avgp
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kann bitte jemand eine bewertung des folgendes berichtes vornehmen?
ich verabschiede mich in ein langes wochenende
cu DrLuck
May 31, 2000
AVIATION GROUP INC (AVGP)
Quarterly Report (SEC form 10QSB)
Management`s Discussion and Analysis and financial statements and notes thereto included in the Company`s Form 10-KSB for the year ended June 30, 1999.
NOTE B - SALE OF DISCONTINUED BUSINESS SEGMENTS & MERGER ACTIVITY
The Company has since 1999 been in discussions with third parties regarding the possible sale or merger of the entire enterprise, and is also in discussions with certain third parties regarding the sale of certain remaining segments of the Company`s operations on an individual basis. Other parties expressed interest in the Company`s status as a public company and have expressed interest in a business combination, spin-off, or other transaction.
On December 29, 1999, the Company sold its Tri-Star Airline Services ground handling subsidiary operations. On February 8, 2000, the Company sold its Casper Air Service general aviation fixed base operations. Both businesses were sold to unrelated third parties and, when combined, generated a net gain on sale to the Company of $600,000. See "Item 2. Management`s Discussion and Analysis of Financial Condition and Results of Operations".
In late February 2000 Aviation Group entered into letters of intent and publicly announced a proposed three-way business combination with Global Leisure Travel, Inc. and travelbyus.com ltd. Global Leisure Travel, Inc. is a Seattle, Washington-based travel business specializing in the sale of Hawaiian and other Pacific-region vacation tour and other travel products to consumers. travelbyus.com ltd. is an Internet-based travel company. The business combination contemplates the acquisition by Aviation Group of these two companies with financing provided by travelbyus.com ltd. and private investment capital raised by Doerge Capital Management, the Company`s financial advisor for this transaction. Additionally, Aviation Group engaged the investment firm of CIBC World Markets Corp. to review the transaction with travelbyus.com ltd. and express an opinion regarding the fairness of the terms to Aviation Group shareholders. The Aviation Group, Inc. shareholders will retain approximately 6% of the combined entity.
NOTE C - ACQUISITION OF GLOBAL LEISURE TRAVEL, INC.
On March 17, 2000, the Company executed agreements to purchase Global Leisure Travel, Inc. ("Global") and obtained control of Global`s voting stock. On May 10, 2000, the Company completed its acquisition of Global, and Global is now a wholly-owned subsidiary of Aviation Group. As consideration for the purchase, the Company issued:
$16,500,000 in liquidation preference, represented by 1,650 shares, of its Series A 9% cumulative convertible preferred stock and Series A warrants to purchase 750,000 shares of its common stock at an exercise price of $5.00 per share to the former owners of Global in exchange for the transfer or cancellation of the stock and indebtedness owned by them and their affiliates; and
Series B warrants to purchase 3,500,000 shares of its common stock at an exercise price of $3.00 per share to the former warrantholders in Global in exchange for cancellation of their warrants. The warrants were recorded at as estimated value of $11,348,000 as calculated under the Black Scholes pricing model.
In connection with the acquisition, through March 31, 2000, the Company also invested $20.4 million in Global. These funds were used primarily to pay debts and other payables of Global. The financing for this investment by Aviation Group in Global was provided by:
$5,000,000 invested by travelbyus.com ltd. through the purchase of 500 shares of Series B preferred stock from Aviation Group at $10,000 per share;
$2,000,000 invested by private investors in the purchase of 750,000 shares of Aviation Group common stock at $2.667 per share, and;
$16,000,000 invested by private investors in the purchase of 1,600 units of Aviation Group`s Series B 12% cumulative preferred stock and Series C warrants, at a price of $10,000 per unit, each unit consisting of one share and 750 warrants.
