-----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, Ag9vbNYyE3HAhYCxD+560HdYBzFIHHCFRqOqqkttsEVIIjXZG/N0YbWAI4IhbB9z LY4aFs25VNhm+JbCbJ1CAA== 0000950144-97-011312.txt : 19971030 0000950144-97-011312.hdr.sgml : 19971030 ACCESSION NUMBER: 0000950144-97-011312 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971029 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX INFORMATION SYSTEMS CORP CENTRAL INDEX KEY: 0000792157 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 133337797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26532 FILM NUMBER: 97702595 BUSINESS ADDRESS: STREET 1: 100 SECOND AVE SOUTH STREET 2: STE 1100 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138947674 MAIL ADDRESS: STREET 1: 100 SECOND AVE STREET 2: STE 1100 CITY: ST PETERSBERG STATE: FL ZIP: 33701 FORMER COMPANY: FORMER CONFORMED NAME: DYNASTY TRAVEL GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CS PRIMO CORP DATE OF NAME CHANGE: 19910718 10-Q 1 PHOENIX INFORMATION SYSTEMS CORP. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1997 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: 0-26532 PHOENIX INFORMATION SYSTEMS CORP. - ------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 13-3337797 - --------------------------------------------- ---------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 100 Second Avenue South, Suite 1100 St. Petersburg, Florida 33701 - --------------------------------------------- ---------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (813) 894-8021 --------------------------- Not Applicable - ------------------------------------------------------------------------------- (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 . ------- ------ As of September 30, 1997, the Registrant had 49,867,200 shares of common stock issued and outstanding. 2 PHOENIX INFORMATION SYSTEMS CORP. INDEX
PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets March 31, 1997 and September 30, 1997 (Unaudited) 3 Unaudited Consolidated Statements of Operations Three Months and Six Months ended September 30, 1997 and September 30, 1996 and Inception to September 30, 1997 4 Unaudited Consolidated Statements of Cash Flows Six Months ended September 30, 1997 and September 30, 1996 and Inception to September 30, 1997 5 Notes to Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 PART II. OTHER INFORMATION 10 - 11 SIGNATURE PAGE 12 EXHIBIT INDEX 13
2 3 PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 MARCH 31, 1997 ------------------ -------------- ASSETS (UNAUDITED) Current assets: Cash and cash equivalents $ 2,472,927 $ 7,012,277 Securities 22,000 22,000 Trade receivables 235,625 437,707 Receivable from related parties 8702 -- Interest receivable 6,368 26,112 Prepaids 370,130 699,390 ------------ ------------ Total current assets 3,115,752 8,197,486 Property and equipment, net 1,638,518 1,672,522 Investment in American Aviation Ltd. 7,500,000 7,500,000 Deposits and other assets 172,873 154,113 Goodwill, net 209,992 256,660 ------------ ------------ Total assets $ 12,637,135 $ 17,780,781 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable 108,762 113,766 Accounts payable 1,083,203 1,640,406 Accrued payroll and payroll taxes 283,922 305,048 ------------ ------------ Total current liabilities 1,475,887 2,059,220 Dividends payable 67,456 75,704 Minority interest 1,301,900 896,892 Notes payable, less current portion -- 50,268 ------------ ------------ 1,369,356 1,022,864 Total liabilities 2,845,243 3,082,084 ------------ ------------ Commitments and contingencies Stockholder's equity: Series A convertible preferred stock, $.01 par value, 1,250,000 shares authorized, 201,820 and 209,750 issued and outstanding at September 30, 1997 and March 31, 1997, respectively 2,018 2,098 Series B convertible preferred stock, $.01 par value 1,250,000 shares authorized, 1,058,325 and 1,194,500 issued and outstanding at September 30, 1997 and March 31, 1997, respectively 10,583 11,945 Series C convertible preferred stock, $.01 par value, 1,500,00 shares authorized, 896,866 and 853,994 issued and outstanding at September 30, 1997 and March 31, 1997 respectively 8,969 8,540 Common stock, $.01 par value, 125,000,000 shares authorized, 49,867,200 and 49,105,212 shares issued and outstanding at September 30, 1997 and March 31, 1997, respectively 498,671 491,052 Additional paid-in capital 47,716,261 46,649,030 Losses that have accumulated during the development stage (38,354,610) (32,373,968) ------------ ------------ 9,881,892 14,788,697 Treasury Stock, at cost, 31,579 common shares (90,000) (90,000) ------------ ------------ Total stockholders' equity 9,791,892 14,698,697 ------------ ------------ Total liabilities and stockholders' equity $ 12,637,135 $ 17,780,781 ============ ============
