FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended Commission file
ended SEPTEMBER 30, 1997. No. 33-17679-D
PIERCE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1067694
(State or other jurisdiction of (I.R.S. Employer ID.)
incorporation or organization)
13275 E. FREEMONT PLACE #101A, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code (303)-792-0719
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 proceeding 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______
Class Outstanding at September 30, 1997
__________________________ ____________________________________
Common Stock, no par value 6,765,703
INDEX
PART I - FINANCIAL INFORMATION *
ITEM 1. Unaudited Financial Statements
Balance Sheets - September 30, 1997 (unaudited)
and June 30, 1997 3
Statements of Operations - Three Months Ended
September 30, 1996 and 1997 (unaudited) 4
Consolidated Statement of Changes in Stockholders' Equity -
For The Three Months Ended September 30, 1997 (Unaudited) 5
and the Years Ended 1996 and 1997.
Statement of Cash Flows - Three Months Ended
September 30, 1995, 1996, and 1997 (unaudited) 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis 10
PART II - OTHER INFORMATION
ITEMS 1 THROUGH 6 11
Signature 12
*The accompanying financial statements are not covered by an independent
certified public accountants' report.
PIERCE INTERNATIONAL, INC.
BALANCE SHEETS
UNAUDITED
ASSETS September 30, June 30,
CURRENT ASSETS: 1997 1997
Cash $ 0 $10,846
Investments and Stocks 33,023 162
Other 367 367
----------- -----------
Total current assets 33,390 11,375
PROPERTY AND EQUIPMENT: (Note 1)
Undeveloped land mineral
property(Note 3) 446,123 434,918
Furniture and equipment 7,705 7,705
Strawboard equipment (Note 4) 57,120 57,120
---------- -----------
510,948 499,743
Less accumulated depreciation and
amortization (5,895) (5,674)
----------- -----------
Net property and equipment 505,053 494,069
----------- -----------
OTHER ASSETS 71,955 59,405
----------- -----------
$610,398 $564,849
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES:
Bank Overdraft 1,049 -
Accounts payable and accrued
liabilities 78,530 85,050
Advances from officers/directors/
stockholders (Note 5) 242,258 242,080
----------- -----------
Total current liabilities 321,837 327,130
NOTE PAYABLE (Note 6) 200,000 200,000
STOCKHOLDERS' EQUITY (Notes 7 & 8)
Preferred stock, no par value;
400,000 shares authorized;
80,000 shares issued and
outstanding as of September 30,
1997 and June 30, 1997 20,000 20,000
Common stock, no par value;
30,000,000 shares authorized;
6,765,703 and 6,380,703
shares issued and outstanding
as of September 30, 1997 and
June 30, 1997, respectively 844,542 844,542
Accumulated deficit (775,981) (826,823)
----------- -----------
88,561 37,719
----------- -----------
$610,398 $564,849
=========== ===========
See notes to financial statements.
3
PIERCE INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED)
___________ ___________
1997 1996
REVENUE:
Net Sales $35,000 $100,000
Cost of goods sold - 70,121
___________ ___________
GROSS MARGIN 35,000 29,879
EXPENSES:
Administrative 21,326 15,229
Bad debt reserve 22,478 22,507
Outside services 14,325 11,629
Advertising and promotion 3,990 (300)
___________ ___________
Total expenses 62,119 49,065
NET OPERATING INCOME
(LOSS) (27,119) (19,186)
Other income 18,000 6,000
Recovery of bad debt 61,681 -
Foreign exchange loss 243 (92)
Loss on investment (318) (2,172)
Other expenses (1,645) -
___________ ___________
NET INCOME(LOSS) BEFORE
MINORITY INTEREST 50,842 (15,450)
MINORITY INTEREST - -
___________ ___________
NET INCOME (LOSS) $50,842 ($15,450)
=========== ===========
NET INCOME(LOSS) PER
COMMON SHARE $0.008 ($0.002)
=========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 6,509,036 6,380,703
============ ===========
See notes to financial statements.
