UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTER PERIOD ENDED MARCH 31, 2001
OR
[ ] 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 0-26943
AMERICAN INFLATABLES, INC.
--------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4695878
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
947 NEWHALL STREET, COSTA MESA, CA 92627
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 949-515-1776
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR
VALUE $.01 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [X] No[ ]
As of May 15, 2001, there were 8,621,346 shares of the Registrant's common
stock, $.01 par value per share, issued and outstanding.
PAGE
PART I FINANCIAL INFORMATION................................. 2
Item 1. Financial Statements (Unaudited)...................... 3
Balance Sheet......................................... 3
Statement of Operations for the Three Months
Ended March 31, 2001 and 2000....................... 4
Statement of Cash Flows For the Three Months
Ended March 31, 2001 and 2000....................... 5
Notes to Financial Statements
as of March 31, 2001................................ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 11
PART II OTHER INFORMATION..................................... 13
Item 1: Legal Proceedings..................................... 13
Item 2: Changes in Securities................................. 13
Item 3: Defaults Upon Senior Securities....................... 13
Item 4: Submission of Matters to a Vote of Security Holders... 13
Item 5: Other Information..................................... 13
Item 6(a): Exhibits.............................................. 13
Item 6(b): Reports on Form 8.K................................... 13
SIGNATURES....................................................... 14
1
PART I - FINANCIAL INFORMATION
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This Form 10-QSB/A1 contains forward-looking statements within the meaning of
the safe harbor" provisions under Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We use
forward-looking statements in our description of our plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may," "expects," "believes,"
"anticipates," "intends," "projects," or similar terms, variations of such terms
or the negative of such terms. These forward-looking statements are based on
management's current expectations and are subject to factors and uncertainties,
which could cause actual results to differ materially from those, described in
such forward-looking statements. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained in this Form 10-QSB/A1 to reflect any change in our
expectations or any changes in events, conditions or circumstances on which any
forward-looking statement is based. Factors, which could cause such results to
differ materially from those described in the forward-looking statements, and
elsewhere in, or incorporated by reference into this Form 10-QSB/A1.
2
ITEM 1 Financial Statements
AMERICAN INFLATABLES, INC.
BALANCE SHEET
MARCH 31, December 31,
2001 2000
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash ............................................$ 8,200 $ 3,900
Accounts Receivable............................. 19,400 -0-
Inventory........................................ 10,800 10,800
Prepaid expenses and other current assets........ 51,800 50,400
--------- ---------
Total current assets....................... 90,200 65,100
Fixed assets
Display and promotional blimps, net.............. 15,200 16,600
Computers, furniture and office equipment, net... 34,300 36,900
Leasehold improvements, net..........................55,400 57,000
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Total fixed assets.......................... 104,900 110,500
Deposits........................................... 15,400 13,400
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Total assets...............................$ 210,500 $ 189,000
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable....................................$ 330,000 $ 330,000
Accounts payable................................. 62,200 77,700
Accrued payroll liabilities...................... 160,660 162,300
Accrued liabilities.............................. 49,000 6,100
Due to related party............................. 48,600 43,600
--------- ---------
Total current liabilities.................. 650,400 619,700
Stockholders' equity
Common stock..................................... 86,000 86,000
Additional paid in capital....................... 3,154,100 3,154,100
Note receivable.................................. (250,000) (250,000)
Accumulated deficit............................. (3,430,000) (3,420,800)
--------- ---------
Total stockholders' equity (deficit)....... (439,900) (430,700)
--------- ---------
Total liabilities and
stockholders' (deficit) equity $ 210,500 $ 189,000
========= =========
See accompanying notes to financial statements
3
AMERICAN INFLATABLES, INC.