See accompanying notes to consolidated financial statements. 3 4 PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES (a development stage company) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS for the three months and six months ended September 30, 1997 and 1996 and cumulative for the period from inception of development stage activities, April 1, 1989, through September 30, 1997
Three Months Six Months Cumulative Ended September 30, Ended September 30, Since 1997 1996 1997 1996 April 1, 1989 ---- ---- ---- ---- ------------- Travel Commissions, net $ -- $ 84,722 $ -- $ 198,504 $ 813,879 Management fee income -- -- -- -- 138,021 Airline/Cargo booking revenues 28,106 -- 58,668 -- 152,489 Reservation center revenues 275,671 165,356 792,458 266,348 1,873,935 License fee income 2,000 6,000 8,000 12,000 103,350 ------------ ------------ ----------- ------------ ------------ Revenues 305,777 256,078 859,126 476,852 3,081,674 Start-up and organizational expenses (3,501,627) (2,993,551) (6,387,414) (5,575,899) (41,979,498) Interest and dividend income 34,341 24,522 100,885 66,562 445,396 ------------ ------------ ----------- ------------ ------------ Net loss before minority interest in net loss of subsidiary (3,161,509) (2,712,951) (5,427,403) (5,032,485) (38,452,428) ------------ ------------ ----------- ------------ ------------ Minority interest in net loss of subsidiary 308,940 -- 595,001 -- 2,608,109 ------------ ------------ ----------- ------------ ------------ Net loss (2,852,569) (2,712,951) (4,832,402) (5,032,485) (35,844,319) ------------ ------------ ----------- ------------ ------------ Preferred stock dividends (527,959) -- (1,148,240) -- (2,510,291) ------------ Net loss applicable to common (3,380,528) (2,712,951) (5,980,642) (5,032,485) (38,354,610) stock ============ ============ =========== ============ ============ Net loss per common share outstanding $ (.07) $ (.06) $ (.12) $ (.11) ============ ============ =========== ============ Weighted average number of common shares outstanding 49,533,939 46,275,834 49,527,689 46,048,741 ============ ============ =========== ============
See accompanying notes to consolidated financial statements. 4 5 PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES (a development stage company) UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS for the six months ended September 30, 1997 and 1996 and cumulative for the period from inception of development stage activities, April 1, 1989, through September 30, 1997
Six Months Ended September 30, Cumulative ---------------------------- Since 1997 1996 April 1, 1989 ------ ------- ------------- Cash flows from operating activities: Net loss $(4,832,402) $(5,032,485) $(35,844,319) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 643,495 551,409 3,197,884 Compensation paid through issuance of stock 432,000 210,000 1,237,964 Transaction fee -- -- 1,140,000 Services paid through issuance of stock 62,143 193,010 1,760,450 Common stock options and warrants issued -- -- 401,010 as compensation Common stock issued as an adjustment of the -- -- 193,408 Tranch E note conversion price Warrants issued as preferred stock non- -- -- 591,031 conversion incentive Write-off of amount due from joint venture partner -- -- 737,662 Rent paid through in-kind contribution 157,855 170,460 669,235 Minority interest in net loss of subsidiary 405,005 -- 52,855 Other -- -- 157,985 ----------- ------------ ------------ (3,131,904) (3,907,606) (25,704,835) Changes in assets and liabilities: Prepaids, deposits and trade receivables 162,728 (186,194) (801,909) Accounts payable (557,203) (1,098,184) 459,795 Accrued payroll and payroll taxes (21,126) 28,935 227,345 Accrued interest 19,744 (8,091) 220,629 ----------- ------------ ------------ Net cash used in operating activities (3,527,761) (5,171,140) (25,598,975) ----------- ------------ ------------ Cash flows from investing activities: Purchase of property and equipment (562,823) (285,156) (3,679,983) Purchase of securities -- -- (22,000) Investment in American Aviation Ltd. -- -- (7,500,000) ----------- ------------ ------------ Net cash used in investing activities (562,823) (285,156) (11,201,983) ----------- ------------ ------------ Cash flows from financing activities: Issuance of common stock -- -- 