U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended September 30, 2003
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from __________ to __________
Commission File Number 0-20642
AMERICAN CONSOLIDATED MANAGEMENT GROUP, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Utah 87-0375093
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
714 Fairview Road
Greer, South Carolina 29651
(Address of Principal Executive Offices)
(864) 848-1900
(Issuer's Telephone Number, Including Area Code)
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 issuer was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]
The number of shares outstanding of each of the issuer's classes of common
equity, as of September 30, 2003: 11,925,652 shares of common stock
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
American Consolidated Management Group, Inc
TABLE OF CONTENTS
PART I Page
Item 1 - Financial Information (unaudited)
American Consolidated Management Group, Inc.
Balance Sheet as of September 30, 2003 ............................. 4
Statements of Operations for the three month period ended
September 30, 2003 ............................................... 5
Statements of Cash Flows for the three month period ended
September 30, 2003 ............................................... 6
Notes to Financial Statements (unaudited)........................... 7-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations ................ 9
PART II
Item 1 - Legal Proceedings ............................................ 12
Item 2 - Changes in Securities and Use of Proceeds..................... 13
Item 3 - Defaults Upon Senior Securities............................... 13
Item 4 - Submission of Matters to a Vote of Security Holders........... 13
Item 6 - Exhibits and Reports on Form 8-K.............................. 13
Exhibit 99.1 ........................................................... 14
FORWARD LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING
STATEMENTS THAT INCLUDE THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES" OR
SIMILAR EXPRESSIONS. FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED
TO, THOSE ITEMS IDENTIFIED WITH THE ASTERISK (*) SYMBOL. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO
DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THE READER SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER
MATTERS REFERRED TO HEREIN, THE FACTORS SET FORTH UNDER THE CAPTION "RISK
FACTORS". THE COMPANY CAUTIONS THE READER, HOWEVER, THAT THESE FACTORS MAY NOT
BE EXHAUSTIVE.
PART I
Item 1- Financial Information (unaudited)
AMERICAN CONSOLIDATED MANAGEMENT GROUP, INC.
BALANCE SHEETS
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,008 $ 1,008
Marketable securities - -
------------- -------------
Total current assets 1,008 1,008
OTHER ASSETS
Note receivable 15,000 15,000
------------- -------------
$ 16,008 $ 16,008
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Payables and accrued expenses $ 323,527 $ 279,427
Related party payables 6,937,417 5,905,735
Other 65,000 65,000
------------- -------------
Total current liabilities 7,325,944 6,250,162
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
Common stock, $.01 par value, 70,000,000 shares
authorized; 11,925,653 and 69,998,900 shares
issued and outstanding, respectively 119,257 119,257
Capital in excess of par value 1,212,454 1,212,454
Accumulated deficit (8,641,647) (7,565,865)
------------- -------------
(7,309,936) (6,234,154)
------------- -------------
$ 16,008 $ 16,008
============= =============
The accompanying notes are an integral part of these financial statements.
AMERICAN CONSOLIDATED MANAGEMENT GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------- -------------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
REVENUE $ -- $ -- $ -- $ --
GENERAL AND ADMINISTRATIVE EXPENSES 11,485 132,627 42,182 213,005
---------------- ---------------- ---------------- ----------------
Loss from operations (11,485) (132,627) (42,182) (213,005)
---------------- ---------------- ---------------- ----------------
OTHER INCOME (EXPENSES)
Interest income
-- -- -- 56
Interest expense
(371,053) -- (1,035,496) (59,229)
Gain on sale of marketable securities
-- -- -- 41,158
Gain on extinguishment of debt
-- -- -- 171,583
Other income -- -- 1,896 --
---------------- ---------------- ---------------- ----------------
(371,053) -- (1,033,600) 153,568
---------------- ---------------- ---------------- ----------------
Loss before provision for
income taxes (382,538) (132,627) (1,075,782) (59,437)
PROVISION FOR INCOME TAXES -- -- -- --
---------------- ---------------- ---------------- ----------------
Net loss $ (382,538) $ (132,627) $ (1,075,782) $ (59,437)
================ ================ ================ ================
LOSS PER SHARE, basic and diluted $ (0.03) $ (0.01) $ (0.09) $ (0.01)
================ ================ ================ ================
WEIGHTED AVERAGE SHARES - basic and diluted 11,925,653 11,475,653 11,925,653 11,475,653
================ ================ ================ ================
The accompanying notes are an integral part of these financial statements.