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31,
2001 2000
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(UNAUDITED) (UNAUDITED)
Revenues.........................................$ 508,500 $ 441,100
Cost of goods sold.......................... 230,000 198,600
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Gross profit..................................... 278,500 242,500
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Administrative expenses
Depreciation and amortization............... 5,600 5,300
Legal and accounting........................ 19,700 13,800
Office expense.............................. 73,800 54,300
Salaries and payroll expenses............... 51,600 67,700
Marketing................................... 75,900 85,100
Travel & entertainment...................... 61,100 21,000
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Total.................................. 287,700 247,200
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Net loss ..........................$ (9,200) $ (4,700)
========== ==========
Loss per share..............................$ (0.00) $ (0.00)
========== ==========
Weighted average shares..................... 8,621,000 4,565,000
========== ==========
See accompanying notes to financial statements
4
AMERICAN INFLATABLES, INC.
STATEMENTS OF CASH FLOWS
QUARTER ENDED MARCH 31,
2001 2000
----------- -----------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)............................... $ (9,200) $ (4,700)
Adjustments to Reconcile
Net Income (Loss) to Net Cash Provided
By (Used In) Operating Activities
Depreciation and amortization................... 5,600 5,300
(Increase) Decrease in:
Accounts receivable............................ (19,400) -0-
Prepaid expense and other assets................ (1,400) 62,300
Inventory....................................... -0- 6,800
Deposits........................................ (2,000) -0-
Increase (Decrease) in:
Accounts payable............................... (15,500) 10,800
Accrued expenses............................... (41,200) 11,800
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES........... (700) (91,100)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment/leaseholds................ -0- (10,600)
Advances to/from related party.................. (5,000) (4,000)
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NET CASH USED IN INVESTMENT ACTIVITIES.......... 5,000 (14,600)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common stock........................ -0- 115,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES....... -0- 115,000
----------- -----------
NET INCREASE (DECREASE) IN CASH................. 4,300 9,300
CASH AT BEGINNING OF PERIOD..................... 3,900 900
----------- -----------
CASH AT END OF PERIOD........................... $ 8,200 $ 10,200
=========== ===========
See accompanying notes to financial statements
5
Notes to Financial Statements (Unaudited)
Note A. BASIS OF PRESENTATION
The unaudited financial statements of American Inflatables, Inc. at March 31,
2001 and for the three month periods ended March 31,2001 and 2000 have been
prepared by the Company in accordance with generally accepted accounting
principles pursuant to Regulation SB of the Securities and Exchange Commission.
Certain information and footnote disclosures required by generally accepted
accounting principles have been condensed or omitted. However, in the opinion of
management, all adjustments necessary, including normal recurring adjustments,
for the financial statements not to be misleading have been made. These interim
statements should be read in conjunction with the financial statements and notes
thereto for the year ended December 31,2000.
Note B. Note Payable
The note payable of $330,000 and accrued interest thereon of $8,500 was due in
May 2001. The note and accrued interest has not been paid and is in default. The
holder of this note has demanded payment.
10
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company has authorized 20,000,000 shares of $0.01 par value common stock. As
of March 31, 2001 there were 8,594,798 shares issued and outstanding.
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
RESULTS OF OPERATIONS. Net sales were $508,550 for the three months ended March
31, 2001, an increase of $67,400 or 15% compared to net sales of $441,000 for
the three months ended March 31, 2000. The increase in sales is due to the
Company increasing its customer base. Sales for the Company continue to grow at
an increasing rate not just from repeat customers but from new customers. The
Company continues to increase its presence and exposure in the advertising
markets through increased attendance at trade shows and other advertising
mediums that provide greater exposure.
Gross margin as a percentage of sales for the three months ended March 31, 2001
was 55%, which was the same as for the three months ended March 31, 2000. The
Company earned $278,500 in gross during the three months ended March 31, 2001.
The increase in net sales contributed to the increase in gross margin. The
Company through its use of higher quality materials for production, decreased
replacements and warranty coverage and provides a stronger product for sale to
the customer. During Fiscal 2000 and the first quarter of 2001 the Company
increased production and manufacturing staff, in order to increase sales,
enabling the Company to fully utilize its production staff to increase gross
margins. This is evident by the Company's continuing ability to increase its
sales and maintain a production facility that keeps up with this growth.
