<PAGE> 1
UNITED STATES
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 period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File No. 0-22744
VIKING CAPITAL GROUP, INC.
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(Exact name of small business issuer as specified in its charter)
Utah 87-0442090
- ----------------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Two Lincoln Centre, Suite 300, 5420 LBJ FWY, Dallas, Texas 75240
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(Address of principal executive offices)
(214) 386-9996
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(Issuer's telephone number)
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(Former name, former address and former fiscal
year, if changed since last report)
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
--- ---
As of March 31, 1997, 14,093,411 shares of Common Stock of the issuer were
outstanding.
<PAGE> 2
VIKING CAPITAL GROUP, INC.
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - For the three
months ended March 31, 1997 and 1996 3
Consolidated Balance Sheets - March 31, 1997 and 1996 4
Consolidated Statement of Stockholders' Equity (Deficit) 5
Consolidated Statements of Cash Flows - For the three
months ended March 31, 1997 and 1996 6
Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation. 9
PART II - OTHER INFORMATION
Item 5. Other Information 10
SIGNATURES 11
2
<PAGE> 3
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31, 1997 and 1996
and Period from November 12, 1986 (inception) to March 31, 1997
<TABLE>
<CAPTION>
Period from
Three Months Ended November 12,
March 31, 1986 to
1997 1996 March 31, 1997
----------------------------------------
<S> <C> <C> <C>
Revenue $ 0 $ -0- $ 316,855
Cost and expenses:
Depreciation and amortization 7,130 300 20,965
General and administrative expenses 284,827 262,648 4,265,961
---------- ---------- -----------
Total cost and expenses 291,957 262,948 4,286,926
---------- ---------- -----------
Loss from operations (291,957) (262,948) (3,970,071)
Other income/expenses:
Oil property expenses and minimal lease loss -0- -0- (0)
Gain on sale of assets -0- -0- 0
Interest income 2,600 1,370 18,561
Interest and penalty expense (17,380) (6,545) (81,509)
Other -0- -0- (37,260)
---------- ---------- -----------
Total other income/expenses (14,780) (5,175) (100,208)
---------- ---------- -----------
Loss before income taxes (306,737) (268,123) (4,070,279)
Income tax provision -0- -0- (32)
---------- ---------- -----------
Net loss $ (306,737) $ (268,123) $(4,070,311)
========== ========== ===========
Loss per common share:
Primary $ (.22) $ (.20)
Assuming full dilution $ (.22) $ (.20)
Dividends per share of preferred stock $ .00 $ .03
</TABLE>
3
<PAGE> 4
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1997 1996
----------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 5,988 $ 209,797
Note receivable and accrued interest 76,173 27,339
Prepaid expenses 0 93,993
------------ ------------
Total Current Assets 82,161 331,129
Office furniture and equipment, net 106,786 5,230
Other Assets:
Other assets 31,767 15,899
------------ ------------
Total Other Assets 31,767 15,899
------------ ------------
Total Assets $ 220,714 $ 352,258
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 54,505 $ 22,401
Accrued payroll and payroll taxes 297,314 143,376
Dividends payable 0 300
Note payable and accrued interest 543,230 207,947
------------ ------------
Total Current Liabilities 919,219 374,024
Long-term debt:
LT portion of capital lease 76,266 0
Notes payable -0- 0
------------ ------------
Total Liabilities 995,485 374,024
Stockholders' Equity (Deficit):
Common stock $0.001 par value; 150,000,000 shares authorized;
14,093,411 and 13,132,470 issued and outstanding as of
March 31, 1997 and 1996, respectively 14,091 13,132
Common stock Class B $0.001 par value; 100,000 shares
authorized and outstanding as of March 31, 1997 100 100
Preferred stock $1.00 Par Value; 50,000,000 shares authorized;
zero and 10,000 shares issued and outstanding at
March 31, 1997 and 1996 respectively -0- 10,000
Paid in capital 3,318,945 3,037,633
Deficits accumulated in the development stage (4,101,501) (3,082,631)
Less Treasury Stock (6,406) -0-
------------ ------------
Total Stockholders' Deficit (774,771) (21,766)
------------ ------------
Total Liabilities and Stockholders' Equity (Deficit) $ 220,714 $ 352,258
============ ============
</TABLE>
4
<PAGE> 5
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
Three Months Ended March 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Class B Additional During the
Common Common Preferred Paid-in Development Treasury
DOLLAR AMOUNTS Stock Stock Stock Capital Stage Stock Total
- -------------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 100 $ 13,971 $ -0- $ 3,294,575 $(3,794,764) $ (6,406) $ (492,524)
Issuance of common stock:
For services -0- -0- -0- -0- -0- -0- -0-
For cash -0- 25 -0- 7,475 -0- -0- 7,500
For loan incentive -0- 58 -0- 5,725 -0- -0- 5,783
For loan & interest conversion -0- 37 -0- 11,170 -0- -0- 11,207
Net loss -0- -0- -0- -0- (306,737) -0- (306,737)
----------- ----------- ----------- ----------- ----------- ---------- -----------
