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, 1997
[ ] 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)
(281) 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 13, 1997 was 5,730,000.
Traditional Small Business Format: Yes [ ] No [ ]
<PAGE>
GOLDEN EAGLE GROUP, INC.
FORM 10
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 3
Consolidated Statements of Income for the three
months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of
Operation 7
PART II. OTHER INFORMATION 9
Signatures 10
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<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Assets
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(Unaudited) 1996
-------------- --------------
Current Assets:
<S> <C> <C>
Cash $ 102,964 $ 513,842
Accounts receivable, net of allowance of
$563,200 and $564,000.......... 9,170,937 8,721,219
Prepaid expenses 452,305 374,805
-------------- --------------
Total current assets 9,726,206 9,609,866
Property and equipment, net of accumulated depreciation 982,494 855,687
Deferred income taxes 528,843 552,891
Intangible assets , net of accumulated amortization 4,149,646 4,173,973
-------------- --------------
Total assets $ 15,387,189 $ 15,192,417
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Cash overdraft $ 286,803 $ -
Notes payable 411,329 400,000
Accounts payable 5,881,559 5,529,546
Accrued expenses 434,775 715,963
Obligations under capital leases, current portion 43,665 38,395
-------------- --------------
Total current liabilities 7,058,131 6,683,904
Long-term debt - 200,000
Obligations under capital leases, net of current portion 13,869 40,645
Deferred income taxes 31,896 31,896
-------------- --------------
Total liabilities 7,103,896 6,956,445
-------------- --------------
Stockholders' Equity:
Preferred stock, par value $.01, 1,000,000
shares authorized, none outstanding - -
Common stock, par value $.01, 10,000,000 shares
authorized; 5,730,000 and 5,642,000 shares issued and 57,300 56,420
outstanding at March 31, 1997 and December 31, 1996,
respectively
Additional paid-in capital 9,249,384 9,016,074
Stock subscriptions - 247,520
Accumulated deficit (1,023,391) (1,084,042)
-------------- --------------
Total shareholders' equity 8,283,293 8,235,972
-------------- --------------
Total liabilities and shareholders' equity $ 15,387,189 $ 15,192,417
============== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
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<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
------------- --------------
<S> <C> <C>
Sales $ 17,146,222 $ 15,672,663
Cost of sales 12,811,186 11,691,334
------------- --------------
Gross profit 4,335,036 3,981,329
Selling, general and administrative expenses 4,263,611 3,693,733
------------- --------------
Operating income 71,425 287,596
------------- --------------
Other income (expense)
Gain on retirement of assets 2,636 500
Interest expense (3,073) (35,029)
Foreign currency gain 11,955 13,837
Other income (expense) 10,756 -
------------- --------------
22,274 (20,692)
------------- --------------
Income before provision for income taxes 93,699 266,904
Provision for income taxes 33,048 -
------------- --------------
Net income $ 60,651 $ 266,904
============= ==============
Income per share $ 0.01 $ 0.05
============= ==============
Weighted average number of shares 5,835,575 5,453,634
============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
-4-
<PAGE>
GOLDEN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 60,651 $ 266,904
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 125,922 133,050
Deferred income taxes 24,048 -
Gain on sale of equipment (2,636) (500)
Changes in operating assets net of effects of
acquisition:
Decrease (increase) in accounts receivable,
net (449,718) (230,696)
Decrease (increase) in prepaid expenses (77,500) (107,228)
Increase (decrease) in cash overdraft 286,803 56,780
Increase (decrease) in accounts payable and 57,495 (117,286)
Accrued expenses
------------- --------------
Net cash provided by operating activities 25,065 1,024
------------- --------------
Cash flows from investing activities:
Proceeds from sale of equipment 3,000 500
Acquisition of business, net of cash acquired (4,762) -
Capital expenditures (224,004) (71,438)
------------- --------------
Net cash used in investing activities (225,766) (70,938)
------------- --------------
Cash flows from financing activities:
Proceeds from notes payable 600,000 1,100,000
Payments on notes payable (788,671) (1,100,714)
Principal payments on capital lease obligations (21,506) (12,346)
------------- --------------
Net cash flows used in financing activities (210,177) (13,060)
------------- --------------
Net decrease in cash and equivalents (410,878) (82,974)
Cash and equivalents at beginning of quarter 513,842 396,812
------------- --------------
Cash and equivalents at end of quarter $ 102,964 $ 313,838
============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
-5-
<PAGE>
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. The 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-K for the year ended December 31, 1996 as filed with the
Securities and Exchange Commission. The December 31, 1996 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,
1997 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 the three months ended March 31,
1996 due to the valuation allowance on deferred tax assets.
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. DEBT
During January 1997, the Company repaid the term note payable to bank
which was scheduled to mature through June 1998. The Company also has a
line of credit available which was renewed in March 1997. The renewal
increased the maximum borrowings available to $2,000,000 and reduced the
interest rate from prime plus 1% to prime. Amounts available under the
line of credit are limited to 80% of the Company's eligible accounts
receivable. The line of credit is collateralized by substantially all of
the Company's assets and expires on or before May 31, 1998. Borrowings
under the line of credit were $400,000 at March 31, 1997.
