As filed with the Securities and Exchange Commission on August 28, 2000
Registration No. 333-_____
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PHOENIX INTERNATIONAL INDUSTRIES, INC.
(Name of registrant as specified in its charter)
Florida 2836 59-2564162
------------------------------ ------------------------- -----------------
(State or Jurisdiction of (Primary Standard (IRS Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
1750 Osceola Drive Thomas N. Donaldson
West Palm Beach, Florida 33409 1750 Osceola Drive
(561) 688-0440 West Palm Beach, Florida 33409
(561) 688-0440
(Address, including zip code, and (Name, address, including zip code, and
telephone number, including area telephone number, including area
code of Registrant's principal code of agent for service)
executive offices)
COPIES TO:
L. Van Stillman James G. Dodrill II
1177 George Bush Boulevard, Suite 307 428 Plaza Real, Suite #326
Delray Beach, Florida 33483 Boca Raton, Florida 33432
(561) 330-9903 (561) 394-5778
Facsimile (561) 330-9116 Facsimile (561) 417-4190
Approximate date of commencement of proposed sale of the securities
to the public: From time to time after the effective date of this
registration statement.
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share(1) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock par value $0.001 per
share to be issued in exchange
for Convertible Debentures...... 12,847,825 $0.26 $ 3.340,435 $ 895.24
Total............................. 12,847,825 $0.26 $ 3,340,345 $ 895.24
</TABLE>
(1) Estimated solely for purposes of calculating the registration
fee. The registration fee is based upon the closing sales price
on August 1, 2000 of $.0.255 based on Rule 457(g) except for
options exerciseable at higher prices.
<PAGE>
PROSPECTUS
PHOENIX INTERNATIONAL INDUSTRIES, INC.
12,847,825 Shares of Common Stock
($0.001 par value per share)
This prospectus relates to the issuance of up to 12,847,825
shares of Common Stock, $0.001 par value of Phoenix International
Industries, Inc., a Florida corporation upon conversion of some
or all of our convertible debentures ("Convertible Securities").
We will not receive any of the proceeds from the sale of stock
issued upon conversion of our Convertible Securities. We will pay
all expenses of registration incurred in connection with this
offering, but any and all selling and other expenses incurred by
security holders wishing to sell common stock issued upon
conversion of our Convertible Securities will be paid by such
selling stock holder.
The Common Stock currently trades on the Electronic
Bulletin Board under the symbol "PHXU" On July 24, 2000, the
last sale price of the Common Stock as reported on the Electronic
Bulletin Board was $0.32 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PURCHASE OF THESE SECURITIES INVOLVES RISKS. See "Risk
Factors" on page 6.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this Prospectus is August 28, 2000.
1
<PAGE> 1
TABLE OF CONTENTS
Page
----
Additional Information............ 3
Prospectus Summary................ 4
Selected Financial Data........... 6
Risk Factors...................... 7
Use of Proceeds................... 10
Determination of Offering Price... 10
Dividend Policy................... 10
Market Price of Common Stock...... 11
Management's Discussion and
Analysis........................ 12
Business and Plan of Operation.... 15
Management........................ 19
Selling Shareholders.............. 21
Principal Shareholders............ 22
Certain Transactions.............. 23
Changes in and Disagreements
with Accountants................ 23
Plan of Distribution.............. 24
Description of Securities......... 25
Legal Matters .................... 26
Experts........................... 26
Indemnification................... 26
Financial Statements.............. F-1
As used in this prospectus, the terms "we," "us," "our," "the
Company," and "Phoenix" mean Phoenix International Industries,
Inc., a Florida corporation. The term "Selling Shareholders"
means our shareholders who are offering to sell their shares of
Phoenix which are being registered through this prospectus. The
term "Common Stock" means our common stock, par value $0.001 per
share and the term "Shares" means the shares of Common Stock being
registered by us through this Prospectus.
You should rely only on the information contained in this
document or that we have referred you to. We have not authorized
anyone to provide you with information that is different. This
Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities covered by this
Prospectus in any state or other jurisdiction to any person to
whom it is unlawful to make such offer or solicitation in such
state or jurisdiction. Neither the delivery of this Prospectus
nor any sales made hereunder shall, under any circumstances,
create an implication that there has been no change in our affairs
since the date hereof.
<PAGE> 2
ADDITIONAL INFORMATION
We have filed a Registration Statement under the Securities
Act with respect to the securities offered hereby with the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. This
Prospectus, which is a part of the Registration Statement, does
not contain all of the information contained in the Registration
Statement and the exhibits and schedules thereto, certain items of
which are omitted in accordance with the rules and regulations of
the Commission. For further information with respect to us and
the securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules
thereto, which may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at its Regional Offices
located at 7 World Trade Center, New York, New York 10048, and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 at prescribed rates during regular business hours.
Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in
each instance reference is made to the copy of such contract or
document filed as an exhibit to the Registration Statement, each
such statement being qualified in its entirety by such reference.
We will provide, without charge upon oral or written request of
any person, a copy of any information incorporated by reference
herein. Such request should be directed to Phoenix International
Industries, Inc. 1750 Osceloa Drive, West Palm Beach, Florida
33409, Telephone Number: (561) 688-0440.
We file reports and other information with the Commission.
All of such reports and other information may be inspected and
copied at the Commission's public reference facilities described
above. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding
issuers that file electronically with the Commission. The address
of such site is http://www.sec.gov. In addition, we intend to
make available to our shareholders annual reports, including
audited financial statements, unaudited semi-annual reports and
such other reports as we may determine.
<PAGE> 3
PROSPECTUS SUMMARY
The following is only a summary of the information, financial
statements and the notes included in this Prospectus. You should
read the entire Prospectus carefully, including "Risk Factors" and
our Financial Statements and the notes to the Financial Statements
before making any investment decision.
Phoenix International Industries, Inc.
We are a development stage company. During the year ended
May 31, 1999, we, along with our subsidiaries historically
provided computer consulting and long distance telephone service
through our wholly-owned subsidiaries HDX 9000, Inc. ("HDX") and
Mic Mac Investments, Inc. ("Mic Mac") to entities located
primarily in the southeastern United States. HDX and Mic Mac were
acquired during the year ended May 31, 1998. Mic Mac
discontinued operation in the fiscal year ended May 31, 1999 and
HDX discontinued operations in June 1999.
We acquired the Telephone Company of Central Florida, Inc.
("TCCF"), a reorganized debtor, in July 1999. TCCF was
incorporated in the State of Florida in December 1995 for the
purpose of purchasing wholesale long distance and local
telecommunication services and to resell these services
throughout the United States. TCCF is also a provider of
telecommunication services to the debit card (prepaid telephone
card) industry.
TCCF signed a letter of intent dated January 28, 2000 to
acquire 100% of the outstanding stock of Moye & Associates, Inc.
("Best Net"). Best Net is primarily an internet service provider
(ISP) in addition to providing retail sales of computer and
computer parts and computer repairs. The proposed terms of the
agreement call for $50,000 to be paid at closing, $50,000 to be
paid within nine months, and approximately $75,000, $112,500 and
$112,500 worth of our common stock to be issued at closing, nine
months after closing and 18 months after closing, respectively.
In January, 2000 we announced that we have expanded our long
distance service agent contract with AT&T. We believe that this
expanded contract will allow TCCF to increase its monthly revenue
by more than 50%.
We have also executed a letter of intent to purchase
Advanced Communications Services, inc., ("ACS"), a systems
integration firm whose main office is in Edison, New Jersey. The
letter of intent calls for a full purchase price of 2,500,000
restricted shares of our common stock, to be paid to ACS's
shareholders over a period of 18 months.
During the nine month period ended February 29, 2000 we
reported revenues of $1,266,000 compared to $54,000 for the same
period in the preceding year. These revenues resulted from
telecommunication service sales generated by TCCF, and
miscellaneous revenue.
Our principal executive offices are located at 1750 Osceola
Drive, West Palm Beach, Florida 33409 and our telephone number is
(561) 688-0440.
Securities Offered:............... 12,847,825 shares of Common Stock,
$0.001 par value per share, which
may be issuable upon conversion of
some or all of our Convertible
Securities.
Risk Factors...................... The securities offered hereby
involve a high degree of risk and
immediate substantial dilution and
should not be purchased by
investors who cannot afford the
loss of their entire investment.
See "Risk Factors."
Common Stock Outstanding(1)
Before Offering:................ 19,853,847 (1) shares
<PAGE> 4
Common Stock Outstanding After
Offering:....................... 32,701,672 (1) shares
Use of Proceeds................... We will not receive any of the
proceeds from the sale of stock
issued upon conversion of any
Convertible Securities.
Dividend Policy:.................. We do not intend to pay dividends
on our Common Stock. We plan to
retain any earnings for use in the
operation of our business and to
fund future growth.
NASD Electronic Bulletin Board
Symbol.......................... PHXU
(1) Based on shares outstanding as of June 27, 2000
Risk Factors
The securities offered hereby are highly speculative and
very risky. Some of these risk factors follow.
<PAGE> 5
SELECTED FINANCIAL DATA
Set forth below is selected financial data for the years
ended May 31, 1999, May 31, 1998 and May 31, 1997, all of which
has been derived from our audited financial statements. Also set
forth below is financial data for the nine month periods ended
February 29, 2000 and February 28, 1999, which has been derived
from our unaudited financial statements. In our opinion, these
unaudited statements have been prepared on the same basis as our
audited financial statements and reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a
fair statement of our results of operations and financial
condition for these periods.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS DATA:
(unaudited)
YEAR ENDED NINE MONTHS ENDED
-------------------------------------------- -------------------------------------
May 31, 1997 May 31, 1998 May 31, 1999 February 28, 1999 February 29, 2000
<S> <C> <C> <C> <C> <C>
Revenue $ 0 $ 175,673 $ 30 $ 54,000 $ 1,266,000
Selling, general and
administrative expenses 0 726,111 1,093,048 1,214,000 2,302,000
Depreciation 1,714 44,429
Amortization of Goodwill 29,176
Impairment of Goodwill, HDX 30,000
Loss from operations 0 (581,328) (1,167,447)
Net other income (expense) 0 (96) 2,044
Income (Loss) from
Discontinued Operations (443,000) (452,508) 73,417 60,000 (65,000)
Income Tax Benefit 112,000
Net income (loss) (331,000) (1,033,932) (1,091,986) (1,100,000) (1,101,000)
Basic loss per share of
Common Stock (0.11) (0.13) (0.11) (0.13) (0.08)
Weighted average number of
common shares outstanding 2,908,000 8,138,702 10,209,834 8,833,000 13,979,000
</TABLE>
BALANCE SHEET DATA (Unaudited):
As of February 29, 2000
Current Assets $1,002,000
Property, Plant and Equipment, Net $ 642,000
Total Assets $1,644,000
Total Liabilities $2,447,000
Stockholders deficit ($803,000)
<PAGE> 6
RISK FACTORS
The Common Stock for sale is a speculative investment and
very risky. You should especially consider these risk factors.
Before you buy consider the following risk factors and the rest of
this prospectus. Additionally, the risks described below are not
the only ones we face. Additional risks and uncertainties not
presently known to us, that we currently deem immaterial or that
are similar to those faced by other companies in our industry or
business in general, may also impair our business operations.
This prospectus also contains forward looking statements that
involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward looking
statements as a result of certain factors, including the risks
faced by us described below and elsewhere in this prospectus.
Please refer to "Risks Associated with Forward-looking Statements"
on page 8.
Investors should assume that, even if not specifically stated
below, if any of the following risks actually materialize, our
business, financial condition or results of future operations
could be materially and adversely affected. In such case, the
trading price of our common stock could decline, and you may lose
all or part of your investment.
We May Require Additional Financing
At February 29, 2000, we had current assets of approximately
$1,002,000. To assist us in our cash flow requirements we may
determine, depending upon the prevailing stock price of our
shares, to seek subscriptions from the sale of securities to
private investors, although there can be no assurance that we
will be successful in securing any investment from private
investors at terms and conditions satisfactory to us, if at all.
Based upon our present liquid resources, our present operating
expenses, and the commitment of our executive officers to
continue to defer most or all of their salaries, and if no
revenues are generated from operations or other sources, we
believe we will be able to operate for a minimum of three months.
However, in the near term, we do not anticipate receipt of
increased operating revenues as a result of the business
developments by TCCF. If additional funds are required, but
cannot be raised, it will have an adverse effect upon our
operations. To the extent that additional funds are obtained by
the sale of equity securities, our stockholders may sustain
significant dilution.
We Are Involved in Litigation
We are the defendant in a lawsuit filed on behalf of the
previous owners of Mic-Mac, Inc. (formerly a wholly owned
subsidiary of the Company) the lawsuit demanded the release of
the restrictions placed on the 220,000 shares of our stock which
was received in payment for Mic-Mac, Inc. Additionally, the
lawsuit demanded that the contingent balance of the purchase
price (250,000 shares of restricted stock) be issued. The Company
has taken the position that the previous owners are not entitled
to any stock as the performance clauses in the purchase agreement
were not met. The litigation is in progress and has of yet not
been decided.
Ability to Continue as a Going Concern
Our independent auditors have issued their report dated
January 5, 2000 on our consolidated financial statements as of May
31, 1999, which includes an explanatory paragraph expressing
substantial doubt about our ability to continue as a going
concern. Among the reasons cited by the independent auditors as
raising substantial doubt as to our ability to continue as a going
concern are the following: we have accumulated losses of
approximately $6,200,000 as of May 31, 1999, have insufficient
working capital and will continue to incur selling, general and
administrative expenses. Additionally, realization of certain
assets is dependent upon our ability to meet our future financing
requirements, the success of future operations and our continued
funding by our CEO and the sale of common stock. These conditions
raise substantial doubt about our ability continue as a going
concern.
History of Losses
We have incurred operating losses since our inception and
have an accumulated deficit of approximately $6,200,000 as of May
31, 1999. We incurred a net loss of $1,091,986 for the year ended
May 31, 1999 as compared with a net loss of $1,033,932 for the
year ended May 31, 1998. For the nine months ended February 29,
2000, we incurred a net loss of $1,101,000. These net losses
continue to be the result of expenses involved with supporting the
day to day operation of TCCF, the expenses of expanding its sales
operation during the period and the continued expenses associated
<PAGE> 7
with continuing to operate and maintain our offices, professional
fees and expenses associated with being a reporting public
company, which include: legal, accounting and EDGAR/printing
preparation, and the write off of our $152,000 investment in HDX.
We Have Been Dependent on Loans From Our CEO, Directors and
Shareholders in Order to Pay Operating Expenses.
In order for us to pay our operating expenses, including
office rents, communication expenses, accounting and bookkeeping
fees, printing and EDGAR preparation costs, publication costs, and
other general and administrative expenses, we have been dependent
upon funds provided by non-interest bearing loans from our CEO,
directors and shareholders. Additionally, we continue to be
dependent upon the willingness of our CEO and directors and
consultants to accept shares of our stock as compensation for
continued services to us, which services we consider to be
valuable and necessary to our continued operations.
We Face Intense Competition
We face intense competition for customers because the
telecommunications industry is highly competitive. Our
competitors consist of several well established companies, the
substantial majority of which have significantly greater financial
resources than we do, longer operating histories, well established
reputations, and marketing and sales networks, and greater
management and technical resources.
Potential Acquisitions
We have in the past, and may in the future pursue
acquisitions of complementary services or businesses. Future
acquisitions may result in potentially dilutive issuances of
equity securities, the incurrence of additional debt, the write-
off of costs, and the amortization of expenses related to goodwill
and other intangible assets, all of which could have a material
adverse effect on our business, operating results and financial
condition. Future acquisitions would involve numerous additional
risks, including difficulties in the assimilation of the
operations, services and personnel of the acquired company, the
diversion of management's attention from other business concerns,
entering markets in which we have little or no direct prior
experience and the potential loss of key employees of the acquired
company. We have executed letters of intent to purchase two
additional companies, Moye & Associates, Inc., an Internet Service
Provider (ISP) headquartered in St. Simons, Georgia and Advanced
Communications Services, Inc., (ACS) a systems integration firm,
whose main office is in Edison, New Jersey. Shareholders will not
vote on any potential acquisitions (unless required by NASDAQ
regulations or applicable law) nor have the opportunity to review
any potential acquisition candidate.
