SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended August 31, 1998.
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 0-4465
Sirco International Corp.
- - --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New York 13-2511270
- - --------------------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
24 Richmond Hill Avenue, Stamford Connecticut 06901
- - --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
- - --------------------------------------------------------------------------------
Registrant's Telephone Number, Including Area Code 203-359-4100
(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. Yes [X] No [ ].
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 6,343,316 shares of
Common Stock, par value $.10 per share, as of September 30, 1998.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Sirco International Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
Aug 31, 1998 Nov. 30, 1997
------------ ------------
(Unaudited) (See note)
Assets
Current assets:
Cash and cash equivalents $ 510,632 $ 114,190
Accounts receivable 2,220,805 3,166,804
Inventories 5,056,290 7,707,631
Prepaid expenses 345,207 253,225
Other current assets 19,219 44,231
Recoverable income taxes -- 125,517
Total current assets 8,152,153 11,411,598
------------ ------------
Property and equipment at cost 1,888,363 1,762,533
Less accumulated depreciation 1,053,759 935,220
------------ ------------
Net property and equipment 834,604 827,313
------------ ------------
Other assets 144,442 207,940
Investment in and advances to subsidiary 480,070 514,797
Investment in Access One Communications, Inc. 1,816,832 1,080,000
Goodwill 1,291,483 --
------------ ------------
Total assets $ 12,719,584 $ 14,041,648
============ ============
Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt $ 3,672,418 $ 1,522,060
Due to related parties 212,783 974,046
Accounts payable 1,703,332 2,489,259
Accrued expenses and other current liabilities 1,182,591 1,318,863
Total current liabilities 6,771,124 6,304,228
------------ ------------
Long-term debt, less current maturities 287,777 4,521,795
------------ ------------
Item 1. Financial Statements
Sirco International Corp. and Subsidiaries
Condensed Consolidated Balance Sheets (continued)
Aug 31, 1998 Nov. 30, 1997
------------ ------------
(Unaudited) (See note)
Stockholders' equity:
Preferred stock, $.10 par value; 1,000,000 shares authorized,
Series A, 700 issued 70 --
Common stock, $.10 par value; 20,000,000 shares authorized,
5,862,400 issued (1998), 4,300,400 issued (1997) 586,240 430,040
Capital in excess of par value 12,231,575 7,753,368
Deficit (6,308,554) (3,887,532)
Treasury stock at cost (27,500) (27,500)
Treasury stock held by equity investee (85,000) (420,000)
Accumulated foreign translation adjustment (736,148) (632,751)
------------ ------------
Total stockholders' equity 5,660,683 3,215,625
------------ ------------
Total liabilities and stockholders' equity $ 12,719,584 $ 14,041,648
============ ============
See notes to the condensed consolidated financial statements.
Note: The balance sheet at November 30, 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.
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For The Nine Months Ended For The Three Months Ended
Aug 31, 1998 Aug 31, 1997 Aug 31, 1998 Aug 31, 1997
------------ ------------ ------------ ------------
Net sales $ 13,403,557 $ 12,112,360 $ 4,373,563 $ 5,936,534
Cost of goods sold 10,502,276 9,756,035 3,343,042 4,813,371
------------ ------------ ------------ ------------
Gross profit 2,901,281 2,356,325 1,030,521 1,123,163
Selling, warehouse, general and
administrative expenses 4,424,797 3,590,880 1,533,515 1,360,511
------------ ------------ ------------ ------------
Loss from operations (1,523,516) (1,234,555) (502,994) (237,348)
Other (income) expense:
Interest expense 412,592 373,828 115,340 136,352
Interest income (44,904) (47,775) (13,628) (16,029)
Miscellaneous income, net (88,350) (280,919) (30,724) (106,600)
Equity in loss of investee 618,168 -- 348,096 --
------------ ------------ ------------ ------------
897,506 45,134 419,084 13,723
Net loss $ (2,421,022) $ (1,279,689) $ (922,078) $ (251,071)
============ ============ ============ ============
Basic loss per share $ (0.49) $ (0.43) $ (0.17) $ (0.07)
============ ============ ============ ============
Diluted loss per share $ (0.49) $ (0.43) $ (0.17) $ (0.07)
============ ============ ============ ============
Shares used in computing loss per share
Basic and diluted 4,942,134 2,985,061 5,553,270 3,361,107
============ ============ ============ ============
