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, 1998
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.)
3301 W. Gandy Blvd., 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. The total outstanding shares
reflected below as at September 30, 1998 includes adjustments made to reflect
2,150,000 authorized, but not yet issued shares and 18,057,700 cancelled, but
awaiting return of certificates.
Class Outstanding at September 30, 1998
- ----- ---------------------------------
(Common stock, $.0001 par value) 18,780,096
<PAGE>
<TABLE>
<CAPTION>
VIKING RESOURCES INTERNATIONAL, INC.
INDEX
Part I: Financial information Page No.
<S> <C>
Condensed consolidated balance sheet September 30, 1998
and June 30, 1998. 3 - 4
Condensed consolidated statement of income three months
ended September 30, 1998 and year ended June 30, 1998 5
Condensed consolidated statement of cash flows - three months
ended September 30, 1998 and year ending June 30, 1998 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
September 30, June 30,
1998 1998
---- ----
(Unaudited) (Audited)
Current assets
Cash - Checking (15) 2,197
Loans Receivable (Note 2) 18,700 3,700
Employee Advances Receivable (Note 2) 1.324 0
Other Receivable (Note 2) 1,825 1,825
------- --------
Total Current Assets 21,834 7,722
Fixed Assets
Computer Equipment/Software (Note 3) 31,440 31,440
Less Accumulated Depreciation (17,885) (16,475)
------- --------
Total Fixed Assets 13,555 14,966
Other Assets
Organizational Costs 76,111 76,111
Less Accumulated Amortization (45,078) (42,828)
------- --------
Total Other Assets 31,033 33,283
------- --------
Total Assets 66,423 55,970
======= ========
The accompanying notes are an integral part of these condensed
financial statements
3
<PAGE>
<TABLE>
<CAPTION>
VIKING RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES
September 30, June 30,
1998 1998
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Current Liabilities
Accounts Payable 31,808 28,166
Notes Payable 14,004 0
Computer/Equip.-Capital Lease 0 14,004
Wages Payable 106,000 106,000
Federal P/R Taxes (W/Penalties & Interest) (Note 4) 200,481 202,677
State P/R Taxes 2,208 2,208
Accrued Expenses 9,400 9,400
---------- ----------
Total Current Liabilities 363,901 362,455
Long Term Liabilities 0 0
---------- ----------
Total Liabilities 363,901 362,455
Stockholders' Equity
Common Stock 3,469 3,469
100,000,000 Authorized
18,780,096 Issued/Outstanding @$.0001 Par Value (Note 6)
Additional Paid In Capital 783,453 840,829
Retained Earnings (1,045,475) (1,150,783)
Net Current Period Earnings (Loss) (38,924) 0
---------- ----------
Total Stockholders' Equity (297,478) (309,954)
---------- ----------
Total Liabilities and Stockholders' Equity 66,423 55,970
========== ==========
</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 September 30, 1998
and Twelve Months Ending June 30, 1998
September 30, June 30,
1998 1998
---- -------------
(Unaudited) (Audited)
Income:
Revenue (Note 5) 0 0
Other Income 0 0
----------- -----------
Gross Income 0 0
Operating Expenses 35,264 292,492
Taxes
FICA & FUI Taxes 0 0
SUI 0 0
----------- -----------
Total Taxes 0 0
----------- -----------
Net Operating Income (Loss) (35,264) (292,492)
Other Deductions
Depreciation 1,410 5,064
Amortization 2,250 14,400
Loss (Gain) on Sale of Assets 0 0
Loss on Investment 0 25,015
----------- -----------
Total Other Deductions 3,660 44,479
Interest Expense (Income) 0 0
----------- -----------
Net Operating Income (Loss) After Taxes (38,924) (336,971)
=========== ===========
Weighted average number of
shares outstanding (Note 6) 18,780,096 34,687,796
Net income per share (.002) (.010)
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,
1998 1998
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) (38,924) (336,971)
Adjustments for non-cash charges:
Depreciation and Amortization 3,660 19,464
Accounts Receivable (Increase) Decrease (16,325) (162)
Other Assets (Increase) Decrease 0 (1,630)
Accounts Payable Increase (Decrease) 2,074 (60,395)
Increase (Decrease) in Income Taxes Payable (2,197) 35,700
Current Liabilities Increase (Decrease) 0 (51,978)
-------- --------
Total adjustments (12,788) (59,001)
-------- --------
Net Cash provided (Used) By Operating Activities (51,712) (395,972)
Cash Flows from Investing Activities:
Purchase of Fixed Assets 0 (3,502)
Investment in Subsidiaries 0 0
Deferred organizational Costs 0 50,000
Cash Used for Investments 0 0
-------- --------
Net Cash Provided (Used) By Investing Activities 0 46,498
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock 0 351,198
Paid-In Capital 49,500 0
Proceeds from Issuance of Long Term Debt 0 0
-------- --------
Net Cash Flows from Financing Activities 49,500 351,198
Net Increase (Decrease) in Cash (2,212) 1,724
Cash At Beginning of Period 2,197 473
-------- --------
Cash At End of Period (15) 2,517
======== ========
</TABLE>
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, 1998
are not necessarily indicative of the results to be expected for the full year.
