-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K5JYDtx41FPFKA1095AExwWV6EfK3gIBcv+j1+18oZPYdseQJmRVMWqfFD508REk NXs5V4w1vtyo7kds+fRiGQ== 0000950147-98-001037.txt : 19981217 0000950147-98-001037.hdr.sgml : 19981217 ACCESSION NUMBER: 0000950147-98-001037 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SC&T INTERNATIONAL INC CENTRAL INDEX KEY: 0001000079 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 860737579 STATE OF INCORPORATION: AZ FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-27382 FILM NUMBER: 98770660 BUSINESS ADDRESS: STREET 1: 15695 NORTH 83RD WAY CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6023689490 MAIL ADDRESS: STREET 1: 15695 NORTH 83RD WAY CITY: SCOTTSDALE STATE: AZ ZIP: 85260 10QSB/A 1 AMENDMENT NO. 1 TO FORM 10-QSB US SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB/A AMENDMENT NO. 1 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31,1998. Commission File Number: 0-27382. SC&T INTERNATIONAL, INC. ---------------------------------------------------------- (Exact name of small business as specified in its charter) ARIZONA 86-0737579 - ------------------------------- ----------------------------- (State or other jurisdiction of (IRS Employer Identification) incorporation or organization) 15695 North 83rd Way, Scottsdale, Arizona 85260 ----------------------------------------------- (Address of principal executive offices) (602) 368-9490 ---------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity as of December 8, 1998 latest practicable date: 25,903,684 shares of Common Stock, par value $0.01 per share. Transitional Small Business Disclosure Format (Check one): Yes [X] No [ ] SC&T INTERNATIONAL, INC. AND SUBSIDIARY Page ---- PART I FINANCIAL INFORMATION Item 1. Financial Information Consolidated Balance Sheet as of October 31,1998 3 Consolidated Statements of Operations for the Three Months Ended October 31,1998 and October 31,1997 5 Consolidated Statement of Shareholders' Equity for the Three Months Ended October 31,1998 6 Consolidated Statements of Cash Flows for the Three Months Ended October 31,1998 and October 31,1997 7 Notes to Consolidated Financial Statements 8 Item 6. Exhibits & Reports on Form 8-K 10 SIGNATURES 11 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SC&T INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET October 31,1998 ASSETS Current assets: Cash $ 74,997 Receivables 1,962,069 Inventory 1,765,252 Other current assets 340,812 ---------- Total Current Assets 4,143,130 Property and equipment, less accumulated depreciation of $399,574 586,558 Other assets 144,507 ---------- Total Assets $4,874,195 ========== The accompanying notes are an integral part of these consolidated financial statements. 3 SC&T INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET October 31,1998 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,143,519 Common stock payable 103,130 Advances From Factor 399,311 Accrued expenses 185,434 ------------ Total current liabilities 2,831,394 Commitments and contingencies Deferred Income-Long Term 181,727 Shareholders' equity: Common stock, $0.01 par; authorized 75,000,000 shares; 25,903,684 shares issued and outstanding 259,038 Series A preferred stock, $0.01 par; authorized 5,000,000 shares; 18 shares issued and outstanding Series B preferred stock, $100,000 Stated Value, 15 shares issued and outstanding 1,500,000 Additional paid-in capital 13,252,528 Currency translation (54,275) Accumulated deficit (13,096,217) ------------ Total shareholders' equity 1,861,074 ------------ Total Liabilities and Equity $ 4,874,195 ============ The accompanying notes are an integral part of these consolidated financial statements. 4 SC&T INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended October 31, 1998 and 1997 1998 1997 ---- ---- Net sales $ 1,846,697 $ 1,330,158 Cost of goods sold 1,145,391 1,058,806 ------------ ------------ Gross profit 701,306 271,352 Selling, general and administrative expenses: Payroll and payroll taxes 332,264 408,618 Selling and promotion 376,993 462,586 Office and administrative 241,664 431,569 Research and development 14,663 71,624 Consulting fees 2,548 77,035 Other 4,201 9,381 ------------ ------------ 972,333 1,460,813 ------------ ------------ Loss from operations (271,027) (1,189,461) Other income (expense) Royalty income 112,201 -- Interest