We Do Not Anticipate Paying Cash Dividends
We have not paid any cash dividends on our capital stock and
we anticipate that our future earnings, if any, will be retained
for use in the business, or for other corporate purposes. It is
not anticipated that any cash dividends on the Common Stock will
be paid in the foreseeable future. See "Dividend Policy" and
"Description of Securities."
If We Are Unable to Meet Nasdaq Stock Market Listing
Requirements, Your Ability to Buy or Sell the Common Stock May be
Impacted.
Our Common Stock does not meet the current Nasdaq listing
requirements for the SmallCap(R) Market. If we are unable to
satisfy Nasdaq's requirements for listing, trading, if any, the
Common Stock will continue to be conducted on the NASD's OTC
Bulletin Board, established for securities that do not meet the
Nasdaq SmallCap(R) Market listing requirements. Consequently, the
liquidity of our securities could be impaired, not only in the
number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in
security analysts' and the news media's coverage of us, and lower
prices for our securities than might otherwise be attained.
Our Board of Directors Has the Power to Issue Additional
Securities Without the Consent of Shareholders.
Our Board of Directors has the power, without the consent of
the shareholders, to issue additional shares of common stock or
<PAGE> 8
preferred stock for such consideration as may be permitted under
Florida law. Preferred stock may be issued with preferences or
rights as to dividends, voting or liquidation which are superior
to those of holders of common stock, see "Description of
Securities."
Possible Issuance of Preferred Stock
Our Certificate of Incorporation authorizes the issuance of
up to 20,000,000 shares of preferred stock, $0.001 par value per
share ("Preferred Stock"), with designations rights, and
preferences determined from time to time by our Board of
Directors. Accordingly, our Board of Directors is empowered,
without stockholder approval, to issue Preferred Stock with
dividends, liquidation, conversion, voting, or other rights that
could adversely affect the voting power or other rights of the
holders of our common stock. In the event of issuance, the
Preferred Stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control
of the company.
Risks Associated with Forward-looking Statements
This Prospectus contains certain forward-looking statements
regarding management's plans and objectives for future
operations, including plans and objectives relating to our planned
marketing efforts and future economic performance. The
forward-looking statements and associated risks set forth in this
Prospectus include or relate to: (i) our ability to obtain a
meaningful degree of consumer acceptance for our products and
future products, (ii) our ability to market our products and
future products on a national basis at competitive prices, (iii)
our ability to develop brand-name recognition for our products and
future products, (iv) our ability to develop and maintain an
effective sales network, (v) our success in forecasting demand for
our products and future products, (vi) our ability to maintain
pricing and thereby maintain adequate profit margins, (vii) our
ability to achieve adequate intellectual property protection for
our products and future products and (viii) our ability to obtain
and retain sufficient capital for future operations.
The forward-looking statements herein are based on current
expectations that involve a number of risks and uncertainties.
Such forward-looking statements are based on assumptions that we
will market and provide products on a timely basis, that we will
retain our customers, that there will be no material adverse
competitive or technological change in conditions in our business,
that demand for our products will significantly increase, that our
President will remain employed as such, that our forecasts
accurately anticipate market demand, and that there will be no
material adverse change in our operations or business or in
governmental regulations affecting us or our suppliers. The
foregoing assumptions are based on judgments with respect to,
among other things, future economic, competitive and market
conditions, and future business decisions, all of which are
difficult or impossible to predict accurately and many of which
are beyond our control. Accordingly, although we believe that the
assumptions underlying the forward-looking statements are
reasonable, any such assumption could prove to be inaccurate and
therefore there can be no assurance that the results contemplated
in forward-looking statements will be realized. In addition, as
disclosed elsewhere in the "Risk Factors" section of this
Prospectus, there are a number of other risks inherent in our
business and operations which could cause our operating results to
vary markedly and adversely from prior results or the results
contemplated by the forward-looking statements. Growth in
absolute and relative amounts of cost of goods sold and selling,
general and administrative expenses or the occurrence of
extraordinary events could cause actual results to vary materially
from the results contemplated by the forward-looking statements.
Management decisions, including budgeting, are subjective in many
respects and periodic revisions must be made to reflect actual
conditions and business developments, the impact of which may
cause us to alter marketing, capital investment and other
expenditures, which may also materially adversely affect our
results of operations. In light of significant uncertainties
inherent in the forward-looking information included in this
Prospectus, the inclusion of such information should not be
regarded as a representation by us or any other person that our
objectives or plans will be achieved. See "Management's
Discussion and Analysis" and "Business."
<PAGE> 9
USE OF PROCEEDS
We will not receive any of the proceeds from the sale
of stock issued upon conversion of any Convertible Securities.
DETERMINATION OF OFFERING PRICE
The price at which the shares may actually be sold by the
selling stockholders will be determined by the market price of the
common stock as of the date of sale.
DIVIDEND POLICY
We have paid no dividends during the past five fiscal years
on any class of our issued and outstanding securities.
Our payment of dividends, if any, in the future rests within
the discretion of our Board of Directors and will depend, among
other things, upon our earnings, capital requirements and
financial condition, as well as other relevant factors. Because
of our present financial condition, we do not contemplate or
anticipate paying any dividends on the Common Stock in the
foreseeable future.
<PAGE> 10
MARKET PRICE OF COMMON STOCK
Our Common Stock has been listed on the NASDAQ OTC Electronic
Bulletin Board sponsored by the National Association of Securities
Dealers, Inc. under the symbol "PHXU" since September 17, 1996 On
August 1, 2000, the closing price as reported by the Electronic
Bulletin Board was $0.255.
The following table sets forth the high and low bid prices
for the Common Stock as reported on the Electronic Bulletin Board
for each quarter since July, 1995 for the periods indicated. Such
information reflects inter dealer prices without retail mark-up,
mark down or commissions and may not represent actual
transactions.
<TABLE>
<CAPTION>
Closing Bid Closing Ask
High Low High Low
<S> <C> <C> <C> <C>
1995 3.28 .15 6.56 .93
7/3/95 through 9/29/95 4.21 .15 7.03 .93
10/2/95 through 12/29/95
1996
1/2/96 through 3/29/96 1.20 .15 1.95 .60
4/1/96 through 6/28/96 .22 .07 .60 .22
7/1/96 through 9/18/96 .30 .11 .75 .37
9/19/96 through 9/30/96 1.125 .375 1.50 .625
10/1/96 through 12/31/96 1.50 .25 2.375 .75
1997
1/2/97 through 3/31/97 1.50 .6875 2.375 1.00
4/1/97 through 6/30/97 1.4375 .625 1.6875 .875
7/1/97 through 9/30/97 2.37 1.125 2.625 1.375
10/1/97 through 12/31/97 2.25 .46 2.625 .875
1998
1/2/98 through 3/31/98 1.50 .4375 1.6875 .4687
4/1/98 through 6/30/98 1.4375 .625 1.6875 .875
7/1/98 through 9/30/98 2.37 1.125 2.625 1.375
10/1/98 through 12/31/98 2.25 .46 2.625 .875
1999
1/2/99 through 3/31/99 1.00 .88 1.06 .94
4/1/99 through 6/30/99 .62 .47 .65 .50
7/1/99 through 9/30/99 .56 .36 .59 .39
10/1/99 through 12/31/99 1.62 .31 1.65 .34
2000
1/2/00 through 3/31/00 1.72 .295 1.75 .325
4/1/00 through 6/30/00 .93 .43 1.00 .45
</TABLE>
The price of shares have been adjusted for all stock splits.
As of May 31, 2000, there were approximately 528 record
holders of Company common stock.
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
Except for the historical information herein, the matters
discussed in this quarterly report includes forward-looking
statements that may involve a number of risks and uncertainties.
Actual results may vary based upon a number of factors, including,
but not limited to, risk in product availability, product
technology changes, market acceptance of new products and
services, questions of continuing demand, the impact of
competitive products and pricing, changes in economic conditions
and other risk factors contained in the Company's most recent
filings with the Securities and Exchange Commission ("SEC").
Results of Operations
---------------------
Period ending February 29, 2000 vs Period ending
February 28, 1999
We are a development stage company. During our three
month period ended February 29, 2000, we incurred net losses of
$615,000 compared to net losses of $796,000 for the comparable
three month period for the preceding year, and net losses for the
nine month period ended February 29, 2000 of $1,101,000 compared
to $1,100,000 for the same period the preceding year.
We reported revenues of $501,000 for the three month
period ended February 29, 2000 compared to sales revenues of
$8,000 for the three month period ended February 28, 1999 and
revenues for the nine month period ended February 29, 2000 of
$1,266,000 compared to $54,000 for the same period the preceding
year. These revenues resulted from telecommunication service
sales generated by our newly acquired affiliate Telephone Company
of Central Florida, Inc.("TCCF"), and miscellaneous revenue, as
disclosed in the combined financial statement which is included
in this filing.
During the three month period ended February 29, 2000 we
executed a letter of intent to acquire 100% of "The Best Net" a
Georgia Corporation based on St. Simons Island. The Best Net is
an Internet Service Provider (ISP) with 2,500 customers, a
computer sales and service company and also has an e-commerce
site on the Internet. Details of the purchase are still being
worked out, but it has been agreed that the method of payment
will be comprised of both cash and stock.
Based upon the representations received from TCCF, we
believe that prior to the end of fiscal 2000, TCCF will continue
to generate increasing revenues from operations, as it increases
its subscriber base for its telecommunications business. The
acquisition of companies like The Best Net is an excellent
example of how TCCF's customer base can be expanded. TCCF and The
Best Net have already begun "cross-selling" their respective
services to each others customers.
During the coming year we will continue to pursue efforts to
add additional affiliates or attractive joint ventures, primarily
in the telecommunications industry in order to generate
additional revenue streams.
Although we still wholly own HDX 9000, Inc. ("HDX"), we have
ceased to operate HDX, as their primary product was related to
solving the Y2K computer problem and they have not been able to
successfully adapt their other methodologies to a readily
marketable format. HDX's President, Timothy Palmer, has agreed to
return the 500,000 shares of our stock, which were issued to
purchase HDX, to us for cancellation. Mr. Palmer will continue to
serve a Director of the company and act as a consultant on an "as
needed" basis. Final disposition of HDX has yet to be decided.
Our net losses for the nine month period ended February 29,
2000, continue to be the result of expenses involved with
supporting the day to day operation of TCCF, the expenses of
expanding our sales operation during the period and the continued
expenses associated with continuing to operate and maintain our
offices, professional fees and expenses associated with being a
reporting public company, which include: legal, accounting and
EDGAR/printing preparation, and the write off of our $152,000
investment in HDX. We incurred non-cash expenses associated with
the issuance of 50,000 shares of restricted stock to TCCF as a
"good faith deposit" toward its acquisition. Said stock will be
returned to our treasury during the next quarter.
<PAGE> 12
In order for us to pay our operating expenses, including
office rents, communication expenses, accounting and bookkeeping
fees, printing and EDGAR preparation costs, publication costs,
and other general and administrative expenses, we were dependent
upon the funds provided by non-interest bearing loans from the
Company's executive officer, director and shareholders.
Again, during this reporting period as it has previously,
the company has raised a portion of its operating capital through
the sale of restricted stock, however in future there can be no
assurance of any additional sale of restricted stock. Further,
there can be no assurance, based upon present market price of the
shares, that it will be able to raise additional private
placement funding, at terms and conditions satisfactory to the
Company.
The Company continues to be dependent upon the willingness
of the Company's executive officers/directors and its consultants
to accept shares as compensation for continued services to the
Company, which services the Company considers to be valuable and
necessary to its continued operations.
During the period ended November 30, 1999 The company
entered into negotiations which led to a letter of intent to sell
its wholly owned subsidiary, TCCF, to Atlanta based Avana
Corporation, a wholly owned subsidiary of Grace Development
Corporation ("GCDV" on the OTCBB) for approximately $2,000,000
cash and 3,000,000 of GCDV.(See the Press Release dated October
15, 1999, under Item 5 in this filing.) The anticipated sale was
never concluded, due to the fact that Avana abruptly backed our
of the deal, giving no satisfactory reason to the Company.(See
Press Release dated January 6, 2000, under Item 5 of this filing.
Year Ending May 31, 1999 vs Year Ending May 31, 1998
The Company's HDX subsidiary was acquired July 21, 1997. For
the 10 months and 10 days through May 31, 1998, HDX had revenues
of $160,039 and expenses of $132,656.
For the year ended May 31, 1999, HDX had no income and an
operating loss of $33,500. This was due to the expiration of the
market for HDX's primary product, a methodology for dealing with
the Y2K computer problem. HDX has returned to the status of a
developmental organization while it re-designs its other
methodologies in preparation to introduce them to the market.
With regard to the Statements of Operations for the year
ending May 31, 1999. The Company had an operating loss of
$1,897,230, a substantial portion of which was due to legal and
accounting expenses incurred in the litigation against the
principals of CTCG and the aborted effort to purchase American
Telecommunications Enterprises, Inc.. (see note to consolidated
financial statements)
Discontinued Operations
Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period from
the date of acquisition through May 31, 1998, Hospitality had
revenues of $ 15,634 and expenses of $30,404.
Hospitality ceased to operate late in the third quarter of
fiscal 1999, claiming they could not meet their business plan
projections or continue without Phoenix acquiring a long distance
telephone company or other telephone service organization to give
them support and additional product. Mic-Mac Investments, Inc and
Hospitality Telecom had no remaining assets or liabilities as of
May 31, 1999, and Phoenix wrote off its remaining investment in
them in that fiscal year.
As of June 1, 1998, the Company sold its ITC subsidiary to a
group headed by ITC management. The Company received $60,900 in
cash. $290,000 in Notes and 1,413,000 shares of the Company'
Common Stock, plus relief from obligations totaling approximately
$800,000 in return for said sale. The Shares of Common Stock have
been returned to the treasury of the Company and have been
canceled. To date, no payment of interest or principal on the
Notes has been made and said payments are past due. Additionally,
the Company has not received any confirmation of relief from the
$800,000 in obligations. The operations of ITC have been treated
<PAGE> 13
as discontinued operations.
Year Ending May 31, 1998 vs Year Ending May 31, 1997
The Company's HDX subsidiary was acquired July 21, 1997. For the
10 months and 10 days through May 31, 1998, HDX had revenues of
$160,039 and expenses of $132,656. Our total revenues for the
year ended May 31, 1998 were $175,673. We had no revenues during
the year ended May 31, 1997. We incurred an operating loss for
the years ended May 31, 1998 and May 31, 1997 of $581,328 and
$443,014, respectively and a net loss for the periods of
$1,033,932 and $443,014, respectively.
Liquidity and Capital Resources
-------------------------------
The Company, at February 29, 2000 had current assets of
$1,002,000 compared to current assets of $603,000 at February 29,
1999. To assist the Company in its cash flow requirements the
Company may determine, depending upon the prevailing stock price
of its shares, to seek subscriptions from the sale of securities
to private investors, although there can be no assurance that it
will be successful in securing any investment from private
investors at terms and conditions satisfactory to the Company, if
at all.
Based upon the Company's present liquid resources, its
present operating expenses, and the commitment of its executive
officers to continue to defer most or all of their salaries, and
if no revenues are generated from operations or other sources,
the Company will be able to operate for a minimum of three
months. However, in the near term, the Company does anticipate
receipt of increased operating revenues as a result the business
developments by TCCF.
The Company's monthly operating expenses during the nine
month period ended February 29, 2000, does not reflect any salary
to Gerard Haryman or Thomas Donaldson, the Company's executive
officers, who's salaries have been accrued, but not paid, at the
rate of $20,833 and $8,600 per month respectively. The Company
does not contemplate commencing full salary payments to Messrs.
