207,000
<SALES> 0
<TOTAL-REVENUES> 30
<CGS> 0
<TOTAL-COSTS> 147,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (117,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (117,000)
<DISCONTINUED> 60,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