The consolidated financial statements include only Viking Resources
International, Inc. corporate operations.
NOTE 2: LOANS RECEIVABLE
The loans receivable due the Company consist of the following:
Loan due from AKO Resources, Inc. $ 3,700
Loan due from Executive JetPort of New Jersey, Inc. 15,000
Employee Advances Receivable 1,324
Other receivables - G.L. Kuhr 1,825
-----------
$ 21,849
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 that was incurred in 1995. A Notice of Levy was sent in the
amount of $206,531.71. The Company has been in communication with the Internal
Revenue Service and 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: SHARES OUTSTANDING
The total outstanding shares at September 30, 1998 includes adjustments made to
reflect 2,150,000 authorized, but not yet issued and 18,057,700 cancelled, but
awaiting return of certificates.
NOTE 7: ACQUISITIONS SUBSEQUENT TO SEPTEMBER 30, 1998
Subsequent to the period ending September 30, 1998, the Company
had no acquisitions.
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 September 30, 1998.
Three months ended September 30, 1998
- -------------------------------------
During the three months ended September 30, 1998, significant events
affected the Company's operations and business plans. The Company, working with
Corporate Counsel, determined that it was in the best interests of the Company
and its shareholders that the Chairman, Gerald L. Kuhr be removed from his
positions with Viking Resources Int'l., Inc. The Company faced the difficult
process associated with the expected shareholder questions and concerns about
the August 25th announcement regarding the Chairman's removal. Additionally, it
was determined that in terminating Mr. Kuhr, the Company had no alternative but
to cancel the EPi acquisition. The Company also completely withdrew from any
association with the Broad Cove Colony transaction since sufficient supporting
documentation was never received. At the same time, the Company cancelled all of
the shares issued to Mr. Kuhr, a total of 18,000,000 which effectively rescinded
the EPi acquisition (6,000,000), the Broad Cove transaction (6,000,000), and
6,000,000 originally issued for purported value of real estate holdings of EPi
(this would include the Connecticut property as well as other parcels that were
to become part of Viking's holdings).
The Company also intensified its search for sufficient funding to secure
the Executive JetPort (EJP) joint venture as well as to support corporate
operations and move forward with its revised business plan. In the interim, the
Company continued to work with EJP (and other acquisition targets) to maintain
communication and keep its options on these transactions open and available. The
lack of funding and any cash flow at this time prohibited any forward movement
on the planned Juleon, Inc. fiberglass operation start-up. Juleon continues to
operate as a single unit long-haul trucking operation supporting only its two
employees and reflecting minimal operating profits.
On July 1, 1998, the Company communicated via press release to its
shareholders the status of its funding and pending acquisitions, which
information was provided by Chairman Kuhr. Following this release, the Company,
through various business contacts, investigation, and requests to Chairman Kuhr
for substantive documentation and information relevant to the 7/1/98 release, as
well as prior releases and other communication, determined that Mr. Kuhr was
unable to secure financing or to conclude acquisition negotiations. (See first
paragraph above under Three months ended September 30, 1998.)
On July 24, 1998, the Company announced a $2.0 Million funding
agreement with Hampton Group, LLC. Despite Hampton Group's efforts, they were
unable to secure the funding due to the Company's current price per share which
had been significantly eroded as a result of possible shorting following the
funding transaction that Mr. Kuhr entered into with Bodden & Co. Hampton Group
did assist the Company in facilitating the return of 3.0M shares of common stock
from Bodden & Co. In a private transaction, the Company sold 500,000 of these
returned shares due to the critical nature of its cash flow situation. The
remaining 2,500,000 shares are housed in a brokerage account maintained by
Hampton Group for the benefit of the Company.
8
<PAGE>
On July 29, 1998, the Memorandum of Understanding was signed with
Executive JetPort of New Jersey, Inc. (EJP). Located at New Jersey's
Trenton-Mercer Airport, EJP holds a 30-year lease for 27 acres of land and
buildings providing Fixed Base Operation (FBO) services to the aviation
industry. During this reporting period, EJP continued with its efforts to
renovate the FBO and to sign contracts and agreements with suppliers and with
new clients as announced on July 31st and August 18th.
