U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] 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 0-32375
AUTEC ASSOCIATES, INC.
-------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0067192
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
38 East Osceola Street
Stuart, Florida 34994
-------------------------------
(Address of Principal Executive Offices)
(561) 288-0666
--------------
(Issuer's telephone number)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of August 31, 2001
- ----- ---------------------------------
Common Stock, no par value 12,500,000
Transitional Small Business Disclosure Format (check one)
Yes No X
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
AUTEC ASSOCIATES, INC.
FINANCIAL STATEMENTS
(Unaudited)
March 31, 2001
Page
----
Balance Sheets 3
Statements of Operations 4
Statement of Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7
2
AUTEC ASSOCIATES, INC.
Balance Sheets
March 31, December 31,
2001 2000
-------- --------
(Unaudited)
CURRENT ASSETS
Cash $ 10,569 $ 23,059
Inventory (Note 1) 17,245 20,145
-------- --------
Total Current Assets 27,814 43,204
-------- --------
TOTAL ASSETS $ 27,814 $ 43,204
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 8.836 $ 22,046
Accrued expenses 952 1,691
-------- --------
Total Current Liabilities 9,788 23,737
-------- --------
STOCKHOLDERS' EQUITY
Common stock; 20,000,000 shares authorized of no par
value, 12,500,000 shares issued and outstanding 20,100 20,100
Additional paid-in capital 24,298 24,298
Accumulated deficit (26,372) (24,931)
-------- --------
Total Stockholders' Equity 18,026 19,467
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,814 $ 43,204
======== --------
The accompanying notes are an integral part of these financial statements.
3
AUTEC ASSOCIATES, INC.
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
--------------------------------
2001 2000
------------ ------------
REVENUE
Net sales $ 35,496 $ 52,741
Cost of goods sold 16,879 25,618
------------ ------------
Gross Profit 18,617 27,123
------------ ------------
EXPENSES
General and administrative 9,249 12,438
Salaries 10,809 15,977
------------ ------------
Total Expenses 20,058 28,415
------------ ------------
LOSS FROM OPERATIONS (1,441) (1,292)
INCOME TAXES -- --
------------ ------------
NET LOSS $ (1,441) $ (1,292)
============ ============
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,500,000 12,500,000
============ ============
The accompanying notes are an integral part of these financial statements.
4
AUTEC ASSOCIATES, INC.
Statements of Stockholders' Equity
Common Stock Additional
----------------------- Paid-In Accumulated
Shares Amount Capital Deficit
---------- ---------- ---------- ----------
Balance, December 31, 1998 12,500,000 $ 20,100 $ 24,298 $ (10,582)
Net loss for the year ended
December 31, 1999 -- -- -- (9,181)
---------- ---------- ---------- ----------
Balance, December 31, 1999 12,500,000 20,100 24,298 (19,763)
Net loss for the year ended
December 31, 2000 -- -- -- (5,168)
---------- ---------- ---------- ----------
Balance December 31, 2000 12,500,000 20,100 24,298 (24,931)
Net loss for the three months ended
March 31, 2001 (unaudited) -- -- -- (1,441)
---------- ---------- ---------- ----------
Balance, March 31, 2001 (unaudited) 12,500,000 $ 20,100 $ 24,298 $ (26,372)
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
5
AUTEC ASSOCIATES, INC.
Statements of Cash Flows
For the Three Months Ended
March 31,
--------------------
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,441) $ (1,292)
Changes in operating assets and liabilities:
(Increase) decrease in inventory 2,900 1,390
Increase (decrease) in accounts payable (13,210) 1,355
Increase (decrease) in accrued expenses (739) 61
-------- --------
Net Cash Provided (Used) by Operating Activities (12,490) 1,514
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES -- --
-------- --------
NET INCREASE (DECREASE) IN CASH (12,490) 1,514
CASH AT BEGINNING OF PERIOD 23,059 7,301
-------- --------
CASH AT END OF PERIOD $ 10,569 $ 8,815
======== ========
CASH PAID FOR:
Interest $ -- $ --
Income taxes $ -- $ --
The accompanying notes are an integral part of these financial statements.
6
AUTEC ASSOCIATES, INC.
Notes to the Financial Statements
March 31, 2001 and 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Autec Associates, Inc. (the Company) was incorporated on June 23, 1988
under the laws of the State of Florida. The Company custom designs,
manufactures and sells several types of modern jewelry by utilizing a new
and unique proprietary casting process developed by the Company.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
c. Basic Loss Per Share
Basic loss per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period.
For the Three Months Ended
March 31,
----------------------------
2001 2000
------------ ------------
(Unaudited) (Unaudited)
Numerator - loss $ (1,441) $ (1,292)
Denominator - weighted average
number of shares outstanding 12,500,000 12,500,000
------------ ------------
Loss per share $ (0.00) $ (0.00)
============ ============
There are no dilutive equity instruments issued and outstanding at March
31, 2001.
d. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7
AUTEC ASSOCIATES, INC.
