UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549





FORM 10-Q


(Mark One)





þ
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934for the quarterly period ended  September 30, 2010.





o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from _______________________ to ________________





Commission File Number 333-140257





Phoenix International Ventures, Inc.


(Exact name of registrant as specified in its charter)





Nevada

20-8018146(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)





61B Industrial PKWY


Carson City, NV 89706


(Address of principal executive offices)





(775) 882-9700


(Registrant’s telephone number, including area code)





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 þ No o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer o
Accelerated filer oNon-accelerated filer o

(do not check if a smaller reporting company)
Smaller reporting company þ





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No þ





The number of shares outstanding of the issuer’s common stock, as of November 15, 2010 was 8,142,657.


-1-














Phoenix International Ventures, Inc.





TABLE OF CONTENTS





PagePART I FINANCIAL INFORMATION
3Item 1.   Financial Statements
3Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
13Item 3.   Quantitative and Qualitative Disclosures about Market Risk
18Item 4. Controls and Procedures
18PART II. OTHER INFORMATION
19Item 1.   Legal Proceedings
19Item 1A. Risk Factors
19Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
19Item 3.    Defaults upon Senior Securities
19Item 4.    (Removed and Reserved.)
19Item 5.    Other Information
19Item 6.    Exhibits
19








-2-





PART I FINANCIAL INFORMATION








Item 1.
Financial Statements





Index to Financial Statements


PageCondensed Consolidated Balance Sheets as of  September 30, 2010 (Unaudited) and  December 31, 2009
4Condensed Consolidated Statements of  Operations for the Three  Months Ended  September 30, 2010  and 2009 and for the Nine Months Ended September 30, 2010 and 2009 (Unaudited)
5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (Unaudited)
6Notes to Condensed Consolidated Financial Statement (Unaudited)
7





-3-


Phoenix International Ventures, Inc


Condensed Consolidated BalanceSheet as of





September 30,


December 31,2010


2009Assets

(Unaudited)


(Audited)Current assetsCash

$
(5,803
)

$
148,478Accounts receivable, net


32,691



61,329Cost in excess of  billings


458,930



277,519Inventory


172,155



437,595Prepaid and other current assets


3,079



7,306Total current assets

$
661,052


$
932,227Property and equipment, net


100,201



73,514Other assets



141,685



118,200Total assets

$
902,938


$
1,123,941Liabilities and Stockholders' (Deficit)Current liabilitiesLine of credit


$
14,382


$
13,087Accounts payable


923,768



599,167Other accrued expenses


296,720



146,979Customer deposits


216,104



450,835Notes payable, current portion net of discounts


274,404



253,721Legal settlement


384,000



384,000Due related party


618,395



536,280Officer loans



39,461



39,461Total current liabilities

$
2,767,234


$
2,423,530Long term liabilitiesNotes payable


227,658



67,849Officer advances



369,375



369,375Total long term liabilities


$
597,033


$
437,224Total liabilities

$
3,364,267


$
2,860,754Commitment and Contingencies



-



-Stockholders' (deficit)Preferred stock - $0.001 par value; 1,000,000 sharesauthorized; zero shares issued and outstanding


-



-at September 30, 2010 and December 31,2009Common stock - $0.001 par value; 50,000,000 sharesauthorized; 8,142,657 and  8,133,902 shares


8,143



8,113issued and outstanding at September 30, 2010 andDecember 31,2009Additional paid in capital


1,456,507



1,427,160-Accumulated Deficit


(3,925,979
)


(3,172,086
)Total stockholders' deficit

$
(2,461,329
)

$
(1,736,813
)Total liabilities and stockholders' (deficit)

$
902,938


$
1,123,941The accompanying notes are an integral part of these unaudited condensed consolidated financial statements


-4-


Phoenix International Ventures, Inc


Condensed Consolidated Statementsof Operations


(Unaudited)








Three Months EndedSeptember 30,


Nine Months EndedSeptember 30,2010 (unaudited)


2009


2010 (unaudited)


2009Sales

$
250,075


$
1,155,596


$
1,952,427


$
2,733,970Cost of sales


285,453



801,674



1,779,883



1,900,603Gross margin

$
(35,378
)

$
353,922


$
172,544


$
833,367Operating expensesGeneral and administrative expenses

$
210,077


$
309,922


$
723,302


$
936,280Total operating expenses

$
210,077


$
309,029


$
723,302


$
936,280Income (loss) from operations

$
(245,455
)

$
44,893


$
(550,758
)

$
(102,913
)Other Income


(15,071
)


-



(137,071
)


-Interest expense


(26,613
)


(12,781
)


(66,063
)


(72,376
)Net Income (Loss) before taxes

$
(287,139
)

$
32,112


$
(753,892
)

$
(175,289
)Income taxes


-



-



-



-Net income (loss)

$
(287,139
)

$
32,112


$
(753,892
)

$
(175,289
)Net income per common share:Basic

$
(0.04
)

$
-


$
(0.09
)

$
(0.02
)Diluted

$
(0.04
)

$
-


$
(0.09
)

$
(0.02
)Weighted average shares outstanding:Basic


8,142,657



8,054,844



8,133,902



8,049,457Diluted


8,142,657



9,625,866



8,133,902



8,049,457The accompanying notes are an integral part of these unaudited condensed consolidated financial statements





-5-


Phoenix International Ventures, Inc.