On August 7, 1998, at a meeting of the Board of Directors of the
Company, a Resolution was prepared terminating Gerald L. Kuhr effective
immediately from all positions held with the Company and demanding the return of
all stock previously issued.
On August 24, 1998, at a meeting of the Board of Directors of the
Company, information was presented concerning the use by the Company of two
blocks of Viking restricted common stock owned by Dan O. Erickson, which shares
had issue dates in 1995. The first, an issue on June 2, 1995 in the amount of
1,000,000 shares, was used by the Company in a collateral transaction in 1995
and subsequently, in November of 1997, the shares were acquired by Industrial
State Bank of Oklahoma due to the default by the borrower for whom these shares
were utilized as collateral. In July of 1998, the Bank sold these shares. The
second, an issue on November 6, 1995 in the amount of 350,000 shares, was
utilized as collateral in 1996 in lieu of repayment of a loan made by Gerald L.
Kuhr to Viking. Mr. Kuhr later used these shares as collateral on a transaction
involving Irving Backman of Boston, MA. Mr. Kuhr defaulted on this loan and it
became a liability for Viking as successor-in-interest when Viking acquired Mr.
Kuhr's company, EPi Systems, Inc. As a result, Mr. Erickson was forced to
forfeit those 150,000 shares. As a result of these transactions, it was
determined that these shares were owned by Mr. Erickson; the shares were used
for Company purposes; he was at full economic risk as of the original dates of
issue; and the holding period began when he became at full economic risk. The
Company, therefore, authorized the issue of 1,150,000 shares of non-restricted
stock to Mr. Erickson.
On August 25, 1998, the Company's transfer agent was directed to issue
100,000 shares of restricted common stock to Linda Specht, an employee. These
shares are a part of Ms. Specht's Employment Agreement of March 15, 1998, and
although authorized, the shares have not been issued.
On August 25, 1998, the Company announced the removal of its Chairman,
Gerald Kuhr. This action was determined to be in the best interests of the
Company and its shareholders. The Company cancelled the transaction with Bodden
& Co. (which included an issue of 6.0M shares of non-restricted common stock).
Further, the Company cancelled all of the restricted stock issued to Mr. Kuhr -
a total of 18.0M shares of restricted common stock.
On August 31, 1998, the Company authorized, by Board Resolution and in
a letter to its transfer agent, the issuance of 900,000 shares of restricted
common stock to Linda Specht, an employee. Ms. Specht's Employment Agreement was
amended effective September 1, 1998 to reflect a new position as Executive Vice
President with a salary increase to $75,000 per year. These resolutions were
recommended as a result of significant additional responsibility demanded of Ms.
Specht in light of the Company's difficulties during the preceding months and in
recognition of her entrepreneurial efforts, working with little or no payment of
salary or other compensation. In addition, Ms. Specht was nominated to be a
Director and the Secretary of the Corporation effective September 1, 1998.
9
<PAGE>
Liquidity and Capital Resources at September 30, 1998
- -----------------------------------------------------
In announcing the $2.0 Million funding agreement with
Hampton Group, LLC, the Company anticipated a fast turnaround enabling it to
consummate the EJP joint venture agreement and move forward with other operating
necessities. Despite Hampton Group's efforts, they were unable to secure the
funding due to the Company's current price per share, which had been
significantly eroded. Hampton Group did assist the Company in facilitating the
return of 3.0M shares of common stock from Bodden & Co. In a private
transaction, the Company sold 500,000 of these returned shares due to the
critical nature of its cash flow situation. The remaining 2,500,000 shares are
housed in a brokerage account maintained by Hampton Group for the benefit of the
Company.
Consequently, the Company's liquidity and capital resources remain limited.
Events Subsequent to September 30, 1998
- ---------------------------------------
There were no substantive events subsequent to September 30, 1998,
although the Company continued its efforts to obtain funding and maintained
communication with EJP.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
To the Company's knowledge, there were no legal proceedings during the
quarter ending September 30, 1998.
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 30, 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 30, 1999
- ------------------- -------------
DAN O. ERICKSON,
PRESIDENT/CEO/CHAIRMAN
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> (15)
<SECURITIES> 0
<RECEIVABLES> 21,849
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,834
<PP&E> 31,440
<DEPRECIATION> (17,885)
<TOTAL-ASSETS> 66,423
<CURRENT-LIABILITIES> 363,901
<BONDS> 0
0
0
<COMMON> 3,469
<OTHER-SE> (297,478)
<TOTAL-LIABILITY-AND-EQUITY> 66,423
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 35,264
<OTHER-EXPENSES> 3,660
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (38,924)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,924)
<EPS-BASIC> (0.002)
<EPS-DILUTED> (0.002)
</TABLE>