4
PIERCE INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30,, 1997 (UNAUDITED)
AND THE THREE YEARS ENDED JUNE 30, 1996 & 1997
TOTAL
COMMON STOCK PREFERRED AMOUNT ACCUMULATED STOCKHOLDERS'
SHARES SHARES DEFICIT EQUITY
BALANCES,
JUNE 30, 1995 149,517,572 - $ 844,542 ($713,631) $130,911
25 for 1
Reverse split
March 13,
1995 (143,536,869) - - - -
Net loss
for the year - - - (6,778) (6,778)
BALANCES,
JUNE 30, 1996 5,980,703 - 844,542 (720,409) 124,133
Issuance of
common stock
in lieu of
compensation 400,000 - - - -
Private Placement
of convertible
preferred - 80,000 20,000 - 20,000
Net loss for
the year - - - (106,414) (106,414)
BALANCES,
JUNE 30, 1997 6,380,703 80,000 864,542 (826,823) 37,719
Issuance of
common stock
in lieu of
compensation 385,000 - - - -
Net loss for
the quarter
Ended September 30,
1997 - - - 50,842 50,842
BALANCES,
SEPTEMBER 30,
1997 6,765,703 80,000 $864,542 ($775,981) $88,561
See notes to financial statements.
PIERCE INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $50,842 ($15,450) ($6,124)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 221 221 220
Changes in operating assets
and liabilities:
Decrease (Increase) in
accounts receivable - (7,687) (5,652)
Decrease (Increase) in
related party receivable - - 11,018
(Increase) in other assets (12,550) - -
Increase in bank overdraft 1,049 - -
(Decrease) Increase in accounts
payable and accrued
expenses (6,520) 13,138 (1,291)
Increase (Decrease) in deferred revenue
Gain(Loss) on sale of investments (679) - (337)
Net cash used in operating -------- -------- --------
activities 32,363 ( 9,778) (2,166)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase)decrease in property and
equipment (11,205) - -
(Increase) decrease in investments (32,182) 10,312 5,421
Net cash used in investing -------- -------- --------
activities (43,387) 10,312 5,421
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts/payments on advances from
officers/directors/stockholders 178 (9,854) (3,255)
Net cash provided by -------- -------- --------
financing activities 178 (9,854) (3,255)
(DECREASE) INCREASE IN CASH (10,846) (9,320) 0
CASH, beginning of period 10,846 13,004 808
-------- -------- --------
CASH, end of period $ 0 $3,684 $ 808
======= ======= =======
See notes to the financial statements.
6
PIERCE INTERNATIONAL, INC.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Operations - Pierce International, Inc. (PI) was incorporated under
the laws of the State of Colorado on July 22, 1987, for the purpose of
obtaining capital to seek potentially profitable business
opportunities. Currently, PI has business interest in two industries,
natural resources and industrial development.
Net Income Per Common Share - Net income (loss) per common share is
computed based upon the weighted average number of shares outstanding
during the period. Common stock equivalents were not considered (for
losses only), as their effect would be antidilutive.
Property, Equipment, Depreciation and Amortization - Property and
equipment are stated at cost. Depreciation is being provided by the
straight-line method over estimated useful lives of three to five
years. All costs related to the acquisition (including associated
legal and other costs), exploration, evaluation, and development, of
the mineral properties have been capitalized. These costs will be
amortized by the units-of-production method of accounting based upon
estimated recoverable reserves.
Continuing Operations - The accompanying financial statements have
been prepared on a going concern basis, which contemplates continuity
of operations and realization of assets and satisfaction of
liabilities in the normal course of business. The continuation of the
Company as a going concern is dependent upon the Company raising
additional capital, and attaining and maintaining profitable
operations. The Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going
concern.
2. UNAUDITED INFORMATION:
The information furnished herein was taken from the books and record
of the Company without audit. However, such information reflects all
adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary to reflect properly the
results of the interim periods presented. Results of operations for
the periods presented are not necessarily indicative of the results to
be expected for the year. These interim financial statements should
be read in conjunction with the Company's annual report on Form 10-K
for the year ended June 30, 1997.
3. UNDEVELOPED MINERAL PROPERTY:
On June 11, 1996, PI reclaimed the "Como" property from Pierce
International Discovery, Inc. (PIDI). PIDI, a 17.24% owned
subsidiary, failed to comply with the stock purchase agreement. Como
consists of gold and gravel mining leases on a property situated
approximately 50 miles southwest of Denver, Colorado, near Como,
Colorado in Park County.