AMERICAN CONSOLIDATED MANAGEMENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
-------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
------------- -------------
OPERATING ACTIVITIES
Net loss $ (1,075,782) $ (59,437)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities
Depreciation and amortization -- --
Gain on disposal of marketable securities -- (41,158)
Gain on extinguishment of debt -- (171,583)
Increase (decrease) in
Payables and accrued expenses 44,100 223,374
------------- -------------
Net cash provided by (used for) operating activities (1,031,682) (48,804)
------------- -------------
INVESTING ACTIVITIES
Proceeds from sale of marketable securities -- 47,830
Assumption of cash in share exchange agreement -- 1,000
------------- -------------
Net cash provided by investing activities -- 48,830
------------- -------------
FINANCING ACTIVITIES
Net proceeds from related party payables 1,031,682 --
Net increase in cash and cash equivalents -- 26
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,008 982
------------- -------------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 1,008 $ 1,008
============= =============
CASH PAID FOR:
Interest $ -- $ --
============= =============
Income taxes $ -- $ --
============= =============
The accompanying notes are an integral part of these financial statements.
AMERICAN CONSOLIDATED MANAGEMENT GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements of
American Consolidated Management Company, Inc. (the "Company") have been
prepared without audit. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows of the
Company as of the dates and for the periods presented herein have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted
pursuant to the Securities and Exchange Commission's rules and regulations.
These condensed financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's December 31, 2002 Annual Report on Form 10-KSB. The results of
operations for the three months and nine months ended September 30, 2003,
are not necessarily indicative of the operating results that may result for
the year ending December 31, 2003. The accounting policies followed by the
Company are set forth in Note 1 to the Company's financial statements in its
December 31, 2002 Annual Report on Form 10-KSB.
NOTE 2 -- ORGANIZATION
Effective September 13, 2002, as a result of a share exchange
agreement entered into in July 2001 between Renassiance Man, Inc., a Texas
corporation ("RMI") and American Consolidated Mining Company, Inc., the
Company changed its name from American Consolidated Mining Company, Inc. to
American Consolidated Management Group, Inc. ("ACMG") Following the
execution of the share exchange agreement, shareholders of RMI own 87
percent of the outstanding stock of the Company.
Immediately prior to the consummation of the transaction, the Company
effected a 100 to 1 reverse stock split. The transaction was accounted for
as a recapitalization of RMI with the issuance of shares for the net assets
of ACMG (reverse acquisition). Accordingly, no goodwill was recorded in the
transaction. As required in accounting for a reverse acquisition, all of
the equity of ACMG was eliminated and the accumulated deficit of RMI was
carried forward. The statement of operations for the year ended
December 31, 2002 include historical operations of the Company through
September 13, 2002 and the date of the recapitalization of the Company. The
activity of RMI before recapitalization is not presented in these financial
statements.
As part of this transaction, the Company also entered into a
settlement and release with Clifton Mining Company (Clifton). Under this
agreement, all mining claims and certain other assets, which carried an
aggregate book value at December 31, 2001 of $-0-, were exchanged for the
release of the Clifton obligation, which at December 31, 2001 was $93,808.
NOTE 2 - ORGANIZATION, CONTINUED
As of December 31, 2002, the Company had no ongoing operations. The
Company had negotiated, but has yet to execute an agreement that, if
executed, would grant the Company an exclusive fifty year license in a new
technology to manufacture, produce, and distribute a trade secret technology
developed; however, the Company would possess an exclusive license in the
United States and many other geographical areas. That technology bonds the
natural nutrients obtained from freeze dried fruits and vegetables to
proteins and other food and beverage products. The technology protects
consumable food products while it extends their longevity. The result is an
increase in the health value of the foods to the consumer.
The Company believes that with this exclusive license of this trade
secret technology it can seek and obtain financing from credit sources which
will enable it to develop and market this technology to customers in the
food service industry. The Company is currently involved in ongoing
negotiations with several food service providers, as well as credit sources,
and when and if certain contingencies are met by the Company, a contract, or
contracts, as well as financing, may follow. This product has been approved
by the Food and Drug Administration for labeling. The Company has
exclusivity with the technology as it related to its application to foods
and related products.
In September 2003, the Company issued 450,000 shares of stock to two
individuals as a closing bonus in recognition of their efforts in
consummating the share exchange with RMI. This transaction resulted in a
charge to income for $1,012,500, which has been recorded in 2002, (when the
share exchange agreement was effective).
On November 18, 2003 the Company entered into an agreement with
related parties of which the purpose is to enable the Company to acquire the
exclusive right to manufacture and market the trade secret technology and
related products. The significant provisions of this agreement include
the following:
* Two shareholders of the Company will contribute 700,000
shares of common stock of the Company to a related party company.
* The Company will pay $3,000,000 to the related party company
on or before May 31, 2004.
* The Company must then satisfy certain contingencies which
include successfully securing contracts for the sale of the trade
secret technology from two food service providers, securing
employment of a specific individual being sought by the Company,
and securing financing from one or more sources.
