SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended February 28, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________ to __________ .
Commission file number 0-4465
Sirco International Corp.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New York 13-2511270
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
24 Richmond Hill Avenue, Stamford, Connecticut 06901
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 203-359-4100
------------
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant (1) has 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 [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 9,243,306 shares of
Common Stock, par value $.10 per share, as of April 1, 1999.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
Feb. 28, 1999 Nov. 30, 1998
------------- -------------
(Unaudited) (See note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 318,299 $ 352,489
Accounts receivable 1,013,206 1,565,727
Inventories 4,695,901 4,397,635
Prepaid expenses 239,876 199,805
Other current assets 17,366 36,791
Recoverable income taxes 119,884 149,902
------------ ------------
Total current assets 6,404,532 6,702,349
------------ ------------
Property and equipment at cost 1,911,555 1,906,326
Less accumulated depreciation 1,074,222 1,070,852
------------ ------------
Net property and equipment 837,333 835,474
------------ ------------
Other assets 152,311 172,254
Investment in and advances to subsidiary 466,273 464,573
Investment in affiliate 1,105,665 1,476,434
Goodwill 1,544,395 1,377,958
------------ ------------
Total assets $ 10,510,509 $ 11,029,042
============ ============
<PAGE>
<CAPTION>
Feb. 28, 1999 Nov. 30, 1998
------------- -------------
(Unaudited) (See note)
<S> <C> <C>
Liabilities and stockholders' equity Current liabilities:
Current maturities of long-term debt $ 2,837,440 $ 3,193,344
Due to related parties 341,821 519,596
Accounts payable 1,172,334 993,779
Accrued expenses 1,732,307 1,661,420
------------ ------------
Total current liabilities 6,083,902 6,368,139
------------ ------------
Long-term debt, less current maturities 304,958 290,994
------------ ------------
Due to related parties and accounts payable refinanced -- 615,829
------------ ------------
Stockholders' equity:
Preferred stock, $.10 par value, 1,000,000 shares authorized,
Series A and B, 896 issued (1999), 700 issued (1998) 90 70
Common stock $.10 par value, 20,000,000 shares authorized,
7,773,306 issued (1999), 6,343,316 issued (1998) 777,330 634,331
Capital in excess of par value 14,539,478 12,851,015
Retained earnings (deficit) (10,382,508) (8,864,535)
Treasury stock at cost (27,500) (27,500)
Treasury stock held by equity investee (105,464) (159,396)
Accumulated foreign translation adjustment (679,777) (679,905)
------------ ------------
Total stockholders' equity 4,121,649 3,754,080
------------ ------------
Total liabilities and stockholders' equity $ 10,510,509 $ 11,029,042
============ ============
</TABLE>
See notes to the condensed financial statements
Note: The balance sheet at November 30, 1998 has been derived from at that date
but does not include all the information and footnotes required by generally
accepted accounting principles.
<PAGE>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
Feb. 28, 1999 Feb. 28, 1998
------------- -------------
<S> <C> <C>
Sales $ 2,487,360 $ 3,832,171
Cost of goods sold 2,069,008 2,980,710
----------- -----------
Gross profit 418,352 851,461
Selling, warehouse, and general and
administrative expenses 1,461,391 1,319,256
----------- -----------
Loss from operations (1,043,039) (467,795)
----------- -----------
Other (income) expense:
Interest expense 81,049 148,781
Interest income (7,886) (2,123)
Miscellaneous income, net (22,930) (40,135)
Equity in loss of investee 424,701 99,335
----------- -----------
474,934 205,858
----------- -----------
Net loss ($1,517,973) ($ 673,653)
=========== ===========
Basic and diluted loss per share ($ 0.23) ($ 0.16)
=========== ===========
Weighted average number of common shares outstanding 6,537,492 4,312,622
=========== ===========
</TABLE>
See notes to the condensed consolidated financial statements
<PAGE>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
Feb. 28, 1999 Feb. 28, 1998
------------- -------------
<S> <C> <C>
Net loss ($1,517,973) ($ 673,653)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 88,427 22,371
Provision for losses in accounts receivable 33,323 --
Loss in equity of investee 424,701 99,335
Changes in operating assets and liabilities:
Accounts receivable 519,198 866,137
Inventories (204,266) 1,582,416