See notes to the condensed consoladated financial statements
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
Aug 31, 1998 Aug 31, 1997
------------ ------------
Cash flows from operating activities:
Net loss ($2,421,022) ($1,279,688)
Adjustments to reconcile net loss,
to net cash provided by (used in) operating activities:
Depreciation and amortization 70,649 78,522
Provision for losses in accounts receivable 37,458 54,033
Loss in sale of property and equipment -- 7,104
Loss in equity of investee 618,168 --
Changes in operating assets and liabilities:
Accounts receivable 894,156 (1,597,555)
Inventories 2,621,761 (2,587,150)
Prepaid expenses 35,719 (319,780)
Other current assets 25,012 115,969
Other assets 63,498 (84,616)
Accounts payable and accrued expenses (693,722) (648,561)
----------- -----------
Net cash provided by (used in) operating activities: 1,251,677 (6,261,722)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (152,263) (36,277)
Proceeds from sale of property and equipment -- 3,655
Cash inflow from agreement to sell subsidiary 34,727 21,145
----------- -----------
Net cash used in investing activities (117,536) (11,477)
----------- -----------
Cash flows from financing activities:
(Decrease) increase in loans payable to
financial institutions and short-term
and long-term loans payable- other (2,035,377) 4,153,675
Proceeds from exercise of stock options 18,187 195,567
Proceeds from private placement of common stock 75,000 609,000
Proceeds from exercise of warrants 488,250 1,347,592
Proceeds form private placement of preferred stock 658,000 --
----------- -----------
Net cash (used in) provided by financing activities (795,940) 6,305,834
----------- -----------
Effect of exchange rate changes on cash 58,241 (23,249)
----------- -----------
Increase in cash and cash equivalents 396,442 9,386
Cash and cash equivalents at beginning of period 114,190 390,043
----------- -----------
Cash and cash equivalents at the end of period $ 510,632 $ 399,429
=========== ===========
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited) (continued)
For the Nine Months Ended
Aug 31, 1998 Aug 31, 1997
------------ ------------
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 385,623 $ 369,194
Income taxes $ -- $ 300,015
See notes to the condensed consolidated financial statements.
SIRCO INTERNATIONAL CORP.
Notes To Condensed Consolidated Financial Statements (Unaudited)
Note 1-Basis of Presentation
The accompanying unaudited condensed consolidated 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 nine month period ended August 31, 1998
are not necessarily indicative of the results that may be expected for the year
ended November 30, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K, as amended, for the year ended November 30, 1997.
Note 2-Financing Arrangements
On December 17, 1996, the Company's factoring agreement with Rosenthal &
Rosenthal Inc. was terminated and replaced with a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift and Loan Association
("Coast"), that provides for revolving loans and letter of credit financing in
the amount of the lesser of $7,000,000 or the sum of (a) 80% of eligible
accounts receivable (as defined) and (b) 50% of eligible inventory (as defined)
up to a maximum inventory loan of $3,000,000 less 50% of letter of credit
financing outstanding. The amount of the facility available for letter of credit
financing is limited to $2,500,000. The loan bears interest at 2% above the
prime rate, matures on December 31, 1998, and is guaranteed by the Company's
Chairman and Chief Executive Officer. The Company has granted Coast a security
interest in substantially all of the Company's travel division assets located in
the United States. The agreement with Coast contains various restrictive
covenants, including among others, a restriction on the payment or declaration
of any cash dividends, a restriction on the acquisition of any assets other than
in the ordinary course of business in excess of $100,000, restrictions related
to mergers, borrowing and debt guarantees, and a $100,000 annual limitation on
the acquisition or retirement of the Company's common and preferred stock, which
acquisitions or retirements are limited to transactions with employees,
directors and consultants pursuant to the terms of employment, consulting or
other stock restriction agreements with such persons. The agreement also
requires the Company to maintain a minimum tangible net worth of $1,400,000. As
of August 31, 1998, the Company owed Coast approximately $3,665,000 and had no
outstanding letters of credit. At August 31, 1998, the prime rate was 8.50%.