Global provides travel related services primarily through retail travel agencies. Global is a seller of bulk travel services, maintaining several wholesale and discount contracts with leading providers of travel in the industry. Global maintains contracts with several major airlines, hotel operators and touring companies, including United Airlines, Continental Airlines, Delta Airlines, Hawaiian Airlines, Alaskan Airlines, Outrigger Hotels Hawaii, and Hotel Corporation of the Pacific d/b/a Aston Hotels & Resorts. These contracts allow Global to purchase airline tickets, hotel reservations and travel packages at wholesale prices.
Global travel products are resold to the public through retail travel agents and other sellers. Several tradenames under which Global operates are "Sunmakers", "Kailani Hawaii Tours", and "Hawaii Leisure". Global has contracts with travel agencies and suppliers of travel in Washington, Hawaii, Nevada and California. These agencies have designated Global as a preferred supplier for all destinations and products that Global offers in exchange for certain sales- based commissions. In most of its contracts, Global competes for a block of tickets with other wholesale travel suppliers.
As of May 15, 2000, Global employed 132 people, and leased 28,614 square feet of office space in Seattle, Washington, its main headquarters, and one floor of an office building in Bellingham, Washington.
For financial reporting purposes, the Company has treated the Global acquisition as if it occurred on March 31, 2000 and has included the balance sheet of Global in the Company`s unaudited financial statements as of March 31, 2000. Global operating results will be consolidated with the Company`s beginning April 1, 2000. The following unaudited pro-forma consolidated results of operations for the nine month periods ended March 31, 2000 and 1999, respectively, assumes the Global acquisition occurred as of July 1, 1999 and 1998, respectively. The information does not purport to be indicative of what would have occurred had the acquisition actually been made as of such date or of results which may occur in the future.
Nine months ended March 31,
---------------------------
2000 1999
---- ----
Revenues $ 13,511,000 $ 18,950,000
Net loss (12,733,000) (9,318,000)
Net loss per share (basic and diluted) $ (3.44) $ (2.73)
NOTE D - PROPOSED MERGER WITH TRAVELBYUS.COM LTD.
Pursuant to its letter of intent agreement in February 2000 to merge with travelbyus.com ltd., Aviation Group executed on May 3, 2000 an agreement to combine their businesses through a statutory arrangement under Canadian law. The completion of the arrangement is subject to receipt of requisite regulatory approval, and when the arrangement is completed, travelbyus.com will become an indirect subsidiary of Aviation Group. The transaction is a one-for-one exchange, and former travelbyus.com shareholders will own directly or indirectly about 94% of Aviation Group`s outstanding common stock after completion of the arrangement. As of May 15, 2000, Aviation Group and travelbyus.com had approximately 4,699,000 and 75,105,000 common shares outstanding, respectively.
travelbyus.com is an Internet-based travel company. travelbyus.com`s Web site, www.travelbyus.com, provides consumers with on-line travel options 24 hours per day. Through the travelbyus.com Web site, consumers have the ability to browse travel options world-wide and to book travel reservations. In addition to offering consumers travel options through the Internet, travelbyus.com also offers the consumer travel options through 1-800 call centers and traditional travel agencies. Since April 1999, travelbyus.com has focused on completing strategic acquisitions to build the components of travelbyus.com`s business model, which include product offerings, distribution, marketing and technology. travelbyus.com provides a broad range of travel products, targeted primarily at the leisure customer, including airline tickets, cruise packages and ground packages.
The companies expect to account for the arrangement under the purchase method of accounting as if travelbyus.com had acquired Aviation Group and had been recapitalized under the capital structure of Aviation Group.
NOTE E: BUSINESS SEGMENT INFORMATION
The following table summarizes financial information by the company`s three business segments and corporate for the three and nine-month periods ended March 31, 2000 and 1999, respectively. See Item 2. "Management`s Discussion and Analysis of Financial Condition and Results of Operations" for descriptions of the segments.
