U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED DECEMBER 31, 1996
COMMISSION FILE NO. 0-17981
HAWK MARINE POWER, INC.
A Florida Corporation 59-1886450
3025 N.E. 188 Street, Miami, Florida 33180
Issuers telephone number: (305) 932-9230
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ].
State the number of shares outstanding of each of the registrant's classes of
common equity as of the latest practicable date. 2,990,198 shares of the
registrant's common stock are issued and outstanding as of May 12, 1997.
Total number of pages contained in this document 10.
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HAWK MARINE POWER, INC.
INDEX
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT (UNAUDITED)
Condensed Balance Sheets as of December 31, 1996 and September 30, 1996.
Condensed Statements of Operations for the Three months ended December 31, 1996
and 1995.
Condensed Statements of Cash Flows for the Three months ended December 31, 1996
and 1995.
Notes to Condensed Financial Statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
PART II. OTHER INFORMATION
ITEM 1. - 5.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
2
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
HAWK MARINE POWER, INC.
BALANCE SHEETS
DECEMBER 31, 1996 SEPTEMBER 30, 1996
----------------- ------------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 25,875 $ 85,737
Accounts Receivable, Net 7,692 8,321
Inventory 208,241 247,610
Other Current Assets 4,532 2,968
-------- --------
TOTAL CURRENT ASSETS 246,340 344,636
PROPERTY AND EQUIPMENT
Furniture & Equipment 234,740 234,740
Less: Accumulated Depreciation 212,343 211,866
-------- --------
PROPERTY AND EQUIPMENT - NET 22,397 22,874
-------- --------
TOTAL ASSETS $268,737 $367,510
======== ========
SEE NOTES TO FINANCIAL STATEMENTS
3
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HAWK MARINE POWER, INC.
BALANCE SHEETS (Cont.)
DECEMBER 31, 1996 SEPTEMBER 30, 1996
----------------- ------------------
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 65,481 $ 83,169
Accrued Expenses 28,195 26,989
Customer Deposits 58,100 121,700
Notes Payable 101,173 101,173
----------- -----------
CURRENT LIABILITIES 252,949 333,031
----------- -----------
TOTAL LIABILITIES 252,949 333,031
----------- -----------
SHAREHOLDERS' EQUITY
Common Stock - $.001 par
value authorized - 50,000,000
shares; issued and outstanding
2,990,198 shares 2,990 2,990
Additional Paid in Capital 1,604,045 1,604,045
Accumulated Deficit (1,607,036) (1,572,556)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (1) 34,479
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 252,948 $ 367,510
=========== ===========
See Notes to Financial Statements
4
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HAWK MARINE POWER, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
----------- -----------
Net Sales $ 282,883 $ 184,338
Cost of Sales 238,690 154,844
----------- -----------
Gross Margin 44,193 29,494
Selling, General
and Administrative
Expenses 63,009 75,865
----------- -----------
Operating (Loss) (18,816) (46,371)
Interest - Net 123 148
----------- -----------
Net Income $ (18,693) $ (46,223)
(Loss)
=========== ===========
Income (Loss) Per
Common Share $ (.01) $ (.02)
=========== ===========
Weighted Shares
Outstanding 2,990,198 2,990,198
=========== ===========
See Notes to Financial Statements
5
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HAWK MARINE POWER, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
--------------------------
1996 1995
-------- --------
OPERATING ACTIVITIES
Net (Loss) $(18,693) $(46,223)
Adjustments to Reconcile Net
Loss to Net Cash Provided
by Operating Activities:
Depreciation & Amortization 479 1,877
(Increase) Decrease in:
Accounts Receivable - Net 629 41,049
Inventory 39,369 (41,796)
Other Current Assets (1,564) (2,785)
Increase (Decrease) in:
Accounts Payable (17,688) (2,594)
Accrued Expenses 1,206 65
Customer Deposits (63,600) (2,822)
-------- --------
Net Cash (Used) Provided
by Operating Activities (59,862) (53,229)
CASH FLOWS FROM INVESTING
ACTIVITES:
Equipment Purchases -- (281)
-------- --------
Net Increase (Decrease) in Cash (59,862) (53,510)
CASH AT BEGINNING OF PERIOD 85,737 89,013
-------- --------
CASH AT END OF PERIOD $ 25,875 $ 35,503
======== ========
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
HAWK MARINE POWER, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements of Hawk Marine Power, Inc. have been
prepared in accordance with generally accepted accounting principles for interim
financial information, and with the instructions to Form 10-QSB and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) considered to be necessary for a fair presentation
have been included. Operating results for the three months ended December 31,
1996 are not necessarily indicative of the expected results for the year ending
September 30, 1997. For further information, refer to the financial statements
and footnotes included in the Company's annual report on Form 10-KSB for the
year ended September 30, 1996.
