FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended Commission file
ended MARCH 31, 1998. No. 33-17679-D
PIERCE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1067694
(State or other jurisdiction of (I.R.S. Employer ID.)
incorporation or organization)
6746 S REVERE PKWY SUITE 130, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code (303)-792-0719
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 proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes___x___ No______
Class Outstanding at March 31, 1998
Common Stock, no par value 6,765,703
INDEX
PART I - FINANCIAL INFORMATION *
ITEM 1. Unaudited Financial Statements
Balance Sheets - March 31, 1998 (unaudited)
and June 30, 1997 3
Statements of Operations - Three Months Ended
March 31, 1998 and 1997 (Unaudited) and the
Year to Date with Last Year Comparison 4
Consolidated Statement of Changes in Stockholders' Equity -
For The Nine Months Ended March 31, 1998 (Unaudited) 5
and the Years Ended 1996 and 1997.
Statement of Cash Flows - Nine Months Ended
March 31, 1996, 1997, and 1998 (unaudited) 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis
10
PART II - OTHER INFORMATION
ITEMS 1 THROUGH 6 11
Signature 12
*The accompanying financial statements are not covered by an independent
certified public accountants' report.
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PIERCE INTERNATIONAL, INC.
BALANCE SHEETS
UNAUDITED
ASSETS March 31, June 30,
CURRENT ASSETS: 1998 1997
<S> <C> <C>
Cash $618 $10,846
Investments
and Stocks 6,432 162
Other 367 367
Total current assets 7,417 11,375
PROPERTY AND EQUIPMENT: (Note 1)
Undeveloped land
mineral property (Note 3) 446,123 434,918
Furniture and equipment 7,705 7,705
Strawboard equipment (Note 4) 57,120 57,120
510,948 499,743
Less accumulated depreciation and
amortization (6,336) (5,674)
Net property and equipment 504,611 494,069
OTHER ASSETS 81,014 59,405
$593,043 $564,849
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES:
Bank Overdraft $0 $0
Accounts payable and accrued
liabilities 89,673 85,050
Advances from officers/directors/
stockholders (Note 5) 259,863 242,080
Total current liabilities 349,537 327,130
NOTE PAYABLE (Note 6) 200,000 200,000
STOCKHOLDERS' EQUITY (Notes 7 & 8)
Preferred stock, no par value;
400,000 shares authorized;
80,000 shares issued and
outstanding as of December 31,
1997 and June 30, 1997 20,000 20,000
Common stock, no par value;
30,000,000 shares authorized;
6,765,703 and 6,380,703
shares issued and outstanding
as of December 31, 1997 and
June 30, 1997, respectively 844,542 844,542
Accumulated deficit (821,035) (826,823)
43,507 37,719
$593,043 $564,849
See notes to financial statements.
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PIERCE INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED YEAR TO DATE (NINE MONTHS)
MARCH 31, MARCH 31,
(UNAUDITED) (UNAUDITED)
1998 1997 1998 1997
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REVENUE:
Net Sales $5,500 $0 $40,500 $100,000
Cost of goods sold 750 - 1,100 70,121
GROSS MARGIN 4,750 0 39,400 29,879
EXPENSES:
Administrative 13,886 8,946 52,627 31,151
Bad debt reserve 0 25,087 23,991 58,194
Outside services 7,234 17,210 37,271 41,993
Advertising and promotion (0) - 5,114 (300)
Total expenses 21,120 51,243 119,003 131,038
NET OPERATING INCOME(LOSS) (16,370) (51,243) (79,603) (101,159)
Other income 18,000 6,000 54,000 18,000
Recovery of bad debt - - 61,606 (92)
Foreign exchange loss - - - (3,499)
Loss on investment (2,093) - (25,841) -
Other expenses (1,532) - (4,374) -
NET INCOME(LOSS) BEFORE
MINORITY (1,995) (45,243) 5,788 (86,750)
MINORITY INTEREST - - - -
NET INCOME (LOSS) ($1,995) ($45,243) $5,788 ($86,750)
NET INCOME(LOSS) PER COMMON
SHARE ($0.000) ($0.007) $0.001 ($0.014)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,765,703 6,380,703 6,765,703 6,380,703
See notes to financial statements.