Notes to the Financial Statements
March 31, 2001 and 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
e. Revenue Recognition
The Company's sales are completed exclusively as cash-on-delivery.
Therefore, revenue is recognized when the product is delivered and cash is
received.
f. Provision for Taxes
At March 31, 2001, the Company had net operating loss carryforwards of
approximately $26,000 that may be offset against future taxable income
through 2021. No tax benefit has been reported in the financial statements,
because the potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
g. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
h. Inventory
Inventories are stated at the lower of cost or market value using the
first-in, first-out method of valuation. Inventory consists of various
unique jewelry items. The Company's inventory consisted entirely of
finished goods as of March 31, 2001 and December 31, 2000.
i. Recent Accounting Pronouncements
The Company has adopted the provisions of FASB Statement No. 138
"Accounting for Certain Derivative Instruments and Hedging Activities, (an
amendment of FASB Statement No. 133.)" Because the Company had adopted the
provisions of FASB Statement No. 133, prior to June 15, 2000, this
statement is effective for all fiscal quarters beginning after June 15,
2000. The adoption of this principal had no material effect on the
Company's consolidated financial statements.
The Company has adopted the provisions of FASB Statement No. 140
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (a replacement of FASB Statement No. 125.)"
This statement provides accounting and reporting standard for transfers and
servicing of financial assets and extinguishments of liabilities. Those
standards are based on consistent application of a financial- components
approach that focuses on control. Under that approach, the transfer of
financial assets, the Company recognized the financial and servicing assets
it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. This statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. This statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after March 31, 2001. This statement is effective for recognition and
8
AUTEC ASSOCIATES, INC.
Notes to the Financial Statements
March 31, 2001 and 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
i. Recent Accounting Pronouncements (Continued)
reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of this principal had no material effect on
the Company's consolidated financial statements.
The Company has adopted the provisions of FIN 44 "Accounting for Certain
Transactions Involving Stock Compensation (an interpretation of APB Opinion
No. 25.)" This interpretation is effective July 1, 2000. FIN 44 clarifies
the application of Opinion No. 25 for only certain issues. It does not
address any issues related to the application of the fair value method in
Statement No. 123. Among other issues, FIN 44 clarifies the definition of
employee for purposes of applying Opinion 25, the criteria for determining
whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and accounting for an exchange of stock compensation
awards in a business combination. The adoption of this principal had no
material effect on the Company's consolidated financial statements.
j. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a fair
presentation. Such adjustments are of a normal recurring nature.
NOTE 2 - COMMON STOCK
On July 28, 1998, the Company amended its Articles of Incorporation to
increase its authorized shares of common stock to 20,000,000 at no par
value. On the same date, the Company approved a stock split of its common
stock on a 105:1 basis, as each existing shareholder received 105,000
shares for each share owned, leaving 10,500,000 shares issued and
outstanding immediately after the split.
During the fourth quarter of 1998, the Company sold an additional 2,000,000
post-split shares of common stock at $0.01 per share. The proceeds were
used to purchase inventory.
9
Statements made in this Form 10-QSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
21E of the Securities Exchange Act of 1934. These statements often can be
identified by the use of terms such as "may," "will," "expect," "believe,"
"anticipate," "estimate," "approximate" or "continue," or the negative thereof.
The Company intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. Any forward-looking statements represent management's best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks, uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical results of operations and events and those presently anticipated or
projected. The Company disclaims any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statement or to reflect the occurrence of anticipated or unanticipated
events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Autec Associates, Inc. (the "Company"), has primarily been engaged in the
design, manufacturing, marketing, distribution and repair of stone-set jewelry
using diamonds and other precious gemstones, such as rubies, sapphires and
emeralds. During prior fiscal years, the Company has designed, manufactured and
marketed numerous modern styles of stone-set jewelry, including necklaces,
earrings, rings, bracelets and other ornaments. The Company's principal markets
includes Canada and the United States. During prior fiscal years, the Company
generally derived its revenues from the market and sale of its jewelry products
to consumers.
Management of the Company believes that its metallurgist has combined
certain processes and developed a new and unique process for the casting and
fabrication of metals, and that the process distinguishes the Company's
creations and designs from others on the market. The Company's casting process
combines modern technology, mechanization and hand craftsmanship to produce
unique, innovative and fashionable jewelry. Management of the Company believes
that its casting process is therefore a superior process because of the
simultaneous utilization of the centrifugal device and vacuum. Management
believes that it thus obtains maximum benefits and eliminates the commonly found
porosity voids and inconsistent densities. As a result, the developed process
provides for the manufacture of high-quality rings, earrings, pendants and
bracelets which are consistent in density with little or no porosity or voids.
After the casting process, the jewelry undergoes a series of cleaning and
polishing stages before being labeled for sale.
