SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d)
Securities Exchange Act of 1934
for Quarterly Period Ended June 30, 1999
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities And Exchange Act of 1934
for the transaction period from _________ to________
Commission File Number 33-55254-10
Seair Group, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 87-0438825
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6831 Edgewater Commerce Parkway, Suite 1110, Orlando, FL 32810
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(Address of principal executive offices, Zip Code)
(407) 445-1035
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(Registrant's telephone number, including area code)
Check whether the issuer (1) 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 [ ] No [ X ]
The number of outstanding shares of the
registrant's common stock, par value $.001
as of June 30, 1999 is 7,841,242.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
SEAIR GROUP, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(NOTE 1) (NOTE 1)
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 57,575 $ 21,081
Notes receivable from stockholder, net -- 12,500
Accounts receivable 11,245 6,066
Inventory, net 77,381 85,127
Prepaid expenses 12,538 30,619
----------- -----------
Total current assets 158,739 155,393
----------- -----------
Property and equipment, net 8,258 9,288
Other assets:
Goodwill, net 446,997 458,812
Deposits 5,140 5,140
----------- -----------
Total other assets 452,137 463,952
----------- -----------
$ 619,134 $ 628,633
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 97,526 $ 6,020
Accrued liabilities 99,238 36,194
Customer deposits 34,000 47,500
Notes payable 50,000 --
----------- -----------
Total liabilities 280,764 89,714
----------- -----------
Stockholders' equity:
Common stock, par value $.001, 25,000,000 shares authorized,
7,841,242 and 10,257,575 shares issued and outstanding 7,841 10,257
Additional paid-in capital 1,171,184 973,319
Deficit accumulated during the development stage (840,655) (444,657)
----------- -----------
Total stockholders' equity 338,370 538,919
----------- -----------
$ 619,134 $ 628,633
=========== ===========
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
2
<PAGE>
SEAIR GROUP, INC.
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
7/9/86
THREE MONTHS ENDED SIX MONTHS ENDED (Date of
June 30, June 30, Inception)
1999 1998 1999 1998 to 6/30/99
---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
REVENUES: $ 122,592 $ 0 $ 203,202 $ 0 $ 271,301
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales 166,592 17,500 256,822 17,500 393,104
Selling, general & administrative 214,340 5,262 373,878 5,262 750,352
----------- ----------- ----------- ----------- -----------
380,932 22,762 630,700 22,762 1,143,456
----------- ----------- ----------- ----------- -----------
OPERATING LOSS (258,303) (22,762) (427,498) (22,762) (872,155)
----------- ----------- ----------- ----------- -----------
OTHER INCOME 31,500 -- 31,500 -- 31,500
----------- ----------- ----------- ----------- -----------
NET LOSS $ (226,803) $ (22,762) $ (395,998) $ (22,762) $ (840,655)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,509,740 5,130,174 7,762,643 5,504,268
NET INCOME (LOSS) PER SHARE $ (.03) $ (.00) $ (.05) $ (.00)
=========== =========== =========== ===========
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
3
<PAGE>
SEAIR GROUP, INC.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
7/9/86
Six Months Ended (Date of
June 30, Inception
1999 1998 to 6/30/99
---- ---- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(395,998) $ (22,762) $(840,655)
Adjustments to reconcile net loss to
net cash flows used in operating activities:
Depreciation and amortization 15,265 -- 31,284
Bad debt expense -- -- 25,000
Obsolete inventory write-down -- -- 23,144
Issuance of stock for services 79,300 -- 79,300
Increase in accounts receivable (5,179) -- (11,245)
Decrease (increase) in inventory 7,746 (3,354) (100,525)
Decrease (increase) in prepaid expenses 18,081 -- (12,538)
(Decrease) increase in customer deposits (13,500) -- 34,000
Increase in accounts payable 91,506 -- 97,526
Decrease (increase) in accrued expenses (63,044) -- 66,667
--------- --------- ---------
Net cash flows used in operating activities (139,735) (26,116) (608,042)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in notes receivable 12,500 (25,000) (25,000)
Purchase of property and equipment (2,420) -- (13,893)
Purchase of organization costs -- -- (50)
Increase in deposits -- -- (5,140)
--------- --------- ---------
Net cash provided by (used for) investing activities 10,080 (25,000) (44,083)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of costs 116,151 485,860 793,700
Proceeds from issuance of notes payable 50,000 -- 50,000
Repayment of long-term debt -- (134,000) (134,000)
--------- --------- ---------
Net cash flows from financing activities 166,151 351,860 709,700
--------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 36,496 300,744 57,575
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,081 -- --
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 57,575 $ 300,744 $ 57,575
========= ========= =========
SUPPLEMENTAL INFORMATION:
Non-cash acquisition of World Seair Corporation $ -- $ 472,596 $ 472,596
========= ========= =========
Non-cash conversion of debt to common stock $ -- $ 300,000 $ 300,000
========= ========= =========
</TABLE>
Unaudited-See accompanying notes to condensed financial statements.
4
<PAGE>
SEAIR GROUP, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1-BASIS OF PRESENTATION:
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete statements. Management believes that all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. If such differences prove significant and material, Seair Group, Inc.
(the "Company") will file an amendment to this report on Form 10-QSB.
