<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-16097
BAYOU INTERNATIONAL, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 98-0079697
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANISATION) IDENTIFICATION NO.)
</TABLE>
LEVEL 8, 580 ST. KILDA ROAD, MELBOURNE, VICTORIA, 3004 AUSTRALIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 011 (613) 9276-7888
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
N/A N/A
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.15 per share
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements the past 90 days.
Yes X No _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the restraint has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. There were 46,941,789
outstanding shares on Common Stock, as of the latest practicable date. There
were 46,941,789 outstanding shares of Common Stock as of December 31, 1997.
================================================================================
<PAGE> 2
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTRODUCTION TO INTERIM FINANCIAL STATEMENTS.
The interim financial statements included here in have been prepared by
Bayou International, Ltd. (the "Company") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (The "Commission").
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. These interim financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1997.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of December 31, 1997 and December 31, 1996, the results of its
operations for the three and six month periods ended December 31, 1997 and
December 31, 1996, and the changes in its cash flows for the six month periods
ended December 31, 1997 and December 31, 1996, have been included. The results
of operations for the interim periods are not necessarily indicative of the
results for the full year.
UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN
AUSTRALIAN DOLLARS.
1
<PAGE> 3
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND JUNE 30, 1997
AND DECEMBER 31, 1996
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1997 1996
------------ -------- ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................................. $ 68 $ 53 $ 48
Accounts Receivable, net.............................. 84 63 51
Investments........................................... -- -- 3
-------- -------- --------
Total Current Assets............................... 152 116 102
-------- -------- --------
Other Assets:
Property and Equipment, net........................... 106 51 54
Goodwill, net......................................... -- -- 266
-------- -------- --------
Total Other Assets................................. 106 51 320
-------- -------- --------
Total Assets.................................. $ 258 $ 167 $ 422
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short Term Notes...................................... $ 369 $ -- $ --
Accounts Payable and Accrued Expenses................. 438 406 281
-------- -------- --------
Total Current Liabilities.......................... 807 406 281
Long-Term Debt........................................ 3,602 3,267 2,730
-------- -------- --------
Total Liabilities.................................. 4,409 3,673 3,011
Stockholders' Equity (Deficit):
Common Stock: $0.20 par value 100,000,000 shares
authorized, 46,941,789 issued and outstanding...... 9,388 9,388 9,388
Additional Paid-in-Capital............................ 11,592 11,592 11,592
Cumulative Translation Adjustments.................... (1,507) (435) (17)
Retained Deficits..................................... (23,624) (24,051) (23,582)
-------- -------- --------
Total Stockholders' Deficit........................ (4,151) (3,506) (2,589)
-------- -------- --------
Total Liabilities and Stockholders' Equity.... $ 258 $ 167 $ 422
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 4
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31 1997 AND 1996 AND
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
(000'S OMITTED)
(IN AUSTRALIAN DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Other Income................................ $ 39 $ 7 $ 45 $ 12
------ ------ ------ ------
39 7 45 12
Costs and Expenses:
Management Fee.............................. -- -- -- --
Interest Expense............................ 73 64 142 124
Legal, Accounting & Professional............ 18 23 66 45
Depreciation & Amortization................. 3 3 6 6
Administrative.............................. 197 71 344 113
Research & Development...................... 54 76 74 164
------ ------ ------ ------
345 237 632 452
------ ------ ------ ------
Loss from Operations.......................... (306) (230) (587) (440)
Gain (Loss) on Disposition of Assets........ -- -- 1 --
Foreign Currency Exchange Gain (Loss)....... 762 (23) 1,013 (54)
------ ------ ------ ------
762 (23) 1,014 (54)
------ ------ ------ ------
Loss before Income Tax and Amortization of
Goodwill.................................... 456 (253) 427 (494)
Provision for Income Tax...................... -- -- -- --
------ ------ ------ ------
Income (Loss) before Amortization of
Goodwill.................................... 456 (253) 427 (494)