Prepaid expenses (40,071) 21,673
Other current assets 49,443 2,210
Other assets 19,943 20,145
Accounts payable and accrued expenses 425,660 (873,296)
----------- -----------
Net cash provided by operating activities: (201,615) 1,067,338
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (32,578) --
-----------
Proceeds from agreement to sell subsidiary -- 508
----------- -----------
Net cash (used in) provided by investing activities (32,578) 508
----------- -----------
Cash flows from financing activities:
Decrease in loans payable to financial institutions
and short-term loans and long-term payable
to related parties 6 (954,637)
Proceed from issuance of preferred stock 196,000 --
Proceeds from exercise of stock options 4,125 --
----------- -----------
Net cash used in financing activities 200,131 (954,637)
----------- -----------
Effect of exchange rate changes on cash (128) (11,258)
----------- -----------
(Decrease) increase in cash and cash equivalents (34,190) 101,951
Cash and cash equivalents at beginning of period 352,489 114,190
----------- -----------
Cash and cash equivalents at the end of period $ 318,299 $ 216,141
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 89,049 $ 144,007
Income taxes -- --
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE>
SIRCO INTERNATIONAL CORP.
Notes To Condensed Consolidated Financial Statements (Unaudited)
Note 1-Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q 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 management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended February 28,
1999 are not necessarily indicative of the results that may be expected for the
year ended November 30, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended November 30, 1998.
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard 130, "Reporting Comprehensive Income" ("Statement
130"). Statement 130 establishes standards for the reporting and display of
comprehensive income and its components in financial statements. Comprehensive
income, as defined, is the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. The provisions of Statement 130 are effective for periods beginning
after December 15, 1997. For the three month period ended February 28, 1999,
there were no significant non-owner sources of income. Accordingly, a separate
statement of comprehensive income has not been presented herein.
Note 2-Financing Arrangements
On December 17, 1996 the Company entered into a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift and Loan Association
("Coast"), that provides for revolving loans and letter of credit financing in
the amount of the lesser of $7,000,000 or the sum of (a) 80% of eligible
accounts receivable (as defined) and (b) 50% of eligible inventory (as defined)
up to a maximum inventory loan of $3,000,000 less 50% of letter of credit
financing outstanding. The amount of the facility available for letter of credit
financing is limited to $2,500,000. The loan bears interest at 2% above the
prime rate, matures on December 31, 1999, and is guaranteed by the Company's
Chairman and Chief Executive Officer. The Company has granted Coast a security
interest in substantially all of the Company's assets. The agreement with Coast
contains various restrictive covenants, including among others, a restriction on
the payment or declaration of any cash dividends, a restriction on the
acquisition of any assets other than in the ordinary course of business in
excess of $100,000, restrictions related to mergers, borrowing and debt
guarantees, and a $100,000 annual limitation on the acquisition or retirement of
the Company's common and preferred stock, which acquisitions or retirements are
limited to transactions with employees, directors and consultants pursuant to
the terms of employment, consulting or other stock restriction agreements with
such persons. The agreement also requires the Company to maintain a minimum
tangible net worth of $1,400,000. As of February 28, 1999, the Company owed
Coast $2,829,863 and had no outstanding letters of credit. At February 28, 1999,
the prime rate was 7.75%.
<PAGE>
In January 1997, the Company's Canadian subsidiary, Sirco International (Canada)
Ltd. ("Sirco Canada"), was advised by its bank, National Bank of Canada, that it
would no longer provide Sirco Canada a revolving line of credit but would
continue to provide the real property mortgage. The mortgage is payable in
monthly installments of approximately $3,500, including interest at 10.25%, with
a balloon payment of approximately $291,000 in the year 2000. At February 28,
1999, the mortgage was approximately $313,000.
