<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
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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 Number: 0-26070
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MOONLIGHT INTERNATIONAL CORP.
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(Exact name of issuer as specified in its charter)
DELAWARE 13-3859185
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18 REYNOLDS STREET, NORWALK, CONNECTICUT 06855
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(Address of principal executive offices) (Zip Code)
(203) 854-1000
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(Issuer's telephone number, including area code)
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(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. [xx] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 10,563,200 shares, all of one
class of $.0001 par value common stock.
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ITEM 2. PLAN OF OPERATION
BACKGROUND
As reported in the Company's Form 10-KSB for calendar year ended December
31, 1996, the Company discontinued all operations as related to its then
commercial offset printing business in late October 1995 and all then officers
and directors resigned. Such Form 10-KSB was not filed until June 1997.
The Company's Plan of Operation for calendar year 1997 continues to revolve
around those activities involving commercial applications of its "Moonlight
Balloon" as heretofore described in the Company's Form 10-KSB for calendar year
ended December 31, 1996.
CASH REQUIREMENTS AND LIQUIDITY
The Company has been able to satisfy its cash requirements and raise the
necessary capital in order to finance its proposed growth through the sale and
issuance of 2,032,200 shares of its common stock (the "Shares") for an aggregate
gross cash consideration of $6,092,306 (said sales having taken place during
calendar year ended December 31, 1996). The Shares referred to herein were sold
in accordance with certain terms and conditions contained in Off-Shore
Securities Subscription Agreements and, accordingly, were sold outside the U.S.,
not as a registered public offering but rather in reliance upon Regulation S
("Reg S") of the General Rules and Regulations under the Securities Act of 1933.
To further satisfy its aforesaid cash requirements, during the first
quarter of 1997 the Company issued an additional 775,000 Shares for an aggregate
gross cash consideration of $1,531,250. The Company also issued an additional
176,000 Shares in order to convert existing Company debt of Sfr$300,000
(approximately US$222,000) into equity. The transactions referred to herein
were similarly conducted in reliance upon Reg S and reported in Forms 8-K dated
January 23, 1997 and February 19, 1997, respectively.
During the quarter ended September 30, 1997 the Company issued an
additional 2,598,166 Shares for an aggregate gross cash consideration of
$779,450.00. This transaction was similarly conducted in reliance upon Reg S
and reported on Form 8-K dated October 3, 1997.
The Company sustained a significant loss during the year ended December 31,
1996 of approximately $3,000,000 and as at such date its current liabilities
exceeded its current assets by $520,330. Additionally, the Company sustained a
further loss during the nine month period ended September 30, 1997 of in excess
of $1,400,000. As indicated in the Company's Form 10-KSB for calendar year
ended December 31, 1996, its auditor cited certain of these factors as creating
an uncertainty as to the Company's ability to continue to operate as a going
concern. If and when the need for additional funds arises, management
anticipates (although no assurance can be given) that the Company will be able
to finance and meet such requirements through such income as may be
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derived from commercial utilization of its products. However, if sufficient
revenues are not generated, and if an unforeseen need arises management
contemplates being able to satisfy same through debt and/or equity financing or
through an as yet undetermined, if necessary, combination of debt and/or equity
financing and/or bank loans.
Management does not currently anticipate any further expenditures of
significant sums for product research and development nor does it currently
expect (a) to purchase or sell any plant or significant equipment or (b) to
significantly increase or change the number of its current employees other than
the hiring of additional employees in order to commence production on or about
December 1997.
CONSOLIDATED BALANCE SHEET
Total Assets of the Company at period ended September 30, 1997 were
$5,944,903 with current assets amounting to $866,509 and with a substantial
portion of such total assets being attributable to certain license agreements
valued at $4,840,833 after net accumulated amortization of $616,667.
Total Current Liabilities of the Company at period ended September 30, 1997
were $417,337 all of which were short term liabilities.
Working capital at September 30, 1997 was $449,172 being attributable to
cash of $797,837 and prepaid expenses and sundry current assets of $68,672 less
accounts payable and accrued liabilities of $250,801, due to officers of $66,536
and a deposit to a licensee of $100,000.
The functional currency of the Company's wholly owned subsidiaries is Swiss
Francs. Gains and losses resulting from foreign currency transactions which are
included in operations have been insignificant for all periods reported.