income/(expense) (3667) 5,267 ------------ ------------ Income (Loss) before extraordinary items (162,493) (1,184,194) Prior Period Adjustment 230,711 -- ------------ ------------ Net loss $ 68,218 $ (1,184,194) ============ ============ Net loss from operations per common share $ .0 $ (.05) ============ ============ Net loss per common share $ .0 $ (.05) ============ ============ Weighted average common shares outstanding 24,729,695 23,135,273 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 5 SC&T INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the Three Months Ended October 31,1998 Common Stock Preferred Stock Additional ------------------- --------------- Paid-in Shares Amount Shares Amount Capital ------ ------ ------ ------ ------- Balance at April 30,1998 23,153,684 $231,536 188 $1,500,002 $13,280,028 Preferred stock issuance costs -- -- -- -- -- Issuance of common stock 2,750,000 27,500 -- -- -- Preferred stock conversion -- -- 155 (2) -- Currency translation -- -- -- -- -- Net loss -- -- -- -- -- ---------- -------- --- ---------- ----------- Balance at July 31,1998 25,903,684 $259,037 33 $1,500,000 $13,280,028 ========== ======== === ========== =========== Treasury Stock -------------- Currency Accumulated Shares Amount Translation Deficit Balance at April 30,1998 -- $ -- $ 58,782 $(13,254,736) Preferred stock issuance costs -- -- -- -- Issuance of common stock -- -- -- -- Preferred stock conversion -- -- -- -- Currency translation -- -- (4507) -- Net loss -- -- -- 68,218 --- ---- -------- ------------ Balance at July 31,1998 -- -- $ 54,275 $(13,186,518) === ==== ======== ============ The accompanying notes are an integral part of these consolidated financial statements. 6 SC&T INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended October 31,1998 and 1997 1998 1997 ---- ---- Cash flows from operating activities: Net Profit (loss) $ 68,218 $(1,184,194) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 51,915 46,788 (Increase) decrease in accounts receivable (712,688) (663,050) Decrease in allowance for doubtful accounts 36,316 (Increase) decrease in inventories (24,037) 498,440 (Increase) decrease in advances on purchases of inventory (Increase)decrease in other current assets (24,063) Loan amortization 2438 Increase in prepaid expenses (164,377) Increase in other assets (612) Increase (Decrease) in accounts payable 896,213 (377,551) Increase (Decrease)n accrued expenses (115,027) 126,129 --------- ----------- Net cash used in operating activities 217 (1,539,359) --------- ----------- Cash flows from investing activities: Purchase of property and equipment 63,478 (87,313) Development costs 8071 (95,498) Loans to related parties -- -- --------- ----------- Net cash used in investing activities 71,549 (182,811) --------- ----------- Cash flows from financing activities: Currency translation Net borrowings under line of credit agreement Principal payments on short-term debt Principal payments on long-term debt Proceeds from note payable, related party Net repayments on related party loans Net borrowings on notes payable, bank Preferred stock issuance costs Repayments to factor (10,297) 0 --------- ----------- Net cash (used in)provided by financing activities (10,297) 0 --------- ----------- Net (decrease)increase in cash 61,469 (1,722,170) Cash, beginning of period 13,528 1,867,874 --------- ----------- Cash, end of period $ 74,997 $ 145,704 ========= =========== The accompanying notes are an integral part of these consolidated financial statements. 7 SC&T INTERNATIONAL, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (Unaudited) 1. Interim financial reporting: The accompanying unaudited Consolidated Financial Statements for SC&T International, Inc. (the "Company") have been prepared in accordance with the generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB. 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 (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods presented have been made. The results of operations for the three month period ended October 31,1998 is not necessarily indicative of the operating results that may be expected for the entire fiscal year ending April 30,1999. Reclassification: Certain prior period amounts have been reclassified to conform to the current period presentation. 