Haryman and Donaldson unless and until it begins to generate
positive cash flow from operations.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant
to the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. We wish to advise readers that
actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: Changing economic conditions,
interest rate trends, continued acceptance of our products in the
marketplace, competitive factors, and other risks detailed in our
periodic report filings with the Securities and Exchange
Commission.
<PAGE> 14
BUSINESS AND PLAN OF OPERATION
Our Business
Historical Development
We incorporated on July 22 1985, pursuant to the laws of
the State of Florida under the name "Hydrobac, Inc. On July 7,
1986, we changed our name to"ProBac, Inc." and on October 5,
1994, changed our name to Trident Environmental Systems, Inc.
During those periods our primary business was in various types of
products and systems for use in the environmental clean-up
industry. On October 2, 1996 we changed our name to Phoenix
International Industries, Inc. and our Common Stock was reverse
split 15 to 1. The shareholders approved Amendments to the
Articles of Incorporation, changing the authorized capital to
200,000,000 shares of Common Stock, par value $.001 per share,
and up to 20,000,000 shares of Preferred Stock for use as needed.
From January 1996 through May 31, 1997, we sought acquisitions
as we wound down and closed our original environmental clean-up
business. We, therefore, treats all matters relating to the
environmental clean-up business as discontinued operations. As of
June 1999, we sold our Intuitive Technology Consultants Inc.
subsidiary ("ITC") to a group headed by the current management of
ITC.
Business of Affiliates
During the year ended May 31, 1999, we provided computer
consulting and investment services through our wholly-owned
subsidiaries HDX 9000, Inc. (HDX) and Mic Mac Investments, Inc.
(Mic Mac) to entities located primarily in the southeastern
United States. HDX and Mic Mac were acquired during the year
ended May 31, 1998. Mic Mac discontinued operation in the fiscal
year ended May 31, 1999 and HDX discontinued operations in June
1999. The remaining assets, liabilities, equity and investment in
these subsidiaries were written off in the periods they ceased
operations.
In July 1999 we acquired the Telephone Company of Central
Florida, Inc., a reorganized debtor ("TCCF"). TCCF purchases
wholesale long distance and local telecom services and resells
these services throughout the United States. TCCF is also a
provider of telecommunication services to the debit card (prepaid
telephone card) industry.
TCCF signed a letter of intent dated January 28, 2000 to
acquire 100% of the outstanding stock of Moye & Associates, Inc.
("Best Net"). Best Net is primarily an internet service provider
(ISP) in addition to providing retail sales of computer and
computer parts and computer repairs. The proposed terms of the
agreement call for $50,000 to be paid at closing, $50,000 to be
paid within nine months, and approximately $75,000, $112,500 and
$112,500 worth of our common stock to be issued at closing, nine
months after closing and 18 months after closing, respectively.
We have also executed a letter of intent to purchase Advanced
Communications Services, inc., ("ACS"), a systems integration
firm whose main office is in Edison, New Jersey. The letter of
intent calls for a full purchase price of 2,500,000 restricted
shares of our common stock, to be paid to ACS's shareholders over
a period of 18 months.
CONTINUING OPERATIONS
Telephone Company of Central Florida
We acquired the common stock of the TCCF in June 1999. TCCF
was incorporated in the State of Florida in December 1995 for the
purpose of purchasing wholesale long distance and local
telecommunication services and to resell these services
throughout the United States. TCCF is also a provider of
telecommunication services to the debit card (prepaid telephone
card) industry. TCCF filed a petition for relief under Chapter 11
of the Bankruptcy code on May 26, 1998. On December 17, 1998, we
issued a letter of intent to TCCF setting forth the terms and
conditions under which we were willing to acquire 100% of the
issued and outstanding common voting stock of TCCF as a
reorganized debtor. The terms and conditions of the purchase and
reorganization plan were as follows:
1. All administrative claims and expenses, not to exceed
$570,000, were to be paid in full within ten days of the
<PAGE> 15
effective date.
2. Priority claims and taxes, not to exceed $300,000. will be
paid in $25,000 installments starting within ten days of the
effective date over a period of six years with interest payable
at 8%.
3. A deposit of $500,000 will be made into a creditor trust
fund. The initial deposit of $100,000 to the trust fund will be
made at the Confirmation Order and the balance will be deposited
in four consecutive semi-annual installments of $100,000.
The effective date of the closing was ten days after the
Order of Confirmation is issued by the Bankruptcy court. The
Order of Confirmation was issued on June 9, 1999 and TCCF began
operating as a reorganized debtor on that date. The Company
acquired TCCF within ten days of the Confirmation Order.
In January, 2000 we announced that we had expanded our long
distance service agent contract with AT&T. We believe that this
expanded contract will allow TCCF to increase its monthly revenue
by more than 50%.
DISCONTINUED OPERATIONS
Intuitive Technology Consultants Inc.
On June 2, 1997, we acquired 100% of the outstanding stock
of ITC by issuing 1,500,000 shares of restricted common stock
valued at approximately $320,000.
In the fourth quarter of the fiscal year ended May 31, 1998,
we agreed with the former owners of ITC to rescind the
transaction, effective June 1, 1998. Accordingly, for the year
ended May 31, 1998, we treated ITC's losses from operations as a
loss from discontinued operations. Under the rescission
agreement, we received and subsequently canceled approximately
1,400,000 shares of its stock in exchange for 100% of the stock
of ITC and $350,000 as reimbursement for losses incurred by ITC
and funding by the Company during fiscal 1998. The remaining
100,000 shares of the Company's stock issued at the time of the
acquisition were retained by an employee of ITC and their value
was included in loss from discontinued operations for the year
ended May 31, 1998.
HDX 9000, Inc. ("HDX")
The Company acquired 100% of the outstanding stock of HDX on
July 21, 1997, by issuing 500,000 shares of restricted common
stock valued at approximately $152,000.
Although we still wholly own HDX, we have ceased to operate
HDX because their primary product was related to solving the Y2K
computer problem and they have not been able to successfully
adapt their other methodologies to a readily marketable format.
HDX's President, Timothy Palmer, has returned the 500,000 shares
of the our stock which were issued to purchase HDX, to us. We
have not canceled these shares at this time. Mr. Palmer will
continue to serve as a Director of the company and act as a
consultant on an "as needed" basis. Final disposition of HDX
9000 has yet to be decided.
Mic Mac Investments, Inc. (Hospitality Telecom)
Mic Mac Investments, Inc., ("Hospitality") was incorporated
in the State of South Carolina in 1992 with its principal place
of business in Myrtle Beach, South Carolina. It commenced
business as an operator service provider for several local pay
phone companies after a regional carrier ceased operations. Word
spread about the service it provided and geographic area of the
customer base grew to include most of the East coast. Because the
company was successful in providing its pay phone clients with a
unique service, as Hospitality grew it was able to negotiate
favorable contracts with its carriers. Accordingly, management
decided to utilize the favorable contracts and began marketing
long distance services to Hotels arid Motels, which became the
bulk of its business.
<PAGE> 16
Core Business Products: One Plus, Zero Plus, 800 Access and
Prepaid Calling Cards
Marketing Plan - Basic Elements
Internal Staff to telemarket
Move current outsourced business to Hospitality's own
system.
Pinpoint advertising.
Use current telecom field agents to market additional
services as a value added product.
Exploit strategic alliances.
Employ direct mail and pinpoint Advertising.
Revenue sharing with trade associations.
To develop a ZERO PLUS base with small to medium sized
properties, it is planned to primarily target the ethnic segments
of the hospitality industry with secondary emphasis on resort and
highway properties. In addition, Hospitality was to target small
to medium private pay phone companies and hospitality management
companies.
Hospitality planed to operate a telemarketing facility
staffed with a majority of ethnic sales people. This marketing
effort would be reinforced by direct mail programs, customer
relations and referral programs Hospitality will be offering
services from several Zero Plus providers that tender, multiple
plans, bundling One Plus and 800 access. This would afford the
telemarketers an advantage over single product competition
The second tier marketing program to acquire business from
resort and highway properties would require a direct sales force
in addition to an agency program. This group would also
regionally market to: pay phone companies, colleges, hospitals,
and property management companies. This program would be
reinforced by advertising, trade shows, strategic alliances and
referrals.
In the year prior to being acquired by us, Mic-Mac
Investments and Hospitality Telecom, earned over $225,000 in
profits. In order to facilitate growth and increase earnings, we
planed to acquire a long distance telephone company to integrate
with Hospitality, forming a powerful marketing and telephone
service organization. To this end, we signed a letter of intent
with American Telecommunications Enterprises, Inc., (American
Telecom) of Syracuse, New York. However, after months of due
diligence, we discovered that American Telecom had misrepresented
its circumstances to the point that made it unwise for us to
complete the acquisition. Evidently this prolonged period of
waiting for us to acquire a long distance telephone company
destroyed the revenue producing plans and timetable for
Hospitality. Every quarter Hospitality's revenue declined until
it was virtually non-existent, the sales force dissipated and
finally the management ceased to operate the company. We were
forced to write off Mic-Mac Investments and Hospitality Telecom
as a total loss. See Note 2 of the included Consolidated
Financal Statements and also Management Discussions Discontinued
Operations.
RESCISSION OF BUSINESS COMBINATION
Cambridge Gas Transport Corporation ("CGTC")
Georgetown, Grand Cayman, Cayman Islands
In December, 1998 the Company signed an agreement to acquire
100% of the outstanding common stock of Cambridge Holdings, LLC.,
a Delaware limited liability company (Cambridge), and Merrimac
Shipping limited, a Liberian corporation (Merrimac) for two
million shares of Phoenix and two million dollars, both payable
at closing, and an additional three million dollars payable with
terms through June 30, 2000. Cambridge and Merrimac owned all of
the outstanding shares of Cambridge Gas and Transport Company
(CGTC). The Company paid Cambridge and Merrimac $200,000 at
closing. The exchange of stock between Cambridge and Merrimac and
the Company did not take place, but the respective shares of all
companies were held in trust by their respective attorneys.
During the Company's fourth quarter, year ending May 31, 1999,
and subsequent to that date, unspecified problems arose regarding
the purchase of Cambridge and Merrimac. An agreement to rescind
the acquisition between Cambridge and Merrimac and the Company
had been written but not signed by the parties. Cambridge and
<PAGE> 17
Merrimac subsequently sold 100% of their ownership interest in
CGTC to another purchaser in August 1999. The Company is
negotiating for the repayment of the $200,000 deposit paid at the
closing. The $200,000 is reflected as a refundable deposit in the
accompanying financial statements. The financial statements at
the Company's year-end, May 31, 1999, reflect no transactions
between Cambridge and Merrimac and the Company. The February 28,
1999 unaudited consolidated financial statements have been
restated to reflect the rescission of this transaction.
Property
Our principal place of business is located at 1750 Osceola
Drive, West Palm Beach, Florida 33409, which consists of office
and warehouse space, both of which we lease from a third party.
This space aggregates approximately 3,500 square feet including
four offices and a conference room. The annual lease cost is
$3,500.00 per month, plus expenses and expires in August 2001.
Competition
Many similar companies, both large and small, offer similar
services as us and our subsidiaries. We believe that the
competitive factors affecting our markets include features such
as functionality, adaptability, ease of use, quality,
performance, price, customer service and support, effectiveness
of sales and marketing efforts and Company reputation. Although
we believe that we currently compete favorably with respect to
such factors, there can be no assurance that we can maintain our
competitive position against current and potential competitors,
especially those with greater financial marketing support and
other resources than us.
Patents
We own two patents for solidification of environmental
waste, which were acquired when we were involved in that
business. However, we are no longer in such business and we
believe Company that these patents are of very little value
today, as they have been rendered obsolete due to the rapid
development of the environmental industry.
Employees
As of May 15, 2000 we employ four (4) full-time employees.
Including the employees of our subsidiaries, we have approximately
35 full time employees. We believe that our relations with our
employees are good.
<PAGE> 18
MANAGEMENT
The following table sets forth certain information with
respect to our executive officers and directors.
<TABLE>
<CAPTION>
Name Position Director Since Age
<S> <C> <C> <C>
Gerard Haryman President, CEO, acting CFO 1996 55
and Chairman of the Board of Directors
Thomas Donaldson Vice President, Secretary and Director 1993 56
Timothy Palmer Director 1997 52
</TABLE>
Gerard Haryman has served as our Chairman of the Board,
President and Chief Executive Officer since January of 1996.
Previously and concurrently, since 1981 to the present, Mr.
Haryman has been President and Chief Executive Officer of SA,
Sitmo, developers and builders of commercial and residential
properties throughout Europe, with corporate offices in Paris,
France. Mr. Haryman has also been involved in the development of
residential property in the Palm Beach area since 1988, and during
that period has also served on the Board of Directors of several
other public and private companies. Mr. Haryman attended the
"Institute General de Finance" in Paris, France majoring in
finance and administration.
Thomas N. Donaldson, since February of 1993, Mr. Donaldson
has been an officer and director of Phoenix, and of Trident
Environmental Systems, Phoenix's predecessor. Prior to his
entering the public company arena, he had a background in the
electronic media, both television and radio. Before being
promoted to executive level management, he was an award winning
Producer/Director at both the local and network levels.
Additionally, he was a majority partner in the television
production company, "American Televent", which produced
commercials and syndicated programming. Mr. Donaldson attended
both the University of Miami and the University of Paris.
Timothy Palmer, has been President of HDX 9000, Inc.,
West Palm Beach, Florida, a computer and business consulting firm
since October 1993, now a wholly-owned subsidiary of the Company,
and a Director of the Company since July 1997. from March 1997 to
the present, he has been President of Quality Advantage, Ltd. of
Kingston, Jamaica, a computer and business consulting firm. Prior
to October 1993, he was manager of the Palmer Family Trust in
London, England. Mr. Palmer holds a Bachelor of Commerce Degree
from McGill University in Montreal, Canada.
Executive Compensation
The following table sets forth the cash compensation of our
executive officers and directors during each of the last three
fiscal years. The remuneration described in the table does not
include the cost we incurred in furnishing benefits to the named
executive officers, including premiums for health insurance and
other benefits provided to such individual that are extended in
connection with the conduct of our business. The value of such
benefits cannot be precisely determined, but the executive
officers named below did not receive other compensation in excess
of the lesser of $25,000 or 10% of such officer's cash
compensation.
<PAGE> 19
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation
----------------------------------------- ---------------------------------------------------
Awards Payouts
------------------------ --------
Name and Principal Other Annual Restricted Options/ LTIP All Other
Position Year Salary Bonus Compensation Stock ($) SARs(#) Payouts($) Compensation
------------------ ---- ------ ----- ------------ ---------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerard Haryman, 1999 250,000(1) -0- -0- (2) -0- -0- -0-
President, CEO, acting 1998 250,000(1) -0- -0- -0- -0- -0-
CFO and Chairman of 1997 250,000(1) -0- -0- -0- -0- -0-
the Board of Directors
Thomas N. Donaldson, 1999 104,000(1) -0- -0- (3) -0- -0- -0-
Vice President, COO 1998 104,000(1) -0- -0- -0- -0- -0-
and Director 1997 104,000(1) -0- -0- -0- -0- -0-
Timothy Palmer, 1999 -0- -0- -0- -0- -0- (4)
Director 1998 -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0-
</TABLE>
(1) Due to our cash position, Mr. Haryman and Mr. Donaldson
have deferred payment of their salaries and bonuses.
(2) Mr. Haryman received a grant of 1,400,000 shares of our common
stock on April 8, 2000.
(3) Mr. Donaldson received a grant of 250,000 shares of our common
stock on April 8, 2000.
(4) Mr. Palmer's total compensation from the Company has
consisted of 50,000 shares of our common stock.