Amortization of Goodwill.................... -- (134) -- (267)
------ ------ ------ ------
Net Income (Loss)............................. $ 456 $ (387) $ 427 (761)
------ ------ ------ ------
Earnings Per Common Equivalent Share.......... $ .01 $ (.01) $ .01 $ (.02)
====== ====== ====== ======
Weighted Number of Common Equivalent Shares
Outstanding................................. 46,942 46,942 46,942 46,942
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 5
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
DECEMBER 31, 1997 AND JUNE 30, 1997
AND DECEMBER 31, 1996
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE
---------------- PAID-IN- TRANSLATION RETAINED
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT EARNINGS
------- ------ ----------------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1995................... 46,942 $9,388 $11,592 $ (665) $(20,781)
Net Income six months ending
12-31-95........................... -- -- -- -- (897)
Foreign Currency Translation.......... -- -- -- 274 --
------ ------ ------- ------- --------
Balance December 31, 1995............... 46,942 9,388 11,592 (391) (21,678)
Net Income six months ending
6-30-96............................ -- -- -- (1,113)
Foreign Currency Translation.......... -- -- -- 321 --
------ ------ ------- ------- --------
Balance June 30, 1996................... 46,942 9,388 11,592 (70) (22,791)
Net Income six months ending
12-31-96........................... -- -- -- -- (761)
Foreign Currency Translation.......... -- -- -- 53 --
------ ------ ------- ------- --------
Balance December 31, 1996............... 46,942 9,388 11,592 (17) (23,552)
Net Income six months ending
6-30-97............................ -- -- -- -- (499)
Foreign Currency Translation.......... -- -- -- (418) --
------ ------ ------- ------- --------
Balance June 30, 1997................... 46,942 9,388 11,592 (435) (24,051)
Net Income six months ending
12-31-96........................... -- -- -- -- 427
Foreign Currency Translation.......... -- -- -- (1,072) --
------ ------ ------- ------- --------
Balance December 31, 1997............... 46,942 $9,388 $11,592 $(1,507) $(23,624)
====== ====== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 6
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
AND YEAR ENDED JUNE 30, 1997
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED THREE MONTHS
ENDED JUNE 30, ENDED
DECEMBER 31, 1997 1997 DECEMBER 31, 1996
----------------- ---------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)............................... $ 427 $ (1,260) $(761)
Adjustments:
Foreign Currency Translation................. (1,072) (365) 53
Depreciation and Amortization................ 6 545 273
(Gain) Loss on Disposition of Assets......... -- 2 --
Diminution of Value.......................... -- -- --
Change Net of Effects of Subsidiary
Acquisitions:
Accounts Receivable........................ (21) (10) 2
A/P and Accrued Liabilities................ 32 60 (65)
----------------- ---------- -------
Net Cash Provided (Used) by Operating
Activities............................ (628) (1,028) (498)
----------------- ---------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital Expenditures, Net....................... (61) (8) (5)
Net Proceeds from Investments................... -- (1) --
----------------- ---------- -------
Net Cash Provided (Used) in Investing
Activities............................ (61) (7) (5)
----------------- ---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowing under Credit Line Arrangements.... -- -- --
Net Borrowing from Affiliates................... 299 1,015 478
Net Borrowings.................................. 405 -- --
----------------- ---------- -------
Net Cash Provided by Financing
Activities............................ 704 1,015 478
----------------- ---------- -------
Net Increase (Decrease) in Cash................... 15 (20) (25)
Cash at Beginning of Year......................... 53 73 73
----------------- ---------- -------
Cash at End of Year............................... $ 68 $ 53 $ 48
============= ======== =============
Supplemental Disclosures:
Common Stock Issued in Lieu of Debt Repayment... $ -- $ -- $ --
Interest Paid (Net Capitalized)................. $ 142 $ 256 $ --
Income Tax Paid................................. $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, JUNE 30, 1997 AND DECEMBER 31, 1996
(1) ORGANIZATION
Bayou International, Ltd. (Bayou) is incorporated in the State of Delaware.
The principal shareholder of Bayou is Edensor Nominees Proprietary Limited
(Edensor), an Australian corporation. Edensor owned 42.7% of Bayou as of
December 31, 1997.
Bayou's subsidiary is Solmecs Corporation N.V. (Solmecs), which it acquired
controlling interest of, on September 3, 1987 and complete ownership on January
2, 1992.
Bayou is primarily engaged in the research and development of high
efficiency, low pollution or pollution-free products and technologies in the
energy conversion and conservation fields through its 100%-owned subsidiary,
Solmecs. All revenue is from contracted services provided by Solmecs. Almost all
of Bayou's operating expenses are for general and administrative and research
and development cost.