Three Months Nine Months
Ended March 31, Ended March 31,
--------------- ---------------
2000 1999 2000 1999
---- ---- ---- ----
Net Revenues:
Painting and maintenance $ 2,889,000 $ 2,628,000 $ 6,770,000 $ 8,937,000
Manufacturing 941,000 958,000 2,589,000 3,004,000
Corporate -- -- -- --
------------ ------------ ------------ ------------
Total $ 3,830,000 $ 3,586,000 $ 9,359,000 $ 11,941,000
============ ============ ============ ============
Operating income (loss):
Painting $ (90,000) $ (158,000) $ (618,000) $ 617,000
Manufacturing (40,000) (80,000) (90,000) 299,000
Corporate (418,000) (447,000) (1,325,000) (1,486,000)
------------ ------------ ------------ ------------
Total $ (548,000) $ (685,000) $ (2,033,000) $ (570,000)
============ ============ ============ ============
Total assets:
Painting and maintenance $ 4,201,000 $ 3,986,000
Manufacturing 4,736,000 4,617,000
Travel 62,912,000 --
Corporate 465,000 617,000
------------ ------------
Total $ 72,314,000 $ 9,220,000
============ ============
There were no significant intersegment sales or transfers for either period. Operating income by business segment excludes interest and other miscellaneous income and interest expense. Corporate assets consist primarily of cash and cash equivalent and prepaid expenses.
NOTE F: PRIOR PERIOD ADJUSTMENTS AND RESTATEMENTS
Certain errors, resulting in the misstatement of previously reported assets, liabilities, income and expenses as of, and for the three and nine month periods ended March 31, 1999 resulted in the following changes to total assets, total liabilities, beginning accumulated deficit and net income:
As of March 31, 1999 Three Months Nine Months
-------------------- Ended Ended
Total Total Accumulated March 31, 1999 March 31, 1999
Assets Liabilities Deficit Net Loss Net Loss
------ ----------- ------- ------- --------
As previously reported $ 14,657,000 $ 8,220,000 $ (3,050,000) $ (754,000) $ (674,000)
Adjustment for effect of
share price guarantee -- 136,000 (136,000) (30,000) (136,000)
Adjustment for value of
warrants issued for service -- -- (123,000) (73,000) (123,000)
Adjustment to correct tax
provision (369,000) -- (369,000) (394,000) (369,000)
------------ ----------- ------------ ------------ ------------
As restated $ 14,288,000 $ 8,356,000 $ (3,678,000) $(1,251,000) $ (1,302,000)
============ =========== ============ =========== ============
Loss per share results previously reported for the three and nine month periods ended March 31, 1999 have been restated as a result of the items identified above as follows:
Three Months Nine Months
Ended Ended
March 31, March 31,
1999 1999
---- ----
Net loss per share as previously reported $ (0.21) $ (0.20)
Effect of errors (0.15) (0.18)
------- -------
Net loss per share as restated $ (0.36) $ (0.38)
======= =======
Item 2. Management`s Discussion and Analysis of Financial
Condition and Results of Operations
General - Management`s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this MD&A regarding the Company`s financial position, business strategy and plans and objectives of management of the Company for future operations are forward- looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including those described below. Investors are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward- looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
A key element of the Company`s strategy historically involved growth through acquisitions of other companies, assets or product or service lines that would complement or expand the Company`s existing businesses. Since 1996, the Company has purchased five separate companies. Management believed that acquisitions would enable it to leverage its fixed costs of operations and further expand the products and services that it could offer to its customers. The Company intended to use its common stock as the major source of its capital to execute its acquisition strategy.
While management was successful in identifying candidates that met its acquisition criteria, the trading price of the Company`s shares and the level of trading volume experienced in the public marketplace has created a significantly negative environment for acquiring aviation businesses for the Company using its stock as consideration. Company management has endeavored since 1998 to remedy this condition, while continuing to incur high corporate overhead costs necessary to properly operate and maintain a larger aviation service enterprise.