However, the effects of exchange rate fluctuations on translating foreign
currency assets and liabilities and results of operations from functional
currency to Unites States dollars has been significant. The cumulative foreign
currency translation adjustment (loss) to stockholders' equity at September 30,
1997 was ($71,849).
COMPARATIVE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
The Company did not have any revenues for either comparative quarters.
Operating expenses for the quarter ended September 30, 1997 amounted to $376,790
as compared to $423,424 for the quarter ended September 30, 1996, a decrease of
$46,634 while net losses (after taking into account interest expense (if any)
during the comparative quarters) amounted to $376,790 for the quarter ended
September 30, 1997 as compared to $436,728 for the quarter ended September 30,
1996. The aforesaid operating expense decrease of $46,634 is primarily
attributable to the fact that depreciation and amortization expenses decreased
by $68,002.
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<PAGE>
COMPARATIVE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
The Company did not have any revenues for either comparative periods.
Operating expenses for the nine month period ended September 30, 1997 amounted
to $1,456,517 as compared to $1,016,455 for the nine month period ended
September 30, 1996, an increase of $440,062 while net losses (after taking into
account interest expense (if any) during the comparative periods) amounted to
$456,517 for the nine month period ended September 30, 1997 as compared to
$1,087,756 for the nine month period ended September 30, 1996. The aforesaid
operating expense increase of $440,062 is primarily attributable to the fact
that the Company incurred research and development operating expenses of
$282,759 during the nine month period ended September 30, 1997 while not having
incurred any research and development expenses during the comparative nine month
period ended September 30, 1996. The secondary reason for the increase in
operating expenses may be attributable to the fact that general and
administrative expenses increased by $225,874 due to the additional cost
associated with establishing the assembly facility and general administration
offices as well as staffing said facility.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None*
* Excepting for potential proceedings in the event that ongoing disputes with
Company licensors (and related parties) cannot be resolved to management's
satisfaction within a reasonable period of time. See Part II, Item 5 "Other
Information".
ITEM 5. OTHER INFORMATION
During the most recently concluded quarter and continuing up to the present
time, the Company has been engaged in certain material and relevant disputes
with is two licensors and certain of their representatives. The Company firmly
believes that it has met its contractual, and in particular extensive monetary
(and other) commitments under such License Agreements and in fact retains
documentary proof that it has met all monetary payments called for pursuant to
the terms of the License Agreements, which payments exceed $3,000,000. Further,
management of the Company is of the firm belief that such licensors have failed
to abide by their respective obligations and responsibilities and by virtue of
having breached such Agreements have caused the Company to suffer loss of
substantial business opportunities to date.
The Company has provided such licensors and their representatives with
written demand and notice that it expects complete and proper performance to
commence in accordance with all representations and warranties contained in the
aforesaid License Agreements and has further demanded that such proper
performance commence forthwith (and no later than October 10, 1997). In the
event that this matter is not susceptible to resolution to the complete
satisfaction of the Company and its management and the corresponding benefit to
the Company's shareholders,
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<PAGE>
management is actively considering (in conjunction with retained Swiss cousel)
various legal remedies available to it in order to protect the Company's
interests.
In the interim and for the foreseeable future the Company intends to
concentrate its efforts to activities within the United States and most
particularly the Northeastern sector thereof utilizing the talents and abilities
of its current Chief Financial Officer and Secretary-Treasurer, who assumed such
positions in April 1997 and who has been able to make substantial inroads on
behalf of the Company since such date with expectation that same may result in
future Company sales of its products with corresponding profits. The Company
has established an assembly facility and anticipates the commencement of its
operations in or about December 1997. The Company is currently in the process
of establishing national sales representation in the United States.
ITEM 6. (a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
On October 3, 1997 the Company filed its Report on Form 8-K reporting the
issuance of 2,598,166 Shares for an aggregate gross cash consideration of
$779,450.00 as set forth in Part I, Item 2 above.
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 thereunto duly authorized.
MOONLIGHT INTERNATIONAL CORP.