(2) ACCOUNTS RECEIVABLE
Accounts Receivable at December 31, 1997, June 30, 1997 and December 31,
1996 includes:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997 DECEMBER 31, 1996
----------------- ------------- -----------------
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
<S> <C> <C> <C>
Miscellaneous Receivables............. $84 $63 $51
Less Allowance for Doubtful
Account.......................... -- -- --
--- --- ---
Net.............................. $84 $63 $51
=== === ===
</TABLE>
(3) INVESTMENT SECURITIES
The following is a summary of Investment Securities at December 31, 1997,
June 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997 DECEMBER 31, 1996
----------------- ------------- -----------------
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
<S> <C> <C> <C>
Trading Securities:
Marketable Equity Securities, at
cost............................. $-- $-- $ 1
Gross Unrealized Gains.............. -- -- 2
Gross Unrealized Losses............. -- -- --
-- -- --
Marketable Equity Securities, at
fair value....................... $-- $-- $ 3
== == ==
</TABLE>
(4) PROPERTY
Property at December 31, 1997, June 30, 1997 and December 31, 1996
includes:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997 DECEMBER 31, 1996
----------------- ------------- -----------------
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
<S> <C> <C> <C>
Office Furniture & Equipment.......... $ 266 $ 185 $ 173
Motor Vehicles........................ 45 40 38
----- ----- -----
311 225 211
Less Accumulated Depreciation......... (205) (174) (157)
----- ----- -----
$ 106 $ 51 $ 54
===== ===== =====
</TABLE>
6
<PAGE> 8
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) SHORT TERM AND LONG TERM DEBT
The following is a summary of Bayou's borrowing arrangements as of December
31, 1997, June 30, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997 DECEMBER 31, 1996
----------------- ------------- -----------------
(IN AUSTRALIAN DOLLARS)
(000'S OMITTED)
<S> <C> <C> <C>
LONG-TERM
Loan made from affiliate of
Subsidiary. Loan has no interest and
has no fixed maturity date.......... 308 268 252
Loan from corporations affiliated with
the President of Bayou. Interest
accrues at the ANZ Banking Group
Limited rate +1% for overdrafts over
$100,000. Repayment of loan not
required before June 30, 1998....... 3,294 2,999 2,478
----- ----- -----
Total Long-Term.................. 3,602 3,267 2,730
----- ----- -----
SHORT-TERM
Overdraft arrangement with balance
accruing interest................... -- -- --
Notes Payable -- Affiliates........... 369 -- --
----- ----- -----
Total Short-Term................. 369 -- --
----- ----- -----
Total....................... $ 3,971 $ 3,267 $ 2,730
===== ===== =====
</TABLE>
(6) AFFILIATE TRANSACTIONS
Bayou advances to and receives advances from various affiliates. All
advances between consolidated affiliates are eliminated on consolidation. At
December 31, 1997, Bayou had no outstanding advances to or from unconsolidated
affiliated companies. $175,000, $125,000 and $69,000 of accounts payable for the
years shown is due to an affiliated management company.
(7) GOING CONCERN
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of Bayou and Solmecs as going concerns. However, both Bayou and
Solmecs have sustained recurring losses. In addition, neither Bayou or Solmecs
have any net working capital and both have retained stockholders' deficits,
which raises substantial doubts as to their ability to continue as going
concerns.
Bayou anticipates that it will be able to defer repayment of certain of its
short term loan commitments until it has sufficient liquidity to enable these
loans to be repaid or other arrangements to be put in place.
In addition Bayou has historically relied on loans and advances from
corporations affiliated with the President of Bayou. Based on discussions with
these affiliate companies, Bayou believes this source of funding will continue
to be available.
Other than the arrangements noted above, Bayou has not confirmed any other
arrangements for ongoing funding. As a result Bayou may be required to raise
funds by additional debt or equity offerings in order to meet its cash flow
requirements during the forthcoming year.
