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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 March 31, 1998
Commission File No. 0-17269
Viking Resources International, Inc.
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(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.)
3301 W. Gandy Blvd., Tampa, Florida 33611
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(Address of principal executive office) (Zip Code)
Registrant's telephone number - (813) 837-2295
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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
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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 March 31, 1998
- ----- -----------------------------
(Common stock, $.0001 par value) 28,687,796
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1
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Part I: Financial information Page No.
<S> <C>
Condensed consolidated balance sheet March 31, 1998
and December 31, 1997. 3 - 4
Condensed consolidated statement of income three months
ended March 31, 1998 and nine months year to date. 5
Condensed consolidated statement of cash flows - three months
ended March 31, 1998 and nine months year to date. 6
Notes to condensed consolidated financial statements 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8 - 9
Part II: Other information
Item 1 Legal Proceedings 10
Item 2 Reports on Form 8-K 10
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
March 31, December 31,
1998 1997
----------- ------------
(Unaudited) (Unaudited)
Current assets
Cash - Checking 5,730 453
Loans Receivable - AKO (Note 2) 3,700 3,538
Employee Advances 0 1,858
Other Receivables (Note 2) 1,825 1,825
Prepaid Expenses 1,500 0
-------- --------
Total Current Assets 12,755 7,674
Fixed Assets
Computer Equipment/Software (Note 3) 31,249 27,938
Less Accumulated Depreciation (15,065) (13,720)
-------- --------
Total Fixed Assets 16,184 14,217
Other Assets
Organizational Costs 76,111 126,111
Less Accumulated Amortization (40,578) (36,528)
Security Deposits 195 195
-------- --------
Total Other Assets 35,728 89,778
-------- --------
Total Assets 64,668 111,670
======== ========
The accompanying notes are an integral part of
these condensed financial statements
3
<PAGE>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Current Liabilities
Accounts Payable 29,380 97,359
Wages Payable 78,000 54,000
Capital Leases Payable 16,404 29,804
Notes Payable - Officers 0 6,100
Federal P/R Taxes (W/Penalties & Interest) (Note 4) 195,777 188,877
State P/R Taxes 2,208 2,208
Accrued Expenses 9,400 13,900
-------- --------
Total Current Liabilities 340,758 478,237
Total Long Term Liabilities 0 0
-------- --------
Total Liabilities 340,758 478,237
Stockholders' Equity
Common Stock 2,869 2,735
100,000,000 Authorized
28,687,796 Issued/Outstanding @$.0001 Par Value
Additional Paid In Capital 655,557 492,492
Retained Earnings (750,946) (813,812)
Net Current Period Earnings (Loss) (183,571) (47,983)
-------- --------
Total Stockholders' Equity (276,091) (366,568)
-------- --------
Total Liabilities and Stockholders' Equity 64,668 111,670
======== ========
</TABLE>
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
For the Three Months Ending March 31, 1998 and Nine Months Year to Date
March 31,
1998 Year to Date
----------- ------------
(Unaudited) (Unaudited)
Income:
Revenue (Note 5) 0 0
Other Income 0 0
----------- -----------
Gross Income 0 0
Operating Expenses 106,199 172,733
Taxes
FICA & FUI Taxes 0 0
SUI 0 0
----------- -----------
Total Taxes 0 0
-----------
Net Operating Income (Loss) (106,199) (172,733)
Other Deductions
Depreciation 1,344 3,654
Amortization 4,050 12,150
Loss on Sale of Assets 0 0
Loss on Investment/Debt 21,462 25,015
----------- -----------
Total Other Deductions 26,856 40,819
Interest Expense (Income) 2,543 8,619
----------- -----------
Net Operating Income (Loss) After Taxes (135,588) (222,171)
=========== ===========
Weighted average number of
shares outstanding 28,687,796 28,687,796
Net income per share (.005) (.008)
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
March 31, Year to
1998 Date
----------- -----------
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net Income (Loss) (135,588) (222,171)
Adjustments for non-cash charges:
Depreciation and Amortization 5,394 15,804
Accounts Receivable (Increase) Decrease 1,696 (1,987)
Other Assets (Increase) Decrease (1,500) (1,500)
Accounts Payable Increase (Decrease) (165,379) (160,770)
Current Liabilities Increase (Decrease) 26,900 62,400
---------- ----------
Total adjustments (132,889) (110,352)
---------- ----------
Net Cash provided (Used) By Operating Activities (268,477) (332,523)
Cash Flows from Investing Activities:
Purchase of Fixed Assets (3,311) (3,311)
Investment in Subsidiaries (6,100,000)
Proceeds from Issuance of Long Term Debt 0 0
Cash Used for Investments 0 0
---------- ----------
Net Cash Provided (Used) By Investing Activities (3,311)
(6,103,311)
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock 134 2,260
Paid-In Capital 163,065 6,262,440
---------- ----------
Net Cash Flows from Financing Activities 163,199 6,264,701
Net Increase (Decrease) in Cash (108,589) (171,133)
========== ==========
Summary:
Cash Balance at End of Period 5,730 5,730
Cash At Beginning of Period 73 (473)
---------- ----------
Net Increase (Decrease) in Cash 5,657 6,203
========== ==========
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 March 31, 1998 and
the nine months year to date, are not necessarily indicative of the results to
be expected for the full year.