Balance, March 31, 1997 $ 100 $ 14,091 $ -0- $ 3,318,945 $(4,101,501) (6,406) $ (774,771)
=========== =========== =========== =========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Shares Issued
------------------------------------------
Class B
Common Common Preferred
SHARE AMOUNTS Stock Stock Stock
- ------------- ------------ ------------ ------------
<S> <C> <C> <C>
Balance, December 31, 1996 100,000 13,971,720 -0-
Issuance of common stock:
For services -0- -0- -0-
For cash -0- 25,000 -0-
For loan incentive -0- 57,833 -0-
For note & interest conversion -0- 37,358 -0-
------------ ------------ ------------
Balance, March 31, 1997 100,000 14,091,911 -0-
============ ============ ============
</TABLE>
5
<PAGE> 6
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, 1997 and 1996
and Period from November 12, 1986 (inception) to March 31, 1997
<TABLE>
<CAPTION>
Period from
Three Months Ended November 12,
March 31, 1986 to
1997 1996 March 31, 1997
------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (306,737) $ (268,123) $(4,070,311)
Noncash charges included in operations
Depreciation and amortization 7,130 300 20,965
Common stock issued for services -0- 123,100 1,000,129
Class B common stock issued for services -0- -0- 100
Note payable issued for services -0- -0- 3,200
Common stock issued for services and accrued expenses -0- -0- 30,434
Provision for doubtful notes receivable -0- -0- 52,754
Common stock issued for interest payable 1,207 -0- 21,309
Loss on assets -0- -0- 15,000
Changes in assets and liabilities
Accounts receivable 99,703 -0- -0-
Prepaid expenses -0- (12,250) -0-
Note receivable and accrued interest (3,100) (7,465) (10,311)
Other -0- -0- (31,182)
Accounts payable and accrued expenses 193 (12,799) 92,477
Accrued payroll and payroll taxes (13,728) (7,389) 288,824
Advances to stockholder expensed to consulting -0- -0- 57,706
------------ ----------- -----------
Net Cash Used for Operating Activities (215,332) (184,626) (2,528,906)
Cash Flows From Investing Activities:
Capital expenditures -0- -0- (21,464)
Loans made to shareholder -0- -0- (17,000)
Loans made -0- -0- (91,142)
Loans made to related parties -0- -0- (95,366)
Loan repayments -0- -0- 15,500
Other -0- -0- (15,000)
------------ ----------- -----------
Net Cash Used for Investing Activities -0- -0- (224,472)
Cash Flows From Financing Activities:
Stock sale expenses -0- -0- (11,716)
Proceeds from sale of common stock 7,500 320,200 1,728,293
Proceeds from notes payable 318,400 0 1,537,386
Repayment of notes payable (114,500) (2,500) (497,444)
Proceeds from preferred stock sale -0- -0- 20,000
Other -0- -0- (11,753)
Preferred dividends paid -0- (300) (5,400)
------------ ----------- -----------
Net Cash Provided by Financing Activities 211,400 317,400 2,759,366
------------ ----------- -----------
(Decrease) Increase in Cash (3,932) 132,774 5,988
Cash at Beginning of Period 9,920 77,023 -0-
------------ ----------- -----------
Cash at End of Period $ 5,988 $ 209,797 $ 5,988
============ =========== ===========
</TABLE>
6
<PAGE> 7
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS- (Continued)
(Unaudited)
Three Months Ended March 31, 1997 and 1996
and Period from November 12, 1986 (inception) to March 31, 1997
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INVESTING ACTIVITIES
<TABLE>
<CAPTION>
Period from
Three Months Ended November 12,
March 31, 1986 to
1997 1996 March 31, 1997
------------------------------------------
<S> <C> <C> <C>
Cash Flow Information:
Interest paid $ 4,481 $ 400 $ 8,293
Income taxes paid $ -0- $ -0- $ 32
Non-Cash Investing Activities:
Common stock issued for:
Acquisition of VISI $ -0- $ -0- $ 434
Oil lease $ -0- $ -0- $ 40,000
Non-Cash Financing Activities:
Preferred stock issued for:
Note payable-related party $ -0- $ -0- $ 60,000
Accrued interest-related party $ -0- $ -0- $ 4,500
Accrued expenses-related party $ -0- $ -0- $ 25,500
Common stock issued for:
Services $ -0- $ 123,100 $1,057,279
Repayment of notes payable $ 10,000 $ -0- $ 237,500
Payment of interest $ 1,207 $ -0- $ 17,103
Payment of accounts payable $ -0- $ -0- $ 15,000
Conversion of preferred stock $ -0- $ -0- $ 100,000
Payment of preferred stock dividend $ -0- $ -0- $ 25,556
Note payable issued for services $ -0- $ -0- $ 3,200
Assignment of oil lease in payment of note payable $ -0- $ -0- $ 40,000
</TABLE>
7
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VIKING CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The March 31, 1997 financial statements were
derived from unaudited data and does not include all disclosures required
by generally accepted accounting principles. The interim financial
statements and notes thereto should be read in conjunction with the
financial statements and notes included in the Company's Form 10-KSB as of
and for the period ended December 31, 1996. In the opinion of management,
the interim financial statements reflect all adjustments of a normal
recurring nature necessary for a fair statement of the results for the
interim periods presented. The current period results of operations are
not necessarily indicative of results which ultimately will be reported
for the full year ending December 31, 1997.