Condensed ConsolidatedStatementof Cash Flows


For the Nine Months Ended September 30,


(Unaudited)





2010


2009Cash flows from operating activitiesNet income (loss)

$
(753,892
)

$
(175,289
)Adjustments to reconcile net income (loss) to net cash used in operating activitiesDepreciation


15,811



15,765Amortization of debt discount


5,915



39,272Amortization of finance fees


9,391



-Accrued interest


13,479



8,105Change in accounts receivable


28,638



121,106Cost in excess of billings


(181,411
)


-Change in inventory


265,440



(3,417
)Change in prepaid expenses


4,227



4,294Change in other assets


(3,499
)


(4,200
)Change in customer deposits


(234,731
)


(211,531
)Change in accounts payable


324,601



125,140Change in accrued expenses


149,741



(45,048
)Change in related party payable


82,115



24,086Net cash used in operating activities

$
(274,175
)

$
(101,717
)Cash flows from investing activitiesPurchase of property and equipment

$
(42,498
)

$
(7,920
)Net cash used in investing activities

$
(42,498
)

$
(7,920
)Cash flows from financing activitiesProceeds from subscription receivable


-



-Proceeds from notes payable

$
240,290


$
131,284Repayments on notes payable


(79,193
)


(147,049
)Repayments related party notes


-



-Issuance of common stock


-



-Proceeds from (payments on) line of credit


1,295



(1,140
)Net cash provided by (used in) financing activities

$
162,392


$
(16,905
)Increase  in cash

$
(154,281
)

$
(126,542
)Cash, beginning of year


148,478



225,767Cash, end of period

$
(5,803
)

$
99,225Cash paid forInterest

$
34,868


$
27,371Income taxes


-



-Non cash investing and financing activities:Issuance of  24,640 shares of common stock with promissory notes


24,640Issuance of 5,322 shares of common stock with promissory notes






5,000Issuance of  4,711 shares of common stock with promissory notes


4,711Issuance of 10,589 shares of common stock with promissory notes






10,724





The accompanying notes are an integral part of these unaudited condensed consolidated financial statements


-6-


Phoenix International Ventures, Inc.


Notes to the Condensed ConsolidatedFinancial Statements


(Unaudited)








Note 1 - Summary of Significant Accounting Policies





Nature of Activities





Phoenix International Ventures, Inc. (“PIV” or the “Company”) was organized on August 7, 2006 as a Nevada corporation to develop business in the market of defense and aerospace. The Company’s primary business is manufacturing, re-manufacturing and upgrading of Ground Support Equipment (“GSE”) used in military and commercial aircraft.





Basis of Presentation





The accompanying unaudited condensed consolidated financial statements of the Company are presented in accordance with the requirements for Form 10-Q and Article 8-03 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP’) have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2009 audited financial statements and the notes thereto included in the Company’s Report on Form 10-K filed with the SEC on March 31, 2010.





The unaudited condensed consolidated financial statements include the accounts of the Company and  its wholly owned US subsidiary Phoenix Aerospace, Inc. (“PAI”) and an Israeli wholly owned subsidiary, Phoenix Europe Ventures, Ltd. (“PEV). Significant inter-company accounts and transactions have been eliminated in consolidation.





Use of Estimates





Management uses estimates and assumptions in preparing consolidated financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported  revenues and expenses.  Actual results could differ from those estimates.




Depreciation





Depreciation is computed by using the straight-line methods for financial reporting purposes and the modified accelerated cost  recovery method and  the accelerated cost recovery method for federal income tax purposes.





Cash and Cash Equivalents





For purposes of preparing the statement of cash flows the company considers all short-term debt securities purchased with a maturity of three months or less and all money market funds to be cash equivalents.





Concentration of Credit Risk





The Company maintains cash in accounts with a federally insured bank located in Nevada. The balances are insured by the Federal Deposit Insurance Corporation up to $250,000.  At times, the balances in these accounts may be in excess of the federally insured limits.  As of  September  30, 2010, the Company did not have a cash balance above the federally insured limit.








-7-


Major Customers





The Company provides services to multiple customers, but mainly provides services to two major customers.  Two major customers accounted for approximately 68% of revenue and 0% of accounts receivable. One of the above mentioned customers has $458,930 of costs in excess of billings reported as an asset in the financial statements and the Company must meet milestones before billing and collecting these amounts.





Recent Accounting Pronouncements





None





Note 2 - Financial Condition, Liquidity, and Going Concern





At September 30, 2010, the Company assessed its ability to continue as a going concern. The Company has a working capital deficit of $2,106,182 and accumulated deficit of $3,925,979, along with a net loss for the nine months ended September 30, 2010 of $753,892. The Company has discontinued making payments to most of its vendors. Additionally the Company is behind in remitting payroll taxes to the Internal Revenue Service. These conditions raise substantial doubt about the Company's ability to continue as a going concern.