7
<PAGE> 9
BAYOU INTERNATIONAL, LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(8) COMMITMENTS
Solmecs has entered into the following commitments:
(a) B.G. Negev Technology and Application Ltd. (AP) and the Ben Gurion
University of the Negev -- The Research and Development Authority (RDA),
jointly and severally (APRDA):
In accordance with an agreement dated November 5, 1981, between Solmecs,
Ben-Gurion University and APRDA, Solmecs' subsidiary is continuing research and
development (R&D) projects which were previously carried out by APRDA on the
campus of Ben-Gurion University. It was further agreed that the University would
enable the projects to continue on its campus in consideration for a fee for the
use of the facilities.
Solmecs owns the patents connected with these projects and agreed to pay
royalties to APRDA at the rate of 1.75% on sales of products and at the rate of
11.5% on income from licensing fees.
Solmecs also agreed to assume the obligations of APRDA to pay royalties to
the Ministry of Energy on products developed from these R&D projects for its
participation in the research and development cost of APRDA. As of December 31,
1997, this liability amounted to approximately $325,000 (including linkage to
the Consumer Price Index and interest at 4% per annum). Subsequent to the
repayment of the liability, Solmecs is to pay royalties to the Ministry of
Energy (ME) at a reduced rate.
Through December 31, 1997, there were no sales or income on which royalties
were payable to APRDA or the ME.
(b) International Lead Zinc Research Organization (ILZRO)
In connection with a research contract with ILZRO, Solmecs' subsidiary
agreed to pay ILZRO a fee for any lead used in future production by the
subsidiary. The total fee commitment is limited to US$1,864,000. Through
December 31, 1997, the subsidiary has not used any lead for which it is required
to pay fees.
(c) Chief Scientist of the Government of Israel
For the period from 1981 to 1991, Solmecs' subsidiary received
participation from the Chief Scientist of $2,274,420 towards the cost of a
research and development project. In return, the subsidiary is required to pay
royalties at the rate of 2% of sales of know-how or products derived from the
project. Through December 31, 1997, no royalties were payable.
(9) Subsequent Events
In March 1997, Bayou commenced negotiations with SCNV Acquisition Corp
("SCNV") for the sale of Bayou's subsidiary Solmecs to SCNV. A letter of intent
was signed on May 5, 1997 and agreements to effect the sale are in the process
of being negotiated. It is intended that, as part of the sale of Solmecs, Bayou
will acquire a 24% interest in SCNV.
The sale of Solmecs is subject to the approval of shareholders of Bayou.
Following the signing of formal contracts for the sale of Solmecs, Bayou will
prepare and distribute an Information Memorandum for the purpose of seeking
shareholder approval. In the event that the sale of Solmecs is consummated, of
which there can be no assurance, the Company intends to seek other business
activities for the Company, which may be in the fields of energy conversion and
conservation and/or other industries, including the mineral exploration
industry. It is the policy of the Board of Directors of the Company that the
Company will not engage in any activities the scope and nature of which would
subject the Company to the registration and reporting requirements of the
Investment Company Act of 1940.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FUND COSTS CONVERSION
The consolidated statements of income and other financial and operating
data contained elsewhere here in and the consolidated balance sheets and
financial results have been reflected in Australian dollars unless otherwise
stated.
The following table shows the average rate of exchange of the Australian
dollar as compared to the US dollar during the periods indicated:
6 months ended December 31, 1996 A$1.00 = U.S. $.7940
6 months ended December 31, 1997 A$1.00 = U.S. $.6503
RESULTS OF OPERATION
SIX MONTHS ENDED DECEMBER 31, 1997 VS. SIX MONTHS ENDED DECEMBER 31 1996.
Net revenue from commercial activities amounted to A$45,000 for the six
months ended December 31, 1997 compared to A$12,000 for the six months ended
December 31, 1996. The major reason for the change was income from the Dead Seas
Project during the six months ended December 31, 1997.
Costs and expenses increased from A$452,000 in the six months ended
December 31, 1996 to A$632,000 in the six months ended December 31, 1997. The
increase is a net result of:
a) an increase in interest expense from A$124,000 for the six months
ended December 31, 1996 to A$142,000 for the six months ended December 31,
1997 as a result of the increase in long term debt of the Company.
b) the increase in legal accounting and professional expense from
A$45,000 for the six months ended December 31, 1996 to A$66,000 for the six
months ended December 31, 1997 due to costs involved with the proposed
disposal of Solmecs Corporation N.V.
c) the increase in administrative costs including salaries from
A$113,000 in the six months ended December 31, 1996 to A$344,000 in the six
months ended December 31, 1997 due to the reorganisation of the operations
whereby the administration of Solmecs (Israel) Ltd was moved from
Ben-Gurion University to Omer Industrial Park to provide greater
accommodation for research and development and administration together with
associated costs.
d) the decrease in research & development from A$164,000 in the six
months ended December 31, 1996 to A$74,000 in the six months ended December
31, 1997 due to a reallocation of certain costs to administration.
