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
September 30, 1999. No. 33-17679-D
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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 Parkway Ste 130, Englewood, CO 80112
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(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 September 30, 1999
-------------------------- ---------------------------------
Common Stock, no par value 7,215,703
1
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INDEX
PART I - FINANCIAL INFORMATION *
- --------------------------------
ITEM 1. Unaudited Financial Statements
Balance Sheets - September 30, 1999* (unaudited)
and June 30, 1998 3
Statements of Operations - Three Months Ended
September 30, 1997, 1998 and 1999 (unaudited) 4
Consolidated Statement of Changes in Stockholders' Equity -
For The Three Months Ended September 30, 1999 (Unaudited)
and the Years Ended 1997, and 1998. 5
Statement of Cash Flows - Three Months Ended
September 30, 1997, 1998 and 1999 (unaudited) 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis 9
PART II - OTHER INFORMATION
- ---------------------------
ITEMS 1 THROUGH 6 10
Signature 10
*The accompanying financial statements are not covered by an independent
certified public accountants' report.
2
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<CAPTION>
PIERCE INTERNATIONAL, INC.
BALANCE SHEETS
ASSETS
UNAUDITED
September 30, June 30,
1999 1999
---- ----
CURRENT ASSETS:
<S> <C> <C>
Cash $ 2,594 $ 12,501
Investments (9,320) --
Other -- --
----------- -----------
Total Current Assets (6,726) 12501
PROPERTY AND EQUIPMENT: (Note 1)
Undeveloped mineral property (Note 2) 434,918 434,918
Furniture and Equipment 8,347 7,705
Stawboard equipment (Note 3) 57,120 57,120
----------- -----------
500,385 499,743
Less accumulated depreciation
and amortization (7,661) (7,440)
----------- -----------
Net property and equipment 485,997 504,804
----------- -----------
OTHER ASSETS 875 874
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$ 486,872 $ 505,678
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 33,240 $ 51,263
Advances and accrued expenses from
officers/directors/stockholders (Note 4) 548,243 537,913
----------- -----------
Total current liablities 581,483 589,176
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NOTES PAYABLE (Note 6) 46,158 42,080
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COMMITMENTS (Note 5)
STOCKHOLDERS' DEFICIT (Notes 7 and 8)
Preferred stock, no par value;
400,000 shares authorized;
80,000 shares issued and outstanding 20,000 20,000
Common stock, no par value; 30,000,000
shares authorized; 7,215,703 and
7,030,703 shares issued and outstanding
as of September 30, June 30,1999,
respectively 872,432 872,432
Deficit (1,018,010) (1,018,010)
----------- -----------
Total stockholders' deficit (15,191) (125,578)
----------- -----------
$ 486,872 $ 505,678
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3
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PIERCE INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDING SEPTEMBER 30TH
UNAUDITED
1999 1998 1997
---- ---- ----
REVENUE:
Sales -- $ 985 $ 35,000
Cost of Goods Sold 1,299 576 --
----------- ----------- -----------
GROSS MARGIN (1,299) 409 35,000
EXPENSES:
Administrative 6,000 14,245 21,326
Bad Debt Reserve -- -- 22,478
Outside Services 3,844 3,769 14,325
Advertising and promotion 1,264 2,321 3,990
Professional Fees 1,924 -- --
Lease Rental 3,672 -- --
----------- ----------- -----------
Total expenses 16,704 20,335 62,119
NET OPERATING LOSS (18,003) (19,926) (27,119)
Other Income -- -- 18,000
Recovery of Bad Debt 2,812 4,336 61,681
Foreign Exchange Loss -- -- 243
Loss on Investment -- -- (318)
Other Expenses -- -- (1,645)
----------- ----------- -----------
NET LOSS (15,191) (15,590) 50,842
=========== =========== ===========
NET LOSS PER
COMMON SHARE ($ 0.002) ($ 0.002) $ 0.008
=========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,215,703 6,861,120 6,319,165
=========== =========== ===========
4
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PIERCE INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED JUNE 30, 1996, 1997, 1999
Preferred Stock Common Stock
Shares Amount Shares Amount Deficit
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Balances, June 30, 1996 -- $ -- 5980703 $ 844,542 ($ 720,409)
Issuance of 80,000 shares of
preferred stock 80000 20000 -- -- --
Issuance of 400,000 shares of
common stock in lieu of services -- -- 400,000 -- --
Net loss -- -- -- -- (106,414)
----------- ----------- ----------- ----------- -----------
BALANCES, June 30, 1997 80,000 20,000 6,380,703 844,542 (826,823)