1,858,095 Proceeds from exercise of stock options -- -- 147,557 Issuance of preferred stock -- 8,675,000 23,320,521 Stock subscriptions -- -- 1,297,000 Proceeds from notes payable -- -- 538,000 Preferred stock dividends (384,792) (130,775) (641,226) Proceeds from related parties -- -- 15,595,287 Payments on notes payable (55,272) (39,579) (691,262) Payments to related parties (8,702) (1,032,560) (2,162,281) Payments on capital lease obligation -- (3,989) 12,194 ----------- ------------ ------------ Net cash provided by financing activities (448,766) 7,468,097 39,273,885 ----------- ------------ ------------ Increase (decrease) in cash and cash equivalents (4,539,350) 2,011,801 2,472,927 Cash and cash equivalents, beginning of period 7,012,277 2,078,510 -- ----------- ------------ ------------ Cash and cash equivalents, end of period $ 2,472,927 $ 4,090,311 $ 2,472,927 =========== ============ ============
See accompanying notes to consolidated financial statements. 5 6 PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES (A development stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (unaudited) NOTE A The accompanying consolidated financial statements include the accounts of Phoenix Information Systems Corp. ("Phoenix Information") and its subsidiaries, Phoenix Systems Group, Inc. (wholly owned since March 27, 1995), Phoenix Systems Ltd. ("PSL" wholly owned since November 11, 1993), Hainan Phoenix Information Systems, Ltd. (70% owned since November 22, 1993), Phoenix Transaction Services, Inc. (wholly owned since June 3, 1997), and American International Travel Agency, Inc. ("AIT", wholly owned since September 15, 1994 and sold in November, 1996). The consolidated group of companies is collectively referred to herein as "Phoenix" or the "Company". All significant intercompany accounts and transactions have been eliminated. On November 15, 1996, in a trilateral agreement between Phoenix, China Southern Airlines Company Ltd. ("China Southern"), and the Company's former Joint Venture partner, Hainan Airlines, China Southern acquired the entire equity interest held by Hainan Airlines for $2,580,000. Furthermore, China Southern agreed to invest an additional $4,780,000 in cash and real estate capital contributions in exchange for an additional 15% interest in the Joint Venture, which will raise China Southern's total stake to 45% upon the completion of the additional contribution. Hainan Airlines continues as a customer of the Joint Venture on a limited basis. On November 20, 1996, the disinterested members of the Board of Directors of Phoenix approved the sale of American International Travel Agency, Inc. to Visitors Services, Inc. (a Company controlled by Robert P. Gordon, Chairman of the Board of Phoenix) for 31,579 shares of Phoenix's common stock valued at $90,000. NOTE B The financial information reflects all normal recurring adjustments that, in the opinion of management, are deemed necessary for a fair presentation of the results for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the year. NOTE C The enclosed summarized financial information does not include all disclosures required to be included in a complete set of financial statements prepared in conformity with generally accepted accounting principles. The Form 10-K, for the fiscal year ended March 31, 1997 should be read in conjunction with the data herein. 6 7 PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. INTRODUCTORY STATEMENT Phoenix Information Systems Corp. ("Phoenix" or the "Company") is a development-stage information systems and services company that has developed airline and hotel travel reservation systems. In fiscal 1996, Phoenix commenced operations in the United States and China. Efforts are under way to enlist additional airlines, hotels and other travel service providers. While Phoenix has now commenced operations, the Company has only a brief operating history and has yet to generate significant revenues or earnings.Consequently, Phoenix's continued existence has depended, primarily, upon its ability to raise capital. In China, Phoenix has installed and begun to operate its advanced computerized travel information network for domestic airlines. Phoenix provides state-of-the-art, travel-related information services to China through its 70% owned joint venture with China Southern Airlines Company, Ltd. RESULTS OF OPERATIONS During the six months ended September 30, 1997, and the fiscal years ended March 31, 1997, 1996 and 1995, the Company sustained net losses of $5,980,642, $12,393,872, $9,704,318, and $4,841,824, respectively. Losses are anticipated to continue until the data network in China is fully implemented and utilized by China Southern for its reservation and data processing services. While Phoenix has concentrated its sales efforts in China, the Company has also focused on small to medium domestic carriers that could utilize the Company's reservation system. In fiscal 1995, Phoenix entered into an Agreement with Eastwind Airlines, Inc. ("Eastwind") to provide Eastwind with a complete reservation system to manage all sales, airport and operations functions. In addition, Phoenix implemented a reservation center that processed all Eastwind reservations as of the second quarter of fiscal 1996. Furthermore, in May 1996, the Company commenced commercial operations with Laker Airlines. Eastwind terminated its relationship with the Company on May 17, 1997. The Company is actively pursuing other small to medium carriers to expand the customer base for its reservation center. For the quarter ended September 30, 1997, the Company had revenues of $305,777 versus $256,078 for the quarter ended September 30, 1996, an increase of 19% as the revenue from Laker Airlines more than offset the prior-year revenue associated with AIT. For the quarter ended September 30, 1997, the Company had start-up and organizational expenses of $3,501,627 compared to $2,993,551 for the quarter ended September 30, 1996, an increase of $508,076 or 17%. The growth in expenses was concentrated in stock option compensation (+$81,000), increased business travel to China (+$149,261), communications expenses (+$117,557), and consulting expenses primarily in support of the Joint Venture (+$169,042). 7 8 For the six months ended September 30, 1997, the Company had start-up and organizational expenses of $6,387,414 as compared to $5,575,899 for the comparable prior year period, an increase of $811,515 or 15%. The growth in spending for the fiscal year-to-date period was concentrated in the same categories: stock option compensation (+$222,000), communications expense (+$244,008), consulting fees (+$161,238) and travel, primarily to China (+$245,398). LIQUIDITY AND CAPITAL RESOURCES Working Capital; Financial Instability As of September 30, 1997, Phoenix had stockholders' equity of $9,791,892 and working capital of $1,639,865. Phoenix has not generated significant revenues, earnings or history of operations from inception through September 30, 1997. Phoenix continues its efforts to raise funds in order to assure that the Company will have sufficient capital to meet its obligations and to implement its proposed operations and plans through late 1998, at which time operating cash flow is projected to turn positive. However, no assurances can be given that such efforts will be successful. For the six months ended September 30, 1997 net cash used in operations declined by $1,643,379 or 32% from the six months ended September 30, 1996, principally due to lower losses, a significant paydown of accounts payable during the six months ended September 30, 1996, and the recording in the period ending September 30, 1997 of the minority interest in the net loss of Hainan Phoenix Information Systems, Ltd. Net cash provided by financing activities declined by $7,916,863 during the six months ended September 30, 1997 from the comparable prior year period. A net outflow of $448,766 occurred during the six months ended September 30, 1997, primarily associated with the payment of preferred stock dividends. The six months ended September 30, 1996 had a net inflow from financing activities of $7,468,097 that resulted from the issuance of the Series A and B 6% convertible preferred stock, offset partly by payments to related parties. In April 1996, Phoenix issued $5,000,000 of Series A 6% convertible preferred stock. The preferred stock was convertible into common stock at a 15% discount to market, originally subject to a maximum conversion price of $4.00 per share and a minimum of $2.00 per share. The market value of the Company's common stock at the date of issuance of the Series A 6% convertible preferred stock was below the $2.00 per share minimum conversion price. If not converted by the purchaser prior to the second anniversary of the issuance date, the preferred stock will automatically be converted into common stock. During the six months ended September 30, 1997, 7,930 shares of Series A convertible preferred stock were converted into 25,000 shares of the Company's common stock. In September 1996, Phoenix