The Company currently maintains a retail outlet for the sale of its jewelry
products to the public in Stuart, Florida. The Company intends to broaden its
customer base by selling its jewelry products within the United State and
Canada. Customers for the jewelry products are primarily consumers. The
Company's current market concentration has been in the southeastern United
States due to existing relationships with certain clients.
10
Gross profit for fiscal years ended December 31, 2000 and 1999 was $108,492
and $100,660, respectively, resulting primarily from the sale of its jewelry
products. However, the Company realized a net loss for fiscal years ended
December 31, 2000 and 1999 of $5,168 and $9,181, respectively.
RESULTS OF OPERATION
Three-Month Period Ended March 31, 2001 Compared to Three-Month Period Ended
March 31, 2000
The Company's net losses for the three-month period ended March 31, 2001
were approximately $1,441 compared to a net loss of approximately $1,292 for the
three-month period ended March 31, 2000.
Net sales for the three-month period ended March 31, 2001 and 2000 were
$35,496 and $52,741, respectively. Net sales decreased by approximately $17,245
or 49% for the three-month period ended March 31, 2000 as compared to the
three-month period ended March 31, 2000. Net sales decreased due to changes in
sales volumes. Prices for the Company's jewelry products have been and continue
to be consistent as a percentage of cost. Therefore, any fluctuation in sales
revenues would be derived from changes in sales volume. Gross profit for the
three-month periods ended March 31, 2001 and 2000 amounted to $18,617 and
$27,123, respectively. Gross profit decreased by approximately $8,506 or 46%
during the three-month period ended March 31, 2001 as compared to the
three-month period ended March 31, 2000. The slight decrease in gross profit is
a result of a decrease in net sales.
General and administrative expenses during the three-month periods ended
March 31, 2001 and 2000 were $9,249 and $12,438, respectively (a decrease of
$3,189 or 34%). The slight decrease in general and administrative expenses
during the three-month period ended March 31, 2001 were primarily due to the
Company incurring less costs associated with its inventory acquisition and
professional fees. Salary expenses during the three-month period ended March 31,
2001 were $10,809 compared to $15,977 during the three-month period ended March
31, 2000 (a decrease of $5,168). General and administrative expenses include
general corporate overhead, shipping and warehousing costs, selling expenses and
professional fees.
As a result of these factors, net loss during the three-month period ended
March 31, 2001 was $1,441, an increase of $149, as compared to a net loss of
$1,292 during the three-month period ended March 31, 2000. Management believes
that the slight increase in net loss during the three-month period ended March
31, 2001 as compared to the same period during 2000 is attributable primarily to
a decrease in net sales.
LIQUIDITY AND CAPITAL RESOURCES
Three-Month Period Ended March 31, 2001
The Company has only recently generated sufficient cash flow to fund its
operations and activities. Historically, the Company has relied upon internally
generated funds and funds from the sale of shares of stock and loans from its
shareholders and private investors to finance its operations and growth. The
Company's continued future success and viability may be dependent upon the
ability of the Company's current management to (i) strengthen and increase its
customer base by enhancing the marketability of its products, (ii) increase the
number of customers and expand into additional markets, (iii) control inventory
costs; and (iv) increase the manufacture rate. There can be no assurance,
however, that the Company will be able to continue to successfully distribute
and market its jewelry products and to raise additional capital. The Company's
failure to do so would have a material and adverse affect upon the Company and
its shareholders.
11
The Company generated $18,617 and $27,123 in gross profit during the
three-month periods ended March 31, 2001 and 2000, respectively.
As of March 31, 2001, the Company's total assets were $27,814. The
Company's assets consisted primarily of cash and cash equivalents in the amount
of $10,569 and inventory in the amount of $17,245. As of March 31, 2001, the
Company's total liabilities were $9,788. The Company's liabilities consisted
primarily of accounts payable in the amount of $8,836 and accrued expenses in
the amount of $952. As of March 31, 2001, the Company's total assets exceeded
its total liabilities by $18,026.
The Company's stockholders' equity decreased from $19,467 for fiscal year
ended December 31, 2000 to $18,026 for the three-month period ended March 31,
2001.
For the three-month period ended March 31, 2001, the net cash used by
operating activities was $12,490 compared to net cash provided from operating
activities of $1,514 for the three-month period ended March 31, 2000 (a decrease
of $14,004). The main decrease in net cash was comprised of an accounts payable
in the amount of $13,210 for the three-month period ended March 31, 2001
compared to an accounts payable of $1,355 for the three-month period ended March
31, 2000.
MATERIAL COMMITMENTS/FUNDING
As of the date of this Quarterly Report, the Company does not have any
material commitments for fiscal year 2001.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any
governmental authority or other party involving the Company or its properties.
No director, officer or affiliate of the Company is (i) a party adverse to the
Company in any legal proceedings, or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any legal proceedings
pending or that have been threatened against the Company or its properties.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No report required.
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.
AUTEC ASSOCIATES, INC.
Dated: August 31, 2001 By: /s/ Arthur Garrison
-----------------------
Arthur Garrison, President/
Principal Financial Officer
12