FORM 10-QSB
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 quarterly period ended September 30, 1997
Commission File No. 0-17269
Viking Resources International, Inc.
------------------------------------
(Exact name of small business issuer in its charter)
Delaware 59-3314928
-------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 S. Himes Ave., Suite 332, Tampa, Florida 33611
(Address of principal executive office) (Zip Code)
Registrant's telephone number - (813) 837-2295
Securities registered under Section 12 (b) of the Exchange Act:
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 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___ No x
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1997
- ----- ---------------------------------
(Common stock, $.0001 par value) 14,981,500
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C>
Part I: Financial information Page No.
Condensed consolidated balance sheet - September 30, 1997
and June 30, 1997 3 - 4
Condensed consolidated statement of income three months
ended September 30, 1997 and twelve months ended June 30, 1997 5
Condensed consolidated statement of cash flows - three months
ended September 30, 1997 and twelve months ended June 30, 1997 6
Notes to condensed consolidated financial statements 7 - 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations 9 - 10
Part II: Other information
Item 1 Legal Proceedings 11
Item 6 Reports on Form 8-K 11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
1997 1997
---- ----
(Unaudited) *
<S> <C> <C>
Current assets
Cash - Checking 17,488 473
Loans Receivable 1,503,538 3,538
Accounts Receivable 1,433 0
Employee Advances 1,214 0
Note Receivable - Shareholder 4,300 0
Escrow Account (Tipping Fees/Europe) 10,150,000
------------- -----------
Total Current Assets 11,677,973 4,011
Fixed Assets
Computer Equipment/Software 27,938 27,937
Office Furniture & Equipment 101,258
Vehicles 85,452
Less Accumulated Depreciation (57,782) (11,410)
------------- -----------
Total Fixed Assets 156,866 16,527
Other Assets
Organizational Costs 601,622 126,111
Less Accumulated Amortization (81,978) (28,428)
Security Deposits 45,195 195
------------- -----------
Total Other Assets 564,839 97,878
------------- -----------
Total Assets 12,399,678 118,417
============= ===========
</TABLE>
* From audited 10-KSB Financial Statements
The accompanying notes are an integral part of these condensed
financial statements
3
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES
September 30, June 30,
1997 1997
---- ----
(Unaudited) *
<S> <C> <C>
Current Liabilities
Accounts Payable 114,901 88,560
Notes Payable 75,000 75,000
Wages Payable 89,400 44,400
Capital Lease Payable (Computer Equip. & Software) 26,785 23,728
Notes Payable - Officers 14,589 19,265
Other Payable - Officer 0 9,589
Federal P/R Taxes (W/Penalties & Interest) 185,757 166,977
State P/R Taxes 2,620 2,338
Accrued Expenses 9,400 9,400
Total Current Liabilities 437,645 439,128
Long Term Liabilities
Note Payable - Others 5,523,000 0
------------- -------------
Total Long Term Liabilities 5,523,000 0
------------- -------------
Stockholders' Equity
Common Stock 1,498 608
100,000,000 Authorized
14,981,500 Issued/Outstanding @$.0001 Par Value
Additional Paid In Capital 8,530,213 492,492
Retained Earnings (2,101,760) (657,853)
Net Current Period Earnings (Loss) (71,725) (155,958)
------------- -------------
Total Stockholders' Equity 6,358,226 (320,711)
------------- -------------
Total Liabilities and Stockholders' Equity 12,399,678 118,417
============= =============
</TABLE>
* From audited 10-KSB Financial Statements
The accompanying notes are an integral part of these condensed
financial statements.