In January 1997, the Company's Canadian subsidiary, Sirco International (Canada)
Ltd. ("Sirco Canada"), was advised by its bank, National Bank of Canada, that it
would no longer provide Sirco Canada a revolving line of credit but would
continue to provide the real property mortgage loan on Sirco Canada's office and
warehouse facility. The mortgage loan is payable in monthly installments of
approximately $3,066, including interest at 10.25%, with a balloon payment of
approximately $286,000 in the year 2000. At August 31, 1998, the principal
amount of the mortgage loan was approximately $295,000.
Note 3-Investment in Subsidiary
On February 27, 1998, the Company acquired all the outstanding shares of common
stock of Essex Communications, Inc. ("Essex") in exchange for 250,000 shares of
the Company's common stock and warrants to purchase up to 225,000 shares of the
Company's common stock at $2.75 per share, of which warrants to purchase 75,000
shares had vested at August 31, 1998 and warrants to purchase 150,000 shares
will vest if certain performance conditions are met. The purchase agreement also
provides for the issuance of up to 600,000 additional shares of the Company's
common stock if certain performance conditions are met. As of September 30,
1998, 100,000 of such shares had been issued. Essex is a start-up
telecommunications provider that is certified to resell local telephone services
in the states of Connecticut, New Jersey and New York. Essex is currently
seeking certification to resell local telephone services in the states of
Massachusetts and Virginia. The acquisition has been accounted for as a
purchase.
On August 14, 1998, the Company acquired all the outstanding membership
interests of WebQuill Internet Services LLC ("WebQuill") and American Telecom,
LLC ("American Telecom") in exchange for 375,000 shares of the Company's common
stock. The purchase agreement also provides that 150,000 additional shares of
the Company's common stock be held in escrow and issued if certain performance
objectives are achieved. WebQuill is an Internet provider and web-site
developer. The acquisition has been accounted for as a purchase.
Item 2. Management's Analysis and Discussion of Financial Condition and Results
of Operations
The following discussion and analysis contains forward-looking statements that
involve risk and uncertainties. The Company's actual results may differ
materially from results discussed in forward-looking statements. Factors that
might cause such a difference include, among others, general economic
conditions; industry trends; the loss of major customers; dependence on foreign
sources of supply; the loss of licenses; availability of management;
availability, terms and deployment of capital; the seasonal nature of the
Company's business; and changes in state and federal regulations of the
telecommunications industry.
Three and Nine Months Ended August 31, 1998 vs. August 31, 1997
Net sales for the three and nine months ended August 31, 1998 decreased by
approximately $1,563,000 and increased by approximately $1,291,000,
respectively, to approximately $4,374,000 for the three months ended August 31,
1998 and approximately $13,404,000 for the nine months ended August 31, 1998, as
compared to approximately $5,937,000 and $12,112,000, respectively, reported for
the comparable periods in 1997. Net sales for the Company's United States
operations decreased by approximately $1,807,000 and increased by approximately
$1,311,000, respectively, for the three and nine months ended August 31, 1998
over comparable periods in 1997. The decline in net sales for the three months
ended August 31, 1998 was primarily due to decreases in the sales of licensed
product, that were partially offset by sales by the Company's recently-formed
subsidiary, Airline Ventures, Inc. ("AVI"), which was not in operation in the
prior fiscal period. The increase in net sales for the nine months ended August
31,1998 was primarily due to sales of certain discontinued and slow-moving
product and sales by AVI, which was not in operation in the prior fiscal period.
Net sales for the Company's Canadian operations increased by approximately
$151,000 for the three months ended August 31, 1998 and decreased by
approximately $113,000 for the nine months ended August 31, 1998 over comparable
periods in 1997. The increase in net sales for the three months ended August 31,
1998 reflects an increased penetration of the Company's Hedgren and Perry Ellis
product lines in the Canadian market, while the decrease in net sales for the
nine months ended August 31, 1998 reflects the loss, by Sirco Canada in fiscal
1996, of the license from Airway Industries Inc. ("Airway") to sell Atlantic
luggage (see below). The sale of Airway product accounted for approximately
$472,000 in net sales for the first three months of fiscal 1997 prior to the
December 31, 1996 termination date.
