UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____________ TO _____________
COMMISSION FILE NO. 1-11480
GOLDEN EAGLE GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 65-0353755
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 STANDIFER DRIVE
HUMBLE, TEXAS 77338
(Address of principal executive offices) (Zip Code)
(713) 446-2656
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required by Section 13 or 15(d)
of the Securities Exchange Act of 1934 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 [ ]
The number of shares outstanding of the issuer's Common Stock, $.01 Par Value,
as of May 6, 1996 was 5,307,000.
Traditional Small Business Format: Yes [ ] No [ ]
Page 1 of 11 pages
GOLDEN EAGLE GROUP, INC.
FORM 10
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 ....................................... 3
Consolidated Statements of Income for the three
months ended March 31, 1996 and 1995 ......................... 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 ................... 5
Notes to Consolidated Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis or Plan of
Operation .................................................... 8
PART II. OTHER INFORMATION .............................................. 10
Signatures .............................................................. 11
-2-
<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Current Assets:
Cash ............................................................................. $ 313,838 $ 396,812
Accounts receivable, net of allowance of $564,616 and $600,000 ................... 8,008,464 7,777,766
Prepaid expenses ................................................................. 404,421 265,199
------------ ------------
Total current assets ........................................................ 8,726,723 8,439,777
Property and equipment, net of accumulated depreciation .......................... 871,902 910,726
Intangible assets , net of accumulated amortization .............................. 4,201,866 4,256,648
------------ ------------
Total assets ................................................................ $ 13,800,491 $ 13,607,151
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft ................................................................... $ 502,126 $ 445,346
Notes payable .................................................................... 511,577 412,291
Accounts payable ................................................................. 5,139,009 5,754,259
Accrued expenses ................................................................. 791,743 293,779
Obligations under capital leases, current portion ................................ 35,846 40,117
------------ ------------
Total current liabilities ................................................... 6,980,301 6,945,792
Long-term debt ................................................................... 515,198 615,198
Obligations under capital leases, net of current portion ......................... 58,645 66,720
------------ ------------
Total liabilities ........................................................... 7,554,144 7,627,710
------------ ------------
Shareholders' equity:
Preferred stock, par value $.01, 1,000,000
shares authorized, none outstanding ........................................... -- --
Common stock, par value $.01, 10,000,000 shares
authorized; 5,307,000 shares issued and outstanding ........................... 53,070 53,070
\Additional paid-in capital ...................................................... 8,733,980 8,733,980
Accumulated deficit .............................................................. (2,540,703) (2,807,609)
------------ ------------
Total shareholders' equity .................................................. 6,246,347 5,979,441
------------ ------------
Total liabilities and shareholders' equity .................................. $ 13,800,491 $ 13,607,151
============ ============
</TABLE>
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<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
------------ ------------
Sales .......................................... $ 15,672,663 $ 11,243,940
Cost of sales .................................. 11,691,334 8,559,697
------------ ------------
Gross profit ............................. 3,981,329 2,684,243
Selling, general and administrative expenses ... 3,693,733 2,545,750
------------ ------------
Operating income/(loss) ........................ 287,596 138,493
------------ ------------
Other income (expense)
Gain (loss) on retirement of assets ......... 500 700
Interest expense ............................ (35,029) (34,677)
Foreign currency gain (loss) ................ 13,837 1,186
------------ ------------
(20,692) (32,791)
------------ ------------
Net income/(loss) .............................. $ 266,904 $ 105,702
============ ============
Income/(loss) per share ........................ $ 0.05 $ 0.02
Weighted average number of shares .............. 5,453,634 4,507,000
-4-
<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ......................................................................... $ 266,904 $ 105,702
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization .................................................... 133,050 104,060
(Gain) Loss on sale of equipment ................................................. (500) (700)
Changes in operating assets net of effects of acquisition:
Decrease (increase) in accounts receivable, net ............................... (230,696) (316,625)
Decrease (increase) in prepaid expenses ....................................... (107,228) 772
Increase (decrease) in cash overdraft ......................................... 56,780 257,457
Increase (decrease) in accounts payable and ................................... (117,286) 347,254