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PIERCE INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
AND THE YEARS ENDED JUNE 30, 1996 & 1997
TOTAL
COMMON STOCK PREFERRED AMOUNT ACCUMULATED STOCKHOLDERS'
SHARES SHARES DEFECIT EQUITY
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BALANCES,
JUNE 30, 1995 149,517,572 - $844,542 ($713,631) $130,911
25 for 1 Reverse'
split
March 13, 1996 (143,536,869) - - - -
Net loss
for the year - - - (6,778) (6,778)
BALANCES,
JUNE 30, 1996 5,980,703 - 844,542 (720,409) 124,133
Issuance of
common stock
in lieu of
compensation 400,000 - - - -
Private placement
of convertible
preferred - 80,000 20,000 - 20,000
Net loss for
the year - - - (106,414) (106,414)
BALANCES, '
JUNE 30, 1997 6,380,703 80,000 864,542 (826,823) 37,719
Issuance of
common stock
in lieu of
compensation 385,000 - - - -
Net income for
the quarter
Ended September
30, 1997 - - - 50,842 50,842
BALANCES,
SEPTEMBER 30, 1997 6,765,703 80,000 864,542 (775,981) 88,561
Net loss for
the quarter
Ended December
31, 1997 - - - (43,059) (43,059)
BALANCES, DECEMBER
31, 1997 6,765,703 80,000 864,542 (819,040) 45,502
Net loss for the
quarter ended
March 31, 1998 - - - (1,995) (1,995)
BALANCES,
MARCH 31, 1998 6,765,703 80,000 $864,542 ($821,035) $43,507
See notes to financial statements.
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PIERCE INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31,
(UNAUDITED)
1998 1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $5,788 ($86,750) ($28,563)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 662 66 662
Changes in operating assets
and liabilities:
Decrease (Increase) in
accounts receivable - (8,967) 1,098
Decrease (Increase) in
related party receivable - - (13,142)
(Increase) in other assets (21,609) - -
Increase in bank overdraft - - (12,682)
(Decrease) Increase in accounts
payable and accrued
expenses 4,623 48,575 26,143
Increase (Decrease) in deferred revenue 35,144
Gain(Loss) on sale of investments - - (3,273)
Net cash used in operating
activities (10,536) (46,480) 5,387
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase)decrease in property and
equipment (11,205) - -
(Increase) decrease in investments (6,270) 15,585 (1,125)
Net cash used in investing
activities (17,475) 15,585 (1,125)
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts/payments on advances from officers/
directors/stockholders 17,783 9,752 (3,882)
Proceeds from private placement offering 15,000
Net cash provided by
financing activities 17,783 24,752 (3,882)
(DECREASE) INCREASE IN CASH (10,228) (6,143) 380
CASH, beginning of period 10,846 13,004 808
CASH, end of period $618 $6,861 $1,188
See notes to the financial statements.
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
OPERATIONS - Pierce International, Inc. (PI) was incorporated
under the laws of the State of Colorado on July 22, 1987, for the
purpose of obtaining capital to seek potentially profitable
business opportunities. Currently, PI has business interest in
two industries, natural resources and industrial development.
NET INCOME PER COMMON SHARE - Net income (loss) per common share
is computed based upon the weighted average number of shares
outstanding during the period. Common stock equivalents were not
considered (for losses only), as their effect would be anti-
dilutive.
PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION - Property and
equipment are stated at cost. Depreciation is being provided by
the straight-line method over estimated useful lives of three to
five years. All costs related to the acquisition (including
associated legal and other costs), exploration, evaluation, and
development, of the mineral properties have been capitalized.
These costs will be amortized by the units-of-production method of
accounting based upon estimated recoverable reserves.
CONTINUING OPERATIONS - The accompanying financial statements have
been prepared on a going concern basis, which contemplates
continuity of operations and realization of assets and
satisfaction of liabilities in the normal course of business. The
continuation of the Company as a going concern is dependent upon
the Company raising additional capital, and attaining and
maintaining profitable operations. The Company has suffered
recurring losses from operations that raise substantial doubt
about its ability to continue as a going concern.
2. UNAUDITED INFORMATION:
The information furnished herein was taken from the books and
record of the Company without audit. However, such information
reflects all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary to
reflect properly the results of the interim periods presented.
Results of operations for the periods presented are not
necessarily indicative of the results to be expected for the year.
These interim financial statements should be read in conjunction
with the Company's annual report and report on Form 10-K for the
year ended June 30, 1997.