2. Common Stock: On October 22, 1997, the Company's shares of common stock, which was traded under the symbol SCTI, were delisted from the Nasdaq Small cap market. This action was taken as a direct result of the Company's failure to meet the filing requirement as stated in marketplace Rule 4310(c)(14). The failure to meet the filing requirement was the result of the untimely resignation of the Company's accounting firm, Toback & Company. The Company has complied with all reporting requirements in a timely manner since retaining Evers & Company in October, 1997. The company has completed and filed its 10K report for the year ended April 30,1998. The company has entered into agreements with the holders of 99% of the Series A Preferred Stock hereby all of their shares of Series A Preferred Stock are tendered for conversion at a fixed conversion price of $1.00 per share ( the "Fixed Conversion "). The holders of Series A Preferred Stock waive all other conversion rights which they may have pursant to any agreement. In addition to the fixed conversion price, the holders of the Series A Preferred Stock will also receive warrants to purchase one-third of the number of shares which they receive pursant to the Fixed Conversion price at a price of $1.75 per share subject to ordinary anti-dilution provisions ( the "Warrant Shares"). The Company did not have an adequate nimber of authorized shares to cover the warrants, employee stock options and the remaining preferred shareholders. In order to allow the Company to have sufficient shares for these transactions, the President of the Company retuned 1,648,444 of his shares to the Company. Subsequent to year end, the Board of Directors approved the issuance of 15 shares of Series B Preferred Stock at $100,000 stated value per share to the President in exchange for 1,500,000 shares of common stock returned. The preferred shares are convertible into common stock at the rate of 12 shares for every $1 of face value of the Series B Preferred stock. In addition, the President received $150,000 in cash for the additional 148,444 shares returned. The transaction has been retroactively applied to the 1998 financial statements. Mr. Copland and his affiliates have indicated they intend to convert the Series B Preferred stock into common stock. 8 SC&T INTERNATIONAL, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (Unaudited) The conversion is expected to be completed in December, 1998. Mr. Copland and his affiliates will be issued a total of 18,000,000 common shares. 3. Proxy Appproval In July, 1998 shareholders of the Company approved two motions. The first, to increase the number of authorized shares by 50,000,000 bringing the total to 75,000,000. The second motion approved was to authorize a reverse split. Management's current intent is not to reverse the stock until the Company' share price has increased and the Company reaches profitability. At this time the Company has not set a date for a reverse split, but does not expect a reverse split before the Company's fourth quarter of fiscal 1999 or until such time as the common share value has improved. 4. Commitments and Contingencies Operating leases: In October 1996, the Company purchased approximately 1.24 acres of land located at the Scottsdale Airpark in Scottsdale, Arizona. The Company completed construction of approximately 12,000 square feet of warehouse space and approximately 6,000 square feet of executive office space in April 1997. The Company has subsequently sold the building on June 30, 1997 and effective July 1, 1997 leased the building back from the buyer. 9 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS 27 Financial Data Schedule - (Incorporated by reference to the Company's Form 10-QSB for the quarter ended October 31, 1998, filed on December 15, 1998. (b) REPORTS ON FORM 8-K On June 17, 1998 the registrant filed an 8-K with the Securities Exchange Commission to change its fiscal year from March 31 to April 30. 10 SIGNATURES In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. SC&T INTERNATIONAL, INC. Signature Capacity Date --------- -------- ---- /s/ James L. Copland Chairman of the Board December 16, 1997 - ------------------------- and Chief Executive Officer James L. Copland /s/ Richard W. Elwood Director of Finance December 16, 1997 - ------------------------- Richard W. Elwood 11 -----END PRIVACY-ENHANCED MESSAGE-----