4. STRAWBOARD INVESTMENT:
The Company purchased strawboard equipment for $57,120. This
equipment is seen as an investment and the Company intends to resell
the equipment.
5. RELATED PARTY PAYABLE AND RELATED PARTY TRANSACTIONS:
Advances include $185,258 due Pierce D. Parker, officer and director,
or his company, Parker Consulting Services, and $57,000 is accrued
consulting fees due Pierce D. Parker.
6. COMMITMENTS:
As of September 30, 1997, PI had the following long term note payable:
PCS Profit Sharing Plan $200,000
PI is obligated to pay $200,000 to Parker Consulting Services Profit
Sharing Plan, owned by Pierce D. Parker, for funds it pledged for the
purpose of funding the Como project. This debt is to be paid from net
profits generated by the Como property.
7. STOCKHOLDERS' EQUITY:
As of September 30, 1997, PI had 6,765,703 common shares issued and
outstanding. There are 30,000,000 shares authorized. A reverse split
of 1 for 25 shares was approved on March 13, 1996.
Of the total shares outstanding, 160,000 shares were issued as part of
PI's initial public offering and are free trading stock. All other
shares have been held a minimum of 1 year and could be sold under Rule
144.
The Company issued 80,000 shares of convertible Series I preferred
stock. The stock was issued in conjunction with a private placement
conducted by the Company. There are 400,000 shares of preferred stock
authorized and may be determined by the Board of Directors as to
dividend rights, dividend rate, conversion rights, voting rights,
redemption rights and terms, liquidation preferences, the number of
shares constituting the series and the designation of each series.
The Series I Convertible Preferred Stockholders are entitled to
dividends when and as declared by the Company's Board of Directors
from funds which are legally available. The Series I Preferred Stock
is convertible, at any time into an identical number of shares of the
Company's Common Stock. Holders of the Series I Convertible Preferred
Stock are entitled to one vote per share on all matters submitted to a
vote of the Company's shareholders. Series I Convertible Preferred
Stock does not have preemptive rights and it is not redeemable.
8. INCENTIVE STOCK OPTION PLAN:
On August 10, 1987, the Company adopted an Incentive Stock Option Plan
(the "Plan") under which options granted are intended to qualify as
"incentive stock options" under Section 422A of the Internal Revenue
code of 1954, as amended (the "Code"). Pursuant to the Plan, options
to purchase up to 400,000 shares of the Company's Common Stock may be
granted to employees of the Company. The Plan is administered by the
Board of Directors which is empowered to determine the terms and
conditions of each option, subject to the limitation that the exercise
price cannot be less than the market value of the Common Stock on date
of the grant (110% of the market value in the case of options granted
to an employee who owns 10% or more of the Company's outstanding
Common Stock) and no option can have a term in excess of 10 years (5
years in the case of options granted to employees who own 10% or more
of the Company's Common Stock).
As of the date of this report, no options have been granted under this
Plan.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1997.
INTRODUCTION
The Company is concentrating on its two major industries, natural
resources and industrial development. The Company is making a
concentrated effort to sell strawboard equipment, and to presell
strawboard.
LIQUIDITY
Working capital at September 30, 1997 was a negative $288,447. A
significant portion
of current liabilities are advances from stockholders. Cash flow continues
to be irregular and the Company will continue to rely heavily on its
current investments to produce future cash flow.
RESULTS OF OPERATIONS
During the quarter ended September 30, 1997, the Company had net
income of $50,842. The Company had an operating loss of $27,119. The
Company was able to recover a portion of bad debt it had allowed for in an
earlier period. The payment was made in marketable securities. In
addition, the Company received payment of fees related to it's strawboard
business and there was not any cost of goods associated with these fees.
Although the Company produce income for the quarter, it continues to
struggle to develop reoccurring revenue.
PART II - OTHER INFORMATION
ITEMS #1 THROUGH #6 (a) - No response required.
ITEM 6 (b) - No reports were filed on the Form 8-K during the quarter ended
September 30, 1997.
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PIERCE INTERNATIONAL, INC.
Dated: December 29, 1997 BY: /S/ PIERCE D. PARKER
Pierce D. Parker,
President (Chief Financial and
Accounting Officer)