Legal and accounting costs increased $5,900 or 43% in the first quarter of 2001
compared to the same period in 2000, primarily as a result of fees associated
with the Company's proposed acquisition by National Paintball Supply Co., Inc.
Office expense increased $19,500 or 36% in the first quarter of 2001 compared to
the same period in 2000 as a result of the Company's increased infrastructure
needed to support growth and its proposed merger.
Payroll costs decreased $16,100 or 24% in the first quarter of 2001 compared to
the first quarter of 2000 due to a more stable work force in 2001, which is more
efficient and resulted in less training time for new employees.
Marketing costs decreased $9,200 or 11% during the first quarter of 2001
compared to the same period in 2000 as a result of the Company's more focused
approach to its target market.
Travel and entertainment costs increased $40,100 or 191% in the first quarter of
2001 compared to the first quarter of 2000 as a result of the Company sending
more representatives to trade shows and attending trade shows more distant from
its offices.
11
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had cash and cash equivalents of $8,200, an
increase of $4,300 from $3,900 at December 31, 2000.
Cash used in operating activities was $700 during the quarter ended March 31,
2001. Use of cash in operating activities consisted mainly of the net loss for
the three month period of $9,200, the offsetting effects of depreciation and
amortization of $5,600, and fluctuations in certain assets and liabilities.
To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk. Cash has
been, and the Company contemplates that it will continue to be, used for general
operating purposes.
From time to time, the Company may evaluate potential acquisitions of products,
businesses, and technologies that may complement or expand the Company's
business. Any such transactions consummated may use a portion of the Company's
working capital and/or require the issuance of equity or debt.
The Company believes that its current cash and cash equivalent balance along
with the additional financing is insufficient to meet its working capital
expenditures through the near term and will require the Company in seeking
additional capital and/or equity. The Company is currently exploring various
financing and credit facilities and is in the process of being acquired by
National Paintball Supply Co., Inc.
RECENT ACCOUNTING PRONOUNCEMENTS
During 2000 the Emerging Issues Task Force issued EITF 00-10 "Accounting for
Shipping and Handling Fees abd Costs" and EITF 00-14 "Accounting for Certain
Sales Incentives." Both of these require implementation during the second
quarter of 2001. The Company does not believe the implementation of either of
these pronouncements will have a material effect on its financial statements.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 137 defers for one year the effective
date of SFAS 133. The rule will now apply to all fiscal quarters o0f all fiscal
years beginning after June 15, 2000. Management does not anticipate the adoption
of the new statement will have an effect on the results of operations or the
financial position of the Company.
In July 2001 the FASB issued SFAS 141, "Business Combinations" and SFAS 142,
"Goodwill and Other Intangible Assets." SFAS 141 requires that the purchase
method of accounting be used to account for all business combinations entered
into after June 30,2001. SFAS 142 requires that goodwill and other intangible
assets with indefinite lives be tested for impairment annually and not be
subjected to amortization. The provisions of SFAS 142 will apply to the Company
beginning January 1,2002. The implementation of these pronouncements will not
have a significant effect of The Company's financial statements.
12
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is currently a
party or to which the property of the Company is subject.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
a) Exhibits
b) Reports on Form 8-K
None.
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: October 31, 2001 By: /s/ Gregg Mulholland
---------------------------
Gregg Mulholland
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: October 31, 2001 By: /s/ Gregg Mulholland
---------------------------
Gregg Mulholland
Chairman of the Board
Chief Executive Officer
Date: October 31,2001 By: /s/ Jeffrey Jacobsen
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Jeffrey Jacobsen
Chief Operating Officer
Director
Date: October 31, 2001 By: /s/ David Ariss
---------------------------
David Ariss
Director
14