By: /s/ M. Walter Levine
-----------------------------------
M. Walter Levine, Secretary
Dated: December 5, 1997
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOONLIGHT INTERNATIONAL CORP.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
ASSETS
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CURRENT ASSETS:
Cash $ 797,837
Prepaid expenses and sundry current assets 68,672
-----------
Total current assets 866,509
Property and equipment, at cost, less
accumulated depreciation of $21,960 186,321
Licensing agreements, less accumulated
amortization of $616,667 4,840,833
Other assets 51,240
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$ 5,944,903
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 250,801
Due to officers 66,536
Deposit - licensee 100,000
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Total current liabilities 417,337
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STOCKHOLDERS' EQUITY:
Common stock, par value, $.0001;
authorized - 25,000,000 shares;
issued and outstanding - 10,563,200 shares 1,317
Additional paid-in capital 10,629,472
Accumulated deficit (461,353)
Deficit accumulated during the development stage (4,570,021)
Foreign currency translation adjustment (71,849)
-----------
5,527,566
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$ 5,944,903
===========
F-1
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MOONLIGHT INTERNATIONAL CORP.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED INCEPTION
SEPTEMBER 30, SEPTEMBER 30, (OCTOBER 25, 1995)
TO
1997 1996 1997 1996 SEPTEMBER 30, 1997
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
General and administrative 870,848 644,974 275,820 254,452 2,305,518
Depreciation and amortization 302,910 371,481 100,970 168,972 753,718
Research and development 282,759 - - - 1,445,804
------------ ------------ ------------ ------------ ------------
1,456,517 1,016,455 376,790 423,424 4,505,040
------------ ------------ ------------ ------------ ------------
Operating loss (1,456,517) (1,016,455) (376,790) (423,424) (4,505,040)
Interest expense - 71,301 - 13,304 64,981
------------ ------------ ------------ ------------ ------------
Net loss $ (1,456,517) $ (1,087,756) $ (376,790) $ (436,728) $(4,570,021)
============ ============ ============ ============ ===========
Loss per share $ (.14) $ (.12) $ (.04) $ (.05)
============ ============ ============ ============
Weighted average number of shares
outstanding 10,444,027 8,768,118 10,704,405 9,272,385
============ ============ ============ ============
</TABLE>
F-2
<PAGE>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, INCEPTION
(OCTOBER 25, 1995)
TO
1997 1996 SEPTEMBER 30, 1997
---- ---- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,456,517) $ (1,087,756) $ (4,570,021)
Depreciation and amortization 302,910 371,481 753,718
Advances to contractor 300,000 - -
Changes in assets and liabilities:
Prepaid expenses (43,192) (25,255) (68,672)
Accounts payable and accrued expenses (73,749) 207,021 145,029
Other assets (11,732) - (58,589)
Deposit - Licensee - 100,000 -
------------- ------------- ------------
Net cash used in operating activties (982,280) (434,509) (3,798,535)
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (103,456) (1,278,490) (224,152)
Payments to licensor - (2,800,000) (2,900,000)
------------- ------------- ------------
Net cash used in investing activities (103,456) (4,078,490) (3,124,152)
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayment) of loans to
stockholders and others (377,934) - 288,758
Net proceeds from issuance of common stock 2,280,435 4,728,680 7,503,615
------------- ------------- ------------
Net cash provided by financing activities 1,902,501 4,728,680 7,792,373
------------- ------------- ------------
Effect of exchange rate changes on cash (42,138) (113,859) (71,849)
------------- ------------- ------------
Net increase in cash 774,627 101,822 797,837
------------- ------------- ------------
Cash - beginning of period 23,210 102,650 -
------------- ------------- ------------
Cash - end of period $ 797,837 $ 204,472 $ 797,837
============= ============= ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,073 $ - $ 1,073
============= ============= ============
Income taxes $ 3,880 $ - $ 3,880
============= ============= ============
Non-cash financing activities:
Issuance of common stock to repay long-term debt $ 222,222 $ - $ 222,222
============= ============= ============
</TABLE>
F-3
<PAGE>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
SEPTEMBER 30, 1997
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair
presentation of the financial position and the results of operations for
the interim periods presented. All such adjustments are of a normal and
recurring nature. The results of operations for any interim period are
not necessarily indicative of a full year.
Certain financial information which is normally included in the
financial statements prepared in accordance with generally accepted
accounting principles, which is not required for interim reporting
purposes, has been condensed or omitted. The accompanying financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Form 10-KSB for
the year ended December 31, 1996.
F-4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 797,837
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 866,509
<PP&E> 208,281
<DEPRECIATION> 21,960
<TOTAL-ASSETS> 5,944,903
<CURRENT-LIABILITIES> 417,337
<BONDS> 0
0
0
<COMMON> 1,317
<OTHER-SE> 5,526,249
<TOTAL-LIABILITY-AND-EQUITY> 5,944,903
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,456,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,456,577)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,456,577)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,456,577)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