accrued expenses
----------- -----------
Net cash provided by (used in) operating activities ........................... 1,024 497,920
----------- -----------
Cash flows from investing activities:
Proceeds from sale of equipment .................................................... 500 700
Capital expenditures ............................................................... (71,438) (19,021)
----------- -----------
Net cash provided by (used in) investing activities .......................... (70,938) (18,321)
----------- -----------
Cash flows from financing activities:
Proceeds from:
Notes payable ................................................................... 1,100,000 1,250,000
Payments on:
Notes payable ................................................................... (1,100,714) (1,800,000)
Capital lease obligations ....................................................... (12,346) (32,272)
----------- -----------
Net cash flows provided by (used in) financing activities ..................... (13,060) (582,272)
----------- -----------
Net increase (decrease) in cash and equivalents ...................................... (82,974) (102,673)
Cash and equivalents at beginning of quarter ......................................... 396,812 106,096
----------- -----------
Cash and equivalents at end of quarter ............................................... $ 313,838 $ 3,423
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the quarter for interest .......................................... $ 35,029 $ 34,677
=========== ===========
</TABLE>
-5-
GOLDEN EAGLE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements, which are
for interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the footnotes thereto contained in the Annual
Report on Form 10-KSB for the year ended December 31, 1995 as filed with
the Securities and Exchange Commission. The December 31, 1995 balance
sheet included herein was derived from audited financial statements, but
does not include all disclosures required by generally accepted
accounting principles. In the opinion of the Company, the accompanying
unaudited consolidated statements contain all adjustments (which are of
a normal recurring nature) necessary for a fair presentation of the
financial statements. The results of operations for the three months
ended March 31, 1996 are not necessarily indicative of the results to be
expected for the full year.
2. INCOME TAXES
There is no provision for income tax for three month periods ended March
31, 1996 or 1995 due to the existence of net operating loss
carryforwards and a reduction in the deferred tax asset valuation
allowance.
3. PER SHARE DATA
Per share data is calculated based upon the weighted average number of
shares of common stock and dilutive stock options outstanding.
4. PURCHASE OF WORLD TRADE TRANSPORT OF VIRGINIA, INC.
Effective July 31, 1995, the Company acquired all of the outstanding
capital stock of World Trade Transport of Virginia, Inc. ("WTT"), a
privately held full-service regional freight forwarder and customs
broker with headquarters in the Washington D.C. area and three
facilities in the Washington, D.C. and Baltimore area. Pursuant to the
terms of the acquisition, the WTT Stockholders conveyed their WTT Stock
to the Company in exchange for the issuance of an aggregate of 800,000
shares of the Company's Common Stock, $.01 par value, and payment of an
aggregate of $1.0 million in cash to them.
For financial reporting purposes, the transaction was accounted for
under the purchase method. Goodwill, cost in excess of assets acquired,
of $1,773,000 is being amortized over a period of 40 years.
-6-
Pro forma unaudited results of operations for the three months ended
March 31, 1995, as if the transaction had occurred January 1, 1995 are
as follows:
Revenue ........................ $ 13, 487,564
Net Income ..................... $ 171,192
Earnings per share ............. $ .03
Weighted average
number of shares .............. 5,307,000
The pro forma information is not necessarily indicative of what actually would
have occurred had the transaction occurred at the beginning of the periods
present.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
Golden Eagle Group, Inc. ("GEGP" or the "Company"), through its
wholly-owned subsidiaries, is engaged in the business of providing international
transportation logistics and related services.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,1996 COMPARED TO THREE MONTHS ENDED MARCH 31,1995
Revenue during the three months ended March 31 1996, increased by
approximately 39.4% to $15,672,663 from $11,243,940 during the same period in
1995. The improvement in sales is attributable to the acquisition on July 31,
1995 of WTT and increased sales to existing customers primarily in the Company's
Texas and Chicago locations. WTT revenues for the three months ended March 31,
1996 were approximately $2,904,675 or approximately 65.5% of the increased
revenue.
Gross Profit, (sales less cost of sales), during the three months ended
March 31, 1996, increased approximately 48.3% or $1,297,086 to $3,981,329 from
$2,684,243 for the same period in 1995. The increase is partially attributable
to an improvement in gross profit margin from 23.9% for the three months ended
March 31, 1995 to 25.4% for the three months ended March 31, 1996. The
improvement in gross margin is a result of increased sales of logistics
management services by existing Company offices and the July 1995 acquisition of
WTT, which specializes in logistics management. Logistics management services
are not offset by direct shipping costs as is the case in many traditional
forwarding shipments and thus will generally improve gross margins. The
remainder of the improvement is directly attributable to the aforementioned
increase in sales.
