U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-82468
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AIM GROUP, INC.
(Exact name of small business issuer as specified in its charter)
2001 W. Sample Road (Suite 300), Pompano Beach, Florida 33064
(Address of registrant's principal executive office)
954-972-9339
(Registrant's telephone number)
Delaware 13-3773537
(State of Incorporation) (I.R.S. Employer
Identification No.)
-------------------
Check whether the issuer (1) filed all reports to be filed by Section 13 or
(15(d) of the Exchange Act during the past 12 months and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock outstanding as of May 13, 1998 was
3,980,053
Transitional Small Business Disclosure Format: [ ] Yes [X] No
<PAGE>
AIM GROUP, INC.AND SUBSIDIARIES
INDEX
THREE MONTHS ENDED MARCH 31, 1998
Page
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PART 1. FINANCIAL INFORMATION
Item 1. Schedule A- Financial Statements & Notes
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of
Operations - Three Months Ended March 31,
1998 and 1997 4
Condensed Consolidated Statements of
Cash Flows - Three Months Ended March 31,
1998 and 1997 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
PART II: OTHER INFORMATION 8
Exhibits and Reports on Form 8-K
2
<PAGE>
Part 1. Financial Information
AIM GROUP, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS (Unaudited) (Note)
CURRENT ASSETS
Cash $ 30,022 $ 9,898
Accounts receivable
Trade 546,475 368,832
Inventories 224,191 202,155
Prepaid expenses 8,387 6,967
------------- -------------
Total current assets 809,075 587,852
PROPERTY, PLANT AND EQUIPMENT 834,289 809,396
Less allowances for depreciation (254,415) (236,685)
------------- -------------
579,874 572,711
RESOURCE PROPERTY 4,010,168 4,000,373
OTHER ASSETS 43,540 40,511
------------- -------------
$ 5,442,657 $ 5,201,447
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 677,309 $ 630,692
Receivable financing liability 429,943 277,441
Current portion of long-term debt 96,055 80,954
Accrued expenses 41,635 46,062
------------- -------------
Total current liabilities 1,244,942 1,035,149
LONG-TERM DEBT, less current portion 90,118 93,091
CONVERTIBLE NOTES PAYABLE 1,050,000 1,050,000
STOCKHOLDERS' EQUITY
Preferred Stock; 1,000,000 shares authorized;
$1 par value; no shares issued or
outstanding. - -
Common stock; 12,000,000 shares authorized;
$.01 par value; 3,980,053 shares issued
and 3,971,107 shares outstanding at
December 31, 1997 and March 31, 1998. 39,801 39,801
Additional paid in capital 4,222,809 4,222,809
Common stock held in treasury - 8,946 shares (6,876) (6,876)
Accumulated deficit (1,198,137) (1,232,527)
------------- -------------
3,057,597 3,023,207
------------- -------------
$ 5,442,657 $ 5,201,447
============= =============
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to condensed consolidated financial statements.
3
<PAGE>
AIM GROUP, INC. AND SUBSIDIARIES
<TABLE>
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Net sales $ 778,189 $ 572,092
Costs and expenses
Cost of products sold 546,355 428,538
Selling and administrative expenses 123,355 226,976
Interest 54,689 49,782
Depreciation and amortization 19,400 19,401
------------ ------------
743,799 724,697
------------ ------------
Earnings (loss) before taxes 34,390 (152,605)
Income taxes - -
------------ ------------
Net earnings (loss) $ 34,390 $ (152,605)
============ ============
Net earnings per share $ 0.009 $ (0.038)
============ ============
Weighted average shares outstanding 3,971,107 3,978,766
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
AIM GROUP, INC. AND SUBSIDIARIES
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATIONS $ 47,385 $ (21,741)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (24,894) -
Increases in other assets and resource property (14,495) (4,327)
------------ ------------
Net cash used by investing activities (39,389) (4,327)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt financing 15,101 -
Payment of long-term debt (2,973) (4,117)
------------ ------------
Net cash provided by financing activities 12,128 (4,117)
------------ ------------
NET INCREASE (DECREASE) IN CASH $ 20,124 $ (30,185)
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
AIM GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1998
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed 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 months ended
March 31, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer
to the refer to the financial statements and footnotes thereto included in the
AIM Group, Inc. annual report on FORM 10-KSB for the period ended December 31,
1997.
