SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 1995.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
Commission File No. 01-18304
VIP GLOBAL CAPITAL, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1096009
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
11250 East 40th Ave., Denver, CO 80239
(Address of principal executive offices) (Zip Code)
(303) 371-8400
(Issuer's telephone number)
Check whether the issuer (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 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
As of December 31, 1995 the issuer had 4,530,060 shares of common stock
outstanding.
<PAGE>
VIP GLOBAL CAPITAL, INC.
FORM 10-QSB
INDEX
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page Number
Condensed Statement of
Operations for the three 3
months ended December 31, 1995.
Condensed Balance Sheets
as of December 31, 1995 and 4
September 30, 1995.
Note to Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition 6
and Results of Operations
Part II. Other Information and Signatures 9
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
VIP GLOBAL CAPITAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31
1995 1994
---- ----
Sales $ 4,277,451 $ 5,734,382
Cost of Goods Sold 3,782,654 3,372,693
Selling, general and administrative expenses 1,033,457 1,925,848
Other income and (expense) 0 108,353
Net income (loss) BIDT (538,660) 544,193
Interest Expense 223,702 197,628
292,590 246,049
------------------------------
Total IDT 516,292 443,678
------------------------------
Net Income (loss) $(1,054,952) $ 100,516
==============================
Loss per share of common stock (0.23) 0.03
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
VIP GLOBAL CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
December 31 September 30
1995 1995
---- ----
Current Assets:
Cash $ (93,466) $ 154,043
Cash, restricted 150,000 150,000
Notes Receivable: 300,000
Accounts Receivable:
Trade, net of allowance 2,296,334 2,473,492
Accounts receivable, other (108,696) 4,112
Inventories 1,746,591 1,645,883
Prepaid expenses and other 49,429 63,514
Total Current Assets 4,040,192 4,791,044
Fixed Assets:
Machinery, furn, fix & equipment 8,579,625 6,641,488
Less accumulated depreciation (1,729,558) (1,557,022)
Other Assets
Intangible assets, net of
accumulated amortization 2,143,735 2,158,938
Deposits 46,676 98,676
Deferred Offering Costs 54,898 70,834
Deferred Refinancing Costs 85,681 100,478
Other 32,857 47,857
Total other assets 2,363,847 2,476,783
Total Assets $13,254,106 $12,352,293
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE>
VIP GLOBAL CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31 September 30
1995 1995
---- ----
Current Liabilities: $ $
Accounts payable 2,691,114 2,617,577
Other accrued expenses 495,576 675,051
Current portion of long-term debt 713,982 684,508
Notes Payable 985,555 852,326
Bank Overdrafts 0 385,966
Advanced deposits on Sales 0 156,339
Total current liabilities 4,886,227 5,371,767
Long-term debt, net of current portion above 5,494,364 3,687,445
Due to affiliated companies 782,878 692,783
Convertible Debentures 1,036,815 1,036,815
Total liabilities 12,200,284 10,788,810
Stockholders' equity
Preferred stock, authorized 10 million
shares @ $.001 par value per share
Series B & C, issued & outstanding 77 76
73,399 shares.
Common Stock, authorized 100 million
shares @ $.001 par value per share
issued & outstanding 4,530,060 shares 4,371 1,987
Additional paid in capital 5,322,129 4,779,221
Retained earnings (deficit) (4,272,755) (3,217,802)
Total stockholders' equity 1,053,822 1,563,483
Total liabilities & stockholders' equity 13,254,106 12,352,292
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE>
VIP GLOBAL CAPITAL, INC.
NOTE TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 310(b)
of Regulation S-B. They do not include all information and notes required by
generally accepted accounting procedures for complete financial statements
prepared in accordance with generally accepted accounting principles. However,
except as noted herein, there has been no material change in the information
disclosed in the notes to the consolidated financial statements included in the
Annual Report on Form 10K-SB of VIP Global Capital, Inc. (the "Company") for the
year ended September 30, 1995. The disclosures presented are sufficient, in
management's opinion, to make the interim information presented not misleading.
All adjustments, consisting of normal recurring adjustments, which are necessary
so as to make the interim information not misleading, have been made. Results of
operations for the three months ended December 31, 1995 are not necessarily
indicative of results of operations that may be expected for the year ending
September 30, 1996. It is recommended that this financial information be read
with the complete financial statements included in the Company's annual report
on Form 10-K for the year ended September 30, 1995 previously filed with the
Securities and Exchange Commission.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
Results of Operations
Sales
Sales for the period decreased by $1,453,931 or 34% to $4,277,451 in
the first quarter of FY 1996 from $5,734,382 for the comparable quarter of FY
1995. Sales in the electronic division in the first quarter 96 were 144% of
sales reported in the same period last year. The manufacturing division
experienced a 33% decline in revenue and the Print/Mail group experienced a 30%
drop in revenues reported for the comparable period last year.