In addition the Company has deferred significant salaries to officers and deferred payments to many suppliers. The Company has developed a plan to address its financial situation and believes it can finance a significant portion of its operations through monetizing its current backlog in particular through performing on a U.S. Air Force contract received in August 2010 for $970,584 as well as obtaining future orders. The plan is based on the Company’s current assets, primarily billing and collecting costs in excess of billings, completing backlog orders, obtaining new orders, and meeting expectations regarding revenues and operating costs.





The Company needs additional capital and it needs to obtain and maintain favorable contracts, and achieve greater operating efficiencies anticipated with increased production levels to continue as a going concern.  The company believes it is viable for the next twelve months partly based on the expectation that it will receive additional orders and conduct successful money raising activities. There can be no assurance that the Company’s future efforts and anticipated operating improvements will be successful.





The unaudited condensed consolidated financial statements do not include any adjustments for future effects on the recoverability and classification of assets, or the amounts and classification of  liabilities that may result from the possible inability of the Company to continue as a going concern.





Note 3 - Geographical Segments





Product revenues are attributed to regions based on the location of the customer. The following table summarizes the Company’s geographical customer concentration of total product revenue.





Nine months endedSeptember 30 ,2010


2009United States


92
%


86
%Europe


8
%


14
%Total


100
%


100
%





-8-


Note 4 - Inventory





Inventory consists of parts and equipment that can be manufactured or re-manufactured for re-sale.  Non-current inventory consists of parts with limited current demand that are of limited supply.  At September 30, 2010 and September 30, 2009, inventory consisted of the following:





September 30, 2010


September 30, 2009Raw materials

$
136,589


$
135,409Work in process


149,566



54,524Total

$
286,155


$
189,933Non-current(classified as other asset)


114,000



-Inventory, current

$
172,155


$
189,933





Note 5 – Long Term Contracts





The Company has certain long-term contracts to design and manufacture equipment. The Company periodically reevaluates its cost estimates in connection with its long term contracts and may estimate that the future costs exceed or be less than previous estimates.  One of these changes in estimates has caused a loss on prior periods of $122,000 which is presented as “other income (loss)” on the statement of operations.  Another adjustment occurred during the quarter ending September 30, 2010 when unused parts were transferred from a long term project to inventory in order to satisfy deliveries on another current contract.  This adjustment reduced Costs in Excess of Billing on the project the parts were taken from and was recorded in “other income (loss)”. The items will be removed from inventory and charged to cost of sales when used in a future project. Costs and estimated earnings on the entire contracts as of September 30, 2010 are as follows:





Costs incurred on contracts

$
1,387,032Estimated contracts profit


161,420Less: billings to date


(1,089,522)Contract costs and related estimated profits in excess of billings, net

$
458,930





Note 6 - Notes Payable and Lines of Credit





The Company has a revolving line of credit from a foreign financial institution totaling $14,382 at September 30, 2010.  The line of credit bears a monthly interest ranging from 10%-13% based upon the amount extended.  As of September 30, 2010 the line was fully extended, the interest was at 13%. This item has been classified as a line of credit.





The Company had a revolving line of credit from a financial institution totaling $35,000.   In October 2009, the line of credit converted to an installment note payable in equal installments of $883 per month which includes interest at 9.75% and  principal until September 30, 2013.  As of  September 30, 2010, the Company owed $27,481 on this note payable.





In July and August 2009, two investors extended their promissory note arrangements that were entered into in the previous year in the aggregate principal amount of $89,474 for an additional one year bearing 15% interest per annum. These notes will mature in the fiscal quarter ending September 30, 2010. In exchange for the extension, the lenders were issued shares of the Company’s common stock equal to 5% of the principal amount of the notes. The Company issued an aggregate of 4,110 shares in connection with these notes.  These two notes reached maturity in the amount of $91,322 during the quarter ending September 30, 2010 and the company was unable to make payments. Subsequent to September 30, 2010, the company entered into negotiations with the investors for extensions or replacements of the notes. As of the date of the report none of these notes were extended.





-9-


In June and August 2009, the Company entered into three new promissory note agreements with related parties (one note with an Israeli individual and two notes with Cyprus corporation), in the aggregate amount of $125,000. These notes were to be paid in full at various dates between June 18, 2010 and August 23, 2010 and bore interest at 15% per annum. In addition, the lenders were issued shares of the Company’s common stock equal to 5% of the principal amount of the notes upon execution. In total, the Company issued an aggregate of 6,479 shares in connection with these notes.





During June 2010, one of the notes to Cyprus Corporation for $50,000 was extended for an additional year. The note bears interest at 11% per annum and the Company will issue 3,684 shares of common stock as an incentive to enter into the extension. As of June 30, 2010 and September 30, 2010 these shares had not been issued yet.