<PAGE> 20
SELLING SHAREHOLDERS
Recent Financing
On June 23, 2000, AJW Partners, LLC and New Millennium
Capital Partners II, LLC purchased an aggregate of $2,000,000 of
12% Convertible Debentures and warrants to purchase,
respectively, a total of 337,500 and 662,500 shares of common
stock from us in a private placement transaction. Of the
$2,000,000 invested, $1,250,000 will be received upon
effectiveness of this registration statement and satisfaction of
certain conditions.
The debentures are convertible into shares of our common
stock, at the option of the holder at any time and from time to
time after the date when the debentures where issued, at a
conversion price equal to the lower of (i) $0.368 per share and
(ii) 65% of the average of the lowest three inter-day trading
prices of our common stock during the twenty trading days
preceding the date of conversion. The warrants issued to AJW
Partners and New Millennium Capital Partners are each exercisable
at an exercise price per share equal to 65% of the average of the
closing bid prices of our common stock during the five trading
days immediately preceding the date of exercise and expire on
June 23, 2002. Interest on the debentures is payable on a
quarterly basis on March 31, June 30, September 30 and December
31 of each year while such debentures are outstanding and on each
Conversion Date, whichever occurs earlier. Interest may be
paid, at our option, in cash or common stock. Any debentures
outstanding on December 23, 2001, automatically convert into
shares of our common stock at the then applicable conversion
price. The debentures are redeemable under certain circumstances
as stated in the Convertible Debenture.
Each holder of the debenture may not convert its securities
into shares of our common stock if after the conversion, such
holders, together with any of its affiliates, would beneficially
own over 4.999% of the outstanding shares of our common stock.
This restriction may be waived by each holder on not less than 61
days' notice to us. Since the number of shares of our common
stock issuable upon conversion of the debentures will change
based upon fluctuations of the market price of our common stock
prior to a conversion, the actual number of shares of our common
stock that will be issued under the debentures, and consequently
the number of shares of our common stock that will be
beneficially owned by AJW Partners and New Millennium Capital
Partners cannot be determined at this time. Because of this
fluctuating characteristic, we agreed to register a number of
shares of our common stock that exceeds the number of our shares
of common stock currently beneficially owned by AJW Partners and
New Millennium Capital Partners. The number of shares of our
common stock listed in the table below as being beneficially
owned by AJW Partners and New Millennium Capital Partners
includes the shares of our common stock that are issuable to AJW
Partners and New Millennium Capital Partners subject to the
4.999% limitation, upon conversion of their debentures and
exercise of their warrants. However, the 4.999% limitation would
not prevent AJW Partners and New Millennium Capital Partners from
acquiring and selling in excess of 4.999% of our common stock
through a series of conversions and sales under the debentures
and acquisitions and sales under the warrants.
The following table sets forth the name of each person who
is offering shares of common stock by this prospectus, the number
of shares of common stock beneficially owned by each person, the
number of shares of common stock that may be sold in this
offering and the number of shares of common stock each person
will own after the offering, assuming they sell all of the shares
offered.
<TABLE>
<CAPTION>
Shares
Common Stock Percentage Shares to be owned Percentage
Name Beneficially Owned Before Offering Sold in Offering After Offering After Offering
---- ------------------ --------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
AJW Partners, LLC 1,044,720(1) 4.999%(2) 4,336,141(3) 0 0
New Millennium Capital
Partners II, LLC 1,044,720(1) 4.999%(2) 8,511,684(3) 0 0
</TABLE>
(1) Includes the shares of our common stock issuable to AJW
Partners and New Millennium Capital Partners, subject to the
4.999% limitation, upon conversion of its debentures and
exercise of its warrants.
<PAGE> 21
(2) Percentages are based on 19,853,847 shares of our common
stock outstanding as of June 27, 2000.
(3) Pursuant to the Registration Rights Agreement between us and
the debenture holders, we are required to register such
number of shares of common stock equal to the sum of (i)
200% of the number of shares of common stock issuable upon
conversion in full of their debentures, assuming for such
purposes that all interest is paid in shares of our common
stock, that the debentures are outstanding for one year and
six months and that such conversion occurred at a price
equal to the lesser of (a) $0.368 and (b) 65% of the average
of the lowest three inter-day prices (which need not occur
on consecutive trading days) during the ten trading days
immediately preceding the closing date and (ii) the number
of shares of common stock issuable upon exercise in full of
the warrants issued on the closing date.
PRINCIPAL SHAREHOLDERS
The following table sets forth information about the
beneficial ownership of our Common Stock as of the date of this
Prospectus by (i) each person who we know is the beneficial owner
of more than 5% of the outstanding shares of Common Stock (ii)
each of our directors and executive officers, and (iii) all of our
directors and executive officers as a group.
<TABLE>
<CAPTION>
Shares
Percentage Shares to be owned Percentage
Name and Address(1) Common Stock Before Offering(2) Sold in Offering After Offering After Offering
------------------- ------------ ------------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Gerard Haryman
President/CEO
501 South Dixie Highway
West Palm Beach, FL 33405 2,900,000(3) 14.61 0 2,900,000 8.87
Thomas Donaldson
VP/COO, Director
501 South Dixie Highway
West Palm Beach, FL 33405 263,333 1.33 0 263,333 0.81
Timothy Palmer, Director
and Pres. of HDX 9000
501 South Dixie Highway
West Palm Beach, FL 33405 500,000 2.52 0 500,000 1.53
All Directors and Executive
Officers as a Group (3 persons) 3,743,333 18.85 0 3,743,333 11.45
</TABLE>
(1) Unless otherwise noted below, we believe that all persons
named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by
them. For purposes hereof, a person is considered to be the
beneficial owner of securities that can be acquired by such
person within 60 days from the date hereof upon the exercise of
warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is
determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not
those held by any other person) and which are exercisable
within 60 days from the date hereof, have been exercised.
(2) Based on shares outstanding as of July 25, 2000.
(3) Includes 200,000 shares owned by Mr. Haryman's wife which are
deemed beneficially to be owned by him.
<PAGE> 22
CERTAIN TRANSACTIONS
In June 1995, we received a loan in the amount of Two Hundred
Forty Five Thousand Dollars ($240,000) from Markus A. Gertsch,
then Chief Executive Officer of the Company. The loan was for a
term of three years at twelve and one-half percent 12.5% simple
interest. In September 1995 we received a loan of Thirty Thousand
One Hundred Thirty Four Dollars ($30,134) from Mr. Gertsch. This
loan was for twelve (12) months.
Both of these loans were repaid to Mr. Gertsch by the
issuance of 220,000 shares of our Common Stock. These shares have
not been registered under the Securities Act of 1933.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no disagreements with any of our accountants
on accounting and financial disclosure. Our auditor for the
period ending May 31, 1999 is Wieseneck, Andres, and Associates,
PA. 772 US Hwy. One, North Palm Beach, Florida 33408. For the
year ending May 31, 1998, our auditor was Kane, Hoffman & Danner,
P.A., 1101 Brickell Ave., suite M-101, Miami, Florida 33131. This
change in accountants was due to our desire to engage a larger
firm.
<PAGE> 23
PLAN OF DISTRIBUTION
We are registering shares of our common stock which may be
issuable upon conversion of some or all of Convertible
Securities. Any individual acquiring shares of our common stock
through such a conversion who subsequently sells such common
stock is considered a Selling Shareholder.
The Selling Stockholders and any of their pledgees,
assignees and successors-in-interest may, from time to time, sell
any or all of their shares of Common Stock on any stock exchange,
market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated
prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the Selling Stockholders to
sell a specified number of such shares at a stipulated price
per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144
under the Securities Act, if available, rather than under this
prospectus.
The Selling Stockholders may also engage in short sales
against the box, puts and calls and other transactions in
securities of the Company or derivatives of Company securities
and may sell or deliver shares in connection with these trades.
The Selling Stockholders may pledge their shares to their brokers
under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time
to time, offer and sell the pledged shares.
Broker-dealers engaged by the Selling Stockholders may
arrange for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the
Selling Stockholders (or, if any broker-dealer acts as agent for
the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the
types of transactions involved.
The Selling Stockholders and any broker-dealers or agents
that are involved in selling the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to
the registration of the shares, including fees and disbursements
of counsel to the Selling Stockholders. The Company has agreed
to indemnify the Selling Stockholders against certain losses,
claims, damages and liabilities, including liabilities under the
Securities Act.
<PAGE> 24
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation authorize the issuance of
200,000,000 shares of Common Stock, $0.001 par value per share.
Of this amount, 18,593,847 are currently issued and outstanding.
Each holder of our common stock is entitled to one vote per
share of common stock standing in such holder's name on our
records on each matter submitted to a vote of our stockholders,
except as otherwise required by law. Holders of our common stock
do not have cumulative voting rights so that the holders of more
than 50% of the combined shares of our common stock voting for the
election of directors may elect all of the directors if they
choose to do so and, in that event, the holders of the remaining
shares of our common stock will not be able to elect any members
to our board of directors. Holders of our common stock are
entitled to equal dividends and distributions, per share, when, as
and if declared by our board of directors from funds legally
available. Holders of our common stock do not have preemptive
rights to subscribe for any of our securities nor are any shares
of our common stock redeemable or convertible into any of our
other securities. If we liquidate, dissolve or wind up our
business or affairs, our assets will be divided up pro-rata on a
share-for-share basis among the holders of our common stock after
creditors and preferred shareholders, if any, are paid.
Preferred Stock
Our Articles of Incorporation authorize the issuance of
20,000,000 shares of preferred stock, $0.001 par value per share,
the designation and rights of which are to be determined by our
Board of Directors. None of the shares of Preferred Stock are
issued and outstanding.
Our Board of Directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but
unissued preferred stock in one or more series and to determine
the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series. We consider
it desirable to have preferred stock available to provide
increased flexibility in structuring possible future acquisitions
and financings and in meeting corporate needs which may arise. If
opportunities arise that would make desirable the issuance of
preferred stock through either public offering or private
placements, the provisions for preferred stock in our Articles of
Incorporation would avoid the possible delay and expense of a
shareholder's meeting, except as may be required by law or
regulatory authorities. Issuance of the preferred stock could
result, however, in a series of securities outstanding that will
have certain preferences with respect to dividends and liquidation
over the Common Stock which would result in dilution of the income
per share and net book value of the Common Stock. Issuance of
additional Common Stock pursuant to any conversion right which may
be attached to the terms of any series of preferred stock may also
result in dilution of the net income per share and the net book
value of the Common Stock. The specific terms of any series of
preferred stock will depend primarily on market conditions, terms
of a proposed acquisition or financing, and other factors existing
at the time of issuance. Therefore, it is not possible at this
time to determine in what respect a particular series of preferred
stock will be superior to our Common Stock or any other series of
preferred stock which we may issue. Our Board of Directors may
issue additional preferred stock in future financings, but has no
current plans to do so at this time.
The issuance of Preferred Stock could have the effect of
making it more difficult for a third party to acquire a majority
of our outstanding voting stock.
We intend to furnish holders of our common stock annual
reports containing audited financial statements and to make public
quarterly reports containing unaudited financial information.
Transfer Agent
The transfer agent for the Common Stock is United Stock
Transfer, Inc., 3615 South Huron, Suite 104, Englewood, CO 80110
and its telephone number is (303) 783-9055.
<PAGE> 25
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon
for the company by The Law Office of L. Van Stillman, P.A., Delray
Beach, FL 33483
EXPERTS
The audited financial statements included in this
Registration Statement as of May 31, 1999 and for the year ended
May 31, 1999 has been audited by Wieseneck, Andres, & Company,
P.A., independent certified public accountant to the extent and
for the periods set forth in their report thereon and are included
in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing. The audited financial
statements included in this Registration Statement for the year
ended May 31, 1998 have been audited by Kane, Hoffman & Danner,
P.A., independent certified public accountant, to the extent and
for the periods set forth in their report thereon and are included
in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing. The audited financial
statements for the year ended May 31, 1997 audited by Leon P.
Wilde, CPA, Inc., independent certified public accountant, to the
extent and for the periods set forth in their report thereon and
are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
INDEMNIFICATION
We have adopted provisions in our articles of incorporation
and bylaws that limit the liability of our directors and provide
for indemnification of our directors and officers to the full
extent permitted under the corporate law of the State of Florida.
Under our articles of incorporation, and as permitted under the
corporate law of the State of Florida, directors are not liable to
Phoenix or its stockholders for monetary damages arising from a
breach of their fiduciary duty of care as directors. Such
provisions do not, however, relieve liability for breach of a
director's duty of loyalty to Phoenix or its stockholders,
liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, liability for
transactions in which the director derived an improper personal
benefit or liability for the payment of a dividend in violation of
Florida law. Further, the provisions do not relieve a director's
liability for violation of, or otherwise relieve Phoenix or its
directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies
such as injunctive relief or recision.
At present, there is no pending litigation or proceeding
involving a director, officer, employee or agent of ours where
indemnification will be required or permitted. We are not aware
of any threatened litigation or proceeding that may result in a
claim for indemnification by any director or officer.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to our
directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of Phoenix in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
<PAGE> 26
PHOENIX INTERNATIONAL INDUSTRIES, INC.
INDEX
FINANCIAL INFORMATION
FINANCIAL STATEMENTS:
INDEPENDENT AUDITORS' REPORT - MAY 31, 1999 F-1
INDEPENDENT AUDITORS' REPORT - MAY 31, 1998 F-2
INDEPENDENT AUDITORS' REPORT - MAY 31, 1997 F-3
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 1999,
1998 and February 29, 2000 F-4
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE YEARS ENDED MAY 31, 1999, 1998 AND 1997 F-6
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MAY 31, 1999, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000 F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE YEARS ENDED MAY 31, 1999 AND 1998 F-8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-10
INDEPENDENT AUDITOR'S REPORT - MAY 31, 2000 AND 1999 F-20
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2000
AND 1999 F-21
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS
ENDED MAY 31, 2000 AND 1999 F-23
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR
THE YEARS ENDED MAY 31, 2000 AND 1999 F-24
CONSOLILDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
ENDED MAY 31, 2000 AND 1999 F-26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-27
<PAGE>
WIESENECK, ANDRES & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
772 U.S. HIGHWAY 1, SUITE 200
NORTH PALM BEACH, FLORIDA 33408
(561) 626-0400
Thomas B. Andres, C.P.A.*, C.V.A. FAX: (561) 626-3453
Paul M. Wieseneck, C.P.A.
*Regulated by the State of Florida
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Phoenix International Industries, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheet of Phoenix
International Industries, Inc. and subsidiaries as of May 31, 1999 and the
related consolidated statements of operations, stockholders' deficit, and
cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company and subsidiaries as of May 31, 1999, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
consolidated financial statements, the Company has accumulated losses of
approximately $6,200,000 as of May 31, 1999, has insufficient working capital
and, in connection with its proposed acquisition (Note 13), 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 and sale of
common stock. The conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding those
matters are described in Note 12. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/Wieseneck, Andres & Company, P.A.
WIESENECK, ANDRES & COMPANY, P.A.
January 5, 2000
<PAGE> F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Phoenix International Industries, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheet of
Phoenix International Industries, Inc. and subsidiaries (the
Company) as of May 31, 1998 and the related consolidated
statements of operations, stockholders' deficiency, and
cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company as of May 31, 1998, and the results of its
operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 12 to the consolidated financial statements, the Company has
accumulated losses of approximately $5,114,000 as of May 31, 1998,
has a working capital deficency of approximately $23,000, will
continue to incur operating expenses which may not be recoverable
from future operations and is dependent upon the continued funding
of the Company's operations by its chief executive officer. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding those
matters are described in Note 12. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/Kane, Hoffman & Danner, P.A.
KANE, HOFFMAN & DANNER, P.A.
Certified Public Accountants
Miami, Florida
December 23, 1998
<PAGE> F-2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Phoenix International Industries,
Inc.
In our opinion, the financial statements listed in the
accompanying index present fairly, in all material respects, the
financial position of Phoenix International Industries, Inc. and
its subsidiaries at May 31, 1997, and the results of their
operations and their cash flows for the year ended May 31, 1997,
in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management: our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/Leon P. Wilde
LEON P. WILDE, CPA, INC.