4
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
---- ----
(Unaudited) *
<S> <C> <C>
Income:
Revenue 36,156 0
Other Income (Fee Income) 38,600 6,151
------------ -------------
Gross Income 74,756 6,151
Operating Expenses 117,902 124,563
Taxes
FICA Taxes 1,681 0
FUI and SUI 0 0
------------ -------------
Total Taxes 1,681 0
------------ -------------
Net Income (Loss) After Taxes (44,827) ( 118,412)
Other Deductions
Depreciation 10,491 4,623
Amortization 13,350 16,175
Loss on Sale of Assets 0 0
Loss on Investment 0 0
------------ -------------
Total Other Deductions 23,841 20,798
Interest Expense (Income) 3,057 11,748
------------ -------------
Net Operating Income (Loss) (71,725) (150,958)
============ =============
Weighted average number of
shares outstanding 14,981,500 6,081,500
Net income per share (.0005) (.025)
</TABLE>
* From audited 10-KSB Financial Statements
The accompanying notes are an integral part of these condensed
financial statements
5
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
---- ----
(Unaudited) *
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) (71,725) (150,958)
Adjustments for non cash charges:
Depreciation and Amortization 23,841 20,798
Accounts Receivable (Increase) Decrease 0 77,214
Other Assets (Increase) Decrease 0 0
Subscriptions Receivable (Increase) Decrease 0 25,000
Accounts Payable Increase (Decrease) (8,176) (24,401)
Current Liabilities Increase (Decrease) 58,500 86,028
----------- -----------
Total adjustments 74,165 184,639
----------- -----------
Net Cash provided (Used) By Operating Activities 2,440 33,681
Cash Flows from Investing Activities:
Purchase of Fixed Assets 0 0
Investment in Subsidiaries (6,100,000) 0
Proceeds from Issuance of Long Term Debt 0 0
Cash Used for Investments 0 0
----------- -----------
Net Cash Provided (Used) By Investing Activities (6,100,000) 0
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock 890 216,146
Paid-In Capital 6,099,375 0
Proceeds from Issuance of Long Term Debt 0 (250,000)
----------- -----------
Net Cash Flows from Financing Activities 6,100,265 (33,854)
Net Increase (Decrease) in Cash 2,705 (173)
Cash At Beginning of Period 14,783 646
----------- -----------
Cash At End of Period 17,488 473
=========== ===========
</TABLE>
* From audited 10-KSB Financial Statements
The accompanying notes are an integral part of these condensed
financial statements
6
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The current quarter financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three month period ending September 30, 1997
and prior audited year end period June 30, 1997 are not necessarily indicative
of the results to be expected for the full year.
The consolidated financial statements include Viking Resources and its
subsidiaries; Juleon, Inc., EPi Systems International, Inc. and its European
division, EPi Recycling & Trading, Gmbh.
NOTE 2: LOANS RECEIVABLE
The loan receivables due the Company consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Balance on loan due from former officer, Mark A. Taylor $ 3,538
Loan due from various parties in Poland re: EPi as represented
by Gerald Kuhr 1,500,000
--------------
1,503,538
</TABLE>
NOTE 3: ESCROW ACCOUNT
Per Mr. Kuhr, an Escrow Account is held by a law firm in Germany for EPi
Recycling & Trading, Gmbh, a wholly owned subsidiary of EPi Systems, Inc. and is
based upon $ 14.00 per ton of municipal solid waste (msw) paid to EPi in escrow
until the waste to fuel pellet plant is under construction. The msw is being
stored on a land site near the planned facility. The current escrow account for
EPi's favor as represented by Gerald Kuhr is $10,150,000.
NOTE 4: INCOME TAXES
The Company has been accruing a significant Federal payroll tax, penalties and
interest payable which was incurred in 1995. The Company expects to negotiate
and settle this payable for a reduced amount.
NOTE 5: REVENUE
The Company has not yet had significant revenue generation and should still be
considered in the developmental stage. It is anticipated that revenue will be
generated by Juleon, Inc. starting in the second quarter of calendar year 1998
and through a pending acquisition beginning in the first calendar quarter of
1998. Juleon, Inc. revenue for the first fiscal quarter in the amount of $36,156
was lower than expected. Other income reported by the Company was $38,600
contributed by Dan O. Erickson, an officer/director and shareholder. This
contribution, a Company debt due Mr. Erickson, was converted from debt to
restricted common stock. Revenues are recognized at the time goods are delivered
to the customer.
7
<PAGE>
NOTE 6: ACQUISITIONS SUBSEQUENT TO SEPTEMBER 30, 1997
No other acquisitions were consummated subsequent to this period.
Remainder of this page left blank intentionally.
8
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the period ended September 30, 1997, and information
relating to the acquisition of Juleon, Inc. on July 1, 1997 and EPi Systems
International, Inc. on September 1, 1997.