The Company's gross profit for the three and nine months ended August 31, 1998
decreased by approximately $93,000 and increased by approximately $545,000,
respectively, to approximately $1,030,000 and $2,901,000, respectively, from
approximately $1,123,000 and $2,356,000, respectively, reported in the prior
fiscal periods. The gross profit percentage for the three and nine months ended
August 31, 1998 increased to approximately 23.6% and 21.6%, respectively, from
approximately 18.9% and 19.5%, respectively, reported in the prior fiscal
periods. While the gross profit percentage has shown improvement for the three
and nine months ended August 31, 1998 as a result of the Company's ability to
better manage its inventory levels, the sales of certain discontinued and
slow-moving products at prices below the Company's normal selling price for
similar items continues to have a negative impact on the gross profit
percentage.
During fiscal 1996, Airway notified the Company that it would not renew its
license agreement with the Company, pursuant to which Sirco Canada was granted
an exclusive license to sell in Canada, luggage and luggage related products
under the trade names "Atlantic" and "Oleg Cassini" through December 31, 1996.
In November 1996, the Company entered into an Asset Purchase Agreement with
Airway, whereby Airway agreed, among other things, to purchase any remaining
Atlantic inventory owned by Sirco Canada on December 31, 1996, to purchase
certain fixed assets and to enter into a two year lease for a substantial
portion of the premises owned by Sirco Canada at fair market value. Sirco Canada
sold approximately $472,000 of Airway product in the first quarter of fiscal
1997 prior to the December 31, 1996 termination date. The loss of the Airway
license had an adverse effect on the Company's results of operations for the
three and nine months ended August 31, 1998 and will have an adverse effect on
Sirco Canada's results of operations for the remainder of the fiscal year ended
November 30, 1998.
On February 27, 1998, the Company acquired Essex Communications, Inc.,
("Essex"), a start-up telecommunications provider that is certified to resell
local telephone services and value-added products in the states of Connecticut,
New Jersey and New York. Essex commenced marketing efforts in May 1998 and first
provided service in June 1998. For the three and nine months ended August 31,
1998, Essex had net sales of approximately $93,000. At August 31, 1998, Essex
had customers utilizing approximately 1,000 telephone lines. Essex is currently
seeking certification to resell local telephone service in the states of
Massachusetts and Virginia and expects to be certified in each of these states
by the end of the Company's current fiscal year.
Selling, warehouse and general and administrative expenses increased for the
three and nine months ended August 31, 1998 by approximately $173,000 and
$834,000, respectively, to approximately $1,534,000 and $4,425,000,
respectively, from approximately $1,361,000 and $3,591,000, respectively,
reported in the prior fiscal periods. A major portion of the increase relates
directly to the expenses incurred by the Company's wholly-owned subsidiaries AVI
and Essex, which were not in operation in the prior fiscal periods.
Interest expense for the three and nine months ended August 31, 1998 decreased
by approximately $21,000 and increased by approximately $39,000, respectively,
from the amounts reported in the same periods in fiscal 1997 due to the relative
changes in average borrowings for the periods.
Miscellaneous income for the three and nine months ended August 31, 1998
decreased by approximately $76,000 and $193,000, respectively, from amounts
reported in the same periods in fiscal 1997. This decrease represents a decline
in the Company's commission income generated from sales arranged by the Company
between overseas suppliers and certain customers that was offset by an increase
in rental income reported by Sirco Canada.
The Company is currently the largest shareholder of Access One Communications
Inc. (formerly CLEC Holding Corp.) ("Access One"), owning approximately 30.6% of
Access One's capital stock. As the Company's investment in Access One is
accounted for under the equity method of accounting, the Company is required to
include its portion of Access One's net loss in the Company's results of
operations. For the three and nine months ended August 31, 1998, the Company has
recorded a loss of approximately $348,000 and $618,000, respectively, relating
to its investment in Access One. The Access One losses are the result of
aggressive customer growth and the related costs associated with gearing up for
an expanded customer base, which includes the hiring of employees to verify and
provision lines, to staff a customer service operation and to develop a
management information system. During the period from the Company's initial
investment in October 1997 until August 31, 1998, Access One experienced growth
of approximately 10,000 installed access lines. The current Access One customer
base is not large enough to generate the revenues needed to cover the overhead
costs associated with a fully integrated communications service provider, and
the Company believes that Access One will continue to lose money for at least
the next twelve months.