-6-
<PAGE>
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 31,1997 COMPARED TO THREE MONTHS ENDED MARCH
31,1996
Revenue during the three months ended March 31 1997, increased by
approximately 9.4% or $1,473,559 to $17,146,222 from $15,672,663 during the same
period in 1996. Approximately $800,000 of the increase in sales is primarily
attributable to the addition of four new offices in July 1996 in conjunction
with an asset purchase agreement with Ryan Freight Services. The remaining
increase is due to internal growth however the growth rate was affected by an
the substantial completion of a project in which the Company's Houston
operations were involved in through the third quarter of 1996. Houston revenues
for the quarter ended March 31, 1997 were approximately $1,100,000 lower than
the same period in 1996, due to reductions in project revenues.
Gross Profit, during the three months ended March 31, 1997, increased
approximately 8.9% or $353,707 to $4,335,036 from $3,981,329 for the same period
in 1996. Approximately 55.1% of the increase is due to the addition of the new
offices. The balance is primarily attributable to the increase in gross sales.
The gross profit margin for the three months ended March 31, 1997 of 25.3% is
comparable to the 25.4 % reported for the same period in 1996.
Selling, general and administrative expenses during the three months ended
March 31, 1997, increased $569,878 to $4,263,611 or approximately 15.4%, from
$3,693,733 in the same period in 1996. As a percentage of sales, selling,
general and administrative expenses increased from 23.6% of sales for the three
months ended March 31, 1996 to 24.9% for the same period in 1997. Approximately
$200,000 of the actual dollar increase in selling, general and administrative
expenses resulted from the four new offices. The remainder of the increase is
attributable to increases in sales and marketing expenses related to development
of new project and national account business.
The Company's operating and net income was $71,425 and $60,651,
respectively for the three months ended March 31, 1997, as compared to operating
and net income of $287,596 and $266,904, respectively for the three months ended
March 31, 1996. The Company attributes the reduction in operating income to the
aforementioned reasons.
-7-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of $2,668,075, as
compared to working capital of $2,925,962 at December 31, 1996. The Company's
primary sources of cash were generated from operations and a $2,000,000 line of
credit facility with a bank. Advances under the facility bear interest at the
bank's prime rate and are due and payable on May 31, 1998. Outstanding
borrowings at March 31, 1997 were $400,000.
Cash flows provided by operating activities were $25,065 for the three
months ended March 31, 1997, as compared to cash flows provided by operating
activities of $1,024 for the three months ended March 31, 1996. Accounts
receivable increased approximately $449,718 due primarily to increases in sales.
The Company's capital expenditures were $224,004 for the three months
ended March 31, 1997 as compared to $71,438 in the same period in 1996. A
majority of capital expenditures are related to upgrade or installation of new
warehouse barcode control systems in several of the Company's facilities.
Additionally, the Company has completed an upgrade of its real-time data network
from a dedicated analog system to high-speed frame relay technology.
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.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward looking statements. Such
statements are typically punctuated by words or phrases such as "anticipate,"
"estimate," "projects," "should," "may," "management believes," and words or
phrases of similar import. Such statements are subject to certain risks,
uncertainties or assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. Among the
key factors that may have a direct bearing on the Company's results of
operations and financial condition are: (i) competitive practices in the
industries in which the Company will compete, (ii) the impact of current and
future laws and governmental regulations affecting the industry in general and
the Company's operations in particular, (iii)) fuel and other costs of company's
that do the shipping for the Company that cannot be passed on to the Company's
customers, and (iv) political or economic strife in major markets to which the
Company's customers transport goods using the Company's services.
-8-
<PAGE>
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.
-9-
<PAGE>
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 14, 1997 By: /S/ PATRICK H. WESTON
Patrick H. Weston, President and
Chief Executive Officer (Principal
Executive Officer)
Date: May 14, 1997 By: /S/ DONALD A. NODORFT
Donald A. Nodorft, Vice President-
Finance (Principal Financial and
Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997 IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 102,964
<SECURITIES> 0
<RECEIVABLES> 9,170,937
<ALLOWANCES> 563,200
<INVENTORY> 0
<CURRENT-ASSETS> 9,726,206
<PP&E> 3,560,068
<DEPRECIATION> 2,577,574
<TOTAL-ASSETS> 15,387,189
<CURRENT-LIABILITIES> 7,058,131
<BONDS> 0
0
0
<COMMON> 57,300
<OTHER-SE> 8,225,993
<TOTAL-LIABILITY-AND-EQUITY> 15,387,189
<SALES> 17,146,222
<TOTAL-REVENUES> 17,146,222
<CGS> 12,811,186
<TOTAL-COSTS> 12,811,186
<OTHER-EXPENSES> 4,263,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,073
<INCOME-PRETAX> 93,699
<INCOME-TAX> 33,048
<INCOME-CONTINUING> 60,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,651
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