issued $4,000,000 of Series B 6% convertible preferred stock. The preferred stock is convertible into common stock at the market value of the Company's common stock at the date of conversion. If not converted by the purchaser prior to the second anniversary of the issuance date, the preferred stock will automatically be converted into common stock. In conjunction with the issuance of the Series B shares, the discount on the Series A convertible preferred stock was amended from 15% to 20% and the maximum conversion price of $4.00 per share and minimum of $2.00 per share were removed. The Company recorded a Series A 6% convertible 8 9 preferred stock dividend of $658,015 for the difference between the conversion prices of the Series A 6% convertible preferred stock and the fair market value of the Company's common stock at the date of the amendment. During the six months ended September 30, 1997, 136,175 shares of Series B convertible preferred stock were converted into 663,038 shares of the Company's common stock. On December 23, 1996, Phoenix acquired for $7,500,000 a 25% interest in American Aviation Limited, through the exercise of an option. The acquisition was financed by the issuance of 833,333 shares of Series C Convertible Preferred Stock for $15,000,000 to S-C Phoenix Partners. American Aviation is a company owned by affiliates of Quantum Industrial Holdings Ltd., George Soros and Purnendu Chatterjee. American Aviation's sole asset is a 21% interest in Hainan Airlines, which it purchased for $25,000,000 in December 1995. Phoenix accounted for the investment by the cost method, because it has no influence on the operations of American Aviation Ltd. despite holding a 25% interest. Phoenix can neither sell or collateralize the investment without the unanimous consent of the owners, who have stated that material financial concessions would be required of Phoenix for such consent. S-C Phoenix Partners ("SC"), an investment partnership also comprised of affiliates of Quantum Industrial Holdings Ltd., George Soros, and Purnendu Chatterjee, is a major shareholder of Phoenix, holding both common stock and Series C convertible preferred stock. Reference is made to the Company's Form 10-K for the fiscal year ended March 31, 1997, for a complete description of certain financing transactions entered into by the Company to meet its operating and investment objectives. 9 10 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings: Ungerleider v. Robert P. Gordon, Phoenix Information Systems Corp., et al. On August 7, 1996, the District Court granted Phoenix's motion to dismiss substantial portions of Plaintiff's claims. The court rejected Plaintiff's claims of fraudulent inducement to enter into the Settlement Agreement, which effectively precludes Plaintiff from trying to enforce a finders fee agreement or any of the options, payments, or other rights which he released as part of the Settlement Agreement. Plaintiff was given leave to amend his Complaint, but the court's order required him to do so in a manner consistent with the court's order, which precludes Plaintiff's claims related to alleged oral promises made prior to the signing of the Settlement Agreement. On August 22, 1996, Plaintiff filed a Second Amended Complaint, which in its first eight counts essentially reiterated the claims which the District Court dismissed on August 7, 1996. Plaintiff also has sued Phoenix for allegedly participating in repossessing 1.2 million shares of Phoenix stock from Plaintiff and failing to perform oral promises which Plaintiff contends were part of the Settlement Agreement. The Defendants have moved to dismiss or strike the Second Amended Complaint, in part because the allegations contradict the rulings contained in the District Court's August 7, 1996 order. The case was referred to mediation for settlement discussions. However, mediation has been postponed because Plaintiff's counsel moved for and was granted leave to withdraw from the case as reflected by the court's September 2, 1996 order. On January 16, 1997, new counsel entered an appearance on behalf of Plaintiff. Reference is made to Item 3 of the Company's Form 10-K, for the fiscal year ended March 31, 1997, for additional information regarding this proceeding. Charles Chang and Juliette Chang v. Robert P. Gordon and Phoenix Information Systems Corp. The motion of defendants Robert P. Gordon and Phoenix to dismiss the Amended Complaint in this action has been fully submitted and is awaiting decision. The Court has stayed discovery