During the quarter ended September 30, 2010, two remaining notes reached maturity and one was paid off in the amount of $50,000. Subsequent to September 30, 2010, the company entered negotiations with the investor for extensions or replacement of the other note. As of the date of the report the note had not been extended.





In February and March 2010, the Company entered into promissory note agreements with related parties in the aggregate amount of $175,000. These notes are to be paid in full at various dates between  February and March of  2012 and  bear interest at 11% per annum.  In addition, the lenders were issued shares of the Company’s common  stock equal to an aggregate of 14% of  the principal amount of the notes.  In total, the Company issued an aggregate of 24,640 shares in connection with these notes.


During May and June 2010,  two new one year promissory notes were entered  into with the aggregate principal amount of  $65,290  bearing interest at  11%.   As an incentive to enter the transaction, the lenders were issued shares of the Company’s common stock equal to 7% of the principal amount of the notes. The Company issued an aggregate of 4,711 shares in connection with these notes.





As of September 30, 2010 unsecured promissory note agreements consisted of the following:


Note

Principal amount


Interest APR


Incentive sharesShort term notes(1year)Note to an Israeli corporation

$
50,000



15
%


2,294Note to an Israeli individual

$
40,000



15
%


1,816Note to a related party Cyprus corporation

$
25,000



15
%


1,157Note to an Israeli individual maturing on May 1, 2011

$
40,000



11
%


2,943Note to an Israeli individual maturing on May 31, 2011

$
25,000



11
%


1,786Note to a related party Cyprus corporation maturing on June 18, 2011

$
50,000



11
%


3,684Total short term


230,000







13,680Long term notes(2year)Note to related party maturing on February 2, 2012

$
100,000



11



14,140Note to a related party Cyprus corporation maturing on March 24, 2012

$
75,000



11



10,500Total long term

$
175,000







24,640





-10-


At  September 30, 2010, a summary of all notes payable:





TotalAmount


CurrentUnsecured note payable to a financial institution in a foreign country; 12.4% per annum

$
3,422


$
3,422Secured note payable to a financial institution; monthly payments of $756 until 2012; collateralized by an automobile


20,456



9,827Unsecured promissory note agreements;  effective interest rates are approximately 15% and 11% due in 2010 and 2011


239,473



239,473Unsecured promissory note agreements; effective interest rates are approximately 11% due in 2012


183,454



8,454Secured note payable to a financial institution; monthly payments of $671 until 2014; interest at 7.99%;collateralized by an automobile


27,776



5,524Unsecured note payable to a financial institution; 9.75% per annum; monthly payments of $883 until 2013


27,481



7,704$
502,062


$
274,404





Note 7 - Related Party Transactions





As of  September  30, 2010, the Company owed a total of $618,395 to related parties of which $279,446 was deferred and accrued salaries to its officers, $74,160 was vacation payable to the officers, $141,789 was fees owed in relation to a consulting agreement entered into with a related party on April 26, 2007, and  $123,000 were purchases of  parts and inventory from a related party.





In addition to this amount, the Company owed an officer for his advances totaling $408,836, of which $39,461 is due in the current year.  As of September  30, 2010, there was no arrangement to pay out this sum and the officer agreed to consider the Company’s cash reserves in collecting this advance. These advances are non-interest bearing and the officer has agreed not to demand payment of the long term portion during the current fiscal year.





Note 8 - Commitments and Contingencies





During the quarter ending September 30, 2010, the company received four air conditioners returned from a customer.  These items were sold and delivered to the customer in 2009.  Correspondence from the customer indicates they do not seek warranty repair or return of the sales price. The customer requested discounts on any new sales orders for some value if the returned items. The company did not record the returned items into inventory as the value of these items has not yet been determined or agreed upon with the customer. Additionally the timing of the credit or discount is contingent upon receiving a valid new sales order and can not be estimated at this time. In no case shall the cost of this contingency be more than $420,000, which is the aggregate sales price of these units.   If a sales order is not received in the future, it may be necessary in a future period to record inventory and income for the fair value of the items received.





The Company leases a 10,300 square foot operating facility under a lease term which commenced on March 1, 2009 and expires on February 28, 2011.  Minimum lease payments remaining for the facility total $20,600.  Lease expenses through  September  30, 2010 were  $37,080 compared  to $54,080  in  September 30, 2009.  During the second and third quarters of 2009, the Company had  leases on two facilities.





On May 26, 2006, the Company entered into a settlement agreement relating to a legal dispute with Kellstrom totaling $1,173,913 plus interest.  As part of the settlement, the Company was required to provide $500,000 in trade credits and a $566,154 payment contingent upon the event the Company was awarded an  Air Start Cart development contract prior to May 26, 2008 in the minimum amount of $10,000,000.  This settlement was then  reflected in the Company’s financial statements. The contingent payment was directly tied to the contract award. The contract was not received by May 26, 2008 but all other terms of the settlement, except for the provision of trade credits, were satisfied.  Since the contingency expired without being met, the Company recovered the previously recognized contingent liability in the amount of $566,154. The remaining trade credits of $500,000 were granted to Kellstrom towards the purchase of materials, repairs, maintenance, and overhaul services.   The credits were due upon receipt of a purchase order from Kellstrom but the Settlement Agreement did not provide a specific termination date in lieu of full satisfaction.   While there is no specific requirement to pay Kellstrom cash in lieu of the trade credits if they fail to execute a purchase order, Kellstrom has reserved the right to pursue any remaining settlement amounts in the event the Company fails to honor the remaining trade credit obligation. As of September 30, 2010, a balance of $384,000 remained outstanding on the trade credits.