Note 3. Investment in subsidiary
On February 27, 1998, the Company acquired all of the outstanding shares of
common stock of Essex Communications, Inc. ("Essex") in exchange for 250,000
shares of the Company's common stock and warrants to purchase up to 225,000
shares of the Company's common stock at $2.75 per share, of which warrants to
purchase 75,000 shares vested immediately and warrants to purchase 150,000
shares vest if certain performance conditions are met. The purchase agreement
also provides for the issuance of up to 600,000 additional shares of the
Company's common stock if certain other performance conditions are met. As of
April 1, 1999, 225,000 of such shares had been issued. Essex is a
telecommunications provider that is certified to resell local telephone services
in the states of Connecticut, Massachusetts, New Jersey, New York and Virginia.
The acquisition has been accounted for as a purchase.
On August 14, 1998, the Company acquired all the outstanding membership interest
of WebQuill Internet Services LLC ("WebQuill") and American Telecom, LLC
("American Telecom") in exchange for 375,000 shares of the Company's common
stock. The purchase agreement also provides that 150,000 additional shares of
the Company's common stock be held in escrow and issued if certain performance
objectives are achieved. WebQuill provides dial-up and dedicated Internet
access, Web design, Web hosting and E-Commerce development to small and medium-
sized businesses. The acquisition has been accounted for as a purchase.
On January 8, 1999, the Company issued to the then shareholders of Tag Air, Inc.
("Tag Air"), 149,210 shares of the Company's common stock in conjunction with
the purchase of all the outstanding stock of Tag Air. Tag Air sells travel
products primarily to American Airlines employees through its Web site, catalog
and two retail locations. The acquisition has been accounted for as a purchase.
<PAGE>
Item 2. Management's Analysis and Discussion of Financial Condition and
Results of Operations
The statements contained in this Report that are not historical facts
are "forward-looking statements" which can be identified by the use of
forward-looking terminology, such as "estimates," "projects," "plans,"
"believes," "expects," "anticipates," "intends," or the negative thereof or
other variations thereon, or by discussions of strategy that involve risks and
uncertainties. Management wishes to caution the reader of the forward-looking
statements, such as the Company's plans to increase the gross margin of its
telecommunications division, to divest its luggage operations, to take advantage
of the market opportunity presented by the Company's target markets and to
further develop the Company's telecommunications, Internet and retail airline
businesses, in addition to other statements contained in this Report regarding
matters that are not historical facts, that these statements are only estimates
or predictions. No assurances can be given regarding the achievement of future
results, as actual results may differ materially as a result of risks facing the
Company, and actual events may differ from the assumptions underlying statements
which have been made regarding anticipated events. Such risks and assumptions
include, but are not limited to, availability of management; availability,
terms, and deployment of capital; the Company's ability to successfully market
its services to current and new customers, generate customer demand for its
product and services in the geographical areas in which the Company can operate,
access new markets, negotiate and maintain suitable reseller and interconnection
agreements with the incumbent local exchange carriers, and negotiate and
maintain suitable vendor relationships, all in a timely manner, at reasonable
cost and on satisfactory terms and conditions, as well as regulatory,
legislative and judicial developments that could cause actual results to vary in
such forward-looking statements. All written and oral forward-looking statements
made in connection with this Report that are attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by these
cautionary statements.
<PAGE>
Three Months Ended February 28, 1999 vs. February 28, 1998
Net sales for the three months ended February 28, 1999 decreased by
approximately $1,345,000 to approximately $2,487,000 as compared to
approximately $3,832,000 reported for the three months ended February 28, 1998.
The following table presents the Company's net sales by industry segment for the
three months ended February 28, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended Increase
Industry segment Feb 28, 1999 Feb. 28, 1998 (Decrease)
- ---------------- ----------- ------------- -----------
<S> <C> <C> <C>
Wholesale luggage $1,772,000 $3,596,000 ($1,824,000)
Retail sales 352,000 236,000 116,000
Telecommunications 363,000 363,000
---------- ---------- -----------
Total $2,487,000 $3,832,000 ($1,345,000)
========== ========== ============
</TABLE>
Net sales for the Company's wholesale luggage division decreased for the three
months ended February 28, 1999 by approximately $1,824,000 to approximately
$1,772,000 from approximately $3,596,000 reported in the three months ended
February 28, 1998. The decrease in net sales in fiscal 1999 is primarily a
result of a change in the ordering programs of the Company's two largest
customers, both of which made minimal purchases in January 1999, but had run
substantial sport bag programs during January 1998. One such customer has also
changed its focus more toward luggage products and away from sport bags. The
luggage products are more frequently sold during the summer travel season and
the holiday season.