Lake Worth, FL
February 1, 1998
<PAGE> F-3
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
May 31, 1999, May 31, 1998 and February 29, 2000
<TABLE>
<CAPTION>
ASSETS
May 31, 1999 May 31, 1998 February 29, 2000
(000s omitted) (000s omitted) (000s omitted)
<S> <C> <C> <C>
CURRENT ASSETS
Cash $128 $3 $89
Refundable deposit 200 -- --
Accounts receivable, net of allowance for
doubtful accounts of $8,000 and 12,000 44 273
Loans receivable 21 -- --
Other current assets 8 4 640
-------- ------- -------
TOTAL CURRENT ASSETS 357 51 1,002
-------- ------- -------
PROPERTY AND EQUIPMENT
Property and equipment, net of
accumulated depreciation 13 20 642
-------- ------- -------
OTHER ASSETS
Goodwill, net 84 189 --
Net investment in subsidiary under contract
for sale 267 --
Other assets 2 -- --
-------- ------- -------
TOTAL OTHER ASSETS 86 457 642
-------- ------- -------
TOTAL ASSETS $456 528 1,644
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-4
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
May 31, 1999, May 31, 1998 and February 29, 2000
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
May 31, 1999 May 31, 1998 February 29, 2000
(000s omitted) (000s omitted) (000s omitted)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 110 $ 69 $ 870
Accrued expenses 8 5
Loan payable, related party 536
Accrued and other liabilities 197
-------- ------- -------
TOTAL CURRENT LIABILITIES 654 74 1,067
Loan payable, related party 571 1,380
-------- ------- -------
TOTAL LIABILITIES 654 645 2,447
COMMITMENTS AND CONTINGENCIES -- -- --
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value: 5,000
shares authorized: no shares outstanding -- -- --
Common stock, $.001 par value: 20,000,000
shares authorized, 12,138,694 issued and
outstanding at May 31, 1999; 8,622,028
issued and outstanding at May 31, 1998
and 18,593,847 issued and outstanding
at February 29, 2000. 12 9 18
Additional paid-in-capital 5,996 4,988 6,486
Accumulated deficit (6,206) (5,114) (7,307)
-------- ------- -------
TOTAL STOCKHOLDERS' DEFICIT (198) (117) (803)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 456 $ 528 $ 1,644
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-5
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended May 31, 1999, May 31, 1998 and May 31, 1997
and for the nine months ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
May 31,1999 May 31, 1998 May 31, 1997 February 29, 2000 February 28, 1999
(000s omitted) (000s omitted) (000s omitted) (000s omitted) (000s omitted)
<S> <C> <C> <C> <C> <C>
REVENUES $ 0 $ 175 $ 0 $ 1,266 $ 54
----------- ------------ ----------- ----------- ----------
GROSS PROFIT 0 175 0 1,266 54
----------- ------------ ----------- ----------- ----------
OPERATING EXPENSES
Selling, general and administrative 1,093 726 443 2,302 1,214
Depreciation and amortization 44 31 0 -- --
Impairment of goodwill, HDX 30 -- -- -- --
----------- ------------ ----------- ----------- ----------
TOTAL OPERATING EXPENSES 1,167 757 443 2,302 1,214
----------- ------------ ----------- ----------- ----------
OPERATING LOSS (1,167) (582) (443) (1,036) (1,160)
----------- ------------ ----------- ----------- ----------
OTHER INCOME AND EXPENSE
Interest income 2 -- 0 -- --
Interest expense -- 0 0 -- --
----------- ------------ ----------- ----------- ----------
LOSS BEFORE INCOME TAXES (1,165) (582) 0 -- --
PROVISION FOR INCOME TAXES -- -- 0 -- --
----------- ------------ ----------- ----------- ----------
(LOSS) FROM CONTINUING OPERATIONS (1,165) (582) 0 (1,036) (1,160)
DISCONTINUED OPERATIONS
Income (loss) from discontinued
operations 73 (452) (65) 60
INCOME TAX BENEFIT -- --
----------- ------------ ----------- ----------- ----------
NET LOSS $ (1,092) $ (1,034) $ (443) $ (1,101) $ (1,100)
=========== ============ =========== =========== ==========
LOSS PER SHARE
Loss from continuing operations $ (0.11) $ (0.07) $ (0.15) $ (0.07) $ (0.13)
=========== ============ =========== =========== ==========
Net loss $ (0.11) $ (0.13) $ (0.15) $ (0.08) $ (0.13)
=========== ============ =========== =========== ==========
Weighted average common shares 10,210 8,139 2,908 13,979 8,833
=========== ============ =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-6
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the years ended May 31, 1999, May 31, 1998 and May 31, 1997 and
for the nine months ended February 29, 2000
<TABLE>
<CAPTION>
COMMON STOCK
------------
ADDITIONAL
Number of PAID IN ACCUMULATED STOCKHOLDERS'
Shares PAR VALUE CAPITAL DEFICIT DEFICIENCY
----------- --------- ---------- ----------- ------------
<S> <S> <C> <C> <C> <C>
BALANCE, May 31, 1996 13,320,420 $ 133,204 $3,160,000 $(2,715,000) $ 578,204
Prior Period Adjustment (922,000) (922,000)
Reverse Split 1:15 on
September 5, 1996 (12,432,392)
Change in Par Value on
October 2, 1996 (132,316) 132,316
Issuance of Common Stock 4,072,000 4,072 400,684 404,756
(Cumulative)
Less: Stock Subscriptions
Receivable (23,000) (23,000)
Net income (loss) (443,014) (443,014)
----------- --------- ---------- ----------- ---------
BALANCE, MAY 31, 1997 4,960,028 $ 4,960 $3,670,000 $(4,080,014) (405,054)
Acquisition of ITC 1,500,000 1,500 320,375 -- 321,875
Acquisition of HDX 500,000 500 151,286 -- 151,786
Acquisition of Mic Mac 250,000 250 54,983 -- 55,233
Issuance of stock for
consulting services 692,000 692 137,121 -- 137,813
Issuance of stock as a
reduction of loan
payable to chief
executive officer (CEO) 720,000 720 71,280 -- 72,000
Capitalization of accrued
wages to CEO -- -- 583,000 -- 583,000
Net Loss -- -- -- (1,033,932) (1,033,932)
----------- --------- ---------- ----------- ---------
BALANCE, MAY 31, 1998 8,622,028 8,622 4,988,045 (5,113,946) (117,279)
Cancellation of ITC (1,413,000) (1,413) (301,789) -- (303,202)
Rescission of restricted
stock (230,334) (230) 92 -- (138)
Issuance of stock for
services rendered 60,000 60 33,191 -- 33,251
Issuance of stock to CEO
in lieu of compensation 2,400,000 2,400 297,600 -- 300,000
Issuance of stock to
officer in lieu of
compensation 250,000 250 31,000 -- 31,250
Sale of stock 2,400,000 2,400 947,957 -- 950,357
Issuance of stock to TCCF 50,000 50 (50) -- --
Net Loss -- -- -- (1,091,986) (1,091,986)
----------- --------- ---------- ----------- - ---------
BALANCE, MAY 31, 1999 12,138,694 $ 12,139 $5,996,046 $(6,205,932) $ (197,747)
Shares issued 6,455,150 6,455 490,308 -- 496,763
Net Loss -- -- -- (1,101,352) (1,101,352)
----------- --------- ---------- ----------- ----------
BALANCE, FEBRUARY 29, 2000 18,593,847 18,594 6,486,354 $(7,307,284) $ (802,336)
=========== ========= ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-7
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 1999, May 31, 1998 and May 31, 1997 and
for the nine months ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
May 31,1999 May 31, 1998 May 31, 1997 February 29, 2000 February 28, 1999
(000s omitted) (000s omitted) (000s omitted) (000s omitted) (000s omitted)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $ (1,091) $ (1,033) $ (443)
Adjustments to reconcile net loss to
net cash used in operating activities
Add items not requiring outlay of
cash:
Depreciation and amortization 44 64 2
Loss from partial impairment of
goodwill, HDX 30 --
Expenses paid by issuing common
stock 364 138
Retirement of assets 4 --
Provision for bad debts -- 32
Charge for stock issued and not
returned -- 21
Other (3) (25)
Cash was provided by
Decrease in accounts receivable
- net 44 -- 3
Decrease (Increase) in notes
receivable -- -- --
Increase (Decrease) in accounts
payable 41 63 (37)
Increase in other accrued
liabilities 3 256 250
Increase (Decrease in notes
payable
Cash was used in
Increase in accounts receivable
- net -- (50)
Increase in refundable deposit (200) --
Increase in other current assets (5) --
Increase in other assets (2) (3)
Increase in loans receivable (20) --
Net current liabilities of
acquired companies -- 3
----------- ---------- ----------
NET CASH USED IN OPERATING
ACTIVITIES (791) (534) (225) (1,479) (1,115)
----------- ---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Disposition of property and equipment -- -- (12)
Acquisition of property and equipment (11) (2)
----------- ---------- ---------- ---------- ----------
NET CASH (USED BY) INVESTING ACTIVITIES (12) (11) (2)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans from related party (34) -- (144) (14) (23)
Proceeds from loan payable - related
party -- 537 -- 786 --
Proceeds from sale of common stock 950 --
Issuance of common stock 405 496 1,357
Less: Stock subscriptions receivable (23) -- --
Proceeds from new borrowings 194 --
Other loans paid (11) --
----------- ---------- ---------- ---------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 916 537 238 1,451 1,334
----------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 125 3 1 (39) 217
CASH AT BEGINNING OF YEAR 3 0 0 128 1
----------- ---------- ---------- ---------- ----------
CASH AT END OF YEAR $ 128 $ 3 $ 1 89 218
=========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-8
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES
NONCASH TRANSACTION
Issuance of common stock for consulting services $ 32,001 $ 137,817
Issuance of common stock for professional services rendered 1,250 --
Issuance of common stock in lieu of officers compensation 331,250 --
Rescind issuance of common stock for the purchase of ITC (303,202) --
Issuance of common stock of TCCF 1 --
Accrued liabilities converted to equity -- 583,000
Loan payable converted to equity -- 72,000
Stock issued to acquire assets -- 526,647
CASH RECEIVED AND PAID DURING THE YEAR FOR:
Interest income 2,044 --
Interest expense -- 96
Income taxes -- --
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> F-9
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL
MATTERS
ORGANIZATION
During the years ended May 31, 1999 and 1998, Phoenix
International Industries, Inc. and subsidiaries (the Company)
provided computer consulting, investment 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) to entities located
primarily in the southeastern United States. HDX, Mic Mac and ITC
were acquired during the year ended May 31, 1998. On June 1,
1998, the Company disposed of ITC in a transaction accounted for
as a rescission of the business combination ( see Note 2). During
1999, the Company discontinued its investment and
telecommunication services of Mic Mac (see Note 2) and also
discontinued substantially all of its computer consulting
operations of HDX (see Note 3).
The Company acquired 100% of the outstanding stock of Cambridge
Holdings, LLC. (Cambridge) and Merrimac Shipping Limited
(Merrimac) on December 26, 1998. Cambridge and Merrimac
collectively owned 100% of the stock of Cambridge Gas and
Transport Company (CGTC). CGTC was formed in 1997 for the purpose
of building and operating a fleet of five state-of-the-art 22,000
cubic meter semi-refrigerated ethylene-capable gas carriers. This
transaction was rescinded in the current period (see Note 4).
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at 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.
REVENUE RECOGNITION
Revenue is generally recognized when services are performed.
GOODWILL
Goodwill represents the excess of the purchase price over the fair
values of the net assets and liabilities acquired resulting from
business combinations and is being amortized on a straight-line
basis over five to ten years. The Company periodically reviews the
value of its goodwill to determine if an impairment has occurred.
The Company measures the potential impairment of recorded goodwill
by the undiscounted cash flows method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company provides
for depreciation over the estimated useful lives of the related
assets, which range from three to seven years, primarily using the
straight-line method.
LOANS RECEIVABLE
The loans receivable at May 31, 1999 are noncollateralized,
noninterest bearing and are due on demand. Included is a $15,000
loan to an officer.
<PAGE> F-10
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL
MATTERS (CONTINUED)
INCOME TAXES
The Company accounts for income taxes under the asset and
liability method, whereby deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. The realizability of deferred tax assets is
assessed throughout the year and a valuation allowance is
established accordingly.
EARNINGS (LOSS) PER SHARE
In March 1997, the FASB issued SFAS No. 128, "Earnings per Share."
This Statement was effective for interim and fiscal periods ending
after December 15, 1997. This Statement requires the presentation
of (1) diluted earnings per share, whose calculations includes not
only average outstanding common share but also the impact of
dilutive potential common shares such as outstanding common stock
options; and (2) basic earnings per share which includes the
effect of outstanding common shares but excludes dilutive
potential common shares. There are no outstanding stock options.
The weighted average common shares outstanding during the years
ended May 31, 1999 and 1998 were 10,209,834 and 8,138,702,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of accounts receivable, accounts payable,
accrued expenses and loan payable to related party approximate
fair value because of the short maturity of these items.
CONCENTRATIONS OF CREDIT RISK
The Company has concentrated its credit risk for cash by
maintaining deposits in one bank in excess of FDIC insured amounts
of approximately $29,000.
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts
receivable and refundable deposits. Management performs regular
evaluations concerning the ability of its
customers to satisfy their obligations and records a provision for
doubtful accounts based upon these evaluations.
NOTE 2 - DISCONTINUED OPERATIONS
ITC
On June 2, 1997, the Company acquired 100% of the outstanding
stock of ITC by issuing 1,500,000 shares of restricted common
stock valued at approximately $320,000. The Company determined the
fair value of the net assets and liabilities acquired in
connection with the acquisitions of ITC, using an 80% discount
from the quoted market value. The acquisition has been accounted
for using the purchase method of accounting, and accordingly the
purchase price has been allocated to the assets purchased and
liabilities assumed based on their fair values at the date of
acquisition. The excess of the purchase price over the values of
net assets acquired was approximately $329,000 and has been
recorded as goodwill, which is being amortized on a straight-line
basis over ten years. The operating results of ITC have been
included in the accompanying financial statements from the date of
acquisition as described below.
<PAGE> F-11
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 2 - DISCONTINUED OPERATIONS (CONTINUED)
In the fourth quarter of the fiscal year ended May 31, 1998, the
Company and the former owners of ITC agreed to rescind the
transaction, effective June 1, 1998. Accordingly, for the year
ended May 31, 1998, the Company has treated ITC's losses from
operations as a loss from discontinued operations. Under the
rescission agreement, the Company will receive approximately
1,400,000 shares of its stock in exchange for 100% of the stock of
ITC and $350,000 as reimbursement for losses incurred by ITC and
funding by the Company during fiscal 1998. At May 31, 1998 the
investment and net liabilities of ITC are included in the balance
sheet as "Net investment in subsidiary under contract for sale."
This transaction is being accounted for in accordance with
Accounting Principles Board Opinion No. 29, ACCOUNTING FOR
NONMONETARY TRANSACTIONS. ITC had a loss of approximately $668,000
for the year ended May 31, 1998, however in connection with the
rescission, the amount of loss recorded in the accompanying
financial statements was limited to the Company's cash investment,
$390,000, and the approximate value of 100,000 shares of the
Company's stock not returned by ITC. On June 1, 1998, the
investment and net liabilities of ITC was charged against equity
and the 1,400,000 common shares will be retired. The $350,000 will
be recorded in the period received as income from discontinued
operations. As of December 15, 1999, $60,000 has been collected
and the common shares have been received. The remaining 100,000
shares of the Company's stock issued at the time of the
acquisition were retained by an employee of ITC and their value
has been included in loss from discontinued operations for the
year ended May 31, 1998.