The consolidated financial statements include only Viking Resources
International, Inc. operations.
NOTE 2: LOANS RECEIVABLE
The loans receivable due the Company consist of the following:
Loan due from AKO Resources, Inc. $ 3,700
Other receivables - G.L. Kuhr 1,825
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Total $ 5,525
=======
During this period, the Company charged off as uncollectable a receivable in the
amount of $3,538.
NOTE 3: COMPUTER EQUIPMENT
The computer equipment listed consists of a capitalized lease originated in July
1995 which has not yet been retired due to the Company's restricted cash flow
during the period January 1996 to December 1997.
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. Revenues are recognized at the time goods
are delivered to the customer.
NOTE 6: ACQUISITIONS SUBSEQUENT TO MARCH 31, 1998
There were no acquisitions subsequent to this period.
7
<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 March 31, 1998.
Three months ended March 31, 1998
During the three months ended March 31, 1998 the Company endeavored to
move forward on funding and ongoing negotiations concerning target acquisitions.
However, the planned Juleon, Inc. fiberglass operation start-up continues to be
delayed due to the Company's inability to fund the operation. Juleon, in the
meantime, operates as a single unit long-haul trucking operation with minimal
operating profits.
Both EPi Systems and its European division remain as developmental stage
operations. Insufficient documentation prohibits the Company from fully
disclosing EPi's status at this time. The Company is also awaiting certain
documentation relevant to Broad Cove Colony, Inc. and the EPi Connecticut
property slated for an assisted living facility. Both of these properties were
brought into Viking through Chairman Kuhr. As soon as the requested information
has been provided, the Company intends to rectify this omission.
Per Chairman Kuhr, and as announced on 2/3/98, 3/2/98, and 3/31/98,
negotiations continue on the Midwest and international environmental waste
operations.
On January 6, 1998, the Company issued 10,000 shares of restricted common
stock to Norman L. Sirak, Esq. as compensation for legal services performed. On
the same date, the Company issued 25,000 shares of restricted common stock to
James E. Cheatham in lieu of payment under a Consulting Agreement dated 12/19/95
and which issuance represents full payment for any remaining fees, expenses or
interest on the unpaid balance of said Agreement. On the same date, the Company
issued 400,000 shares of restricted common stock to LBI Group, Inc. as payment
for certain consulting fees, expenses paid, and a capital infusion of $60,000
covered in a Letter of Agreement dated 12/15/96. This Agreement also included
stock options for up to 100,000 shares of restricted common stock in exchange
for value received in the amount of $80,000. LBI Group, Inc. exercised this
option on January 6, 1998 and the Company issued 100,000 shares of restricted
common stock.
On January 7, 1998, Chairman Kuhr, through an affidavit to the Company's
transfer agent, CDR Transfer, Inc., reported that Stock Certificates #1747 and
#1768 were lost or stolen. A Stop Transfer order was issued on these two
Certificates. Replacement Certificates #1857 and #1858 were issued on this date.
On January 14, 1998, the Company entered into a $5,000 agreement with
Kostech, Inc. to have a website hosted on their financial network. This website
was never fully developed and has since been removed from the Internet.
On January 23, 1998, the Company issued a total of 136,296 shares of
restricted common stock to six individuals who provided administrative,
financial and consulting services.
On March 2, 1998, the Company issued 120,000 shares of restricted common
stock to James W. Walters for consulting services.
8
<PAGE>
On March 6, 1998, the Company issued 50,000 shares of restricted common
stock to Caliente Consulting, Inc./Dan Lawrence as per the terms of the 9/1/97
Financial Public Relations Contract.
