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 March 31, 2002
[ ] 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 May 13, 2002
- ------ -------------------------------
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)
March 31, 2002
Page
----
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
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AUTEC ASSOCIATES, INC.
Balance Sheets
March 31, December 31,
2002 2001
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(Unaudited)
CURRENT ASSETS
Cash $ 17,016 $ 43,947
Inventory 12,160 12,160
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Total Current Assets 29,176 56,107
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PROPERTY AND EQUIPMENT
Furniture and fixtures 2,497 2,497
Less - accumulated depreciation (375) (250)
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Total Property and Equipment 2,122 2,247
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TOTAL ASSETS $ 31,298 $ 58,354
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LIABILITIES AND STOCKHOLDERS" EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 10,532 $ 40,791
Accrued expenses 1,736 1,788
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Total Current Liabilities 12,268 42,579
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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 30,510 30,510
Accumulated deficit (31,580) (34,835)
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Total Stockholders' Equity 19,030 15,775
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,298 $ 58,354
======== ========
The accompanying notes are an integral
part of these financial statements
2
AUTEC ASSOCIATES, INC.
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
-------------------------------
2002 2001
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REVENUE
Net sales $ 33,529 $ 35,496
Cost of goods sold 9,031 16,879
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Gross Profit 24,498 18,617
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EXPENSES
General and administrative 12,003 9,249
Salaries 9,240 10,809
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Total Expenses 21,243 20,058
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INCOME (LOSS) FROM OPERATIONS 3,255 (1,441)
INCOME TAXES -- --
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NET INCOME (LOSS) $ 3,255 $ (1,441)
============ ============
BASIC INCOME (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
3
AUTEC ASSOCIATES, INC.
Statements of Stockholders' Equity
Common Stock Additional
----------------------- Paid-In Accumulated
Shares Amount Capital Deficit
---------- ---------- ---------- ----------
Balance December 31, 2000 12,500,000 $ 20,100 $ 24,298 $ (24,931)
Contributed capital -- -- 6,212 --
Net loss for the year ended
December 31, 2001 -- -- -- (9,904)
---------- ---------- ---------- ----------
Balance, December 31, 2001 12,500,000 20,100 30,510 (34,835)
Net income for the three months
ended March 31, 2002 (unaudited) -- -- -- 3,255
---------- ---------- ---------- ----------
Balance, March 31, 2002 (unaudited) 12,500,000 $ 20,100 $ 30,510 $ (31,580)
========== ========== ========== ==========
The accompanying notes are an integral
part of these financial statements
4
AUTEC ASSOCIATES, INC.
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
--------------------
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,255 $ (1,441)
Adjustments to reconcile net income (loss) to net cash used
by operating activities:
Depreciation 125 --
Changes in operating assets and liabilities:
Decrease in inventory -- 2,900
Decrease in accounts payable (30,259) (13,210)
Decrease in accrued expenses (52) (739)
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Net Cash (Used) by Operating Activities (26,931) (12,490)
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CASH FLOWS FROM INVESTING ACTIVITIES -- --
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CASH FLOWS FROM FINANCING ACTIVITIES -- --
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NET (DECREASE) IN CASH (26,931) (12,490)
CASH AT BEGINNING OF PERIOD 43,947 23,059
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CASH AT END OF PERIOD $ 17,016 $ 10,569
======== ========
CASH PAID FOR:
Interest $ -- $ --
Income taxes $ -- $ --
The accompanying notes are an integral
part of these financial statements
5
AUTEC ASSOCIATES, INC.
Notes to the Financial Statements
March 31, 2002 and 2001
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, 2001 Annual Report on Form 10-KSB.
Operating results for the three months ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the
year ending December 31, 2002.
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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's principal executive offices are located at 38 East Osceola
Street, Stuart, Florida 34994. Its telephone number is (561) 288-0666, its
facsimile number is (561) 220-8132, and its e-mail address is autec@hotmail.com.
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 year ended December 31, 2001 and the three-month
period ended March 31, 2002 were $210,965 and $33,529, respectively, resulting
primarily from the sale of its jewelry products. However, the Company realized
net income for the three-month period ended March 31, 2002 of $3,255 compared to
a net loss of $5,168 realized for fiscal year ended December 31, 2001.
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RESULTS OF OPERATION
Three-Month Period Ended March 31, 2002 Compared to Three-Month Period
Ended March 31, 2001
The Company realized net income of $3,255 for the three-month period ended
March 31, 2002 compared to a net loss of approximately $1,441 for the
three-month period ended March 31, 2001 (an increase of $1,814).
Net sales for the three-month periods ended March 31, 2002 and 2001 were
$33,529 and $35,496, respectively. Net sales decreased by approximately $1,967
or 6% for the three-month period ended March 31, 2002 as compared to the
three-month period ended March 31, 2001. The decrease in net sales during the
three-month period ended March 31, 2002 was primarily 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
revenue would be derived from changes in sales volume. Gross profit for the
three-month periods ended March 31, 2002 and 2001 amounted to $24,498 and
$18,617, respectively (a net increase of $5,881 or 32%). Although net sales
decreased during the three-month period ended March 31, 2002, the increase in
gross profit is a result of a decrease in cost of goods sold from $16,879
incurred during the three-month period ended March 31, 2001 to $9,031 incurred
during the three-month period ended March 31, 2002.
