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 DECEMBER 31, 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 December 31, 1997
Common Stock, no par value 6,765,703
INDEX
PART I - FINANCIAL INFORMATION *
ITEM 1. Unaudited Financial Statements
Balance Sheets - December 31, 1997 (unaudited)
and June 30, 1997 3
Statements of Operations - Three Months Ended
December 31, 1997 and 1996 (Unaudited) and the
Year to Date with Last Year Comparison 4
Consolidated Statement of Changes in Stockholders' Equity -
For The Six Months Ended December 31, 1997 (Unaudited) 5
and the Years Ended 1996 and 1997.
Statement of Cash Flows - Six Months Ended
December 31, 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 December 31, June 30,
1997 1997
CURRENT ASSETS:
Cash $1,296 $10,846
Investments and stocks 8,525 162
Other 367 367
Total current assets 10,188 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 accumlated depreciation and
amortization (6,116) (5,674)
Net property and equipment 504,832 494,069
OTHER ASSETS 71,545 59,405
$586,565 $564,849
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank Overdraft $0 $0
Accounts payable and accrued
liabilities 89,755 85,050
Advances from officers/directors/
stockholders (Note 5) 251,308 242,080
Total current liabilities 341,063 327,130
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 December 31,
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 December 31, 1997 and
June 30, 1997, respectively 844,542 844,542
Accumulated deficit (819,040) (826,823)
45,502 37,719
$586,565 $564,849
See notes to financial statements.
PIERCE INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS YEAR TO DATE
ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) (UNAUDITED)
1997 1996 1997 1996
REVENUE:
Net Sales $0 $0 $35,000 $100,000
Cost of goods
sold 350 - 350 70,121
GROSS MARGIN (350) 0 34,650 29,879
EXPENSES:
Administrative 17,415 6,976 38,741 22,205
Bad debt
reserve 1,513 10,600 23,991 33,107
Outside
services 15,711 13,154 30,037 24,783
Advertising and
promotion 1,124 - 5,114 (300)
Total
expenses 35,763 30,730 97,883 79,795
NET OPERTING INCOME
(LOSS) (36,113) (30,730) (63,233) (49,916)
Other income 18,000 6,000 36,000 12,000
Recovery of
bad debt - - 61,606 (92)
Foreign exchange
loss - (1,327) - (3,499)
Loss on
investment (23,748) - (23,748) -
Other expenses (1,197) - (2,843) -
NET INCOME (LOSS) BEFORE
MINORITY
INTEREST (43,059) (26,057) 7,783 (41,507)
MINORITY INTEREST - - - -
NET INCOME
(LOSS) ($43,059) ($26,057) $7,783 ($41,507)
NET INCOME (LOSS) PER
COMMON SHARE ($0.006) ($0.004) $0.001 ($0.007)
WEIGHTED AVERAGE NUMBER OF
SHARES
OUTSTANDING 6,765,703 5,980,703 6,765,703 5,980,703
See notes to financial statements.
PIERCE INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED)
AND THE YEARS ENDED JUNE 30, 1996 & 1997
TOTAL
COMMON PREFERRED ACCUMULATED STOCKHOLDERS'
STOCK SHARES SHARES AMOUNT 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 income for the
quarter Ended
September 30, 1997 - - - 50,842 50,842
BALANCES, SEPTEMBER 30,
1997
Net loss for the
quarter Ended
December 31, 1997 - - - (43,059) (43,059)
BALANCES, DECEMBER 31,
1997 6,765,703 80,000 $864,542 ($819,040) 45,502
See notes to financial statements.
PIERCE INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31,
(UNAUDITED)
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $7,783 ($41,507) ($8,590)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 442 442 440
Changes in operating assets
and liabilities:
Decrease (Increase) in accounts
receivable - (6,093) (2,552)
Decrease (Increase) in related
party receivable - - (785)
(Increase) in other assets (12,140) - -
Increase in bank overdraft - - -
(Decrease) Increase in accounts
payable and accrued expenses 4,705 17,835 (2,607)
Increase (Decrease) in deferred
revenue 35,144
Gain (Loss) on sale of investments - - (337)
Net cash used in operating
activities 790 (29,323) 20,713
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in property
and equipment (11,205) - -
(Increase) decrease in investments (8,363) 15,585 (16,182)
Net cash used in investing
activities (19,568) 15,585 (16,182)
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts/payments on advances from
officers/directors/stockholders 9,228 1,602 (3,968)
Net cash provided by financing
activities 9,228 1,602 (3,968)
(DECREASE) INCREASE IN CASH (9,550) (12,136) 563
CASH, beginning of period 10,846 13,004 808
CASH, end of period $1,296 $868 $1,371
See notes to the financial statements.
UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 anti-dilutive.
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 and 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 $188,308 due Pierce D. Parker, Officer and Director, or
his company, Parker Consulting Services, and $63,000 is accrued
consulting fees due Pierce D. Parker.
6. COMMITMENTS:
As of December 31, 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 December 31, 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 Stock holders 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 DECEMBER 31, 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 December 31, 1997 was a negative $330,875. 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 December 31, 1997, the Company had net loss of
$43,059. The Company had an operating loss of $36,113. The Company failed to
generate income from operations and 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
December 31, 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: March 6, 1997 BY:
Pierce D. Parker,
President (Chief Financial and
Accounting Officer)