As a result of the foregoing, the loss from operations increased from
A$440,000 for the six months ended December 31, 1996 to A$587,000 for the six
months ended December 31, 1997.
The Company realised a foreign exchange gain of A$1,013,000 for the six
months ended December 31, 1997 compared to a foreign currency exchange loss of
A$54,000 for the six months ended December 31, 1996 caused by the movement in
the Australian dollar versus the U.S. dollar. All of the Company's loan accounts
are denominated in U.S. dollars.
Amortization of goodwill amounted to A$nil for the six months ended
December 31, 1997 compared to A$267,000 for the six months ended December 31,
1996 as goodwill has now been amortised in full.
Net income was A$427,000 for the six months ended December 31, 1997
compared to a net loss of A$761,000 for the six months ended December 31, 1996.
9
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997 the Company had short term obligations of A$807,000
comprising accounts payable and accrued expenses and owed an amount of
A$3,294,000 to Chevas Pty Ltd of which the President and the Chief Executive
Officer of the Company Mr. J I Gutnick is a Director. A company associated with
the party who are negotiating the purchase of Solmecs had provided loan funds to
Solmecs amounting to A$308,000. These funds are interest free.
The Company anticipates that it will be able to defer repayment of certain
of its short term loan commitments until it has sufficient liquidity to enable
these loans to be repaid which there can be no assurance. In addition the
Company has historically relied upon loans and advances from affiliates to meet
a significant portion of the Company's cash flow requirements which the Company
believes based on discussions with such affiliates will continue to be available
during fiscal 1998 and 1999.
The Company will still be required to fund Solmecs in order to complete the
development of the next stage of the LMMHD project together with other projects
that Solmecs is developing. As noted above, a company associated with the party
who are negotiating the purchase of Solmecs have provided loan funds to Solmecs
to enable operations to continue. However, there can be no assurance that this
party will continue to provide these funds.
Other than the arrangements above the Company has not confirmed any further
arrangements for ongoing funding. As a result the Company may be required to
raise funds from additional debt or equity offerings and/or increase the
revenues from operations in order to meet its cash flow requirements during the
forthcoming year.
CAUTIONARY SAFE HARBOR STATEMENT UNDER THE UNITED STATES
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Certain information contained in this Form 10-Q is forward looking
information within the meaning of the Private Securities Litigation Act of 1995
(the "Act") which became law in December 1995. In order to obtain the benefits
of the "safe harbor" provisions of the act for any such forwarding looking
statements, the Company wishes to caution investors and prospective investors
about significant factors which among others have affected the Company's actual
results and are in the future likely to affect the Company's actual results and
cause them to differ materially from those expressed in any such forward looking
statements. This Form 10-Q report contains forward looking statements relating
to future financial results. Actual results may differ as a result of factors
over which the Company has no control including the strength of the domestic and
foreign economies, slower than anticipated completion of research and
development projects and movements in the foreign exchange rate. Additional
information which could affect the Company's financial results is included in
the Company's Form 10-K on file with the Securities and Exchange Commission.
10
<PAGE> 12
PART II
ITEM 1. LEGAL
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company did not file any Report on Form 8-K during the six months ended
December 31, 1997.
ITEM 5. OTHER INFORMATION
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereinto duly authorised.
BAYOU INTERNATIONAL, LTD.
By: /s/ JOSEPH I. GUTNICK
------------------------------------
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Dated: , 1998
By: /s/ PETER LEE
------------------------------------
Peter Lee
Director, Assistant Secretary and
Chief Financial Officer
(Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT
ON FORM 10-Q OF BAYOU INTERNATIONAL, LTD FOR THE QUARTER ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> AUSTRALIAN DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 68
<SECURITIES> 0
<RECEIVABLES> 84
<ALLOWANCES> 0
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0
0
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