-----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, QoTS+jEIydKes3hvk0wwPDL8EYVvV7XK+GkR9lLRrAZrPitxcWRwh99/5JkNI/sI XBpAvdmCdMP7z40mPAqung== 0001023856-98-000010.txt : 19980403 0001023856-98-000010.hdr.sgml : 19980403 ACCESSION NUMBER: 0001023856-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19980402 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEGASUS INDUSTRIES INC CENTRAL INDEX KEY: 0000757073 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 953599648 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12977 FILM NUMBER: 98585828 BUSINESS ADDRESS: STREET 1: 400 N ST PAUL STREET 2: SUITE 950 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2145208300 FORMER COMPANY: FORMER CONFORMED NAME: PATHFINDER CORP DATE OF NAME CHANGE: 19940324 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1996 Commission File Number 0-12977 PEGASUS INDUSTRIES, INC. ---------------------------------------------------- (Exact name of registrant as specified in charter) Nevada 95-3599648 - ----------------------------- ------------------------------------------ (State or other jurisdiction) (I.R.S. Employer Identification Number) 400 N. St. Paul, Suite 950, Dallas, TX 75201 ------------------------------------------------------ (Address of principal executive offices) (214) 520-8300 ------------------------------------------- (Registrant's telephone number) Title of each class Name of each exchange on which to be so registered each class is to be registered - ---------------------- ------------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: Common Stock Par Value $0.01 Outstanding as of March 31, 1996 - --------------------------------------- --------------------------------------- (Title of Class) 14,352,151 Indicate by check mark whether the registrant (1) has filed all reports re- quired 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 No X Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrants knowledge [in definitive proxy or information state- ments incorporated by reference in Part III this form 10-K or any amendment to this form 10-K. [ X ] PEGASUS INDUSTRIES, INC. INDEX PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Condensed consolidated financial statements 3 Condensed Consolidated Balance Sheets March 31, 1996 and December 31, 1995 3 Condensed Consolidated Statement of Income Three Months Ended March 31, 1996 and March 31, 1995 6 Condensed Consolidated Statement of Cash Flows -- Three Months Ended March 31, 1996 and March 31, 1995 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10 2 PART I ITEM I. PEGASUS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS In the opinion of management, the information set forth in the Condensed Consolidated Balance Sheets is fairly stated in all material aspects in re- lation to the consolidated balance sheets from which it has been derived.
Pro Forma March 31, December 31, 1996 (1) 1995 (1) ----------- ------------ Current Assets: Cash $ 69,242 $ 73,782 Financing Contract Receivables Current Portion 4,137,719 4,456,621 Inventories 949,831 1,026,491 Prepaid Expenses and Other 179,620 219,645 ---------- ---------- Total Current Assets 5,336,412 5,776,539 Property and Equipment, net of accumulated depreciation of $976,244 and $918,472 337,812 350,869 Financing Contracts Receivable 0 non current portion 2,228,002 2,625,230 Deferred Tax Benefits 60,152 60,152 Other Assets 118,012 61,420 ----------- ----------- $8,080,390 $8,874,210 ----------- -----------
The accompanying notes are an integral part of the Condensed Consolidated Balance Sheets. 3
LIABILITIES AND STOCKHOLDERS' EQUITY Pro Forma March 31, December 31, 1996 (1) 1995 (1) ----------- ------------ Current Liabilities: Accounts Payable $ 901,608 $ 795,324 Accrued Expenses 229,317 238,317 Current maturities of long term debt 7,126,757 7,678,870 ----------- ------------ Total Current Liabilities 8,242,182 8,712,511 Long-term debt, less current maturities 285,042 286,828 ------------ ------------ 8,547,224 8,999,339 Preferred Stockholders' Equity in Subsidiary 1,128,370 (2) 1,128,370 Stockholders' Equity Common stock, $.01 par value, 50,000,000 shares authorized; 14,352,151 shares issued and outstanding at March 31, 1996 and 14,342,151 shares issued and out- standing at December 31, 1995 143,521 143,521 Additional Paid in Capital 58,446 58,446 Accumulated Loss (1,797,171) (1,455,466) ------------- ------------- (1,595,204) (1,253,499) ------------- ------------- $8,080,390 $8,874,210
The accompanying notes are an integral part of the Condensed Consolidated Balance Sheets. 4 NOTES TO CONDENSED CONSOLIDATED BALANCE SHEET (1) The unaudited condensed consolidated balance sheet represent the con- solidated assets, liabilities and stockholders' equity of the Company and its wholly owned subsidiary, Zearl T. Young, Incorporated ("ZTY"). (2) Reflects the preferred stockholders' equity interest in ZTY as a result of a reorganization in 1994. The preferred stock, issued as part of the re- organization, has a $5.00 par value and 5% cumulative dividend. 5 CONSOLIDATED CONDENSED STATEMENT OF INCOME The interim consolidated condensed statement of income contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods presented. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996.