-11-


Note 9 – Subsequent events:





Subsequent events were evaluated through November 15, 2010.





During the quarter ended September 30, 2010, three private capital notes reached maturity dates in the aggregate amount of $116,322 and the company was not in the position to make payment.   Subsequent to September 30, 2010, the company entered into negotiations with the investors for extensions or replacements of the notes. As of the date of the report none of these notes were extended.





-12-





Item 2.
Management’s Discussion and Analysisof Financial Condition and Results of Operations





FORWARD-LOOKING STATEMENTS





The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements”, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,” “intends” or “expects.” These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.





You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this quarterly report.





The Company’s revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of the Company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, changing government regulations domestically and internationally affecting our products and businesses.





These forward-looking statements speak only as of the date of this Quarterly Report.  Subject at all times to relevant federal and state securities law disclosure requirements, we expressly disclaim any obligation or undertaking to disseminate any update or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.  Consequently, all of the forward-looking statements made in this Quarterly Report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.





OVERVIEW





Phoenix International Ventures, Inc. (“PIV” or the “Company”) was incorporated on August 7, 2006. The financial statements are consolidated with the Company’s wholly owned subsidiaries, Phoenix Aerospace, Inc. and Phoenix Europe Ventures, Ltd.





We manufacture support equipment for military aircraft which is used for maintaining, operating or testing aircraft sub-systems. We also remanufacture existing support equipment in order to extend usefulness and eliminate original product defects. The Company is ISO 9001/2000 certified, which is due to expire on June 11, 2011.





The main users of the equipment are the United States Air Force, US Navy and defense-aerospace companies.





Results of Operations





Financial Information - Percentage of Revenues


(Unaudited)





Nine Months endedSeptember 30,2010


2009Revenues


100
%


100
%Cost of Goods Sold


-91
%


-70
%Gross Profit


9
%


30
%Operating Expenses:General and Administrative


-37
%


-34
%Total Operating Expenses


-37
%


-34
%Other Income (Expenses)


-10
%


-3
%Income (Loss) before Taxes


-39
%


-6
%Net income (loss)


-39
%


-6
%





-13-


Results of Operations-Fiscal Summary





Comparison of the nine months ended  September 30, 2010 and September 30, 2009





Revenues. Revenues decreased 29% to $1,952,427 for the nine  months ended September 30, 2010, compared to $2,733,970 for the nine  months ended September 30, 2009.





For the nine months ended September 30, 2010, remanufacturing revenue accounted for 44% of our total revenue, manufacturing and design accounted for 35%,  parts trading accounted for  9%,  and study contracts were 12% of revenues.  This compares to revenue from  remanufacturing of  38%,  from manufacturing and design of  33%, from study contracts of 14% and from parts trading of  15% of revenues for the nine months ended September 30, 2009.





In nominal numbers the company experienced decreases in all its revenue streams as shown below:





Nine months ended September 30, 2010


Nine months ended September 30, 2009


DifferenceRemanufacturing

$
855,600.00


$
1,049,300.00


$
(193,700.00
)Manufacturing


686,321.00



903,592.00



(217,271.00
)Study


224,860.00



404,993.00



(180,133.00
)Parts


185,646.00



376,085.00



(190,439.00
)$
1,952,427.00


$
2,733,970.00


$
(781,543.00
)





Remanufacturing revenues decreased due to the receipt of fewer contracts for delivery in 2010 than 2009. Typically remanufactured units are of high dollar volume. Management believes that there will continue to be a reduction in revenue from this stream over the next three months. The Company did receive an order for one remanufactured air start cart unit which is expected to be delivered within the next six months.





The Company had two long term manufacturing and design contracts, one to design aircraft engine trailers and one to design an engine adapter.  Manufacturing and design revenue decreased in 2010 primarily due to completing the more cost intensive portion of the project during 2009 and less costs incurred in 2010. Management believes when the project meets milestones and enters into its final phase of manufacturing; the first engine trailer production units will recognize additional revenues.  This order also contains an option for the customer to order additional units which, if exercised, will lead to additional revenues.





During the quarter the Company transferred parts purchased for the trailer project to inventory to satisfy delivery on a new contract which was received in August 2010. This trailer project has accumulated approximately $458,930 of costs in excess of billings. The Company finished the other contract it had for the design of engine adapters during the quarter. The billing and collection of the costs in excess of billings is partly depended on reaching milestones that are expected to occur in the near future.