Selling, general and administrative expenses during the three months
ended March 31, 1996, increased $1,147,983 to $3,693,733 or approximately 45.1%,
from $2,545,750 in the same period in 1995. As a percentage of sales, selling,
general and administrative expenses increased slightly from 22.6% of sales for
the three months ended March 31, 1995 to 23.6% for the same period in 1996.
However, as a percentage of gross profit, selling, general and administrative
expenses decreased from 94.8% for the period ended March 31, 1995 to 92.8% for
the same period in 1996. The actual dollar increase in selling, general and
administrative expenses is primarily a result of the acquisition of WTT and
additional personnel costs required to service the increase in sales.
The Company's operating and net income was $287,596 and $266,904,
respectively for the three months ended March 31, 1996, as compared to operating
and net income of $138,493 and $105,702, respectively for the three months ended
March 31, 1995. The Company attributes the approximately 107.7% improvement in
operating income and 152.5% improvement in net income to adjustments made in
operations in Laredo after the January 1995 Mexican Peso devaluation combined
with the acquisition of WTT in July of 1995. Laredo operations reported a loss
for the three months ended March 31, 1996 of approximately $15,000 as compared
to a loss of approximately $109,000 for the same period in 1995.
-8-
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had working capital of $1,746,422, as
compared to working capital of $1,493,985 at December 31, 1995. The Company's
primary sources of cash were generated from operations and a $1,000,000 line of
credit facility with a bank. Advances under the facility bear interest at the
bank's prime rate plus 1% and are due and payable on May 2, 1996. Outstanding
borrowings at March 31, 1996 were $100,000.
Cash flows provided by operating activities were $1,024 for the three
months ended March 31, 1996, as compared to cash flows provided by operating
activities of $497,920 for the three months ended March 31, 1995. Accounts
receivable increased approximately $230,696 due to the increase in sales.
The Company's expenditures for facilities and equipment were $71,438 for
the three months ended March 31, 1996 as compared to $19,021 in the same period
in 1995. Approximately, $50,000 of the expenditures are related to modification
of existing warehouse space to handle new logistics business in the Company's
facilities. In January 1996, the Company signed a three year agreement with
C.S.I., a distributor of upscale table top products, to manage C.S.I.'s
inventory and fulfill all North American distribution requirements. The Company
has built a dedicated climate controlled warehouse environment in existing
facilities to provide the pick and pack services related to this contract.
At March 31, 1996, the Company had cash and equivalents of $313,838 as
compared to $396,812 at December 31, 1995 as a result of the financing
activities described above.
The Company's primary financing needs relate to the expansion of its
business in existing markets. The Company believes that its present capital
resources, when combined with revenues generated from operations, are adequate
to fund its present level of operations.
-9-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
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
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
None.
(B) REPORTS ON FORM 8-K:
None.
-10
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLDEN EAGLE GROUP, INC.
Date: May 13, 1996 By: /s/ PATRICK H. WESTON
Patrick H. Weston, President and
Chief Executive Officer (Principal
Executive Officer)
Date: May 13, 1996 By: /s/ DONALD A. NODORFT
Donald A. Nodorft, Vice President-
Finance (Principal Financial and
Accounting Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FORM 10Q FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 313,838
<SECURITIES> 0
<RECEIVABLES> 8,008,464
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,726,723
<PP&E> 871,902
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,800,491
<CURRENT-LIABILITIES> 6,980,301
<BONDS> 0
0
0
<COMMON> 53,070
<OTHER-SE> 6,196,277
<TOTAL-LIABILITY-AND-EQUITY> 13,800,491
<SALES> 15,672,663
<TOTAL-REVENUES> 15,672,663
<CGS> 11,691,334
<TOTAL-COSTS> 11,691,334
<OTHER-EXPENSES> 3,693,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,029
<INCOME-PRETAX> 266,904
<INCOME-TAX> 266,904
<INCOME-CONTINUING> 266,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 266,904
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