Net sales of the Company's retail division, consisting of the operations of
Airline Ventures, Inc. ("AVI"), increased for the three months ended February
28, 1999 by approximately $116,000 to approximately $352,000 from approximately
$236,000 reported in the three months ended February 28, 1998. The increase in
net sales is partially attributable to the acquisition in January 1999 of Tag
Air. AVI operates three retail stores in Texas for professional airline flight
crew members and sells pilot uniforms, study guides and travel products. Its
products are sold on the E-commerce sites, www.avishop.com and www.800bags.com
and on a Web site, www.tagintl.com.
Net sales of the Company's telecommunications division, consisting of the
operations of Essex and WebQuill, were $363,000 for the three months ended
February 28, 1999. The Company's telecommunications division was not in
operation in the three months ended February 28, 1998. Essex is certified to
resell local telephone services and value-added products in the states of
Connecticut, Massachusetts, New Jersey, New York and Virginia and currently has
approximately 2,200 installed lines. WebQuill provides dial-up and dedicated
Internet access, Web deign, hosting and E-commerce development to small and
medium sized businesses.
<PAGE>
The Company's gross profit for the three months ended February 28, 1999
decreased by approximately $433,000 to approximately $418,000 from approximately
$851,000 reported in the prior fiscal period, and the gross profit percentage
decreased to 16.8% from 22.2% reported in the prior fiscal period. The decrease
in gross profit percentage is primarily attributable to the unfavorable mix of
lower margin products in the luggage division, which reported a gross margin of
13%, combined with a 42% gross margin from the retail division and a 15% gross
margin from the telecommunication division. Management expects the retail
division's gross margin to continue at its current level and the
telecommunication division's gross margin to increase throughout the year as
Essex converts its customer base to a "leased facilities" product that is now
being offered by Bell Atlantic Corporation in New York State. This product
should allow the Company to obtain gross margins on local telephone service of
approximately 30%. Such conversion should commence during the Company's third
fiscal quarter.
Selling, warehouse, and general and administrative expenses increased for the
three months ended February 28, 1999 by approximately $142,000 to approximately
$1,461,000 from approximately $1,319,000 reported in prior fiscal period. A
major portion of this increase was attributable to the expenses of the Company's
telecommunications division, which was not in operation in the prior fiscal
period, which were partially offset by decreases in expenses recorded in the
Company's luggage division.
Interest expense for the three months ended February 28, 1999 decreased by
approximately $68,000 from the amount reported in the three months ended
February 28, 1998 due to lower average borrowings.
Miscellaneous income for the three months ended February 28, 1999 decreased by
approximately $17,000 over the amount reported in the prior fiscal period. The
decline is attributable to a reduction in the Company's commission income
generated from sales arranged by the Company between the Company's suppliers and
certain customers.
<PAGE>
The Company is currently the largest shareholder of Access One
Communications Inc. ("Access One"), owning approximately 30.6% of Access One's
capital stock as of February 28, 1999 and 39.1% as of April 14, 1999. As the
Company's investment in Access One is accounted for under the equity method of
accounting, the Company is required to include its portion of Access One's net
loss in the Company's results of operations. For the period ended February 28,
1999, the Company has recorded a loss of approximately $425,000 relating to its
investment in Access One. The Company has been advised by Access One that Access
One's losses in the first quarter of fiscal 1999 were primarily the result of
their efforts to fund aggressive customer growth and the related costs
associated with hiring employees to verify and provision lines, to staff a
customer service operation and to develop a management information system. The
revenue for Access One has increased by approximately $971,000, or by 79%, from
approximately $1,235,000 in the first quarter of its fiscal 1998, to
approximately $2,206,000 in the first quarter of fiscal 1999. In addition,
during this time period, Access One purchased local telephone service from
BellSouth Corporation ("BellSouth") at a wholesale discount of 16.8% and passed
on almost half of its discount to its customer base. The gross profit on this
business was not large enough to cover the selling, general and administrative
expenses associated with operating a local telephone company. However, in
February 1999, Access One signed a leased facilities agreement with BellSouth
pursuant to which it can increase its gross profit percentage on local service
to as much as 30%. If Access One can successfully convert its installed access
lines to this leased facilities agreement, which BellSouth has indicated will be
accomplished in May 1999, Access One anticipates being able to reach a monthly
breakeven level within the next twelve months.