Assets and Liabilities of ITC include (in thousands):
ASSETS LIABILITIES
-------- -----------
Accounts receivable $ 318 Bank overdraft $ 21
Other current assets 44 Accounts payable 64
Property and equipment, net 199 Accrued expenses 613
----- Notes payable 537
------
$ 561 $1,235
===== ======
Revenues for the year ended May 31, 1998 (in thousands): $1,600
Included in accrued expenses of ITC is approximately $541,000 due
to the Internal Revenue Service for unpaid and delinquent payroll
taxes, including interest and penalties. Management does not
believe that the Company will be liable for payment of these taxes
because the Company has been indemnified by ITC for any such
liability.
MIC MAC
The Company acquired 100% of the outstanding stock of Mic Mac on
April 9, 1998 by issuing 250,000 shares of restricted common stock
valued at $55,000. The Company determined the fair value of the
net assets and liabilities acquired in connection with the
acquisitions of Mic Mac using an 80% discount from the quoted
market value. The acquisition has been accounted for using the
purchase method of accounting, and accordingly the purchase price
has been allocated to the assets purchased and liabilities assumed
based on their fair values at the date of acquisition. The excess
purchase price over the value of net assets acquired was $54,000
and has been recorded as goodwill, which is being amortized on a
straight-line basis over five years. The Company ceased operating
in the third quarter of 1999 and had a net loss from operations of
approximately $2,000 and income from disposal of assets and
discontinued operations of approximately $15,500. Mic Mac had no
remaining assets or liabilities at May 31, 1999.
<PAGE> F-12
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 3 - BUSINESS COMBINATIONS
The Company acquired 100% of the outstanding stock of HDX on July
21, 1997, by issuing 500,000 shares of restricted common stock
valued at approximately $152,000. The Company determined the fair
value of the net assets and liabilities acquired in connection
with the acquisitions of HDX using an 80% discount from the quoted
market value. The acquisition has been accounted for using the
purchase method of accounting and accordingly the purchase price
has been allocated to the assets purchased and liabilities assumed
based on their fair market value at the date of acquisition. The
excess of the purchase price over the values of net assets
acquired was approximately $164,000 and has been recorded as
goodwill, which is being amortized on a straight-line basis over
five years. HDX is a system design company specializing in
analyzing the effect of the year 2000 on a company's computer
system. The operating results of HDX for the year ended May 31,
1999 and from the date of acquisition to May 31, 1998, which
approximates a full year, have been included in the accompanying
financial statements. HDX had no income and an operating loss of
approximately $33,500 in the year ended May 31, 1999.
NOTE 4 - RESCISSION OF BUSINESS COMBINATION
In December, 1998 the Company signed an agreement to acquire 100%
of the outstanding common stock of Cambridge Holdings, LLC., a
Delaware limited liability company (Cambridge), and Merrimac
Shipping Limited, a Liberian corporation (Merrimac) for two
million shares of Phoenix and five million dollars. Cambridge and
Merrimac owned 43.85% and 56.15% respectively, of Cambridge Gas
and Transport Company (CGTC). The Company paid Cambridge and
Merrimac $200,000 at closing. The exchange of stock between
Cambridge and Merrimac and the Company did not take place, but the
respective shares of all companies were held in trust by their
respective attorneys. During the Company's fourth quarter and
subsequent to the year-end, unspecified problems arose regarding
the purchase of Cambridge and Merrimac. An agreement in principle
to rescind the acquisition between Cambridge and Merrimac and the
Company has been written. Cambridge and Merrimac subsequently sold
100% of their ownership interest in CGTC to another purchaser in
August 1999. The Company is negotiating for the repayment of the
$200,000 deposit paid at the closing. The $200,000 is reflected as
a refundable deposit in the accompanying financial statements.
NOTE 5 - IMPAIRED LONG-LIVED ASSETS
The goodwill acquired from the purchase of HDX in 1998 was
determined to be impaired in the current fiscal year. HDX has
failed to generate the revenues that management had expected prior
to their purchase and the opportunity to capitalize on computer
consulting services relating to year 2000 have passed. Therefore,
management has determined that approximately 25% ($30,000) of the
remaining value of goodwill be charged to expense in the current
period.
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at May 31, 1999
and 1998:
1999 1998
------- -------
Furniture, fixtures and equipment $24,085 $40,664
Less accumulated depreciation 10,740 20,754
------- -------
Total $13,345 $19,910
======= =======
<PAGE> F-13
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 7 - LOAN PAYABLE - RELATED PARTY
Loan payable to related parties consisted of the following:
1999 1998
--------- --------
Notes payable to shareholder
and Chief Executive Officer,
non interest bearing, noncollateralized
and due on demand $ 536,292 $ 570,955
========= =========
In June 1997, 720,000 shares of the Company's stock were issued to
non-related persons as a reduction of the loan payable to chief
executive officer.
NOTE 8 - ACCRUED COMPENSATION
During 1999, the Company issued 2,650,000 shares of restricted
common stock with a fair value of $331,250 to the officers of the
corporation as compensation for their services. The Company used a
75% discount from quoted market value of the Company's stock to
determine the fair value for compensation to officers and for
consulting and professional services rendered. Such amounts have
been credited to additional paid in capital at May 31, 1999.
During 1998, the Company accrued approximately $250,000 for
compensation to the chief executive officer (CEO). At May 31,
1998, the CEO waived his rights to receive the 1998 accrued
compensation plus $333,000 of compensation from prior to 1998.
Such amounts have been credited to additional paid in capital at
May 31, 1998.
NOTE 9 - INCOME TAXES
Deferred income taxes are provided for temporary differences
between the financial reporting and income tax basis of the
Company's assets and liabilities. Temporary differences, net
operating loss carry forwards and valuation allowances comprising
the net deferred taxes on the balance sheets are as follows:
May 31, 1999 May 31, 1998
----------- ------------
(000) (000)
Loss carry forward for tax purposes $ 2,320 $ 1,560
======= =======
Deferred tax asset (34%) $ 789 $ 530
Valuation allowance (789) (530)
------- -------
Net deferred tax asset $ -- $ --
======= =======
At May 31, 1999, the Company had federal income tax net operating
loss carry forward of approximately $2,320,000, which will expire
through the year 2019.
<PAGE> F-14
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 9 - INCOME TAXES (CONTINUED)
Year of Expiration Amount
------------------ --------
2009 $ 43,000
2010 308,000
2011 166,000
2012 193,000
2013 850,000
2019 760,000
In addition, the Company is reviewing its ability to utilize
certain net operating losses prior to the Company's emergence from
bankruptcy in 1994. These losses have not been reflected in
arriving at the net operating loss carry
forwards in the calculation of the deferred tax assets.
As disclosed in Note 8 the Company has incurred compensation to
its chief executive and chief operating officers. Generally, until
the restricted common stock issued in lieu of compensation becomes
substantially vested in the employee, the company cannot claim a
compensation deduction. Such compensation aggregating for 1999 is
$331,250 and for 1998 is $543,000.
NOTE 10 - BUSINESS SEGMENTS
The Company's reportable segments are strategic business units
that offer different products or services. The Company has three
reportable segments: computer consulting, investment and
telecommunications services, and acquisition services. The
accounting of the segments is the same as those described in the
summary of significant accounting policies. There have been no
intersegment sales or transfers.
The following is a summary of segment activity:
<TABLE>
<CAPTION>
INVESTMENT
COMPUTER SERVICES ACQUISTION
CONSULTING (DISCONTINUED) SERVICES TOTALS
---------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
MAY 31, 1999
Revenues $ 30 $ 54,109 $ -- $ 54,139
Interest income -- -- 2,044 2,044
Interest expense -- 92 -- 92
Depreciation and amortization -- -- 74,429 74,429
Segment profit (loss), and (33,546) -- (1,131,857)
income from discontinued
operations -- 13,417 60,000 (1,091,986)
Segment assets 4,434 -- 451,730 456,164
MAY 31, 1998
Revenues 160,039 15,634 -- 175,673
Interest expense -- 96 -- 96
Depreciation and amortization -- -- 63,815 63,815
Segment profit (loss), and 27,383 (14,770) (626,962)
loss from discontinued
operations -- -- (419,583) (1,033,932)
Segment assets 46,128 16,085 465,215 527,428
</TABLE>
<PAGE> F-15
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company leases its principal business location from a related
party, the spouse of the chief executive officer. The lease, which
provides for annual rental of approximately $40,000, expires in
September, 2001. HDX shares the space. No rent is being charged to
HDX. Rent expense for the years ended May 31, 1999 and 1998 was
$42,400 and $41,320, respectively.
The Company is obligated for the lease of an automobile for 36
months with monthly payments of $508. The lease expires in
December 2001.
A suit has been filed against the Company for nonpayment of
occupancy lease payments for a facility that was vacated by the
Company in November 1995. The outcome of the litigation is not
determinable at this time.
NOTE 12 - GOING CONCERN
The financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the
realization of assets and satisfaction of liabilities in the
normal course of business over a reasonable length of time. The
Company has incurred losses in the last two years aggregating
approximately $2,100,000 and, as of May 31, 1999, has a deficit of
approximately $6,200,000 and insufficient working capital. During
these two years, the Company has made several acquisitions, two of
which have been rescinded. In connection therewith, it has
incurred significant selling, general and administrative expenses
which have been funded by loans from the Company's chief executive
officer and selling of common stock in the United States and in
foreign markets. Theses conditions raise substantial doubt about
the Company's ability to continue as a going concern.
The Company believes that these acquisitions will become
profitable in the future and that, with its prospective
acquisition described in Note 13, 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.
NOTE 13 - SUBSEQUENT EVENTS
The Company acquired the common stock of the Telephone Company of
Central Florida, Inc. (TCCF), a reorganized debtor, in June 1999.
TCCF was incorporated in the State of Florida in December 1995 for
the purpose of purchasing wholesale long distance and local
telecommunication services and to resell these services throughout
the United States. TCCF is also a provider of telecommunication
services to the debit card (prepaid telephone card) industry. TCCF
filed a petition for relief under Chapter 11 of the Bankruptcy
code on May 26, 1998. On December 17, 1998, the Company issued a
letter of intent to TCCF setting forth the terms and conditions
under which it is willing to acquire 100% of the issued and
outstanding common voting stock of TCCF as a reorganized debtor.
The terms and conditions of the purchase and reorganization plan
are as follows:
1. All administrative claims and expenses, not to
exceed $570,000, will be paid in full within ten days of the
effective date.
2. Priority claims and taxes, not to exceed
$300,000. will be paid in $25,000 installments starting within ten
days of the effective date over a period of six years with
interest payable at 8%.
3. A deposit of $500,000 will be made into a
creditor trust fund. The initial deposit of $100,000 to the trust
fund will be made at the Confirmation Order and the balance will
be deposited in four consecutive semi-annual installments of
$100,000.
<PAGE> F-16
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and 1998
NOTE 13 - SUBSEQUENT EVENTS (CONTINUED)
The effective date of the closing is ten days after the Order of
Confirmation is issued by the Bankruptcy court. The Order of
Confirmation was issued on June 9, 1999 and TCCF began operating
as a reorganized debtor on that date. The Company acquired TCCF
within ten days of the Confirmation Order.
The following is a condensed balance sheet of TCCF at May 31,
1999, a condensed proforma balance sheet of TCCF at June 9, 1999
assuming fresh-start accounting and a condensed consolidated
proforma balance sheet of Phoenix and TCCF at June 9, 1999
assuming fresh-start accounting. The $695,000 increase in cash
represents the initial deposit of cash by Phoenix in accordance
with the terms of the purchase agreement described in numbers 1, 2
and 3 above. The remaining amounts due from Phoenix to TCCF in the
form of a stock subscription receivable, $675,000, are reflected
at net in stockholders' equity. Intercompany receivable, payables
and investment in subsidiary have been eliminated in the condensed
consolidated proforma balance sheet.
<TABLE>
<CAPTION>
PROFORMA
------------------------------
TCCF CONSOLIDATED
FRESH-START PHOENIX
TCCF REPORTING AND TCCF
MAY 31, 1999 (UNAUDITED) (UNAUITED)
----------- ----------- ------------
<S> <C> <C> <C>
Cash $ 250 $ 695,250 $ 822,967
Receivables 479,237 479,237 718,536
Property and equipment, net 334,527 600,000 610,334
Other assets 104,648 104,648 115,024
Goodwill, net -- -- 51,350
Reorganization value in excess of
amounts allocable to identifiable assets -- 447,223 447,223
---------- ----------- -----------
Total Assets $ 918,662 $ 2,326,358 $ 2,765,434
=========== =========== ===========
Accounts payable $ 790,776 $ 790,776 $ 1,388,395
Other liabilities 340,582 340,582 340,582
Notes payable stockholder -- -- 533,312
Liabilities subject to compromise 1,338,668 500,000 --
----------- ----------- -----------
Total Liabilities 2,470,026 1,631,358 2,262,289
=========== =========== ===========
Common stock -- -- 12,139
Paid in capital -- 695,000 8,185,884
Retained deficit (1,551,364) -- (7,694,878)
----------- ----------- -----------
Total Liabilities and Stockholder's Deficit $ 918,662 $ 2,326,358 $ 2,765,434
=========== =========== ===========
</TABLE>
The Company issued 50,000 shares of common stock to TCCF as a good
faith deposit.
<PAGE> F-17
NOTE 14 - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of the year ended May 31, 1999, the
Company recorded an adjustment to record the compensation element
of $364,501 relating to stock issued for services.
During the fourth quarter of the year ended May 31, 1998, the
Company recorded an adjustment to record the compensation element
of $137,000 relating to stock issued for services.
<PAGE> F-18
PHOENIX INTERNATIONAL INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
<PAGE> F-19
WIESENECK, ANDRES & COMPANY, P.A.
Certified Public Accountants
772 U.S. HIGHWAY 1, SUITE 200
NORTH PALM BEACH, FLORIDA 33408
(561) 626-0400
THOMAS B. ANDRES, C.P.A.*, C.V.A. FAX (561) 626-3453
PAUL M. WIESENECK, C.P.A.
*Regulated by the State of Florida
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Phoenix International Industries, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheet of Phoenix
International Industries, Inc. and subsidiaries as of May 31, 2000 and 1999
and the related consolidated statements of operations, stockholders' deficit,
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company and subsidiaries as of May 31, 2000 and 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
consolidated financial statements, the Company has accumulated losses of
approximately $9,300,000 as of May 31, 2000, has insufficient working
capital and 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 and sale of common stock. The conditions raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding those matters are described in
Note 15. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/Wieseneck, Andres & Company, P.A.