Liquidity and Capital Resources
At August 31, 1998, the Company had cash and cash equivalents of approximately
$511,000 and working capital of approximately $1,381,000.
Net cash provided by (used in) operating activities aggregated approximately
$1,252,000 and ($6,262,000) in the nine month fiscal periods ended August 31,
1998 and August 31, 1997, respectively. The increase of approximately $7,514,000
in net cash provided by operating activities in fiscal 1998 as compared to
fiscal 1997, primarily reflects a decrease in inventory and accounts receivable,
partially offset by an increase in the net loss. The reduction in inventory
levels is primarily due to sales of certain discontinued and slow-moving
inventory, the Company's ability to better manage its purchases relative to its
sales forecasts and the lack of import quota constraints in fiscal 1998 that
existed in fiscal 1997. The reduction in accounts receivable primarily reflects
tighter credit and collection policies.
Net cash used in investing activities aggregated approximately $118,000 and
$11,000 in the nine month fiscal periods ended August 31, 1998 and August 31,
1997, respectively. The principal uses of cash in investing activities in fiscal
1998 and 1997 was for the purchase of equipment. The principal source of cash
provided by investing activities in 1998 and 1997 was the proceeds of a note
receivable from a 1992 sale of a subsidiary.
Net cash (used in) provided by financing activities aggregated approximately
($796,000) and $6,306,000 in the nine month fiscal periods ended August 31, 1998
and August 31, 1997, respectively. In the nine month fiscal period ended August
31, 1998, net cash used in financing activities resulted from a decrease in
short-term debt of approximately $2,035,000, partially offset by approximately
$18,000 from the proceeds of the exercise of stock options, by approximately
$488,000 from the proceeds of the exercise of warrants, by approximately
$658,000 from the proceeds of a private placement of preferred stock and by
approximately $75,000 from the proceeds of a private placement of common stock.
In the nine month fiscal period ended August 31, 1997, approximately $4,154,000
of net cash was provided by short-term debt, approximately $196,000 was provided
from the proceeds of the exercise of stock options, approximately $1,348,000 was
provided from the proceeds of the exercise of warrants and approximately
$609,000 was provided from the proceeds of a private placement of common stock.
On December 17, 1996, the Company entered into a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift & Loan Association
("Coast"). See Note 2 to Notes to Condensed Consolidated Financial Statements
(Unaudited). As of August 31, 1998, the Company was indebted to Coast in the
principal amount of approximately $3,665,000 and had no outstanding letters of
credit. This loan matures on December 31, 1998. As a result, the entire
indebtedness is classified as a current liability, whereas a significant portion
of the indebtedness was considered a long-term liability at the Company's most
recent fiscal year-end. The reclassification in debt from long-term to current
had a significant impact on the Company's working capital position. However,
management believes it can successfully refinance this working capital line in a
manner that will not be disruptive to operations. The Company's ability to
refinance the loan impacts materially on the Company's future liquidity.
In January 1997, Sirco Canada was advised by its bank, National Bank of Canada,
that it would no longer provide Sirco Canada a revolving line of credit but
would continue to provide the real property mortgage loan on Sirco Canada's
office and warehouse facility. See Note 2 to Notes to Condensed Consolidated
Financial Statements (Unaudited). At August 31, 1998, the principal amount of
the mortgage loan was approximately $295,000. The Company is currently using the
Coast line of credit to provide letter of credit financing that was formerly
provided by National Bank of Canada.
For the nine month period ended August 31, 1998, the Company had approximately
$152,000 in capital expenditures. The Company expects to make additional capital
expenditures over the next twelve months to purchase equipment for its
telecommunications division, but does not anticipate that these expenditures
will be significant.