NOTE B - INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Finished goods $ -0- $ -0-
Raw materials 163,379 141,926
Klannerite Ore 48,645 48,645
Spare parts and supplies 12,167 11,584
--------- ----------
$ 224,191 $ 202,155
</TABLE>
6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of AIM Group, Inc. (the "Company") for the first quarter of
1998 amounted to $778,189, an increase of $206,097,or 36%, over net sales of
$572,092 in the prior year's comparable quarter. The increase in net sales was
primarily attributable to a significant increase in a major customer's product
line. Cost of products sold amounted to $546,355 and $428,538 in the first
quarters of 1998 and 1997, respectively, resulting in a gross margin of 30% in
the first quarter of 1998 compared to a 25% gross margin in the first quarter
of 1997. The increase in the gross margin was primarily attributable to the
increase in net sales.
Selling and administrative expenses during the first quarter were
$123,355, or 16% of net sales, compared to $226,976, or 40% of net sales, in
the first quarter of 1997. The decrease in selling and administrative expenses
is primarily attributable to the major cost reduction program implemented by
new management in the last half of 1997. Various personnel and other expense
reductions have been achieved primarily in the corporate overhead area.
Interest expenses were $54,689, or 7% of net sales, in the first quarter
of 1998 compared to $49,782, or 9% of net sales, in the first quarter of 1997.
The dollar increase in interest expenses was mainly attributable to a plant
improvement loan obtained in the third quarter of 1997.
Primarily as a result of the above, the Company earned a net profit of
$34,390, or $.009 per share, in the quarter ended March 31, 1998, compared to
a net loss of $152,605, or $.038 per share, in the quarter ended March 31,
1997.
No assurance can be given that the first quarter's increased revenues
and earnings will be experienced in the second quarter or balance of the year.
7
<PAGE>
LIQUIDITY AND SOURCES OF CAPITAL
The Company had a positive cash flow from operations of $47,385 in the
first quarter of 1998, compared to a negative cash flow from operations of
$21,741 in the first quarter of 1997. As of March 31, 1998, the Company had a
working capital deficit of $435,867.
In order to increase available cash to meet expenses in the short term,
the Company continued its factoring arrangement which provides for cash
advances against invoices to customers during the period in which such
invoices are outstanding. Generally, the cost of factoring, similar to
interest rates on short term borrowings, is payable on the amounts outstanding
and customer payments are then applied directly to advances. Factoring, while
not increasing working capital, does provide liquidity of receivables. The
improved financial results in the first quarter of 1998 enabled the company to
reduce its factoring and it is the continued intention of management to
minimize and ultimately discontinue the use of factoring as soon as
practicable.
On March 23, 1998 the Company entered into agreements with the three holders
of its 10% Convertible Promissory Notes (the "Notes"). The agreements extend
the maturity dates to Dec. 31, 1998, maintain the current interest rate at 10%
per annum and conversion price at $.70 per share, provide that Noteholders may
not convert their Notes prior to August 1, 1998 and provide that if the
Company is successful in closing a proposed equity offering in mid-1998 there
will be a mandatory conversion if the closing price of the Company's common
stock on the Vancouver Stock Exchange averages in excess of $1.50 per share
for the 90-day period following the closing.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following exhibit is filed herewith:
Exhibit No. Document
----------- --------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. There were no Forms 8-K filed by the Company during
the first quarter ended March 31, 1998.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AIM GROUP, INC.
May 13, 1998 By: /s/PAUL R. ARENA
----------------
Paul R. Arena
Chairman of the Board,
Chief Executive Officer
and President
May 13, 1998 By: /s/LEIGH S. ZOLOTO
-------------------
Leigh S. Zoloto
Chief Financial Officer,
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000928032
<NAME> AIM GROUP, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 30,022
<SECURITIES> 0
<RECEIVABLES> 546,475
<ALLOWANCES> 0
<INVENTORY> 224,191
<CURRENT-ASSETS> 809,075
<PP&E> 834,289
<DEPRECIATION> 254,415
<TOTAL-ASSETS> 5,442,657
<CURRENT-LIABILITIES> 1,244,942
<BONDS> 1,140,118
0
0
<COMMON> 39,801
<OTHER-SE> 3,017,796
<TOTAL-LIABILITY-AND-EQUITY> 5,442,657
<SALES> 778,189
<TOTAL-REVENUES> 778,189
<CGS> 546,355
<TOTAL-COSTS> 743,799
<OTHER-EXPENSES> 142,755
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,689
<INCOME-PRETAX> 34,390
<INCOME-TAX> 34,390
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,390
<EPS-PRIMARY> .009
<EPS-DILUTED> 0
</TABLE>