Liquidity and Capital Resources
At February 28, 1999, the Company had cash and cash equivalents of approximately
$318,000, and working capital of approximately $321,000.
Net cash (used in) provided by operating activities aggregated approximately
($202,000) and $1,067,000 in fiscal quarters ended February 28, 1999 and
February 28, 1998, respectively. The decrease in net cash provided by operating
activities of approximately $1,269,000 primarily reflects the increase in the
net loss in the first fiscal quarter of 1999 as compared to the year-ago period.
Net cash (used in) provided by investing activities aggregated approximately
$(33,000) and $500 in fiscal quarters ended February 28, 1999 and February 28,
1998, respectively. The use of cash from investing activities in the first
fiscal quarter of 1999 was the purchase of fixed assets. The source of cash
provided from investing activities in the first fiscal quarter 1998 was the
proceeds from the 1992 sale of a subsidiary.
Net cash provided by (used in) financing activities aggregated approximately
$200,000 and ($955,000) in fiscal quarters ended February 28, 1999 and February
28, 1998, respectively. In the first quarter of fiscal 1999, net cash provided
by financing activities resulted primarily from $196,000 in proceeds from a
private placement of preferred stock and approximately $4,000 from the proceeds
of the exercise of stock options. In the first quarter of fiscal 1998, net cash
used in financing activities resulted from the decrease in short-term and
long-term debt of approximately $955,000.
<PAGE>
On December 17, 1996, the Company entered into a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift & Loan Association
("Coast"). See Note 2 to Notes to Condensed Consolidated Financial Statements
(Unaudited). As of February 28, 1999, the Company was indebted to Coast in the
amount of $2,829,863 and had no outstanding letters of credit. This loan matures
on December 31, 1999. As a result, the entire indebtedness is classified as a
current liability.
In January 1997, Sirco Canada was advised by its bank, National Bank of Canada,
that it would no longer provide Sirco Canada a revolving line of credit but
would continue to provide the real property mortgage. See Note 2 to Notes to
Condensed Consolidated Financial Statements (Unaudited). At February 28, 1999,
the mortgage was approximately $313,000. The Company is currently using the
Coast line of credit, when necessary, to provide letter of credit financing that
was formerly provided by National Bank of Canada.
For the quarter ended February 28, 1999, the Company had approximately $33,000
in capital expenditures. The Company does not plan to make significant capital
expenditures for the remainder of fiscal 1999.
As of March 4, 1999, the Company increased its ownership in its affiliate,
Access One, to approximately 39.1%. Although Access One has approximately 750
shareholders, it is not publicly traded, there is no readily ascertainable
market for the stock, and the shares held by the Company bear a restrictive
legend stating that the shares have not been registered under the Securities Act
of 1933. The investment in Access One is recorded on the Company's books by the
equity method of accounting.
The report of the independent auditors on the Company's financial statements for
the year ended November 30, 1998, indicates there is substantial doubt about the
Company's ability to continue as a going concern. At that time, the Company was
in violation of two loan covenants with Coast, both of which have since been
cured. The Company, however, continues to incur operating losses, primarily from
its wholesale luggage division. The Board of Directors has announced that it
intends to sell this division, and the Company is currently in discussions with
several interested parties. However, if the Company is unable to successfully
divest its luggage division, and the depressed levels of sales of the luggage
division continue to generate operating losses and require operating cash, the
Company will experience temporary cash shortages, which will have an adverse
effect on the financial condition and results of operations of both the retail
division and the telecommunications division.