* Upon satisfying all of the above criteria, the related party
company will reduce its outstanding payable balance by $2,750,000
and will record the debt forgiveness. As of December 31, 2002,
the Company owed the related party $4,632,735.
NOTE 3 -- NET LOSS PER COMMON SHARE
Basic net loss per common share is computed on the basis of the
weighted average number of common shares outstanding in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per
Share. The treasury stock method is used to compute the effect of stock
options on the weighted average number of common shares outstanding for the
diluted method. Since the Company incurred a loss, the effect of stock
options on the treasury stock method is anti-dilutive.
NOTE 4 - GOING CONCERN
At December 31, 2002, in the Company's audited financial statements
the audit report included an explanatory paragraph, which raised substantial
doubt about the ability of the Company to continue as a going concern.
The Company negotiated, but has yet to execute an agreement that, if
executed, would grant the Company an exclusive fifty year license in a new
technology to manufacture, produce, and distribute a trade secret technology
developed, but not yet patented.
The Company believes that with this exclusive license of this trade
secret technology it can seek and obtain financing from credit sources which
will enable it to develop and market this technology to customers in the
food service industry. The Company is currently involved in ongoing
negotiations with several food service providers, as well as credit sources,
and when and if certain contingencies are met by the Company, a contract, or
contracts, as well as financing may follow.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The Company commenced operations in July, 2002 and to date is engaged
primarily in research and development. Accordingly, the Company has a limited
operating history, and faces all of the risks and uncertainties encountered by
companies with no ongoing operations. For the fiscal years ended December 31,
2002 and 2001, the Company incurred net losses of $2,086,055 and $10,495
respectively. The Company also incurred a net loss for the three months ending
September 30, 2003 in the amount of $382,538 as opposed to a loss of $132,627
for the same three month period in 2002. For the nine months ended September
30, 2003, the Company incurred a net loss of $1,075,782 as opposed to a loss of
$59,437 for the same nine month period in 2002. The Company anticipates having
a negative cash flow from operating activities in future quarters and years.
The Company also expects to incur further operating losses in future quarters
and years until such time, if ever, as there is a substantial increase in
orders for its products and product sales generating sufficient revenue to fund
its continuing operations. There can be no assurance that sales of its products
will ever generate significant revenue, that the Company will ever generate
positive cash flow from its operations or that it will attain or thereafter
sustain profitability in any future period.
The Company's trade secret technology products play a significant role
in its plans for future growth. The Company needs to market its trade secret
technology products on a timely basis to keep pace with technological
developments, emerging industry standards, and the anticipated needs of its
customers. The Company intends to extend the offerings of its product through
the food service industry. However, it may experience difficulties in marketing
these new products, and its inability to timely and cost-effectively introduce
them and future enhancements, or the failure of these new products or
enhancements to achieve market acceptance, could seriously harm its business.
The introduction of competing products that employ new technologies and
emerging industry standards could render its products and services obsolete and
unmarketable or shorten the life cycles of its products and services. The
emergence of new industry standards might require the Company to redesign its
products. If its products are not in compliance with industry standards that
become widespread, the Company's customers and potential customers may not
purchase its products.
Liquidity and Capital Resources.
The Company is engaged in development stage activities and had no operating
revenues and reported net losses for the three month period and the nine month
period ended September 30, 2003. During the quarter ended September 30, 2003,
total assets were unchanged at $16,008. The primary asset of the Company,
which is intangible, is its trade secret technology for application in food
related processes to provide the nutritional equivalent of 3-5 servings of
fruits and vegetables to the food(s) to which applied. Several prestigious
food service companies have evaluated the technology, and are deciding if it is
ready for commercialization and implementation in their products. The Company
expects a contract or contracts in the future. Failure to receive a contract
or contracts could be fatal to the Company.
The Company had negotiated, but has yet to execute an agreement that, if
executed, would grant the Company an exclusive fifty (50) year license in a new
technology to manufacture, produce, and distribute a trade secret technology
("trade secret technology") developed, but not yet patented. The company that
would grant the license shall retain ownership of the technology; however, the
Company would possess an exclusive license in the United States. That
technology bonds the natural nutrients obtained from freeze dried fruits and
vegetables to proteins and other food and beverage products. The technology
protects consumable food products while it extends their longevity. The result
is an increase in the health value of the foods to the consumer.
The Company believes that with this exclusive license of this trade
secret technology it can seek and obtain financing from capital and credit
sources which will enable it to develop and market this technology to customers
in the food service industry. The Company is currently involved in ongoing
negotiations with several food service providers, as well as capital and credit
sources, and when, and if, certain contingencies are met by the Company, a
contract, or contracts, as well as financing, may follow.