in the action pending a decision on the motion to dismiss. Reference is made to Item 3 of the Company's Form 10-K for the fiscal year ended March 31, 1997, for additional information regarding this proceeding. ITEM 2. Changes in Securities: None ITEM 3. Defaults Upon Senior Securities: None ITEM 4. Submissions of Matters to a Vote of Security Holders: None ITEM 5. Other Information: Phoenix Transaction Services, Inc. ("PTS"), a wholly-owned subsidiary of the Company, was established on June 3, 1997. PTS now manages the existing U.S. reservations and call center operation, which was previously controlled by PSL. The goal of PTS is to establish ventures in volume- 10 11 intensive transaction environments such as passenger reservation services, airline cargo services, and hotel reservation services. These ventures will be created through alliances, partnerships, and acquisitions. PTS would bring industry knowledge and proprietary solutions, built or acquired, to the ventures, while the partners would have the facility, manpower, and management responsibilities. PTS is responsible for securing strategic partners and achieving revenue growth. On June 23, 1997, the Company and China Southern Airlines, China's largest airline, with a 21 percent domestic market share, executed the PHOENIX-AIR Management System (PAMS) Service Contract with Hainan Phoenix Information Systems Ltd., Phoenix's 70 percent-owned joint venture company in China. Under the terms of this 46 year agreement, China Southern will book all of its airline reservations and procure data processing and other services from the Joint Venture. The Joint Venture has already installed a Stratus fault tolerant server as a test system in Guangzhou and is proceeding with installation of the data network across China. On June 26, 1997, Hainan Airlines Co., Ltd. completed a Public Offering ("Offering") and was listed on the Shanghai Stock Exchange. The Offering was for 71 million Chinese B-shares at $0.47 per share, representing 15 percent of Hainan's outstanding shares. The B-shares are a class of Chinese stock that can be purchased by foreigners. Affiliates of Quantum Industrial Holdings Ltd., George Soros, and Purnendu Chatterjee established American Aviation in December 1995, and Phoenix arranged for American Aviation to purchase a 25 percent interest in Hainan Airlines. For arranging this purchase, Phoenix obtained an option to purchase a portion of American Aviation. In December 1996, Phoenix paid $0.30 per Hainan share to exercise its option to purchase a 25 percent interest in American Aviation Limited, which owns 100.04 million shares of Hainan Airlines. The American Aviation investment in Hainan Airlines represented the first equity investment in a Chinese airline by a foreign investor. Hainan Airlines is one of China's fastest growing regional carriers and a customer of the Joint Venture with China Southern on a limited basis. As a result of the Offering, American Aviation Limited now holds a 21% interest in Hainan Airlines. On July 30, 1997 China Southern, the Company's Joint Venture partner, completed its public offering in the United States of 20.6 million American Depository Shares (ADS). The shares are trading on the New York Stock Exchange under the ZNH symbol. The offering, managed by Goldman Sachs (Asia) L.L.C. as the global coordinator, was priced at $30.66 per ADS share.
ITEM 6. Exhibits and Reports on Form 8-K: (a) Exhibits 11) Earnings Per Share - See Consolidated Statement of Operations 27) Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K - None
11 12 PHOENIX INFORMATION SYSTEMS CORP. 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 thereunto duly authorized. PHOENIX INFORMATION SYSTEMS CORP. --------------------------------- (Registrant) Dated: October 29, 1997 /s/ DELBERT F. BLOSS --------------------------------- Delbert F. Bloss, Chief Executive Officer /s/ PETER J. FORD --------------------------------- Peter J. Ford, Vice President and Chief Financial Officer 12 13 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT DESCRIPTION 11) Earnings Per Share - See Consolidated Statement of Operations 27) Financial Data Schedule (for SEC use only)
13 EX-27 2 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 6-MOS MAR-31-1998 APR-01-1997 SEP-30-1997 2,472,927 22,000 235,625 0 0 3,115,752 4,360,481 2,721,963 12,637,135 1,475,887 0 0 21,570 498,671 9,271,651 12,637,135 859,126 859,126 0 6,387,414 0 0 0 (5,980,642) 0 0 0 0 0 (5,980,642) $(.12) 0
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