In the present view of management, (a) the Company`s stock traded below the value of its existing underlying companies, (b) acquisitions of new companies at these lower share price levels would dilute existing shareholders, and (c) continuation of its historical corporate overhead strategy would erode shareholder value. Additionally, the Company`s operating subsidiaries continue to be hindered by the corporate overhead associated with the Company`s original strategy of acquiring additional aviation companies with a combination of cash and Company common stock. Accordingly, in August 1999, the Board of Directors approved a management plan to engage investment advisors and pursue the additional strategy of selling all or part of the Company`s businesses.
During the quarter ended December 31, 1999, the Company sold its Tri-Star Airline Services ground handling subsidiary operations. On February 8, 2000, the Company sold its Casper Air Service general aviation fixed base operations. Both businesses were sold to unrelated third parties, and together generated a net gain on sale to the Company of $600,000. In February 2000 Aviation Group entered into letters of intent and publicly announced a proposed three-way business combination with Global Leisure Travel, Inc. and travelbyus.com ltd. Global Leisure Travel, Inc. is a Seattle, Washington-based travel business specializing in the sale of Hawaiian and other Pacific-region vacation tour and other travel products to consumers. travelbyus.com ltd. is an Internet-based travel company. The business combination contemplates the acquisition by Aviation Group of these two companies with financing provided by travelbyus.com ltd. and private investment capital raised by Doerge Capital Management, the Company`s financial advisor for this transaction. Additionally, Aviation Group engaged the investment firm of CIBC World Markets Corp. to review the transaction and express an opinion regarding the fairness of the terms to Aviation Group shareholders.
Results of Operations - The following discussions and tables set forth a summary of the major categories, presented by division, of revenues, costs of goods sold and operating expenses. These historical results are not necessarily indicative of results to be expected for any future period.
Three months ended Nine months ended
March 31, March 31,
(Unaudited 000`s) (Unaudited 000`s)
----------------- -----------------
Total Company 2000 1999 2000 1999
------------- ---- ---- ---- ----
Revenues $ 3,830 $ 3,586 $ 9,359 $ 11,941
Cost of revenue (2,340) (2,348) (5,890) (7,187)
Operating and other expenses (1,397) (1,183) (3,693) (3,313)
----------- ----------- ----------- -----------
93 55 (224) 1,441
----------- ----------- ----------- -----------
Corporate overhead (475) (544) (1,304) (1,470)
Depreciation and amortization (166) (196) (505) (541)
Loss from discontinued operations (82) (314) (221) (314)
Gain (loss) on sale of subsidiaries (90) - 600 -
Interest income 2 - 3 2
Interest expense (112) (53) (493) (221)
----------- ----------- ----------- -----------
Pre-tax loss $ (830) $ (1,052) $ (2,144) $ (1,103)
=========== =========== =========== ===========
Overhaul & Service Division - Revenues consist primarily of gross revenues from stripping and painting and other aircraft coating services to major passenger and freight airlines and corporate aircraft and aviation related companies. During fiscal 1999, the Company executed a hangar-facility operating lease and incurred $137,000 of start up costs during the quarter ended March 31, 1999 leading to the opening of a new paint facility in Greenville, Mississippi. Start-up costs for this facility for the three and nine months ended March 31, 2000 were $80,000 and $131,000, respectively. This location commenced operations during the quarter ended March 31, 2000.
The Company`s paint operations and related revenue and income can vary significantly from quarter to quarter based upon seasonality and scheduling factors of its major customers. During fiscal 1999, the Company experienced significant revenue and income in the first and second fiscal quarters, and its third and fourth quarters were relatively flat. During this current fiscal 2000 year, the Company experienced its slow season during the first and second quarter, and all of its facilities are scheduled to return to historical utilization levels during the fourth fiscal quarter.
The Company`s Aero Design battery manufacturing subsidiary is positioning for significant growth. During the fiscal 1999 year, Aero Design applied for and won approval from the FAA for numerous additional manufacturing licenses relating to its line of commercial and general aviation replacement batteries. These licenses will allow Aero Design to focus its activities in fiscal 2000 on growth in sales and operating profits. General Electrodynamics Corporation (acquired in August 1998) comprises the remaining operating activities of this division.