The financial statements have been prepared on the assumption that the
Company will continue as a going concern. Its continued existence depends
upon the success of management's efforts to raise additional capital
necessary to meet the Company's obligations as they come due and to obtain
sufficient capital to execute its business plan.
Management has estimated that the Company will require an additional
$300,000 to $500,000 to operate until phase two is completed. Phase two of
the Company's plan to acquire an insurance company and to acquire books of
business from existing insurance companies will require additional capital.
During the period January 1, 1997 to March 31, 1997, the Company incurred
additional short term debt of approximately $318,400 of which $21,900 was
from related parties.
There can be no degree of assurance given that the Company will be
successful in completing additional financing transactions. Should the
Company be unsuccessful in its efforts to obtain adequate financing, its
current financial condition may be affected adversely, and such affects
may be material.
8
<PAGE> 9
2. 133,358 common stock options were granted during the first quarter to
unrelated parties at the rate of $0.50 per share for a period of one year.
3. Notes totaling $107,500 were repaid in cash by the Company to unrelated
parties during the first quarter. $7,000 in notes were repaid in cash by
the company to related parties. $10,000 in notes were converted into 33,333
shares of common stock as payment to an unrelated party.
4. The company entered into two additional capital leases of three years each
with a total present value of the leased assets of $10,378. The leases are
for additional computer equipment.
5. The company received its $99,703 A/R balance from its customer. The
company does not foresee any additional contracts of this nature at this
time.
SUBSEQUENT TO MARCH 31, 1997
6. Subsequent to March 31, 1997 577,490 options were issued for one year with
option prices varying from $0.30 to $1.00. The weighted average exercise
price of these options is $0.47.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
During the three month period ended March 31,1997, the company continued
in its efforts to secure capital and implement its proposed plan of business.
The Company had no operating revenues during such period.
In connection with its efforts to attract capital and implement its plan
of business, the Company incurred general and administrative expenses and
reported net losses of $291,957 and $306,737, respectively for the three month
period ended March 31, 1997.
MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $5,988 at March 31, 1997. During the
first quarter of 1997, the company raised $318,400 via short term loans and an
additional $7,500 from the sale of stock to an unrelated party pursuant to
the exercising of option rights.
9
<PAGE> 10
Even after the receipt of $325,900 from these sources, the Company lacks
adequate financing to implement its full plan of business or to sustain its
operations beyond the following twelve months. Management believes that to
support the first stage of the Company's plan of operations, involving the
supporting of the operations of its subsidiaries; Viking Insurance Services,
Inc., Viking Financial Services, Inc., Viking Administrator, Inc. and Viking
Systems Inc., will require additional capital over the next twelve months. The
Company is currently evaluating various options to raise additional capital,
including possible placements of debt and equity. There is no assurance,
however, that the Company will be successful in securing additional financing
and, therefore, there is no assurance that the Company can implement its full
plan of operations.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's common stock trades on the OTC Electronic Bulletin Board.
Its symbol is "VGCP".
Company information can be found on the World Wide Web. The address is
http://www.vcgi.com.
Subsequent to the first quarter of 1997, Mr. Skip Muller chose not to stand
for reelection and resigned from the Board of Directors. Also subsequent to the
first quarter, Mr. Robin Sandifer was appointed to the Board of Directors.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) The registrant has not filed any form 8-K reports during the
first quarter of 1997.
10
<PAGE> 11
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.
VIKING CAPITAL GROUP, INC.
Dated: May 14, 1997 By: \s\ William J. Fossen
----------------------------------
William J. Fossen, President
Dated: May 14, 1997 By: \s\ William J. Fossen
----------------------------------
William J. Fossen, Principal
Financial and Accounting Officer
11
<PAGE> 12
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF THE COMPANY AS OF MARCH 31, 1997 INCLUDED IN THE 10QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10QSB.
</LEGEND>
<CIK> 0000886093
<NAME> VIKING CAPITAL GROUP, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,988
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 82,161
<PP&E> 125,751
<DEPRECIATION> 18,965
<TOTAL-ASSETS> 220,714
<CURRENT-LIABILITIES> 919,219
<BONDS> 0
0
0
<COMMON> 14,091
<OTHER-SE> (788,862)
<TOTAL-LIABILITY-AND-EQUITY> 220,714
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 291,957
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,380
<INCOME-PRETAX> (306,737)
<INCOME-TAX> 0
<INCOME-CONTINUING> (306,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (306,737)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