Three months ended September 30, 1997
- -------------------------------------
During the three months ended September 30, 1997, Juleon, Inc. was
acquired in exchange for 250,000 shares of the Company's restricted common
stock. Juleon, Inc. is a small long-haul trucking firm that is also in the
process of setting up a fiberglass manufacturing operation for which it has a
very salable product-line. The primary product is a double-walled, in-ground
petroleum tank designed to meet the $84 billion market created by Federal and
state mandates for the industry. As the tank business is being established,
Juleon, Inc. will produce and market several products for which it already has a
customer base; including van conversion and pick-up running boards, van tops,
pick-up toppers and dock boxes. Juleon is also finalizing plans to produce new
and environmentally sound interlocking fiberglass roof panels with impregnated
color and texture to match various current roofing materials. This product would
have a much longer life and less maintenance than most available roofing
systems.
On September 1, 1997, the Company acquired EPi Systems International, Inc.
(EPi), located in Huntington, New York, for 6,000,000 shares of restricted
common stock. The business was acquired from the Chairman/CEO of Viking, Gerald
L. Kuhr. EPi has been in a developmental stage for several years with a planned
waste-to-fuel pellet plant in the process of being funded and built in Poland
near the German border. This business segment of EPi, with three plants
scheduled to be built in Europe, functions under the name of EPi Recycling &
Trading, Gmbh and has an office in Munich, Germany according to information
supplied by Mr. Kuhr. The company has a contract with a large German municipal
solid waste hauler for over 1.0 million tons with a fee to EPi of $20 DM ($14
USD) per ton. The fuel pellets to be produced will be sold as an alternative
fuel to the utility industry in Europe.
Liquidity and Capital Resources at September 30, 1997
- -----------------------------------------------------
At September 30, 1997, the Company had strengthened its asset position
substantially over the past three months with its acquisition of EPi Systems
International, Inc. which added over $6 million in net equity value. Although
the Company had announced it had secured over $2 million of interim funding, it
was determined by the Board of Directors that the funding was too expensive and
that the Company would pursue other options.
9
<PAGE>
Events Subsequent to September 30, 1997
- ---------------------------------------
Pending Major Waste Management Operation: The Chairman is, as has been
announced previously, involved in the final stages of the acquisition of the
environmental division of a major international company which will be financed
by a private joint venture partner. This acquisition will add substantial assets
and revenues to the Company with minimal up-front cost in stock or cash.
Included in the acquisition is substantial funding for the Company to move
forward with its plans according to the Chairman.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
No legal proceedings during the quarter ending September 30, 1997.
Item 6. Form 8-K
- -----------------
Form 8-K, Dated July 1, 1997
Viking acquires Juleon, Inc. for 250,000 shares of restricted common
stock.
Form 8-K, Dated July 17, 1997
Viking authorizes the issuance of 1,000,000 shares of its common stock
to Delmar A. Janovec in settlement of a judgment for $250,000.
Form 8-K, Dated July 30, 1997
Viking signs acquisition agreement to purchase EPi Systems
International, Inc. of Huntington. NY. Total purchase price of 6.0M shares of
restricted common stock issued to Gerald L. Kuhr.
11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
VIKING RESOURCES INTERNATIONAL, INC.
DATE: DECEMBER 10, 1997 BY /S/ GERALD L. KUHR
----------------------
GERALD L. KUHR
CHAIRMAN/CEO
DATE: DECEMBER 10, 1997 BY /S/ DAN O. ERICKSON
----------------------
DAN O. ERICKSON
PRESIDENT/CFO/DIRECTOR
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE DATE
/S/ GERALD L. KUHR NOVEMBER 15, 1997
- ------------------
GERALD L. KUHR
CHAIRMAN/CEO
SIGNATURE DATE
/S/ DAN O. ERICKSON NOVEMBER 15, 1997
- -------------------
DAN O. ERICKSON,
PRESIDENT/CFO/DIRECTOR
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,488
<SECURITIES> 0
<RECEIVABLES> 11,660,485
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,677,973
<PP&E> 721,705
<DEPRECIATION> 159,760
<TOTAL-ASSETS> 12,399,678
<CURRENT-LIABILITIES> 5,960,645
<BONDS> 0
0
0
<COMMON> 1498
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,399,678
<SALES> 0
<TOTAL-REVENUES> 74,756
<CGS> 117,902
<TOTAL-COSTS> 119,583
<OTHER-EXPENSES> 23,841
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,057
<INCOME-PRETAX> (71,725)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71,725)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
