U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-32375
AUTEC ASSOCIATES, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0067192
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
38 East Osceola Street
Stuart, Florida 34994
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(Address of Principal Executive Offices)
(561) 288-0666
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(Issuer's telephone number)
N/A
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(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
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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 November 10, 2001
- ----- -----------------------------------
Common Stock, no par value 12,500,000
Transitional Small Business Disclosure Format (check one)
Yes No X
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AUTEC ASSOCIATES, INC.
FINANCIAL STATEMENTS
(Unaudited)
September 30, 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
September 30, December 31,
2001 2000
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(Unaudited)
CURRENT ASSETS
Cash $ 7,695 $ 23,059
Inventory 15,115 20,145
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Total Current Assets 22,810 43,204
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FIXED ASSETS, NET 2,357 --
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TOTAL ASSETS $ 25,167 $ 43,204
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 10,521 $ 22,046
Accrued expenses 717 1,691
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Total Current Liabilities 11,238 23,737
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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 27,186 24,298
Accumulated deficit (33,357) (24,931)
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Total Stockholders' Equity 13,929 19,467
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,167 $ 43,204
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The accompanying notes are an integral part of these financial statements.
3
AUTEC ASSOCIATES, INC.
Statements of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
REVENUE
Net sales $ 24,298 $ 59,354 $ 96,108 $ 158,224
Cost of goods sold 10,756 31,869 46,460 76,855
------------ ------------ ------------ ------------
Gross Profit 13,542 27,485 49,648 81,369
------------ ------------ ------------ ------------
EXPENSES
General and administrative 7,927 26,931 29,067 49,753
Salaries 9,204 16,020 29,007 47,931
------------ ------------ ------------ ------------
Total Expenses 17,131 42,951 58,074 97,684
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (3,589) (15,466) (8,426) (16,315)
INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (3,589) $ (15,466) $ (8,426) $ (16,315)
============ ============ ============ ============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,500,000 12,500,000 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)
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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)
Expense paid on behalf of Company -- -- 2,888 --
Net loss for the nine months ended
September 30, 2001 (unaudited) -- -- -- (8,426)
---------- ---------- ---------- ----------
Balance, September 30, 2001
(unaudited) 12,500,000 $ 20,100 $ 27,186 $ (33,357)
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
5
AUTEC ASSOCIATES, INC.
Statements of Cash Flows
For the Nine Months Ended
September 30,
2001 2000
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,426) $(16,315)
Changes in operating assets and liabilities:
(Increase) decrease in inventory 5,030 --
Increase (decrease) in accounts payable (11,525) 22,181
Increase (decrease) in accrued expenses (974) 4,601
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Net Cash Provided (Used) by Operating Activities (15,895) 10,467
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CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for fixed assets (2,357) --
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Net Cash Used by Investing Activities (2,357) --
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CASH FLOWS FROM FINANCING ACTIVITIES
Contributed capital 2,888 --
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Net Cash Provided by Financing Activities 2,888 --
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NET INCREASE (DECREASE) IN CASH (15,364) 10,467
CASH AT BEGINNING OF PERIOD 23,059 7,301
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CASH AT END OF PERIOD $ 7,695 $ 17,768
======== ========
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
September 30, 2001 and 2000
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in accordance with such rules and regulations. The
information furnished in the interim condensed financial statements include
normal recurring adjustments and reflects all adjustments, which, in the
opinion of management, are necessary for a fair presentation of such
financial statements. Although management believes the disclosures and
information presented are adequate to make the information not misleading,
it is suggested that these interim condensed financial statements be read
in conjunction with the Company's most recent audited financial statements
and notes thereto included in its December 31, 2000 Annual Report on Form
10-KSB. Operating results for the nine months ended September 30, 2001 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2001.
7
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.
Net sales for fiscal years ended December 31, 2000 and 1999 were $210,965
and $191,426, 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.
8
RESULTS OF OPERATION
Nine-Month Period Ended September 30, 2001 Compared to Nine-Month Period Ended
September 30, 2000
The Company's net losses for the nine-month period ended September 30, 2001
were approximately $8,426 compared to a net loss of approximately $16,315 for
the nine-month period ended September 30, 2000.
Net sales for the nine-month periods ended September 30, 2001 and 2000 were
$96,108 and $158,224, respectively. Net sales decreased by approximately $62,116
or 65% for the nine-month period ended September 30, 2001 as compared to the
nine-month period ended September 30, 2000. Net sales decreased due to changes
in sales volume. Prices for the Company's jewelry products have been and
continue to be consistent as a percentage of costs. Therefore, any fluctuations
in sales revenues would be derived from changes in sales volumes. Gross profit
for the nine-month periods ended September 30, 2001 and 2000 amounted to $49,648
and $81,369, respectively. Gross profit decreased by approximately $31,721 or
64% during the nine-month period ended September 30, 2001 as compared to the
nine-month period ended September 30, 2000. The decrease in gross profit is a
result of a decrease in net sales.