NOTE 2 - DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Nevada on July 9,
1986 and has been in the development stage since inception. On May 28, 1998, the
Company acquired World Seair Corporation ("WSC") as a wholly owned subsidiary
and changed its name from Vicuna, Inc. to Seair Group, Inc. WSC has designed and
developed the Seair Ultralite Flying Inflatable Boat.
NOTE 3 - STOCKHOLDERS' EQUITY:
On January 7, 1999, the Company's two majority stockholders retired 3,500,000
shares of common stock.
During the six months ended June 30, 1999, the Company issued 437,000 shares of
its common stock to certain of its officers and employees in lieu of
compensation. The value of these shares of common stock was determined to range
from $.15 to $.20 per share, based on the date of issue. This resulted in a
charge to earnings for compensation in the amount of $79,300.
During the six months ended June 30, 1999, the Company also converted $24,900 of
notes payable to 100,000 shares of common stock.
NOTE 4 - SUBSEQUENT EVENT
On August 31, 1999, the Company entered into a memorandum of understanding with
SeaGliders, LLC. SeaGliders has agreed to purchase the Company's product line,
assets, and limited liabilities, subject to shareholder approval and the signing
of a definitive agreement.
5
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERALL FINANCIAL CONDITION
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate that Seair Group,
Inc. (the "Company") will continue as a going concern. For the first six months
of 1999 and 1998, the Company incurred losses of $427,000 and $23,000,
respectively. Losses increased in the first six months of 1999 over 1998 due to
a full six months of operations, compared to only one month of operations in
1998. The Company experienced negative cash flows from operations of $140,000
and $26,000 for the first six months of 1999 and 1998, respectively.
RESULTS OF OPERATIONS
The Company had revenue from operations of $203,000 during the first six months
of 1999, compared to $0 in the first six months of 1998. Revenue for the three
months ended June 30, 1999 was $123,000, compared to $0 in the three months
ended June 30, 1998.
Cost of sales for the six months ended June 30, 1999 were $257,000, compared to
$18,000 in the first six months of 1998. Cost of sales for the three months
ended June 30, 1999 were $166,000 compared to $18,000 for the three months ended
June 30, 1998. Selling, general and administrative costs for the six months
ended June 30, 1999 were $374,000 as compared to $5,000 for the comparable
period in 1998. Selling, general and administrative costs for the three months
ended June 30, 1999 were $214,000 as compared to $5,000 for the comparable
period in 1998.
PLAN OF OPERATION
The Company continues to experience negative cash flows from operating
activities. Due to the continued negative cash flow, the Company has continued
to raise funds through private placements.
Management's plans to improve the financial position of the Company, with the
goal of sustaining the Company's operations for the current year and beyond
include: (1) increasing sales through wholesale channels using select
distributors and retail channels using direct marketing; and (2) increasing
operating efficiencies as the Company progresses further in its development
stage.
The Company is currently negotiating the sale of its product line, assets, and
limited liabilities to SeaGliders, LLC, and has entered into a memorandum of
understanding with respect to such sale. In addition, the Company is continuing
to seek other candidates for an acquisition or merger.
6
<PAGE>
Part II
ITEM 1 - LEGAL PROCEEDINGS
Not applicable.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
During the six months ended June 30, 1999, the Company issued
200,000, 100,000, 50,000, 50,000, 25,000, 8,000 and 4,000
shares of its common stock to Steven Weismann, Steven Kerr,
Patrick Walsh, Darren Clark, Jeff Lampe, Scott Bolton, and
Thomas Keith, respectively, as compensation in connection with
their employment with the Company. The value of these shares
of common stock was determined to range from $.15 to $.20 per
share, based on the date of issue. This resulted in a charge
to earnings for compensation in the amount of $79,300.
During the six months ended June 30, 1999, the Company also
converted $24,900 of notes payable to 100,000 shares of common
stock, and issued 546,667 shares for cash of $91,250.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 - OTHER INFORMATION
On August 31, 1999, the Company entered into a memorandum of
understanding with SeaGliders, LLC. SeaGliders has agreed to
purchase the Company's product line, assets, and limited
liabilities, subject to shareholder approval and the signing
of a definitive agreement.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed herewith:
Exhibit 27.1 Financial Data Schedule
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
SEAIR GROUP, INC.
Dated: December 30, 1999 By: /s/ Steven H. Kerr
--------------------------
Steven H. Kerr
Chairman of the Board of
Directors and President
(duly authorized
officer of the registrant and
principal financial officer
of the registrant)
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 57,575
<SECURITIES> 0
<RECEIVABLES> 11,245
<ALLOWANCES> 0
<INVENTORY> 77,381
<CURRENT-ASSETS> 158,739
<PP&E> 13,893
<DEPRECIATION> 5,635
<TOTAL-ASSETS> 619,134
<CURRENT-LIABILITIES> 280,764
<BONDS> 0
0
0
<COMMON> 7,841
<OTHER-SE> 1,171,184
<TOTAL-LIABILITY-AND-EQUITY> 619,134
<SALES> 203,202
<TOTAL-REVENUES> 234,702
<CGS> 256,822
<TOTAL-COSTS> 630,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (395,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> (395,998)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (395,998)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