Total operating expenses of $21,243 were incurred during the three-month
period ended March 31, 2002 as compared to total operating expenses of $20,058
incurred during the three-month period ended March 31, 2001 (an increase of
$1,185 or 6%). Operating expenses consisted of general and administrative
expenses and salary expenses. General and administrative expenses during the
three-month periods ended March 31, 2002 and 2001 were $12,003 and $9,249,
respectively (an increase of $2,754). The increase in general and administrative
expenses during the three-month period ended March 31, 2002 was primarily due to
the Company incurring more costs associated with its inventory acquisition and
professional fees. Salary expenses during the three-month periods ended March
31, 2002 and 2001 were $9,240 and $10,809, respectively (a decrease of $1,569).
General and administrative expenses include general corporate overhead, shipping
and warehousing costs, selling expenses and professional fees.
Although operating expenses increased during the three-month period ended
March 31, 2002, the Company realized net income during the three-month period
ended March 31, 2002 as compared to a net loss realized during the three-month
period ended March 31, 2001. This was primarily due to the decrease in cost of
goods sold. The Company's net income during the three-month period ended March
31, 2002 was approximately $3,255 compared to a net loss of approximately
($1,441) during the three-month period ended March 31, 2001. The weighted
average of common shares outstanding were 12,500,000 for the three-month periods
ended March 31, 2002 and 2001, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company has only recently generated sufficient cash flow to partially
fund its operations and activities. The Company may experience a liquidity
crisis and be required to raise additional capital. 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. Management may raise additional capital through future
public or private offerings of its stock or through loans from private
investors, although there can be no assurance that the Company will be able to
obtain such financing. The Company's future success and viability are entirely
dependent upon the ability of the Company's current management to (i) strengthen
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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. Management is
optimistic that the Company will be successful in its capital raising efforts.
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 $24,498 and $70,517 in gross profit during the
three-month period ended March 31, 2002 and the fiscal year ended December 31,
2001, respectively.
As of March 31, 2002, the Company's current assets were $29,176 and its
current liabilities were $12,268, which resulted in a working capital surplus of
$16,908. As of the three-month period ended March 31, 2002, the Company's total
assets were $31,298 compared to total assets of $58,354 for fiscal year ended
December 31, 2001. This decrease in total assets from fiscal year ended 2001 was
due primarily to a decrease in cash.
As of the three-month period ended March 31, 2002, the Company's total
liabilities were $12,268 compared to total liabilities of $42,579 for fiscal
year ended December 31, 2001. This decrease in liabilities from fiscal year
ended 2001 was due primarily to a decrease in accounts due and owing by the
Company to $10,532 as of the three-month period ended March 31, 2002 from
$40,791 as of fiscal year ended December 31, 2001.
As of March 31, 2002, the Company's total assets exceeded its total
liabilities by $19,030.
The Company's stockholders' equity increased from $15,775 for fiscal year
ended December 31, 2001 to $19,030 for the three-month period ended March 31,
2002.
For the three-month period ended March 31, 2002, the net cash used by
operating activities was $26,931 compared to net cash used by operating
activities of $12,490 for the three-month period ended March 31, 2001 (an
increase of $14,441). During the three-month period ended March 31, 2002, net
cash used by operating activities was comprised mainly of $3,255 in net income
and $30,259 in accounts payable as compared to a net loss of $1,441 and $13,210
in accounts payable during the three-month period ended March 31, 2001.
During the three-month periods ended March 31, 2002 and 2001, cash flows
from investing activities was $-0-, respectively. During the three-month periods
ended March 31, 2002 and 2001, cash flows from financing activities was $-0-,
respectively.
MATERIAL COMMITMENTS/FUNDING
As of the date of this Quarterly Report, the Company does not have any
material commitments for fiscal year 2002.
Based upon a twelve-month plan proposed by management, it is anticipated
that the Company's operational work plan will require approximately $200,000 of
financing designed to fund the general business operations. As of the date of
this Quarterly Report, the Company does not have any material commitments nor
does management anticipate any material commitments within the next twelve
9
months. It is anticipated that any expenditures to be incurred by the Company
will be operational. Management anticipates that a substantial portion of the
initial budget of $200,000 for the twelve-month work plan, which includes such
expenditures, will be funded pursuant to revenues generated from the sale of the
Company's jewelry products, or pursuant to public or private offerings of its
debt or equity securities, or future advancements. The Company may not be able
to raise such funds and, therefore, the successful marketing of its products may
not be accomplished.
From the date of this Quarterly Report, management believes that the
Company can satisfy its cash requirements for approximately the next six months
based on its ability to generate revenues or obtain advances from certain
investors and related parties. In the event the Company is unable to generate
such cash, management believes that the Company can satisfy its cash
requirements for approximately the next three months from its liquid assets.
The Company does not own any plant and/or equipment. Management does not
anticipate any purchases of plant and/or significant equipment.
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.
10
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: May 13, 2002 By: /s/ Arthur Garrison
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Arthur Garrison,
President/ Principal
Financial Officer
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