On March 15, 1998, the Company entered into a three year Employment
Agreement with Linda Specht to serve as Vice President, Corporate Communications
providing for an annual salary of $60,000 with a $500 per month auto allowance
and other customary benefits as they become available. Ms. Specht's employment,
which provides for two (2) three-year renewals of the Agreement, includes an
initial 100,000 shares of restricted common stock.
Liquidity and Capital Resources at March 31, 1998
During the period ending March 31, 1998, with only a minor infusion of
capital ($80,000) the Company's liquidity and capital resources continued to be
severely restricted in its operation, development and acquisitions. The need for
capital infusion will be necessary for the Company to move forward on its
acquisition and operations goals. Subsequent to the March 31st period, the
Company announced a $2.0M loan signed with 6.0M shares of restricted Viking
common stock as collateral. The loan proceeds were never paid to Viking and
through the insistence of Chairman, Gerald Kuhr, the shares were converted to a
free trading status. Viking subsequently obtained the return of 3.0M shares of
this issue, but have not yet received the balance. Subsequent to this period,
Viking's stock was substantially shorted by broker/dealers in the market which
caused a major reduction in the market value of its stock price over the ensuing
months. The Company may initiate legal proceedings against all parties involved
in this transaction and subsequent shorting.
Events Subsequent to March 31, 1998
On April 2, 1998, the Company authorized a buy back of up to 1,000,000
shares of its common stock in open market or private transactions, subject to
market conditions. On May 1, 1998, the Company opened brokerage accounts with
Comprehensive Capital Corporation of Boca Raton, FL and with J.E. Liss &
Company, Inc. of Milwaukee, WI. Subsequently, the Company purchased 57,700
shares of its common stock.
On April 27, 1998, Chairman Kuhr announced an increase in the ownership of
Broad Cove Colony, Inc. to 80%.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As a result of a 12/27/97 Judgement brought against Mark Taylor and Viking
Resources Int'l., Inc., a Court Order was issued on 2/12/98 directing Viking to
cancel 500,000 shares of its common stock previously issued in the name of Mark
Taylor and reissue without restriction 250,000 shares each to Messrs. Clark and
Holt. Court costs and attorney fees were awarded against Mark Taylor.
Subsequently, the Company discovered that the 500,000 shares issued to Taylor
had already been sold. To comply with the Court Order, the Company directed its
transfer agent to issue the 500,000 shares to Clark and Holt.
On January 28, 1998, Irving A. Backman of Boston, MA, filed a Verified
Complaint with the Middlesex Court of the Commonwealth of Massachusetts, against
Gerald L. Kuhr, EPI Systems Int'l., Inc. (EPi) and Viking Resources Int'l., Inc.
based upon the non-payment of a $100,000 note dated April 26, 1996 signed by Mr.
Kuhr, personally and as Chairman/CEO of EPi. A "Complaint for Contempt", based
upon failure to comply with a court ordered Preliminary Injunction in favor of
the Plaintiff, Backman, was issued on 3/9/98. A second agreement was then
reached among the parties wherein Mr. Backman would hold certain collateral in
the form of securities which would be released upon payment of 300,000 shares of
Viking stock and cash in the amount of $130,000. Although Mr. Backman did
receive personally from Mr. Kuhr 150,000 shares of Viking stock and personally
from Mr. Erickson 150,000 shares of Viking stock, the cash portion was not paid.
Item 2. Form 8-K
No reports on Form 8-K were filed during this period.
10
<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: JUNE 29, 1999 BY /S/ DAN O. ERICKSON
----------------------
DAN O. ERICKSON
PRESIDENT/CEO/CHAIRMAN
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/ DAN O. ERICKSON JUNE 29, 1999
- ----------------------
DAN O. ERICKSON,
PRESIDENT/CEO/CHAIRMAN
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,730
<SECURITIES> 0
<RECEIVABLES> 5,525
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,755
<PP&E> 31,249
<DEPRECIATION> (15,065)
<TOTAL-ASSETS> 64,668
<CURRENT-LIABILITIES> 340,758
<BONDS> 0
0
0
<COMMON> 2,869
<OTHER-SE> (276,091)
<TOTAL-LIABILITY-AND-EQUITY> 64,668
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 106,199
<OTHER-EXPENSES> 26,856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,543
<INCOME-PRETAX> (135,588)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (135,588)
<EPS-BASIC> (0.005)
<EPS-DILUTED> (0.005)
</TABLE>