Revenue from study orders decreased during the final stages of performance on existing contracts during the nine month ended September 30, 2010. The Company did not receive additional study type orders during the nine months ended September 30, 2010 and management believes that revenue from this stream will decrease in the future possibly to zero. Management believes, although there can be no assurance, that completed study orders may spawn additional orders to remanufacture and/or manufacture the equipment studied thereby, increasing manufacturing and remanufacturing revenue in the future.





Parts trading revenue decreased during the nine  months ended September 30, 2010 compared to the same period in 2009.   Management expects, although there can be no assurance, that this revenue stream will decrease during the remainder of the year ended December 31, 2010.





The Company has diverse contracts with a few large customers which make up significant portions of revenue. The United States Air Force and  Navy represented 25% of the Company’s revenues for the nine months ended September 30, 2010.  The remaining 75% of revenues were to aerospace companies and military contractors. Two customers represented  68% of the Company’s revenues for the nine  months ended  September 30, 2010. Management feels that similar trends will continue in the near future.


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Cost of Sales.Cost of sales consisted primarily of sub-contractors and raw materials used in the manufacturing and remanufacturing processes, along with labor and allocations of indirect labor and overhead.  Cost of sales decreased  to $1,779,883 for the nine  months ended  September 30, 2010, compared to $1,900,603 for the nine months ended September 30, 2009, representing 91% and 70% of total revenues for the nine months ended for each period, respectively.





Cost of sales as a percentage of revenue increased on design and manufacturing contracts as costs were adjusted higher than previously expected, this resulted in a decrease of gross margin on this project which comprised 24% of our revenues for the nine months ended September 30, 2010. Additionally, a smaller long-term contract was completed with a less than expected gross profit margin. Also, there were fewer remanufacturing deliveries which partly caused the reduced margin.





There was a decrease in materials purchased for all revenue streams. There were also decreases in external engineering and internal labor costs regarding the Company’s largest long-term manufacturing contract as engineering was completed and those resources were shifted away to the smaller long term project. Additionally cost allocations were made from general and administrative accounts to cost of sales accounts, including reallocation of some salaries, facilities costs and other costs during the nine months ended September 30, 2010 to appropriately reflect cost of sales. These allocations were not completed for the nine months ended September 30, 2009.





General and Administrative Expenses.  General and administrative expenses decreased 22% for the nine months ended  September 30, 2010  to  $723,302 compared  to $936,280 during the nine months ended September 30, 2009.  A portion of the decrease can be attributable to the cost allocations described above. The Company also saw a reduction in travel and other expenses during the period.





As a percentage of revenues, general and administrative expenses increased to 37% of total revenue for the nine months ended September 30, 2010, as compared to 34% of total revenue for the nine months ended September 30, 2009. This was primarily due to reduced revenues and similar administrative expenses. Management further believes, although there can be no assurance, that the current general and administrative infrastructure can accommodate significantly higher revenue volume.





Interest Expense and Other Income. Interest expense decreased by 1% to $66,063 for the nine  months ended September 30, 2010, from $72,376 for the nine  months ended September 30, 2009. Notes entered into in 2009 which mature in 2010 carry interest at 15% per annum and include incentive shares of common stock equal to 5% of the principal amount of the notes. Notes entered into in 2010 carry interest at 11% per annum and include shares of common stock equal to 7% of the principal amount of the notes.  We expect total interest expense to remain the same during the remainder of the year ended December 31, 2010.





Other loss.  At September 30, 2010 there was a loss adjustment of $137,071 relating to a long term contract.  One adjustment was made in the three months ending March 31, 2010, due to an anticipated higher cost associated with this contract than previously estimated. Another adjustment to the long term project occurred during the quarter ending September 30, 2010 when unused parts were transferred from a long term project into inventory to satisfy completion and delivery for a different contract.





Taxes on Income. We  had  no  tax  liabilities for either of the nine months ending September 30, 2009 or September  30, 2010.





Net Loss.  Net loss for the nine  months ended September 30, 2010 amounted to ($753,892) compared to a net loss of ($175,289) for the nine  months ended  September 30, 2009.





Comparison of the three months ended September 30, 2010 and September 30, 2009





Revenues. Revenues decreased 78% to $250,075 for the three months ended September 30, 2010, compared to $1,155,596 for the three months ended September 30, 2009.





For the three months ended September 30, 2010, remanufacturing revenue accounted for 0% of our total revenue, manufacturing and design accounted for 63%, parts trading accounted for 0%, and study contracts were 37% of revenues.  This compares to remanufacturing of  36%, manufacturing and design of 36%, study contracts of  10% and parts trading of  18% of revenues for the three months ended  September 30, 2009.





In nominal numbers, revenues declined in all revenue streams and there were no revenues from remanufacturing and parts sales for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009.The company received an order for one additional remanufactured air start cart unit which is expected to be delivered within the next six months. Additionally, there were reduced revenues related to a long term manufacturing contract as less costs and revenue was recognized for this project. Management believes, although there can be no assurance, that additional orders will be issued to the company in the near future.