The Company currently owns approximately 30.6% of Access One, a Florida-based
competitive local exchange carrier. Access One is not publicly traded, there is
no readily ascertainable market for the stock, and the shares held by the
Company bear a restrictive legend stating that the shares have not been
registered under the Securities Act of 1933. The investment in Access One is
recorded on the Company's books by the equity method of accounting. In October
1998, the Company signed a non-binding letter of intent to acquire for stock
additional shares of Access One to increase the Company's ownership in Access
One to 80%. The closing of this proposed transaction, which is subject to the
negotiation by November 30, 1998 of a definitive acquisition agreement and
typical closing conditions, is expected to occur following receipt of
shareholder approval. However, no assurances can be given that such transaction
will occur.
Management believes that the Company's present sources of financing, combined
with its present working capital and cash flow from operations may not be
sufficient to meet the cash and capital requirements of the Company's travel
division for the next twelve months. If the depressed level in net sales of the
Company's travel division does not increase or the Company is unable to improve
its cash position by raising capital, the Company may experience temporary cash
shortages. Such cash shortages may negatively impact the Company's ability to
purchase inventory in a timely manner, which could impact the Company's results
of operations.
The Company anticipates that it will be able to raise $1,300,000 over the next
60 days to fund some of the losses of its travel division and to support the
business plan for the Company's telecommunications division for the next twelve
months, as it is expected that this division will incur losses during this
period. The Company also anticipates that, if it completes its proporsed
purchase of additional shares of Access One as discussed above, it will need to
raise capital in excess of $2 million to support the growth plan of Access One
into ten states that are located in the southeastern United States. Even though
the Company has identified financing sources and has negotiated terms on a
preliminary basis, there can be no assurances that the Company will be able to
obtain such funding when needed, or that such funding, if available, will be
obtainable on terms acceptable to the Company. The failure by the Company to
raise the necessary funds to finance its telecommunications operations will have
an adverse effect on the ability of the Company to carry out its business plan
for its telecommunications division.
SIRCO INTERNATIONAL CORP.
PART II-OTHER INFORMATION
Item 2. Changes in Securities
On September 10, 1998, the Company sold to Access One 400,000
shares of common stock of the Company in consideration of the
issuance to the Company by Access One of 400,000 shares of
common stock, par value $.001 per share, of Access One. Such
transaction was effected pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
On September 4, 1998, the Company issued to the former
shareholders of Essex 50,000 shares of common stock of the
Company in conjunction with the satisfaction of certain
performance criteria established in connection with the
acquisition of Essex. Such transaction was effected pursuant
to Section 4(2) of the Securities Act of 1933, as amended.
On August 14, 1998, the Company issued to the then members of
WebQuill Internet Services LLC and American Telecom, LLC,
375,000 shares of the Company's common stock in conjunction
with the purchase of all the outstanding membership interests
of WebQuill and American Telecom. Such transaction was
effected pursuant to Section 4(2) of the Securities Act of
1933 ,as amended.
On June 18, 1998, the Company issued 700 shares of the
Company's Series A Preferred Stock, par value $0.10 per share,
in consideration of a payment of $658,000. Each share is
entitled to dividends and distributions at the same rate and
in like kind as is declared on the shares of the Company's
common stock; shall receive preference to the common stock
shareholders in the event of any liquidation, dissolution or
winding-up of the corporation; and shall have a minimum
conversion price into fully paid and non-assessable shares of
common stock at the option of the holder at a rate of 667
shares of common stock for each share of preferred stock. It
is anticipated that the number of shares of common stock
issuable will be increased to 1,000 in conjunction with the
issuance of additional shares of Series A Preferred Stock in
October 1998. Such transaction was effected pursuant to
Section 4(2) of the Securities Act of 1933, as amended.
Item 6. Exhibits and Reports on Form 8-K
Exhibit No. Description
----------- -----------
3.1 Certificate of Amendment of the Certificate of Incorporation,
June 24, 1998
3.2 Certificate of Amendment of the Certificate of Incorporation,
July 9, 1998
27 Financial Data Schedule
Reports on Form 8-K
None
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 hereunto duly authorized.
Sirco International Corp.
October 15, 1998 By: /s/Joel Dupre
---------------- -------------
Date Joel Dupre
Chairman of the Board and
Chief Executive Officer
October 15, 1998 By: /s/Paul Riss
---------------- ------------
Date Paul Riss
Chief Financial Officer
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
No. Description
27 Financial Data Schedule.