<PAGE> 1
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 June 30, 1997
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: 0-26070
Moonlight International Corp..
(Exact name of registrant as specified in its charter)
Delaware 13-3859185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
18 Reynolds Street, E. Norwalk, Connecticut 06855
(Address of principal executive offices) (Zip Code)
(203) 854-1000
(Registrant's telephone number, including area code)
c/o M. Walter Levine, 1 River Road, Cos Cob, Connecticut 06807
(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 class of
common stock, as of the latest practicable date.
The number of shares outstanding of each of the registrant's classes of common
stock, as of September 25, 1997 is 10,563,200 shares, all of one class of $.0001
par value common stock.
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<PAGE> 2
TABLE OF CONTENTS
Page No.
PART I
Item 1. Financial Statements F1-F4
Item 2. Plan of Operation 3-5
PART II
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a
Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
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<PAGE> 3
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 153,043
Prepaid expenses and sundry current assets 224,083
-----------
Total current assets 397,126
Property and equipment, at cost, less
accumulated depreciation of $21,960 180,397
Licensing agreements, less accumulated
amortization of $616,667 4,933,333
Other assets 51,868
-----------
$ 5,562,724
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 190,278
Due to officers 150,991
Deposit - licensee 100,000
-----------
Total current liabilities 441,269
-----------
Stockholders' equity:
Common stock, par value, $.0001;
authorized - 25,000,000 shares;
issued and outstanding - 10,563,200 shares 1,057
Additional paid-in capital 9,851,622
Accumulated deficit (461,353)
Deficit accumulated during the development stage (4,193,231)
Foreign currency translation adjustment (76,640)
------------
5,121,455
-----------
$ 5,562,724
===========
</TABLE>
See notes to financial statements
F-1
<PAGE> 4
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Inception
(October 25, 1995)
Six Months Ended June 30, Three Months Ended June 30, To
1997 1996 1997 1996 June 30, 1997
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ --
----------- --------- ---------- --------- -----------
OPERATING EXPENSES:
General and administrative 595,028 390,522 211,321 174,443 2,029,698
Depreciation and amortization 201,940 202,509 100,970 108,943 652,748
Research and development 282,759 -- 3,449 -- 1,445,804
----------- --------- ---------- --------- -----------
1,079,727 593,031 315,740 283,386 4,128,250
----------- --------- ---------- --------- -----------
Operating loss (1,079,729) (593,031) (315,740) (283,386) (4,128,250)
Interest expense -- 57,997 -- 22,907 64,981
----------- --------- ---------- --------- -----------
Net loss $(1,079,727) $(651,028) $ (315,740) $(306,293) $(4,193,231)
=========== ========= ========== ========= ===========
Loss per share $ (.10) $ (.08) $ (.03) $ (.03)
=========== ========= ========== =========
Weighted average number of shares outstanding 10,310,284 8,513,210 10,563,200 8,822,009
=========== ========= ========== =========
</TABLE>
See notes to financial statements
F-2
<PAGE> 5
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Inception
(October 25, 1995)
Six Months Ended June 30, To
1997 1996 June 30, 1997
---- ---- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................. $(1,079,727) $ (651,028) $(4,193,231)
Depreciation and amortization ........................ 201,940 202,509 652,748
Advances to contractor ............................... 300,000 -- --
Changes in assets and liabilities:
Prepaid expenses ................................... (218,603) (6,667) (244,083)
Accounts payable and accrued expenses .............. (134,272) 138,205 83,877
Other assets ....................................... (12,360) -- (58,589)
----------- ----------- -----------
Net cash used in operating activities ............ (943,022) (317,181) (3,759,278)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ................... (89,061) (704,278) (209,757)
Payments to licensor ................................. -- (1,300,000) (2,900,000)
----------- ----------- -----------
Net cash used in investing activities ............ (89,061) (2,004,278) (3,109,757)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayment) of loans to
stockholders and others ........................... (293,479) 48,000 373,213
Net proceeds from issuance of common stock .......... 1,502,325 2,487,485 6,725,505
----------- ----------- -----------
Net cash provided by financing activities ....... 1,208,846 2,535,485 7,098,718
----------- ----------- -----------
Effect of exchange rate changes on cash ............... (46,930) (77,740) (76,640)
----------- ----------- -----------
Net increase in cash .................................. 129,833 136,286 153,043
Cash - beginning of period ............................ 23,210 102,650 --
----------- ----------- -----------
Cash - end of period .................................. $ 153,043 $ 228,936 $ 153,043
=========== =========== ===========
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>
See notes to financial statements
F-3
<PAGE> 6
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
JUNE 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 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
<PAGE> 7
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 Form 10-KSB for calendar year
ended December 31, 1996.