August 11, 2000
<PAGE> F-20
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 2000
<TABLE>
CAPTION>
ASSETS
2000 1999
----------- -----------
<S> <C> <C>
Current Assets
Cash $ 46,905 $ 127,776
Accounts receivable net of allowance for
doubtful accounts of $5,000. 331,654 -
Refundable deposit 110,000 200,000
Loans receivable 15,000 20,526
Other current assets 61,765 8,000
----------- -----------
Total Current Assets 565,324 356,302
----------- -----------
Property and Equipment
Property and equipment, net of $91,792
and $5,906 accumulated depreciation 624,807 13,345
----------- -----------
Other Assets
Reorganization value in excess of amounts
allocable to identifiable assets 678,351 -
Goodwill, net of $60,195 accumulated
amortization - 84,141
Other assets 8,929 2,376
----------- -----------
Total Other Assets 687,280 86,517
----------- -----------
Total Assets $ 1,877,411 $ 456,164
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 2 of 15
<PAGE> F-21
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 2000
<TABLE>
CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
2000 1999
----------- -----------
<S> <C> <C>
Current Liabilities
Accounts payable 976,979 $ 110,119
Accrued expenses 80,711 7,500
Loans payable 611,199 -
Notes payable - current portion 250,000 -
----------- -----------
Total Current Liabilities 1,918,889 117,619
----------- -----------
Long-Term Debt
Long-term debt - net 1,170,820 -
Loan payable stockholder 558,820 536,292
----------- -----------
Net Long-Term Debt 1,729,640 536,292
----------- -----------
Commitments and Contingencies
Stockholders' Deficit
Preferred stock, $.001 par value: 5,000
shares authorized: no shares outstanding
Common stock, $.001 par value: 20,000,000
shares authorized 19,353,847. Issued and
outstanding 19,354 12,139
Additional paid-in-capital 7,543,466 5,996,046
Accumulated deficit (9,333,938) (6,205,932)
----------- -----------
Total Stockholders' Deficit (1,771,118) (197,747)
----------- -----------
Total Liabilities and
Stockholders' Deficit $ 1,877,411 $ (80,128)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3 of 15
<PAGE> F-22
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Revenues $ 1,748,220 $ 30
Cost of Sales 1,641,892 -
----------- -----------
Gross Profit 106,328 30
----------- -----------
Operating Expenses
Selling, general and administrative 2,268,997 1,093,048
Loan Facility Fees 678,000 -
Depreciation and amortization 87,141 44,429
Write off of, and impairment of
goodwill, HDX 65,594 30,000
----------- -----------
Total Operating Expenses 3,099,732 1,167,477
----------- -----------
Operating Loss (2,993,404) (1,167,447)
----------- -----------
Other Income and Expense
Interest income 20,000 2,044
Interest expense (154,602) -
----------- -----------
Loss Before Income Taxes (3,128,006) (1,165,403)
Provision For Income Taxes - -
----------- -----------
Loss From Continuing Operations (3,128,006) (1,165,403)
----------- -----------
Discontinued Operations
Income from discontinued operations - 73,417
----------- -----------
Net Loss $(3,128,006) $(1,091,986)
=========== ===========
Loss Per Share
Loss from continuing operations $(0.18) $(0.11)
=========== ===========
Net loss $(0.18) $(0.11)
=========== ===========
Weighted average common shares 17,349,553 10,209,834
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4 of 15
<PAGE> F-23
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the years ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
COMMON STOCK
------------
ADDITIONAL
Number of PAID IN ACCUMULATED STOCKHOLDERS'
Shares PAR VALUE CAPITAL DEFICIT DEFICIENCY
----------- --------- ---------- ----------- ------------
<S> <S> <C> <C> <C> <C>
Balance, May 31, 1998 8,622,028 $ 8,622 $4,988,045 $(5,113,946) $ (117,279)
Cancellation of ITC (1,413,000) (1,413) (301,789) - (303,202)
Rescission of restricted
stock (230,334) (230) 92 - (138)
Issuance of stock for
services rendered 60,000 60 33,191 - 33,251
Issuance of stock to CEO
in lieu of compensation 2,400,000 2,400 297,600 - 300,000
Issuance of stock to
officer in lieu of
compensation 250,000 250 31,000 - 31,250
Sale of stock 2,400,000 2,400 947,957 - 950,357
Issuance of stock to TCCF 50,000 50 (50) - -
Net Loss - - - (1,091,986) (1,091,986)
----------- --------- ---------- ----------- ------------
Balance, May 31, 1999 12,138,694 12,139 5,996,046 (6,205,932) (197,747)
Sale of common stock 2,565,153 2,565 778,820 - 781,385
Issuance of stock for
services rendered 150,000 150 95,100 95,250
Issuance of stock for
loan facility fees 2,000,000 2,000 676,000 678,000
Stock issued as
collateral for note 3,000,000 3,000 (3,000) -
Recission of HDX
stock (500,000) (500) 500 - -
Net Loss (3,128,006) (3,128,006)
----------- --------- ---------- ----------- ------------
Balance, May 31, 2000 19,353,847 19,354 7,543,466 (9,333,938) (1,771,118)
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5 of 15
<PAGE> F-24
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
----------- ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Loss $(3,128,006) $(1,091,986)
Adjustments to reconcile net loss to
net cash used in operating activities
Add items not requiring outlay of cash:
Depreciation and amortization 87,141 44,429
Loss from write off and partial
impairment of goodwill, HDX 65,594 30,000
Expenses paid by issuance of common stock 773,250 364,501
Bad debts 48,850 -
Loss on Sale of Assets 13,951 -
Other - 1,577
Cash was provided by
Decrease in accounts receivable - net - 44,251
Decrease refundable deposit 100,000 -
Decrease in loan receivable 5,526 -
Increase in accounts payable 976,979 41,255
Increase in accrued liabilities 73,211 2,612
Cash was used in
Increase in accounts receivable - net (331,654) -
Increase in other current assets - (4,697)
Increase in refundable deposits - (200,000)
Increase in loans receivable - (20,526)
Increase in other assets (6,553) (2,376)
----------- -----------
Net Cash Flows Used in Operating
Activities (1,321,711) (790,960)
----------- ------------
Cash Flows From Investing Activities
Purchase of equipment (10,555) -
Proceeds from sale of equipment 4,000 -
----------- ------------
Net Cash Flows Used in Investing
Activities (6,555) -
Cash Flows From Financing Activities
Proceeds from sale of stock 895,310 950,357
Proceeds from notes payable 628,000 -
Proceeds from loans payable 611,199 -
Payments on notes to trustee (686,656) -
Repayment of loan to stockholder - net (35,722) (34,663)
----------- ------------
Net Cash Flows Provided by
Financial Activities 1,412,131 915,694
----------- ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 6 of 15
<PAGE> F-25
PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
----------- ------------
<S> <C> <C>
Net Increase(Decrease) in Cash (80,865) 124,734
Cash at Beginning of Year 127,770 3,042
----------- ------------
Cash at End of Year $ 46,905 $ 127,776
Supplemental Disclosures
------------------------
Noncash Transaction
Issuance of common stock for services rendered $ 95,250 $ 33,251
Issuance of common stock in lieu of officers
compensation - 331,250
Rescind issuance of common stock for the
purchase of ITC - (303,202)
Issuance of common stock of TCCF - 1
Issuance of common stock as collateralization
of loan 1 -
Issuance of common stock as payment for loan
"facility fees" 678,000 -
Cash Received and Paid During the Year for:
Interest income 10,000 2,044
Interest expense (47,219) -
Income taxes - -
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 7 of 15
<PAGE> F-26
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 1 - Summary of Significant Accounting Policies and General
Matters
------------------------------------------------------
Organization
------------
Phoenix International Industries, Inc., (the Company), and
subsidiaries purchase wholesale long distance and local
telecommunication services and resells these services to its
customers throughout the United States. The Telephone Company of
Central Florida (TCCF), a wholly owned subsidiary, was acquired
during the year ended May 31, 2000 as a reorganized debtor to
facilitate these activities.
The Officers of the Company and HDX mutually agreed on March 20,
2000 to exchange the stock and records of HDX for all shares of
stock issued by the Company to HDX at its acquisition in July 1997.
During 1999, the Company discontinued its investment services
provided by Mic Mac (see Note 3).
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.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at 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.
Revenue Recognition
-------------------
Revenue is generally recognized when services are performed.
Goodwill
--------
Goodwill represents the excess of the purchase price over the fair
values of the net assets and liabilities acquired resulting from
business combinations and is being amortized on a straight-line
basis over five to ten years. The Company periodically reviews the
value of its goodwill to determine if an impairment has occurred.
The Company measures the potential impairment of recorded goodwill
by the undiscounted cash flows method.
Property and Equipment
----------------------
Property and equipment are stated at cost. The Company provides
for depreciation over the estimated useful lives of the related
assets, which range from five to twelve years, primarily using the
straight-line method.
Income Taxes
------------
The Company accounts for income taxes under the asset and liability
method, whereby deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between
financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. Deferred tax assets
and liabilities are measured using tax rates expected to apply to
taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. The
realizability of deferred tax assets is assessed throughout the
year and a valuation allowance is established accordingly.
Page 8 of 15
<PAGE> F-27
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 1 - Summary of Significant Accounting Policies and General
Matters (continued)
------------------------------------------------------
Earnings (Loss) Per Share
-------------------------
In March 1997, the FASB issued SFAS No. 128, "Earnings per Share."
This Statement was effective for interim and fiscal periods ending
after December 15, 1997. This Statement requires the presentation
of (1) diluted earnings per share, whose calculations includes not
only average outstanding common share but also the impact of
dilutive potential common shares such as outstanding common stock
options; and (2) basic earnings per share which includes the effect
of outstanding common shares but excludes dilutive potential common
shares.
The weighted average common shares outstanding during the years
ended May 31, 2000 and 1999 were 17,349,553 and 10,209,834
respectively.
Fair Value of Financial Instruments
-----------------------------------
The carrying amount of accounts receivable, accounts payable,
accrued expenses and loan payable to related party approximate fair
value because of the short maturity of these items.
Concentrations of Credit Risk
-----------------------------
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts
receivable and refundable deposits. Management performs regular
evaluations concerning the ability of its customers to satisfy
their obligations and records a provision for doubtful accounts
based upon these evaluations.
NOTE 2 - Loans Receivable
----------------
At May 31, 2000 and 1999, loans receivable consisted of a $15,000.
non-interest bearing and non-collateralized loan due on demand from
an Officer and Stockholder of the Company.
At May 31, 1999, loans receivable consisted on two additional loans
that were non-interest bearing, non-collateralized and are due on
demand.
NOTE 3 - Discontinued Operations
-----------------------
HDX
---
The Company acquired 100% of the outstanding stock of HDX on July
21, 1997, by issuing 500,000 shares of restricted common stock
valued at approximately $152,000. The acquisition was accounted
for using the purchase method of accounting and accordingly the
purchase price was allocated to the assets purchased and
liabilities assumed based on their fair values at the date of
acquisition. The excess of the purchase price over the values of
net assets acquired was approximately $164,000 and was recorded as
goodwill and amortized on a straight-line basis over five years.
HDX was a system design company specializing in analyzing the
effect of the year 2000 on a company's computer system. The
operating results of HDX for the year ended May 31, 1999, is
included in continuing operations in the accompanying financial
statements. On March 20, 2000, the Officers of both company's
mutually agreed to exchange the stock and records of HDX for the
500,000 shares of Phoenix stock initially issued thereby rescinding
this relationship. There was no income or expenses recorded for
HDX for the year ending May 31, 2000. Approximately $65,000 of
unamortized goodwill was charged to expense in the current year.
Page 9 of 15
<PAGE> F-28
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 3 - Discontinued Operations (continued)
-----------------------------------
Mic Mac
-------
The Company acquired 100% of the outstanding stock of Mic Mac on
April 9, 1998 by issuing 250,000 shares of restricted common stock
valued at $55,000. The acquisition was accounted for using the
purchase method of accounting and the purchase price was allocated
to the assets purchased and liabilities assumed based on their fair
values at the date of acquisition. The excess purchase price over
the value of net assets acquired was $54,000 and was recorded as
goodwill and amortized on a straight-line basis over five years.
The Company ceased operating in the third quarter of the year
ending May 31, 1999 and had a net loss from operations of
approximately $2,000 and income from disposal of assets and
discontinued operations of approximately $15,500. This income from
the disposal was recognized in Discontinued Operations in May 31,
1999.
Note 4 - Allowance for Doubtful Accounts, Bad Debts
------------------------------------------
The Company established an allowance for doubtful accounts in the
amount of $5,000 for the year ending May 31, 2000. The amounts
charged to the allowance for doubtful accounts represents .3%
(three tenths of 1%) of sales for the fiscal year ending May 31,
2000. Activity in the allowance for doubtful accounts and bad debt
expense are summarized as follows:
<TABLE>
<CAPTION>
Allowance
For Doubtful Bad Debt
Accounts Expense
------------ -----------
<S> <C> <C>
May 31, 2000 provision for doubtful accounts 5,000 $ 5,000
Direct write off of account receivable - 43,850
------------ -----------
$ 5,000 $ 48,850
============ ===========
</TABLE>
Note 5 - Other Current Assets
--------------------
Other Current Assets at May 31, 2000 and 1999 consisted of the
following:
May 31,
----------------------
2000 1999
-------- ---------
Deposit on equipment $ 61,765 $ -
Prepaid advertising costs - 8,000
-------- ---------
$ 61,765 $ 8,000
======== =========
NOTE 6 - Business Combinations
The Company acquired 100% of the issued and outstanding voting
common stock of TCCF (a reorganized debtor) on July 27, 1999. The
consideration and terms are as follows. All administrative claims
and expenses are not to exceed $570,000. Priority claims and
taxes, not exceeding $300,000 to be paid in $25,000 installments
over a period of six years with interest payable at 8%. In addition,
Phoenix will deposit a total of $500,000 into a creditor trust fund.
The initial deposit of $100,000 to the trust fund was made at the
Page 10 of 15
<PAGE> F-29
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 6 - Business Combinations (continued)
---------------------------------
Confirmation Order and the balance will be deposited in four
consecutive semi-annual installments of $100,000 (see Note 10).
The "effective date" of the closing is ten days after the
Bankruptcy Court issues the Order of Confirmation.
The United States Bankruptcy Court issued the Order of Confirmation
on June 9, 1999. The Bankruptcy Court reserved comprehensive and
expansive jurisdiction to resolve any dispute and questions arising
in connection with the plan and Confirmation Order. The court has
jurisdiction over any remaining cases as discussed in Note 14.
The Company began operating as a Reorganized Debtor using Fresh
Start Accounting in compliance with Accounting Statement of
Position (SOP) 90-7 on July 28, 1999. Except as expressly provided
in the Plan, the Confirmation Order shall discharge any and all
debts or claims whatsoever and any prior equity interests in the
Company. The assets of the Company were restated to properly
reflect their reorganized value, the liabilities subject to
compromise and those that are not subject to compromise are
segregated and any prior stockholder's equity was eliminated.
NOTE 7 - Property and Equipment
----------------------
Property and equipment consists of the following at May 31, 2000
and 1999:
2000 1999
--------- ---------
Computer Equipment $ 268,687 $
Furniture, fixtures and equipment 147,913 24,085
Software Development 300,000 -
Accumulated Depreciation (91,793) (10,740)
--------- ---------
Total $ 624,807 $ 13,345
========= =========
NOTE 8 - Loan Payable - Related Party
----------------------------
May 31,
2000 1999
--------- ---------
Notes payable to shareholder
and Chief Executive Officer,
noncollateralized and due on
demand. Interest is accrued
at the Applicable Federal Rate
(AFR) of approximately 6.25%
Principal $ 536,574 $ 489,635
Accrued Interest Payable 58,246 46,657
--------- ---------
$ 558,820 $ 536,292
========= =========
Page 11 of 15
<PAGE> F-30
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 9 - Accrued Compensation
--------------------
During 1999, the Company issued 2,650,000 shares of restricted
common stock with a fair value of $331,250 to the officers of the
corporation as compensation for their services. The Company used a
75% discount from quoted market value of the Company's stock to
determine the fair value for compensation to officers and for
consulting and professional services rendered. Such amounts have
been credited to additional paid in capital at May 31, 1999.
NOTE 10 - Notes Payable
-------------
Notes payable at May 31, 2000 is as follows:
Two notes payable due to the creditor trust fund.