Costs of revenues consist largely of direct and indirect labor, direct material and supplies, insurance and other indirect costs applicable to the completion of each contract or order. Operating expenses consist of all general and administrative and operating costs not included in costs of sales, including but not limited to facilities rent, indirect labor and other overhaul costs.
Three months ended Nine months ended
March 31, March 31,
(Unaudited 000`s) (Unaudited 000`s)
----------------- -----------------
Overhaul & Service Division 2000 1999 2000 1999
--------------------------- ---- ---- ---- ----
Revenues $ 3,830 $ 3,586 $ 9,359 $ 11,941
Cost of revenue (2,340) (2,348) (5,890) (7,187)
Operating and other expenses (1,397) (1,183) (3,693) (3,313)
----------- ----------- ----------- -----------
Recurring division income (loss) 93 55 (224) 1,441
----------- ----------- ----------- -----------
Depreciation and goodwill amortization (159) (190) (483) (525)
Interest income 2 - 3 -
Interest expense (102) (10) (242) (113)
----------- ----------- ----------- -----------
Pre-tax income (loss) $ (166) $ (145) $ (946) $ 803
=========== =========== =========== ===========
Ground Handling & Service Division The Company`s ground handling and service division derived revenue primarily by providing commercial airlines with a variety of support services including aircraft interior cleaning, exterior washes, lavatory and water services and ramp services and baggage handling. On December 31, 1999, the Company sold this operation to a non-affiliated third party. The Company received $1,500,000 cash for the operating assets, and retained cash, receivables, and other working capital with a net realizable value of approximately $200,000. Following is a summary of ground handling and service operations for the three and nine months periods ended March 31, 2000 and 1999, which are included on a net basis, along with the Casper Air Service fixed base operations, in the Company`s financial statements as Income from Discontinued Operations.
Three months ended Nine months ended
March 31, March 31,
(Unaudited 000`s) (Unaudited 000`s)
----------------- -----------------
Ground Handling & Service Division 2000 1999 2000 1999
---------------------------------- ---- ---- ---- ----
Revenues $ - $ 367 $ 766 $ 1,124
Cost of revenue - (189) (522) (590)
Operating and other expenses ( 2) (137) (147) (389)
----------- ----------- ----------- -----------
Recurring division income (loss) (2) 41 97 145
----------- ----------- ----------- -----------
Depreciation and amortization - (27) (27) (84)
Interest income - - - -
Interest expense - (16) (16) (18)
----------- ----------- ----------- -----------
Operating income (loss) $ (2) $ (2) $ 54 $ 43
=========== =========== =========== ===========
Gain (loss) on sale summary -
Purchase proceeds $ 1,500 --
Book value of assets sold, net of debt (334) --
----------- -----------
Gain on sale of division $ 1,166
===========
FBO Operations Division - In August 1997, the Company acquired Casper Air Service, Inc., which operated a fixed-base operation in Casper, Wyoming. This operation, located at Natrona County International Airport in Casper, Wyoming, provided fuel and light maintenance services to general aviation, corporate and light freight aircraft customers. On February 8, 2000, the operating assets of this division were sold to an unrelated private third party. The Company received $200,000 in cash for the operating assets of this division, plus the buyer assumed $600,000 in related accounts payable. The Company retained its ownership in Casper`s accounts receivable, inventories, and certain aircraft which will be sold during fiscal 2000. Following is a summary of Casper`s operations for the three and nine months periods ended March 31, 2000 and 1999, which are included on a net basis, along with the ground handling and service operations, in the Company`s financial statements as Income from Discontinued Operations.