6
<PAGE>
Cost of Goods Sold
Cost of Goods increased by $409,961 or 11% to $3,782,654 from the
reported first quarter cost of goods sold last year. As a percentage of sales,
Cost of Goods Sold increased by 29%. This increase can be attributed to
competitive pricing pressures, inefficiencies of production, and quality issues.
For the print and manufacturing segments, sales and production volume
inefficiencies and product mix differences contributed to the higher cost
percentage.
Management has aggressively looked at direct and indirect labor and
related expenses in all areas of the Company. Through consolidation of
operations and realignment, many positions have been eliminated and processes
have been streamlined. In the Print and Direct Marketing ("PDM") segment of the
business, comparing the period ended September 30, 1995 to the period ended
January 31, 1996 there has been approximately a 16% reduction in wages, salaries
and payroll related expenses. It should be noted as well, that revenues
increased during this period by 11%.
Management is taking this same aggressive approach in reducing material
costs, overhead costs and in improving quality. Information systems have
improved reporting throughout the company and as a result, controls have been
tightened.
Management is confident that the reduction in labor costs and tightened
material and overhead spending will begin to reflect as a reduction of the Cost
of Goods Sold in the second quarter of 1996.
Selling, General and Administrative Expense
Administrative and general expenses were $1,033,458 in the first
quarter of fiscal year1996, down $892,390 or 86% from the corresponding quarter
of fiscal year1995. The reduction in selling, administrative and general expense
is attributed primarily to reduction in overhead staff positions and in the
consolidation of operations.
Operating Income
Operating income in the first quarter decreased by $1,082,854 or 201%
to ($538,660) from the same quarter last year. This decrease is due primarily to
the increased cost of goods sold noted above.
Interest and Depreciation Expense
Interest expense for the first quarter of fiscal year 1996 was
$223,702, an increase of 12% from the same period last year. Interest expense
increased due to increased utilization of a $5,000,000 revolving line of credit
put into effect by the Company in November of 1994 through FINOVA Capital
Corporation, (formally referred to as GFC Corporation).
7
<PAGE>
Interest and Depreciation Expense (Continued)
Depreciation and amortization expense increased to $292,590 or 16% from
$246,049 in the comparable period last year. This increase is primarily
attributed to the amortization of "other assets" and "deferred costs"
capitalized by the Company in fiscal 1995. Financing for the "VIPCOMM" building
was finalized in this quarter resulting in higher depreciation as well.
Liquidity and Capital Resources
During the quarter ended December 31, 1995 the Company was provided
with working capital primarily from borrowings from its working capital line of
credit, and various other short term borrowings.
Net Profit
The Company realized a net loss for the three month period ended
December 31, 1995 of $1,054,952 or approximately ($.23) per share, a decrease of
$1,155,469 or (110%) from a $100,517 profit during the same period last year.
This decrease is due primarily to the decrease in revenues, deterioration of
margin and underabsorbtion of fixed overhead in all divisions of the Company.
8
<PAGE>
Part II. Other Information and Signatures
SIGNATURES
Pursuant to the requirements 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.
VIP GLOBAL CAPITAL, INC.
By: /S/ TIMOTHY S. VASKO
-------------------------------
Timothy S. Vasko,
Chief Executive Officer
Date: February 27,1995 By: /S/ MICHAEL J. SCHUCHARD
-------------------------------
Michael J. Schuchard,
Sr. Vice President
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 56,534
<SECURITIES> 0
<RECEIVABLES> 2,187,638
<ALLOWANCES> 0
<INVENTORY> 1,746,591
<CURRENT-ASSETS> 6,404,039
<PP&E> 8,579,625
<DEPRECIATION> (1,729,558)
<TOTAL-ASSETS> 13,254,106
<CURRENT-LIABILITIES> 6,705,920
<BONDS> 5,494,364
0
77
<COMMON> 4,371
<OTHER-SE> 1,049,374
<TOTAL-LIABILITY-AND-EQUITY> 13,254,106
<SALES> 4,277,451
<TOTAL-REVENUES> 4,277,451
<CGS> 3,782,654
<TOTAL-COSTS> 4,816,111
<OTHER-EXPENSES> 292,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 223,702
<INCOME-PRETAX> (1,054,952)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,054,952)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,054,952)
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