The Company protects the technology as Trade Secrets under Intellectual
Property Law. The inventor of the process and the technology has applied for a
patent of the process. Effectively, the Company maintains unique control over
the information that will enable it to commercialize and exploit the trade
secret technology and processes more efficiently than any other party.
Working Capital Meeting Operating Needs and Commitments
Due to the length of time with no ongoing operations, liquidity
has always been a continuing concern. The Company has assumed liabilities
and incurred net losses from its inception in 2002 through September 30, 2003,
of approximately $7,325,944. These factors, among others, may indicate that
the Company will be unable to continue in existence. The financial statements
do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classification
of liabilities that might be necessary should the Company be unable to
continue in existence. The Company's continuation in existence is dependent
upon its ability to generate sufficient cash flow to meet its continuing
obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain successful operations. For the nine months
ending September 30, 2003, the Company received funding sufficient to remain in
existence from an operating line from a related party, which is subject to
repayment. Management believes that the negotiations with major food service
providers and the potential for contracts with the same are possible and have
the potential to generate significant income using the trade secret technology
and its applications. Failure to secure such contract or contracts could be
fatal to the Company.
The Company intends to be the catalyst for this revolutionary change in
the food and food service industry. The Company is not a major player in the
food service industry and its financial condition does not promote confidence
in its perceived ability to see the implementation of the trade secret
technology through to a successful conclusion.
The Company's future plans call for expanding its technology into other
fields, including pharmacology and health care. There are no guarantees that
the Company will have any success in these or any other future endeavors.
The Company had no operating revenues and has reported net
losses. The Company has planned operations, but the Company has received no
revenue therefrom. The net loss for the three months ended September 30, 2003,
was $382,538 compared with $132,627 for the corresponding period in 2002. For
the nine months ended September 30, 2003, the Company incurred a net loss of
$1,075,782 as compared to $59,437 for the corresponding period in 2002.
Competition
The Company believes that it does not currently have any competition
with a product the same as the trade secret technology.
The Company expects that to the extent the market for any of its
products develops, competition will intensify and new competitors will enter
the market. There can be no assurance that the Company will be able to compete
successfully against existing and new competitors as the market for its
products evolves and the level of competition increases. A failure to compete
successfully against existing and new competitors would have a materially
adverse effect upon its business and results of operations.
Controls and Procedures
The Company's chief executive officer and its chief financial officer,
after evaluating its "disclosure controls and procedures" (as defined in
Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-
15(e)) have concluded that as of the end of the period covered by this
Quarterly Report on Form 10-QSB, its disclosure controls and procedures are
effective to ensure that information the Company is required to disclose in
reports that the Company files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.
RISK FACTORS
An investment in the Company's Common Stock involves risks, and you
should consider these risks before making a decision to invest in the Company's
Common Stock. PROSPECTIVE PURCHASERS OF THE COMPANY'S COMMON STOCK MUST BE
PREPARED FOR THE POSSIBLE LOSS OF THEIR ENTIRE INVESTMENT. The order in which
the following risks factors are presented is arbitrary, and you should not
conclude, because of the order of presentation, that one risk factor is more
significant than another risk factor.
THE COMPANY'S INDEPENDENT AUDITORS HAVE INCLUDED A "GOING CONCERN"
EMPHASIS OF A MATTER IN THEIR REPORT ON THE COMPANY'S 2002 AUDITED FINANCIAL
STATEMENTS REFERENCED IN THIS QUARTERLY REPORT.
The Company maintains that its liquidity will improve marginally with
improved earnings, but will not be sufficient to allow it to expand its
operations to any significant degree. The Company has adopted a plan to raise
additional capital through an offering of shares of the Company's common stock
but has not implemented that plan to any significant extent.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
See Item 3 of the Company's Form 10-KSB for the year ended December 31,
2002, concerning legal proceedings.
No director, officer, or affiliate of the Company, or any associate of
any of them, is a party to, or has a material interest in any proceeding
adverse to us.
Item 2 - Changes in Securities and Use of Proceeds
The total number of shares of Common Stock issued and outstanding as of
September 30, 2003 was 11,925,652.
Item 3 - Default Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
Not applicable
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
AMERICAN CONSOLIDATED
MANAGEMENT GROUP, INC.
Date: February 27, 2004 By: /s/ HERSCHEL J. WALKER
-------------------------------------
Herschel J. Walker, President and CEO
Exhibit 99.1
CERTIFICATION OF PRINCIPAL EXECUTIVE, ACCOUNTING AND FINANCIAL OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of American Consolidated Management
Group, Inc. (the "Company") on Form 10-QSB for the period ended September 30,
2003, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Herschel J. Walker, President of the Company, hereby certify
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ HERSCHEL J. WALKER
- -------------------------
Herschel J. Walker
President and CEO
March 1, 2004