General and administrative expenses during the nine-month periods ended
September 30, 2001 and 2000 were $29,067 and $49,753, respectively (a decrease
of $20,686). The decrease in general and administrative expenses during the
nine-month period ended September 30, 2001 were primarily due to the Company
incurring less costs associated with its inventory acquisition and professional
fees. Salary expenses during the nine-month period ended September 30, 2001 were
$29,007 compared to $47,931 during the nine-month period ended September 30,
2000 (a decrease of $18,924). 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 nine-month period ended
September 30, 2001 decreased as compared to the net loss during the nine-month
period ended September 30, 2000. Management believes that the decrease in net
loss during the nine-month period ended September 30, 2001 as compared to the
same period during 2000 is attributable primarily to a decrease in general and
administrative and salary expenses. The Company's net losses during the
nine-month period ended September 30, 2001 were approximately ($8,426) compared
to a net loss of approximately ($16,315) during the nine-month period ended
September 30, 2000. The weighted average of common shares outstanding were
12,500,000 for the nine-month periods ended September 30, 2001 and 2000,
respectively.
Three-Month Period Ended September 30, 2001 Compared to Three-Month Period Ended
September 30, 2000
The Company's net losses for the three-month period ended September 30,
2001 were approximately $3,589 compared to a net loss of approximately $15,466
for the three-month period ended September 30, 2000.
Net sales for the three-month periods ended September 30, 2001 and 2000
were $24,298 and $59,354, respectively. Net sales decreased by approximately
$35,056 or 144% for the three-month period ended September 30, 2001 as compared
to the three-month period ended September 30, 2000. Net sales decreased due to
changes in sales volumes. Gross profit for the three-month periods ended
September 30, 2001 and 2000 amounted to $13,542 and $27,485, respectively. Gross
profit decreased by approximately $13,943 or 103% during the three-month period
ended September 30, 2001 as compared to the three-month period ended September
30, 2000. The decrease in gross profit is a result of a decrease in net sales.
General and administrative expenses during the three-month periods ended
September 30, 2001 and 2000 were $7,927 and $26,931, respectively (a decrease of
$19,004). The decrease in general and administrative expenses during the
three-month period ended September 30, 2001 were primarily due to the Company
incurring more costs associated with its inventory acquisition and professional
fees. Salary expenses during the three-month period ended September 30, 2001
were $9,204 compared to $16,020 during the three-month period ended September
30, 2000 (a decrease of $6,816).
As a result of these factors, net loss during the three-month period ended
September 30, 2001 decreased as compared to the net loss during the three-month
period ended September 30, 2000. Management believes that the decrease in net
loss during the three-month period ended September 30, 2001 as compared to the
same period during 2000 is attributable primarily to a decrease in general and
administrative and salary expenses. The Company's net losses during the
three-month period ended September 30, 2001 were approximately ($3,589) compared
to a net loss of approximately ($15,466) (a decrease of $11,877 or 331%) during
the three-month period ended September 30, 2000. The weighted average of common
shares outstanding were 12,500,000 for the three-month periods ended September
30, 2001 and 2000, respectively.
9
LIQUIDITY AND CAPITAL RESOURCES
Nine-Month Period Ended September 30, 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.
The Company generated $49,648 and $81,369 in gross profit during the
nine-month periods ended September 30, 2001 and 2000, respectively.
As of September 30, 2001, the Company's total assets were $25,167. The
Company's assets consisted primarily of cash in the amount $7,695 and inventory
in the amount of $15,115. As of September 30, 2001, the Company's total
liabilities were $11,238. The Company's liabilities consisted primarily of
accounts payable in the amount of $10,521 and accrued expenses in the amount of
$717. As of September 30, 2001, the Company's total assets exceeded its total
liabilities by $13,929.
The Company's stockholders' equity decreased from $19,467 for fiscal year
ended December 31, 2000 to $13,929 for the nine-month period ended September 30,
2001.
For the nine-month period ended September 30, 2001, the net cash used by
operating activities was $15,895 compared to net cash provided from operating
activities of $10,467 for the nine-month period ended September 30, 2000. The
main decrease in net cash was comprised of an accounts payable in the amount of
$11,525 for the nine-month period ended September 30, 2001.
MATERIAL COMMITMENTS/FUNDING
As of the date of this Quarterly Report, the Company does not have any
material commitments for fiscal year 2001.
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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: November 12, 2001 By: /s/ Arthur Garrison
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Arthur Garrison,
President/ Principal
Financial Officer
11