NOTE B - GOING CONCERN CONSIDERATION
The Company's consolidated financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
reported cumulative losses since inception of $1,607,036. In addition, the
Company's $405,000 11% notes payable (principal balance of 101,173 at December
31, 1996) were due November 1, 1991. The Company has reached agreement with
certain noteholders to retire the notes payable for the sum of $50,000.
The Company's ability to continue operations is dependent upon maintaining
reduced costs and its current level of business.
7
<PAGE>
NOTE C - FAS 109
Deferred income taxes are provided on the tax effect of changes in temporary
differences. Deferred tax assets are subject to a valuation allowance if their
realization is not reasonably assured. Deferred tax assets are comprised of the
following at December 31, 1996:
Net Operating Loss Carry Forward $ 506,925
Valuation Allowance (506,925)
----------
Net Deferred Tax Asset $ 0
==========
NOTE D - MAJOR CUSTOMER
For the years ended September 30, 1996 and 1995, approximately 24% and 33% of
the company's sales were with the Cigarette Racing Team, Inc. A principal
shareholder and chief executive officer of the company is also an officer and
employee of Cigarette. During the quarter ended December 31, 1996, no sales were
generated by Cigarette. The loss of this customer, or a substantial decrease in
engine orders would have a material adverse affect on the Company's operations.
NOTE E - LITIGATION
The Company is a defendant in a lawsuit filed on March 20, 1995 in the Circuit
Court of Dade County, Florida styled as PETROCELLI ELECTRONIC COMPANY, INC. ET
AL VS. HAWK MARINE POWER, INC. (Case No. 95-5279 CA01-01). The Plaintiffs are
holders of Promissory Notes which the Company executed on November 10, 1988 and
which were the subject of various settlement agreements executed on April 16,
1992 which were fulfilled in part by the Company. There are seven Plaintiffs
represented in this litigation who are seeking damages of in excess of $40,000
together with interest and cost of collection. The Company has filed a Motion to
Dismiss the Plaintiff's complaint and is awaiting a ruling by the court. The
Company has reached agreement with certain noteholders to retire the notes
payable for the sum of $50,000.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
For the quarter ended December 31, 1996 the Company reported a net loss of
$18,693 compared to a net loss of $46,371 for the quarter ended December 31,
1995. Net revenues of $282,883 during the current quarter increased 53% from
$184,338 during the same period in fiscal 1996.
Selling, general and administrative expenses for the quarter ended December 31,
1996 were $63,009, a 17% decrease from the same period in fiscal 1996. The
change resulted from decreased overhead costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash on hand in the amount of $25,875 at December 31, 1996
compared to $85,737 at September 30, 1996. Working capital decreased from
$11,605 at September 30, 1996 to $6,609 at the end of the current quarter. The
decrease was related to a loss from operations during the first three months of
fiscal 1997.
The Company was obligated to retire at November 1, 1991, $405,000 principal
amount of its 11% secured promissory notes issued to a group of private
investors in October 1988. On April 16, 1992, the Company agreed to enter into
settlement with the noteholders pursuant to which the participants who accepted
the terms of the settlement agreement would receive a cash payment equal to 86%
of their entire investment. The Company has reached a subsequent agreement to
retire said notes for the sum of $50,000.
9
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PART II. OTHER INFORMATION
Items 1 - 5
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
SIGNATURES
In accordance with requirements of the Exchange Act, the Issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 12, 1997 HAWK MARINE POWER, INC.
BY: /s/ CRAIG N. BARRIE
-----------------------
CRAIG N. BARRIE
President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1996
<CASH> 25,875
<SECURITIES> 0
<RECEIVABLES> 7,692
<ALLOWANCES> 0
<INVENTORY> 208,241
<CURRENT-ASSETS> 246,340
<PP&E> 22,397
<DEPRECIATION> 479
<TOTAL-ASSETS> 268,737
<CURRENT-LIABILITIES> 252,949
<BONDS> 0
0
0
<COMMON> 2,990
<OTHER-SE> 1,604,045
<TOTAL-LIABILITY-AND-EQUITY> 252,948
<SALES> 282,883
<TOTAL-REVENUES> 282,883
<CGS> 238,690
<TOTAL-COSTS> 63,009
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,693)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,693)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