Management believes that the retail division's working capital and cash flow
from operations will be sufficient to meet the cash and capital requirements for
the Company's retail division for the next twelve months. This division operated
profitably in the first quarter and anticipates being able to continue its
current rate of growth for the next several quarters. Management anticipates
that it will need to raise up to $2 million to meet the cash requirements for
its telecommunications division contemplated by the business plan for that
division. There can be no assurances that the Company will be able to obtain
such funding when needed, or that such funding, if available, will be obtainable
on terms acceptable to the Company. The failure by the Company to raise the
necessary funds to finance its telecommunications operations will have an
adverse effect on the ability of the Company to carry out its business plan for
its telecommunications division. The inability to carry out this plan may result
in the continuance of unprofitable operations, which would adversely affect the
financial condition and results of operations of the Company.
<PAGE>
SIRCO INTERNATIONAL CORP.
PART II-OTHER INFORMATION
Item 2. Changes in Securities
On March 4, 1999, the Company sold to Access One 1,420,000 shares of
common stock of the Company in consideration of the issuance to the Company by
Access One of 1,775,000 shares of common stock, par value $.001 per share, of
Access One. Such transaction was effected pursuant to Sections 4(2) of the
Securities Act of 1933, as amended.
On February 24, 1999, the Company sold an aggregate of 1,152,780 shares
of common stock of the Company to six vendors from which the Company buys
luggage, sports bags and travel related products, in consideration of the
cancellation of an aggregate of $1,339,597 in vendor invoices. Such transaction
was effected pursuant to Sections 4(2) of the Securities Act of 1933, as
amended.
On January 29, 1999, the Company issued to the five former shareholders
of Essex 125,000 shares of common stock of the Company in conjunction with the
satisfaction of certain performance criteria established in connection with
acquisition of Essex. Such transaction was effected pursuant to Sections 4(2) of
the Securities Act of 1933, as amended.
On January 8, 1999, the Company issued to the two shareholders of Tag
Air and the introducing broker an aggregate of 149,210 shares of the common
stock of the Company in conjunction with the purchase of assets of Tag Air. Such
transaction was effected pursuant to Sections 4(2) of the Securities Act of
1933, as amended.
On December 1, 1998, January 13, 1999 and February 3, 1999, the Company
issued an aggregate of 196 shares of the Company's Series B Preferred Stock, par
value $.10 per share, in consideration of payments in an aggregate amount of
$196,000. Each share is entitled to dividends and distributions at the same rate
and in like kind as is declared on the shares of the Company's common stock;
shall receive preference to the common stock shareholders in the event of any
liquidation, dissolution or winding-up of the Company; and shall have a minimum
conversion price into fully paid and non-assessable shares of common stock at
the option of the holder at a rate of 1,000 shares of common stock for each
share of preferred stock. Such transaction was effected pursuant to Sections
4(2) of the Securities Act of 1933, as amended.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None
27-- Financial Data Schedule.
(b) Reports on Form 8-K
None.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Sirco International Corp.
April 14, 1999 By: /s/ Joel Dupre
- -------------------------------- ------------------------------
Date Joel Dupre
Chairman of the Board and
Chief Executive Officer
April 14, 1999 By: /s/ Paul H. Riss
- -------------------------------- ------------------------------
Date Paul H. Riss
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
No. Description Page No.
- --- ----------- --------
27 Financial Data Schedule. 14
<PAGE>
Sirco International Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from the Balance
Sheet and Income Statement and is qualified in its entirety by reference to such
financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> FEB-28-1999
<CASH> 318,299
<SECURITIES> 0
<RECEIVABLES> 1,803,265
<ALLOWANCES> 790,059
<INVENTORY> 4,695,901
<CURRENT-ASSETS> 6,404,532
<PP&E> 1,911,555
<DEPRECIATION> 1,074,222
<TOTAL-ASSETS> 10,510,509
<CURRENT-LIABILITIES> 6,083,902
<BONDS> 304,958
0
90
<COMMON> 777,330
<OTHER-SE> 3,344,229
<TOTAL-LIABILITY-AND-EQUITY> 10,510,509
<SALES> 2,487,360
<TOTAL-REVENUES> 2,510,290
<CGS> 2,069,008
<TOTAL-COSTS> 1,461,391
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,049
<INCOME-PRETAX> (1,517,973)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,517,973)
<DISCONTINUED> 0
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