-15-





Revenue from study orders decreased. The Company did not receive additional study type orders during the nine  months ended  September 30, 2010 and  management believes that revenue from this stream will decrease in the future. Management believes, although there can be no assurance, that completed study orders may spawn additional orders to remanufacture and/or manufacture the equipment studied thereby, increasing manufacturing and remanufacturing  revenue in the future.





Cost of Sales.Cost of sales consisted primarily of sub-contractors and raw materials used in the manufacturing and remanufacturing processes, along with labor and allocations of indirect labor and overhead. Cost of sales decreased to $285,453 for the three months ended  September 30, 2010, compared to $801,674 for the three months ended September 30, 2009 primarily due to a decrease in revenues. Cost of sales represented 114% and 69% of total revenues for the three months ended for each period respectively.





Cost of sales as a percentage of revenue increased to 114%, meaning that cost of sales was more than our revenue for the three months ended September 30, 2010. This is a result of low margin orders being performed and the allocation the company’s production infrastructure costs on a very low volume of revenue.





There was a decrease in materials purchased for all revenue streams. There were also significant decreases  in external engineering and  internal labor costs regarding  the Company’s largest long term manufacturing  contract as engineering  was completed and  those resources were shifted to the smaller long term project. Additionally cost allocations were made from general and administrative accounts to cost of sales accounts including reallocation of salaries, facilities costs and other costs during the three months ended September 30, 2010 to appropriately reflect cost of sales. These allocations were completed for the three months ended September 30, 2009.





General and Administrative Expenses.General and administrative expenses decreased 32% for the three months ended September 30, 2010 to $210,077 compared to $309,029 during the three months ended September 30, 2009.  A portion of the decrease can be attributable to the cost allocations described above; the Company also saw a reduction in travel expenses and other expenses. Management expects, although there can be no assurance, that general and administrative expenses will continue at these levels in the near future.





As a percentage of revenues, general and administrative expenses increased to 84% of total revenue for the three months ended September 30, 2010, compared to 27% of total revenue for the three months ended September 30, 2009. The changes in general and administrative expenses as a percentage of revenues are primarily attributable to the decrease in revenues.  Management further believes, although there can be no assurance, that the current general and administrative infrastructure can accommodate significantly higher revenue volume.





Summary of Liquidity and going concern





At September 30, 2010, we assessed the Company’s ability to continue as a going concern. The Company has a working capital deficit of  $2,106,182 and accumulated deficit of  $3,925,979, along with a net loss of $753,892 for the nine months ended September 30, 2010. These conditions raise substantial doubt about the Company's ability to continue as a going concern.





The Company’s financial situation deteriorated during the last nine months primarily because management’s expectations regarding additional short term orders did not materialize during the this period coupled with increased costs and delays in the company’s major design and manufacturing contract. Management expects, although there can be no assurance, that additional orders will be received by the Company in the near future; we also expect that some of these orders will provide advances to assist our working capital needs. The Company may be unable to finance its operations solely from revenues from operations.





We have developed a plan to address the financial situation and believe the Company can still finance a significant portion of its operations through monetizing its current backlog in particular through performing on a U.S. Air Force contract received in August 2010 for $970,584 which should provide a steady monthly income that should cover most of our operating costs. This contract is expected to last through the second quarter 2011 and may be extended for an additional 6-12 months. In addition management believes the Company will receive additional orders. We found it necessary during the first nine months of 2010 to extend and issue new debt through promissory notes to replace previous note arrangements and raise additional operating capital, in addition we were unable to pay several notes that matured this period, although the note holders tentatively indicated that they may be willing to extend and replace the notes. As of the date of the report none of these notes were extended. In addition, we have deferred significant salaries to officers and deferred payments to many suppliers for long periods of time. The plan is based on the Company’s current assets, primarily billing and collecting costs in excess of billings, completing backlog orders, obtaining new orders, and meeting expectations regarding revenues and operating costs.





-16-


We need to depend on additional capital raising efforts, obtain and maintain favorable contracts, and achieve greater operating efficiencies anticipated with increased production levels.  We believe that we are viable for the next twelve months partly based on the expectation that we will receive additional orders and conduct successful money raising activities. There can be no assurance that the our future efforts and anticipated operating improvements will be successful.





We currently have $458,930 of costs in excess of billings which we expect to bill and collect in the near future. The billing of this amount is also dependent on reaching certain contractual milestones. We have diverse customer payment arrangements regarding our contracts. Certain contracts require payments upon delivery and have a net 30 payment schedule while other contracts allow for advances or milestone billing which enables the Company to obtain financing for the production process which is typical in all of our revenue streams.





Cash Flows (Operating, Investing, and Financing)





Cash as of September 30, 2010, amounted to ($5,803) compared to $99,225 as of September 30, 2009, which is a decrease of $105,028.





Cash used in operating activities increased by $172,458 to $274,175 for the nine months ended September 30, 2010 from$101,717for the nine months ended September 30, 2009.  Cash decreased during the nine months ended September 30, 2010 primarily due to a reduced level of revenues received. In addition, cash was increased and conserved by deferring payments to vendors. Cash was used to make purchases for costs in excess of billings as well as relieving customer deposits earlier in the year.