For the Three Months Ended March 31, March 31, 1996 1995 ------------ ------------ (unaudited) (unaudited) Net Sales $ 832,964 $ 1,206,886 Cost of Sales 546,155 724,759 ------------ ------------ Gross Profit 286,809 482,127 Financing Income 511,322 614,372 ------------ ------------ 798,131 1,096,499 Selling, General and Administrative Expenses 923,490 996,929 ------------ ------------ Operating Income (125,359) 99,570 Interest Expense 216,346 230,540 Net Income/(Loss) $ (341,705) $ (130,970) ------------ ------------ Loss per Common Share (0.024)(1) (0.009)(1) ------------ ------------ Weighted Average Common Shares 14,352,151 14,352,151 ------------ ------------
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW
For the Three Months Ended March 31, March 31, 1996 1995 ------------ ------------ (unaudited) (unaudited) Cash flow provided by (used in) operating activities: Net income/(loss) (341,705) (130,970) Adjustments to reconcile net cash provided (used in) operating activities: Depreciation and amortization 13,058 63,139 (Increase)decrease in finance contract receivables 716,130 650,926 (Increase)decrease in inventories 76,660 12,095 (Increase)decrease in prepaid expenses 40,025 (26,773) Increase(decrease) in accounts payable 110,784 38,556 Increase(decrease) in accrued expenses (9,000) (30,126) ------------ ------------ Net cash provided by (used) in operating activities 605,952 576,847 Cash flows (used in) investing activities: (Increase)decrease in property and equipment (56,592) (51,632) (Increase)decrease in other assets -0- -0- ------------ ------------ Net cash (used in) investing activities (56,592) (51,632) Cash flows (used in) financing activities: Increase(decrease) in long-term debt (553,899) (528,629) ------------ ------------ Net cash (used in) financing activities (610,492) (528,629) ------------ ------------ Net Increase in Cash (4,540) (3,414) Cash - beginning of period 73,782 99,759 ------------ ------------ Cash - end of period 69,242 96,345 ------------ ------------
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's business consists of the sale of retail consumer products, primarily consumer durable goods such as furniture, appliances, carpet and electronics and the related financing of those purchases with consumer finance contracts. Accordingly, the Company experiences the normal cyclical fluctuations of most retailers with operations during the fourth quarter (October through December) comprising a disproportionate portion of its annual revenues and gross profits. LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 1996 COMPARED TO DECEMBER 31, 1995 During the three months ended March 31, 1996, ZTY's current assets de- creased by $440,127 primarily due to a decrease of $318,902 in the current portion of finance contract receivables. The decrease is due to seasonal increases in collections on Christmas season purchases during the first quarter of each year and due to a 31% decrease in first quarter sales in 1996 as compared to 1995. The decrease during the same period for the prior year was $454,876. Cash balances decreased $4,540 during the quarter. Current liabilities decreased $470,329 during the three months ended March 31, 1996. Trade accounts payable increased $106,284 while accrued expenses decreased $30,126. Current maturities of long term debt decreased $552,113 which consisted primarily of paydown of debt due to inventory liqui- dation and reduction in finance contract receivable. ZTY is experiencing liquidity shortages resulting in extended terms on trade credit. The entire portion of ZTY's note payable to its primary lender is shown as a current liability. It matures December 31, 1996. ZTY is currently in default of its financial covenants which gives the lender the right to ac- celerate the note at any time. Long term debt decreased $1,786. Finance contracts receivable decreased $716,130 and inventory decreased $76,660 during the three months ended March 31, 1996. RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995 The Company's consolidated statements of income and cash flows for the three months ended March 31, 1996 and 1995 consist of the Company and of ZTY, its wholly owned subsidiary. 8 Net retail sales for the quarter ended March 31, 1996 decreased $373,922 or 31% while gross profits decreased $195,318 compared to the same period in 1995. The decrease is primarily due to the Company's working capital short- ages which severely restricted its ability to purchase inventory. The Com- pany was able to replace only limited merchandise on primarily COD terms due to its inability to pay its vendors. Financing income decreased $103,050 compared to the first quarter in 1996 primarily due to the decrease in outstanding finance contracts. Selling, general and administrative expenses decreased $73,439 during this quarter as compared to a year earlier. The decrease was primarily re- lated to reduced staff resulting from slow sales. The Company reported an operating loss of $125,359 for the first quarter of 1996 as compared to a $99,570 operating profit in the first quarter of 1995. The net loss of $341,705 for the first quarter of 1996 compared to a loss of $130,970 for the first quarter the prior year is due to reduced sales, low inventories and an inability to further reduce overhead without closing additional stores. 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. The Company filed a report on Form 8-K for the first quarter of 1996 to report a change in the Company's independent auditors. Pegasus Industries, Inc. ("Pegasus") has engaged William L. Clancy, CPA, ("Clancy") 4041 North Central Avenue, Phoenix, Arizona 85011 as the independent accountant for Company and its subsidiary the fiscal year ended December 31, 1995. Duane V. Midgley ("Midgley"), CPA was dismissed by Pegasus as of March 12, 1996. Pegasus also dismissed Johnson, Miller & Co. ("Johnson") as the independent accountant for Pegasus' wholly owned subsidiary Zearl T. Young, Incorporated ("ZTY") as of March 12, 1996. 2. Midgley opinions during the part two years were unqualified and included no disclaimers. The opinions of Johnson were unqualified but included specific language as to the requirements of ZTY to comply with certain provisions of its Plan of Reorganization, The change in accountants for Pegasus was approved by the Company's audit committee. The change in accountants for ZTY was approved by its Board of Directors. 4. Management has no disagreements with Midgley or Johnson regarding: a) Accounting principles of practices b) Financial statement disclosure C) Auditing scope or procedure SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on March 6, 1998. PEGASUS INDUSTRIES, INC. /s/ Robert W. Schleizer ---------------------------------- By: Robert W. Schleizer, President 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 MAR-31-1996 69,242 0 4,137,719 0 949,831 5,336,412 337,812 0 8,080,390 8,242,182 0 0 1,128,370 143,521 0 8,080,390 832,964 832,964 546,155 546,155 923,490 0 216,346 (341,705) 0 0 0 0 0 (341,705) (0.024) (0.024)
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