Quarter Ended June 30, 1997 and Thereafter
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, then in that event management is actively
considering (in conjunction with retained Swiss counsel) 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.
Consolidated Balance Sheet
Total Assets of the Company at period ended June 30, 1997 were
$5,562,724 with current assets amounting to $397,126 and with a substantial
portion of such total assets being attributable
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<PAGE> 8
to certain License agreements valued at $4,933,333 after net of accumulated
amortization of $616,667.
Total Current Liabilities of the Company at period ended June 30, 1997
were $441,269 all of which were short term liabilities.
Working capital at June 30, 1997 was $(44,143) being attributable to
cash of $153,043 and prepaid expenses and sundry current assets of $244,083 less
accounts payable and accrued liabilities of $190,278, due to officers of
$150,991, and a deposit to the 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 June 30, 1997 was $(76,640).
Comparative Consolidated Statements of Operations for the three months ended
June 30, 1997 and June 30, 1996
The Company did not have any revenues for either comparative quarters.
Operating expenses for the quarter ended June 30, 1997 amounted to $315,740 as
compared to $283,396 for the quarter ended June 30, 1996 - an increase of
$32,354 while net losses (after taking into account interest expense (if any)
during the comparative quarters) amounted to $315,740 for the quarter ended June
30, 1997 as compared to $306,293 for the quarter ended June 30, 1996. The
aforesaid operating expense increase of $32,354 is primarily attributable to the
fact that general and administrative expenses increased by $36,878.
Comparative Consolidated Statements of Operations for the six months ended June
30, 1997 and June 30, 1996
The Company did not have any revenues for either comparative periods.
Operating expenses for the six month period ended June 30, 1997 amounted to
$1,079,727 as compared to $593,031 for the six month period ended June 30, 1996
- - an increase of $486,696 while net losses (after taking into account interest
expense (if any) during the comparative periods) amounted to $1,079,727 for the
six month period ended June 30, 1997 as compared to $651,028 for the six month
period ended June 30, 1996. The aforesaid operating expense increase of $486,696
is primarily attributable to the fact that the Company incurred research and
development operating expenses of $282,759 during the six month period ended
June 30, 1997 while not having incurred any research and development expenses
during the comparative six month period ended June 30, 1996. The secondary
reason for the increase in operating expenses may be attributable to the fact
that general and administrative expenses increased by $204,506.
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<PAGE> 9
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 for an aggregate gross cash
consideration of $6,092,306 (said sales having taken place during calendar year
ended December 31, 1996). The shares of Company common stock 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 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 $222,000) into equity. The transactions referred to herein were
similarly conducted in accordance with Reg S and reported in Forms 8-K dated
January 23, 1997 and February 19, 1997.
During the quarter ended June 30, 1997 the Company did not sell any
additional shares of its common stock nor engage in any equity and/or debt
financing.
The Company sustained a significant loss during the year ended December
31, 1996 of close to $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 six month period ended June 30, 1997 of in excess of
$1,000,000 and as at such date its current liabilities exceeded its current
assets by $44,143. 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 derived from
commercial utilization of its products. However, if sufficient revenues, if any,
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.
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<PAGE> 10
PART II
Item 1. Legal Proceedings - None *
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a
Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) Reports on Form 8-K 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 "Plan of Operation -
Quarter Ended June 30, 1997 and Thereafter".
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<PAGE> 11
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: September 30, 1997
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 153,043
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 397,126
<PP&E> 202,357
<DEPRECIATION> 21,960
<TOTAL-ASSETS> 5,562,724
<CURRENT-LIABILITIES> 441,269
<BONDS> 0
0
0
<COMMON> 1,057
<OTHER-SE> 5,120,398
<TOTAL-LIABILITY-AND-EQUITY> 5,562,724
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,079,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,079,727)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,079,727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,079,727)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