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
3. UNDEVELOPED MINERAL PROPERTY:
On June 11, 1996, PI reclaimed the "Como" property from Pierce
International Discovery, Inc. (PIDI). PIDI, a 17.24% owned subsidiary,
failed to comply with the stock purchase agreement. Como consists of
gold and gravel mining leases on a property situated approximately 50
miles southwest of Denver, Colorado, near Como, Colorado in Park
County.
4.STRAWBOARD INVESTMENT:
The Company purchased strawboard equipment for $57,120.
This equipment is seen as an investment and the Company
intends to resell the equipment.
5. RELATED PARTY PAYABLE AND RELATED PARTY TRANSACTIONS:
Advances include $196,863 due Pierce D. Parker, Officer and Director, or
his company, Parker Consulting Services, and $63,000 is accrued
consulting fees due Pierce D. Parker.
6.COMMITMENTS:
As of March 31, 1998, PI had the following long term note payable:
PCS Profit Sharing Plan$200,000
PI is obligated to pay $200,000 to Parker Consulting Services Profit
Sharing Plan, owned by Pierce D. Parker, for funds it pledged for the
purpose of funding the Como project. This debt is to be paid from net
profits generated by the Como property.
7.STOCKHOLDERS' EQUITY:
As of March 31, 1998, PI had 6,765,703 common shares issued and
outstanding. There are 30,000,000 shares authorized. A reverse split
of 1 for 25 shares was approved on March 13, 1996.
Of the total shares outstanding, 160,000 shares were issued as part of
PI's initial public offering and are free trading stock. All other
shares have been held a minimum of 1 year and could be sold under Rule
144.
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
7. STOCKHOLDERS' EQUITY:(CONTINUED)
The Company issued 80,000 shares of convertible Series I preferred
stock. The stock was issued in conjunction with a private
placement conducted by the Company. There are 400,000 shares of
preferred stock authorized and may be determined by the Board of
Directors as to dividend rights, dividend rate, conversion rights,
voting rights, redemption rights and terms, liquidation
preferences, the number of shares constituting the series and the
designation of each series.
The Series I Convertible Preferred Stock holders are entitled to
dividends when and as declared by the Company's Board of Directors
from funds which are legally available. The Series I Preferred
Stock is convertible, at any time into an identical number of
shares of the Company's Common Stock. Holders of the Series I
Convertible Preferred Stock are entitled to one vote per share on
all matters submitted to a vote of the Company's shareholders.
Series I Convertible Preferred Stock does not have preemptive
rights and it is not redeemable.
8. INCENTIVE STOCK OPTION PLAN:
On August 10, 1987, the Company adopted an Incentive Stock Option Plan
(the "Plan") under which options granted are intended to qualify as
"incentive stock options" under Section 422A of the Internal Revenue
code of 1954, as amended (the "Code"). Pursuant to the Plan, options to
purchase up to 400,000 shares of the Company's Common Stock may be
granted to employees of the Company. The Plan is administered by the
Board of Directors which is empowered to determine the terms and
conditions of each option, subject to the limitation that the exercise
price cannot be less than the market value of the Common Stock on date
of the grant (110% of the market value in the case of options granted to
an employee who owns 10% or more of the Company's outstanding Common
Stock) and no option can have a term in excess of 10 years (5 years in
the case of options granted to employees who own 10% or more of the
company's Common Stock).
As of the date of this report, no options have been granted under this
Plan.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1998.
INTRODUCTION
The Company is concentrating on its two major industries, natural
resources and industrial development. The Company is making a
concentrated effort to sell strawboard equipment, and to presell
strawboard.
LIQUIDITY
Working capital at March 31, 1998 was a negative $342,120. A
significant portion of current liabilities are advances from
stockholders. Cash flow continues to be irregular and the Company will
continue to rely heavily on its current investments to produce future
cash flow.
RESULTS OF OPERATIONS
During the quarter ended March 31, 1998, the Company had net loss
of $1,995. The Company had an operating loss of $16,370. The Company
failed to generate income from operations and it continues to struggle
to develop reoccurring revenue.
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PART II - OTHER INFORMATION
ITEMS #1 THROUGH #6 (a) - No response required.
ITEM 6 (b) - No reports were filed on the Form 8-K during the quarter
ended March 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PIERCE INTERNATIONAL, INC.
Dated: May 15, 1998 BY: /s/ Pierce D. Parker
Pierce D. Parker,
President (Chief Financial and
Accounting Officer)