1) A $500,000, 8% non-collateralized note with
$100,000 payment due semi-annually starting July
26, 1999. The proceeds from this note are for
paying the allowed general unsecured creditors
(pre-petition accounts payable). This note matures
July 26, 2001 and 2) A $300,000, 8% non-
collateralized note with semiannual payments of
$25,000 starting July 26, 1999. The proceeds from
this note are for paying allowed priority tax
claims. This note matures July 26, 2005. $670,820
A 13% $750,000 note due July 21, 2000 with interest
payable quarterly. The note was renewed, in
accordance with the terms of the note, for an
additional twelve months by giving written notice
prior to maturity. The note is collateralized by
3,000,000 shares of the company's stock issued to the
lender in accordance to the terms of a pledge and
security agreement. The lender has an option to
purchase the 3,000,000 pledged shares at any time for
a period of two years from the date of the pledge for
.36c per share. An additional 1,000,000 shares were
issued to the lender at inception of the loan as
payment for a "facility fee". 750,000
----------
Total Long Term Debt 1,420,820
Less Current Portion 250,000
----------
Net Long Term Debt $1,170,820
==========
NOTE 11 - Loans Payable
-------------
At May 31, 2000, the company is obligated to the following loans
payable:
Two non-interest bearing, non-collateralized loans
due on demand to current employees and stockholders
of the company. $ 103,722
A non-interest bearing, non-collateralized loan due
on demand to a related company of the Chief Executive
Officer. 208,419
Two non-interest bearing, non-collateralized loans due
on demand. 299,058
---------
Total Loans Payable $ 621,199
=========
NOTE 12 - Income Taxes
------------
Deferred income taxes are provided for temporary differences
between the financial reporting and income tax basis of the
Company's assets and liabilities. Temporary differences, net
operating loss carry forwards and valuation allowances comprising
the net deferred taxes on the balance sheets are as follows:
Page 12 of 15
<PAGE> F-31
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 12 - Income Taxes (continued)
------------------------
May 31, 2000 May 31, 1999
----------- ------------
(000) (000)
Loss carry forward for tax purposes $ 5,448 $ 2,320
======= =======
Deferred tax asset (34%) $ 1,852 $ 789
Valuation allowance (1,852) (789)
------- -------
Net deferred tax asset $ - $ -
======= =======
At May 31, 2000, the Company had federal income tax net operating
loss carry forward of approximately $5,420,000 which will expire
through the year 2020.
Year of Expiration Amount
------------------ -----------
2009 $ 43,000
2010 308,000
2011 166,000
2012 193,000
2013 850,000
2019 760,000
2020 3,100,000
In addition, the Company is reviewing its ability to utilize
certain net operating losses prior to the Company's emergence from
bankruptcy in 1994. These losses have not been reflected in
arriving at the net operating loss carry forwards in the
calculation of the deferred tax assets.
As disclosed in Note 9, the Company has incurred compensation to
its chief executive and chief operating officers. Generally, until
the restricted common stock issued in lieu of compensation becomes
substantially vested in the employee, the company cannot claim a
compensation deduction. Such compensation aggregating for 2000 is
$0 and for 1999 is $331,250.
NOTE 13 - Business Segments
-----------------
The Company's reportable segments are strategic business units that
offer different products or services. The Company has four
reportable segments: computer consulting, investment,
telecommunications services, and acquisition services. The
accounting of the segments is the same as those described in the
summary of significant accounting policies. There have been no
intersegment sales or transfers.
The following is a summary of segment activity:
Page 13 of 15
<PAGE> F-32
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 13 - Business Segments (continued)
-----------------------------
<TABLE>
<CAPTION>
COMPUTER INVESTMENT
CONSULTING SERVICES TELEPHONE ACQUISTION
(DISCONTINUED) (DISCONTINUED) SERVICES SERVICES TOTALS
-------------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
MAY 31, 1999
Revenues $ 30 $ 54,109 $ -- $ -- $ 54,139
Interest income -- -- -- 2,044 2,044
Interest expense -- 92 -- -- 92
Depreciation and amortization -- -- -- 74,429 74,429
Segment profit (loss) -- -- -- (1,131,857)
Income from discountinued
operations (33,546) 13,417 -- 60,000 (1,091,986)
Segment assets 4,434 -- -- 451,730 456,164
MAY 31, 2000
Revenues $ -- $ -- $ 1,748,218 $ -- $ 1,748,218
Interest income -- -- 20,000 -- 20,000
Interest expense -- -- 643 153,959 154,602
Depreciation and amortization -- -- 84,557 2,584 87,141
Segment profit (loss) -- -- (1,693,295) (1,434,711) (3,128,006)
Segment assets -- -- 1,695,790 181,621 1,877,411
</TABLE>
NOTE 14 - Commitments and Contingencies
-----------------------------
The Company leases its principal business location from a related
party, the spouse of the chief executive officer. The lease, which
provides for annual rental of approximately $40,000, expires in
September 2001. Rent expense for the years ended May 31, 2000 and
1999 was $42,400 of which $17,667 was accrued in Year 2000.
The Company is obligated for the lease of an automobile for 36
months with monthly payments of $508. The lease expires in
December 2001.
A suit has been filed against the Company for nonpayment of
occupancy lease payments for a facility that was vacated by the
Company in November 1995. The outcome of the litigation is not
determinable at this time.
A suit has been filed by the Company in an attempt to recover past
due promissory notes in excess of $290,000. The outcome of the
litigation is not determinable at this time.
A suit has been filed against the Company involving breach of
contract of an alleged consulting agreement. The outcome of the
litigation is not determinable at this time.
A suit has been filed against the Company involving breach of
contract by the Company regarding the transfer of stock to the
previous owners of the Mic Mac Investments, a corporation that was
purchased by the Company. The Company is currently entered into
settlement negotiations.
NOTE 15 - Going Concern
-------------
The financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business over a reasonable length of time. The Company
has incurred losses in the last two years aggregating approximately
$4,200,000 and, as of May 31, 2000, has a deficit of approximately
$9,300,000 and insufficient working capital.
Page 14 of 15
<PAGE> F-33
PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2000 and 1999
NOTE 15 - Going Concern (continued)
-------------------------
During these two years, the Company has made several acquisitions,
two of which have been rescinded. In connection therewith, it has
incurred significant selling, general and administrative expenses
which have been funded by loans from the Company's chief executive
officer and selling of common stock in the United States and in
foreign markets. These conditions raise substantial doubt about
the Company's ability to continue as a going concern.
The Company believes that its recent acquisitions will become
profitable in the future and will generate future cash flows.
However, 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 and provide temporary
working capital in the U.S. and 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.
NOTE 16 - Subsequent Events
-----------------
The Company entered into an "Agreement and Plan of Share Exchange"
on July 28, 2000 to acquire Moye and Associates, Inc., (Moye), a
Georgia Corporation. Moye provides Internet Service, specializing
in DSL and web page design, to commercial/residential customers
throughout the United States. Moye also provides computer sales
and service throughout the State of Georgia. The agreement
contemplates a tax free exchange of 600 shares of the Company's
common stock for each outstanding share of common stock of Moye.
Approximately 600,000 shares of the Company's common stock will be
issued. The following is Moye's condensed unaudited statement of
assets, liabilities and stockholder's equity - income tax basis -
and statement of revenues, expenses and retained earnings - income
tax basis - for the six months ended June 30, 2000:
Statement of Assets, Liabilities
and Stockholder's Equity - Income Tax Basis
June 30, 2000
(unaudited)
-------------
Assets $ --
=============
Liabilities $ 54,000
Stockholder's Equity (54,000)
-------------
Total Liabilities and
Stockholder's Equity $ --
=============
Statement of Revenues, Expenses
and Retained Earnings - Income Tax Basis
Six Months Ended
June 30, 2000
----------------
Revenues $ 176,000
Cost of Sales 51,000
-------------
Gross Profit 125,000
Expenses (130,000)
Net Loss $ ( 5,000)
=============
Page 15 of 15
<PAGE> F-34
No dealer, salesman or
other person is authorized to
give any information or to make
any representations not
contained in this Prospectus in
connection with the offer made
hereby, and, if given or made,
such information or
representations must not be
relied upon as having been
authorized by Phoenix. This
Prospectus does not constitute
an offer to sell or a
solicitation to an offer to buy
the securities offered hereby to
any person in any state or other
jurisdiction in which such offer
or solicitation would be
unlawful. Neither the delivery
of this Prospectus nor any sale
made hereunder shall, under any
circumstances, create any
implication that the information
contained herein is correct as
of any time subsequent to the
date hereof.
---------------------------------
TABLE OF CONTENTS
Page
----
Additional Information........... 3 PHOENIX INTERNATIONAL
Prospectus Summary............... 4
Selected Financial Data.......... 6 INDUSTRIES, INC.
Risk Factors..................... 7
Use of Proceeds.................. 10
Determination of Offering
Price.......................... 10
Dividend Policy.................. 10 12,847,825 SHARES
Market Price of Common Stock..... 11
Management's Discussion and
Analysis....................... 12
Business and Plan of Operation... 15
Management....................... 19
Selling Shareholders............. 21
Principal Shareholders........... 22
Certain Transactions............. 23
Changes in and Disagreements
with Accountants............... 23 PROSPECTUS
Plan of Distribution............. 24
Description of Securities........ 25
Legal Matters.................... 26
Experts.......................... 26
Indemnification.................. 26
Financial Statements............. F-1
-------------------------------------
August 28, 2000
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC. PART II
Item 13. Other Expenses of Issuance and Distribution.
--------------------------------------------
Filing fee under the Securities Act of 1933 $ 895
Legal Fees(1) $25,000
Auditing Fees(1) $12,500
Miscellaneous(1) $ 1,605
-------
TOTAL $40,000
=======
(1) Estimates
Item 14. Indemnification of Directors and Officers.
------------------------------------------
Our Articles of Incorporation, as well as our By-Laws
provide for the indemnification of directors, officers, employees
and agents of the corporation to the fullest extent provided by
the Corporate Law of the State of Florida, as well as is described
in the Articles of Incorporation and the By-Laws. These sections
generally provide that the Company may indemnify any person who
was or is a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or
investigative except for an action by or in right of the
corporation by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has
been determined to be negligent or guilty of misconduct in the
performance of his or her duties to the Company.
At present, there is no pending litigation or proceeding
involving a director, officer, employee or agent of Phoenix where
indemnification will be required or permitted. We are not aware
of any threatened litigation or proceeding that may result in a
claim for indemnification by any director or officer.
Item 15. Recent Sales of Unregistered Securities.
----------------------------------------
The following information is furnished with regard to all
securities sold by Phoenix within the past three years which were
not registered under the Securities Act. The issuances described
hereunder were made in reliance upon the exemptions from
registration set forth in Section 4(2) of the Securities Act
relating to sales by an issuer not involving any public offering
and in Regulation S relating to securities offered outside of the
United States. None of the foregoing transactions involved a
distribution or public offering.
<PAGE>
<TABLE>
<CAPTION>
Issuances of Common Stock
Name Number of Shares Purchase Price Date Sold
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Carousel Consultants, Inc 200,000(1) (2) June 5, 1997
First Florida Promotions 30,000 (2) June 10,1997
Timothy C. Palmer 500,000 (3) March 9, 1998
Hobart Group 50,000(1) (2) March 9, 1998
Julie MacAlinden 220,000 (4) May 7, 1998
Julie MacAlinden 15,000 (4) May 7, 1998
Ed Alexander 15,000 (4) May 7, 1998
Michael R. Sheridan 50,000 (2) July 20, 1998
Joseph Passalaqua 50,000 (2) September 14, 1998
Signature Equities Agency GmbH 1,000,000 $750,000 September 30, 1998
Signature Equities Agency GmbH 200,000 $150,000 December 17, 1998
Signature Equities Agency GmbH 300,000 $225,000 December 28, 1998
Signature Equities Agency GmbH 200,000 $150,000 December 28, 1998
Signature Equities Agency GmbH 200,000 $150,000 December 28, 1998
Signature Equities Agency GmbH 100,000 $75,000 December 28, 1998
Signature Equities Agency GmbH 100,000 $75,000 December 28, 1998
Signature Equities Agency GmbH 100,000 $75,000 December 28, 1998
Signature Equities Agency GmbH 1,200,000 $900,000 February 8, 1999
Cambridge Holdings, PLC 877,000(1) $877,000 February 16, 1999
Merimac Shipping Ltd. 1,123,000(1) $1,123,000 February 16, 1999
Barclay's Group International, Inc. 100,000(1) $100,000 February 16, 1999
Thomas R. Kjeldsberg 20,000(1) $20,000 February 16, 1999
Nunzio C. Li Pomi 2,000(1) $2,000 February 16, 1999
Joel Bernstein 10,000(1) $10,000 February 16, 1999
Nunzio C. Li Pomi 18,000(1) $18,000 February 16, 1999
Gerard Haryman 1,400,000 $184,376 April 8, 1999
Thomas N. Donaldson 250,000 $36,875 April 8, 1999
Gerard Haryman 1,000,000 (5) May 28, 1999
Positive Management Ltd. 1,000,000 (6) July 29, 1999
Positive Management Ltd. 3,000,000 (6) July 29, 1999
Elder N. Ripper III 175,000 (7) October 21, 1999
Andrea Welch 75,000 (7) October 21, 1999
TTC Vermogensberatung, AG 300,000 $152,100 February 2, 2000
TTC Vermogensberatung, AG 300,000 $152,100 February 2, 2000
RMP Vermogensberatung, 500,000 $253,500 February 2, 2000
Aptek Communications 1,000,000 (2) February 2, 2000
GRS Medcom Services, Inc. 50,000 shares $50,000 March 21, 2000
</TABLE>
(1) This stock was subsequently returned to the company.
(2) Issued in connection with a services contract.
(3) Issued in connection with the acquisition of HDX, 9000, Inc.
(4) Issued in connection with the acquisition of Mic-Mac
Investments
(5) Issued in lieu of cash bonus.
(6) Issued as collateral on note.
(7) Issued as signing bonus.
Item 16. Exhibits and Financial Schedules
--------------------------------
3. Certificate of Incorporation and Bylaws
3.1 Articles of Incorporation(1)
3.2 Articles of Amendment to the Articles of
Incorporation (1)
3.3 Bylaws(1)
<PAGE>
5. Opinion of Law Office of L. Van Stillman, P.A. as to
legality of securities being registered.(2)
10. Material Contracts. Some of our Material Contracts were
filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to our Form 10-KSB as of May 31, 1995 under
the Securities and Exchange Act of 1934, filed April 1,
1998 with the Securities and Exchange Commission. The
Contracts for the sale of ITC and the purchases of
Hospitality Telecom Corp. (formerly Mic Mac Investments,
Inc.) and Cambridge Gas Transport Corporation, were
included in our 10-KSB for the year ended May 31, 1998 and
are incorporated herein by reference.
16 Letters Re: Change in Certifying Accountants. See SEC Form
8-K as filed on August 31, 1999 and incorporated herein by
reference.
21. Subsidiaries of the Registrant
Telephone Company of Central Florida, a Florida corporation.
23. Consents of Experts and Counsel
23.1 Consent of Wieseneck, Andres & Company, P.A.(2)
23.2 Consent of Kane Hoffman & Danner, P.A. (2)
23.3 Consent of Leon P. Wilde, CPA, Inc. (2)
23.4 Consent of Law Office of L. Van Stillman included
in Exhibit 5 hereto
23.5 Consent of Wieseneck, Andres & Company, P.A.
dated August 28, 2000 (2)
(1) Included in original filing of the Company's Form 10-KSB, for
the fiscal year 1995, filed April 1, 1998.
(2) Filed herewith.
All other Exhibits called for by Rule 601 of Regulation S-K
are not applicable to this filing.
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or
because the required information is included in the financial
statements or notes thereto.
Item 17. Undertakings.
-------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
<PAGE> F-38
information in the registration statement, including (but not
limited to) any addition or election of a managing underwriter.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities offered at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(h) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Item 18. Financial Statements and Schedules.
-----------------------------------
Not Applicable.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Clearwater, State of Florida on August 28,
2000.
PHOENIX INTERNATIONAL INDUSTRIES, INC.
By: /s/ Gerard Haryman
-----------------------------------
Gerard Haryman
President, Chief Executive
Officer, acting Chief Financial
Officer and Chairman of the
Board of Directors
In accordance with the requirements of the Securities Act of
1933, this Registration Statement has been signed by the following
persons in the capacities indicated on August 28, 2000.
By: /s/ Gerard Haryman President, Chief Executive Officer,
-------------------------- acting Chief Financial Officer and
Gerard Haryman Chairman of the Board of Directors
By: /s/ Thomas Donaldson Vice President, Secretary, Acting
-------------------------- Comptroller and Director
Thomas Donaldson
By: /s/ Timothy Palmer Director
--------------------------
Timothy Palmer
<PAGE>