Three months ended Nine months ended
March 31, March 31,
(Unaudited) (Unaudited)
----------- -----------
FBO Operations Division 2000 1999 2000 1999
----------------------- ---- ---- ---- ----
Revenues $ 199 $ 1,591 $ 1,689 $ 4,548
Cost of revenue (226) (1,505) (1,551) (3,576)
Operating and other expenses (52) (352) (318) (1,184)
----------- ----------- ----------- -----------
Recurring division loss (79) (266) (180) (212)
----------- ----------- ----------- -----------
Depreciation and amortization - (13) (66) (87)
Interest income 1 - 1 1
Interest expense (2) (33) (30) (59)
----------- ----------- ----------- -----------
Operating loss $ (80) $ (312) $ (275) $ (357)
=========== =========== =========== ===========
Gain (loss) on sale summary -
Purchase proceeds $ -- $ 200
Book value of assets sold, net of debt (90) 215
Write-off of unrealized goodwill, net -- (981)
----------- -----------
Loss on sale of division $ (90) $ (566)
=========== ===========
Aviation Group - Corporate Overhead - Operating expenses consist of all general and administrative and operating costs to provide management to the Company`s divisions, to support expected growth, and to seek acquisition targets, not directly attributable to the divisions` operations. These charges include legal, accounting, travel and other related overhead. During the quarters ended March 31, 2000 and 1999, the Company incurred $40,000 and $100,000 in non-amortizable acquisition related costs and direct costs associated with the Company`s status as a public company. For the nine months ended March 31, 2000 and 1999, such amounts were $139,000 and $140,000. Increases in interest expense relating to the issuance of Common Stock warrants associated with the Company`s $600,000 short term notes accounted for the rise in overhead in fiscal 2000. These notes were repaid in January 2000. Management continues its efforts to reduce overhead costs.
Three months ended Nine months ended
March 31, March 31,
(Unaudited 000`s) (Unaudited 000`s)
----------------- -----------------
Corporate Overhead 2000 1999 2000 1999
------------------ ---- ---- ---- ----
Operating and other expenses $ (435) $ (444) $ (1,165) $ (1,330)
Depreciation and amortization (7) (6) (21) (16)
Acquisition activity costs (40) (100) (139) (140)
Interest income -- -- -- 2
Interest expense (10) (43) (251) (108)
----------- ----------- ----------- -----------
Operating loss $ (492) $ (593) $ (1,576) $ (1,592)
=========== =========== =========== ===========
Seasonality and Variability of Results The Company`s Overhaul and Service Division experiences significant seasonality and quarter-to-quarter variability in its stripping and painting operations. Scheduling of the Company`s paint customer fleet deliveries can significantly affect quarter to quarter results as well. During fiscal 1999, the Company experienced significant revenue and income in the first and second fiscal quarters, and its third and fourth quarters were relatively flat During this current fiscal 2000 year, the Company experienced its slow season during the first and second quarter, and its facilities are scheduled to return to historical utilization levels during the fourth fiscal quarter. Significant changes in such scheduled operations could have a material adverse effect on Company operations. At March 31, 2000, the paint division had a backlog of approximately $20,000,000 from numerous customers. With the sale of its ground handling and fixed base operations, a significant percentage of the Company`s current revenue is generated by its aircraft paint operations. Management, therefore, is required to plan cash flow accordingly.
Year 2000 Compliance Issues - The Company`s systems have experienced no significant Year 2000 shutdowns, issues or costs. The Company considers its present systems to be Year 2000 compliant and operational. The Company continues to monitor its hardware and software systems for potential Year 2000 operating risks and costs, however, and will continue such oversight for the remainder of the fiscal 2000 year.
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31, The Company`s revenue for the three months ended March 31, 2000 increased $244,000 to $3,890,000 compared to the quarter ended March 31, 1999. The increase was primarily due to seasonal variations in paint revenues and commencement of paint operations at the Company`s Greenville, Mississippi location.
The cost of revenue for the three months ended March 31, 2000 was virtually unchanged compared to the quarter ended March 31, 1999. Cost of revenue as a percentage of revenue decreased by 4%, from 65% in 1999, to 61% in 2000. Marginal improvements in paint operations accounted for most of the cost percentage improvement.