Issuance of 845,000 shares of
common stock in lieu of services -- -- 845,000 19,940 --
Net loss -- -- -- -- (101,283)
----------- ----------- ----------- ----------- -----------
BALANCES, June 30, 1998 80,000 20,000 7,225,703 864,482 (928,106)
Issuance of 105,000 shares of
common stock in lieu of services -- -- 105,000 19,950 --
Common stock returned -- -- (300,000) (12,000) --
Net loss -- -- -- -- (89,904)
----------- ----------- ----------- ----------- -----------
Balances, June 30, 1999 80,000 20,000 7,030,703 872,432 (1,018,010)
Issuance of 185,000 shares of
common stock in lieu of services -- -- 185,000 -- --
Net loss for quarter ending
September 30, 1999 -- -- -- -- (15,191)
Balances, September 30, 1999 80,000 20,000 7,215,703 872,432 ($1,033,201)
=========== =========== =========== =========== ===========
5
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<CAPTION>
PIERCE INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THREE MONTHS ENDED SEPTEMBER 30,
CASH FLOWS FROM OPERATING ACTIVITIES: 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Income (Loss) (15,191) (15,726) 50,842
Adjustments to reconcile net loss
to cash used in operating activities:
Depreciation and amortization 221 221 221
Changes inoperating assets and
liabilities
Decrease (Increase in accounts receivable 1,186 43,878
Decrease Yorkton Security 64
Decrease C. Henry Receivable 4,448
Increase Other Assets (12,550)
Increase in Bank Overdraft 1,049
(Decrease) Increase in accounts payable
and accrued expenses 4,519 (32,504) (6,520)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loss in sale of investments (642) (679)
(Increase) decrease in property and equipment (11,205)
(Increase) decrease in investments (32,182)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts/payments on advances from officers/
directors/stockholders 178
Proceeds from Bginning Retained Earnings 11
------- ------- -------
(DECREASE) INCREASE IN CASH (9,907) 392 (10,846)
CASH, JULY 1 12,501 286 10846
------- ------- -------
CASH SEPTEMBER 30 2,594 678 0
======= ======= =======
6
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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 interests 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,
1999.
7
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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, and claims 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 $156,462 due Piece D. Parker, officer and director, or his
company, Parker Consulting Services, and $200,000 is accrued consulting
fees due Pierce D. Parker.
6. COMMITMENTS:
------------
As of September 30, 1999, PI had the following long term note payable:
PCS Profit Sharing Plan $401,386
PI is obligated to pay $401,386 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 September 30, 1998, PI had 7,215,703 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.
8
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PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Quarter Ended September 30, 1999.
- --------------------------------------------------------------------------------
9
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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 September 30, 1999 was a negative $19,157. 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 September 30, 1999, the Company had net income of
$2,812 The Company had an operating loss of $15,191. The Company was able to
recover a portion of bad debt it had allowed for in an earlier period. The
payment was made in marketable securities. In addition, the Company received
payment of fees related to it's strawboard business and there was not any cost
of goods associated with these fees. Although the Company produce income for the
quarter, it continues to struggle to develop reoccurring revenue.
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
September 30, 1999.
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: October 21, 1999 BY: /s/ Pierce D. Parker
- ----------------------- ------------------------
Pierce D. Parker,
President (Chief Financial and
Accounting Officer)
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> (6726)
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 501259
<DEPRECIATION> (7661)
<TOTAL-ASSETS> 486872
<CURRENT-LIABILITIES> 627641
<BONDS> 0
0
20000
<COMMON> 872432
<OTHER-SE> (1033201)
<TOTAL-LIABILITY-AND-EQUITY> 486872
<SALES> 2812
<TOTAL-REVENUES> 2812
<CGS> 1299
<TOTAL-COSTS> 1299
<OTHER-EXPENSES> 16033
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 671
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15191)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