As our products consist of large items of equipment, changes in the cash flow items period to period are subject to significant fluctuations which might not be attributable to a trend but rather to specific circumstances of a delivery and cutoff date.





Net cash provided by financing activities for the nine months ended September 30, 2010 was $162,392, which is related to the issuance of private capital note and repayments on notes payable.


Capital Expenditures and Other Obligations





Management believes that, although working capital is needed, there is no need for material additional capital investments in order to execute the current order backlog. Our capital investments are primarily for the purchase of equipment for the services and products that we provide or intend to provide. This equipment includes vehicles, shop tools, and shop machinery. Although this may change, we currently do not expect to make material capital investments during the next twelve months.





On January 29, 2009, we entered into an agreement to lease a new production facility starting March 1, 2009 until February 28, 2011 at a monthly rent of $4,120.  Minimum payments on this lease until termination are $20,600.





Sources of Liquidity





We shall continue to finance a significant portion of our operations through monetizing our current backlog and deliveries on new orders we expect to receive, although there can be no assurance we will be successful. In particular we expect to finance a significant portion of our operations through performing on a U.S. Air Force contract received in August 2010 for $970,584 which should provide a steady monthly income that should cover most of our operating costs. This contract is expected to last through the second quarter 2011 and may be extended for an additional 6-12 months. In addition the Company is pursuing financing activities through the issuances of debt and equity instruments as necessary. Please see summary of Liquidity and Going Concern section above.


As of September 30, 2010, we had backlog orders of approximately $4.5 million compared to a backlog of $7 million for September 30, 2009.  Management believes a significant portion of our backlog will be delivered during the next twelve months. Additionally, management is expecting, although there can be no assurance, that additional orders will materialize during that time.  Included in our 2010 backlog is $1,800,000 consisting of a Department of Defense program designated to Phoenix Aerospace projects.  In this program we will supply the Department of Defense with parts linked to products we developed.  We expect, although there can be no assurance, to see significant revenue from this program in 2011 and 2012.





Debt and Capital





We are seeking to raise additional capital through private and/or public placements to fund our operations, although there can be no assurance that our efforts will be successful.


-17-





We issued several promissory note arrangements in 2009 and three are left outstanding in the amount of $116,310 as of September 30, 2010. These notes matured during the quarter ending September 30, 2010 the notes issued in 2009 bear interest at 15%. Incentive stock shares were also issued along with these notes. Subsequent to September 30, 2010, the Company entered into negotiations with these investors to extend or replace the note in return for an additional issuance of shares. The investors tentatively indicated that they may be willing to extend and replace the notes. As of the date of the report none of these notes were extended.





In February and March 2010, we entered into long term promissory note agreements with related parties in the aggregate amount of $175,000, including accrued interest of $8,454 as of September 30, 2010. These notes are to be paid in full at various dates between February and March of 2012 and bear interest at 11% per annum. In addition, the lenders were issued additional shares of the Company’s common stock equal to an aggregate of 14% of the principal amount of the notes. In total, we issued an aggregate of 24,640 shares in connection with these notes.





During May and June 2010, two new one year promissory notes were entered into with the aggregate principal amount of $65,290 bearing interest at 11% per annum. As an incentive to enter into these transactions, the lenders were issued shares of the Company’s common stock equal to 7% of the principal amount of the notes. The Company issued an aggregate of 4,711 shares in connection with these notes.





During June 2010, one of the 2009 notes for $50,000 was extended for an additional year. The note bears interest at 11% per annum and the Company agreed to issue 3,684 shares of common stock as an incentive to enter into an extension. As of the date of this report those shares had not yet been issued.





Item 3.
Quantitativeand Qualitative Disclosures about Market Risk





Not applicable.




Item 4.
Controls and Procedures





(a) Evaluation of Disclosure Controls and Procedures:As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure of material information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to provide reasonable assurance of achieving these objectives. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective.





(b) Changes in Internal Control over Financial Reporting:During the nine months ended September 30, 2010, we implemented new procedures, including updated procedures relating to accounting which include greater scrutiny over cut-off   issues, work in process and revenue recognition.  Although we believe these new controls and procedures are reasonably expected to improve our internal control over financial reporting we have not yet experienced sufficient reporting cycles to test these new controls, and so we cannot yet attest to their effectiveness.





-18-





PART II. OTHER INFORMATION





Item 1.
Legal Proceedings.





Not applicable.





Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.





Not applicable.




Item 3.
Default upon Senior Securities.





Not applicable.





Item 4.
(Removed and Reserved.)





Item 5.
Other Information.





None.





Item 6.
Exhibits





No.
Exhibit31.1
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




-19-


SIGNATURES




In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Phoenix International Ventures, Inc.(Registrant)November 15, 2010
By:
/s/ Zahir TejaZahir TejaPresident and Chief Executive OfficerNovember 15, 2010
By:
/s/ Neev NissensonNeev NissensonChief Financial Officer

(principal financial and accounting officer)





-20-


INDEX TO EXHIBITS




No.
Exhibit31.1
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.







-21-