The Company`s general and administrative expenses for the three months ended March 31, 2000 were up slightly relative to the amounts reported for the quarter ended March 31, 1999. Reductions in corporate overhead continue to be pursued by management. The Company`s interest expense increased by $59,000, to $112,000 for the quarter ended March 31, 2000 versus the same period in 1999. This increase is due to increased balances and rates in working capital lines of credit outstanding during the quarter ended March 31, 2000.
During the quarter ended March 31, 2000, the Company recognized a loss from discontinued operations of $82,000, versus losses from these divisions of $314,000 for the same period ended March 31, 1999. This reduction relates to the Company`s lower fixed base operating levels which were sold during the quarter ended March 31, 2000.
Nine Months Ended March 31, 2000 Compared to the Nine Months Ended March 31, The Company`s net revenue decreased by $2,582,000, or 28%, for the nine months ended March 31, 2000 compared to the nine months ended March 31, 1999. The decrease was primarily due to seasonal variations in paint revenues of $2,157,000. The cost of revenue for the nine months ended March 31, 2000 decreased by $1,297,000 to $5,890,000 compared to the nine months ended March 31, 1999. Cost of revenue as a percentage of revenue increased by 5%, from 60% in 1999, to 65% in 2000. Marginal cost of revenues is higher at reduced paint activity levels, and this accounted for most of the cost percentage increase. Gross margins should improve as expected as paint revenues increase during the remainder of the fiscal 2000 year.
Operating costs and overhead associated with the Company`s new paint facility in Greenville, Mississippi contributed to increase in Company`s general and administrative expenses for the nine months ended March 31, 2000. Reductions in corporate overhead continue to be pursued by management. The Company`s interest expense increased by $272,000, to $493,000 for the nine months ended March 31, 2000, compared to the same nine month period in 1999. This increase is due to increased balances and rates in working capital borrowing lines and the non-cash interest expense of $140,000 associated with common stock warrants issued to lenders relating to the Company`s $600,000 short term note issuance in June 1999. These notes were repaid in December 1999.
During the nine months ended March 31, 2000, the Company recognized a loss from discontinued operations of $221,000, versus a loss from these divisions of $314,000 for the same period ended March 31, 1999. This reduction was associated with the Company`s lower operating levels of its fixed base operations in anticipation of its eventual sale. The Company sold its ground handling operations and certain fixed base departments during the nine months ended March 31, 2000, and on February 8, 2000 sold its fixed base operations, recognizing a net gain on sale of $600,000.
Financial Condition and Liquidity - The Company has incurred significant losses, due principally to corporate overhead associated with the Company`s acquisition strategy. Management continues its efforts to control overhead costs. Aviation Group is also pursuing reductions in non-essential division operating expenses, along with elimination of marginal products and services that do not provide future growth or near-term profits.
During the nine months ended March 31, 2000, the Company sold its Tri-Star Airline Services ground handling subsidiary operations. On February 8, 2000, the Company sold its Casper Air Service general aviation fixed base
operations. Both businesses were sold to unrelated third parties, and together generated a gain on sale to the Company of $600,000. Identified cost-saving activities, combined with the Company`s sale of its ground handling and fixed base assets should generate significant cash resources during the next six months.
In connection with the Company`s acquisition of Global Leisure Travel, Inc., through March 31, 2000 the Company raised a total of $20.4 million in capital. These funds were used primarily to finance Global, with the Company retaining approximately $500,000 in funds for operating and transaction cost funding purposes. These funds will supplement the Company`s existing revolving credit facilities to fund its business. While these funds combined with current operating levels should allow the Company to meet its working capital requirements during fiscal 2000, significant interruptions in currently scheduled Company operations would adversely affect the Company`s financial condition and require additional capital from asset sales, borrowings, or equity financings in order to allow the Company to meet its obligations. No assurance can be made that such sales or financings will be available or available on terms deemed advantageous to the Company if such events occur.
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