UNITED STATES
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: JUNE 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: 000-26627
COMMAND INTERNATIONAL CORPORATION
(Exact name of small business issuer as specified in its charter)
- --------------------------------------------------------------------------------
DELAWARE 13-4031359
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1090 KING GEORGE'S POST ROAD, SUITE 802
EDISON, NEW JERSEY 08837
----------------------------------------
(Address of principal executive offices)
(732) 738-6500
---------------------------
(Issuer's telephone number)
ALGIERS RESOURCES, INC.
317 MADISON AVENUE, SUITE 2310
NEW YORK, NY 10017
---------------------------------------------------------------
(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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: There were a total of 12,051,976
shares of the registrant's common stock, par value $.001 per share, outstanding
as of August 14, 2003.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
- INDEX -
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - June 30, 2003 (Unaudited)
Condensed Consolidated Statements of Operations (Unaudited) -
for the Six Months and Three Months Ended June 30, 2003 and 2002
Condensed Consolidated Statements of Cash Flows (Unaudited) -
for the Six Months Ended June 30, 2003 and 2002
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 2. Change in Securities - Recent Sales of Unregistered Securities
Item 6 Exhibits and Reports on Form 8-K
SIGNATURE
EXHIBIT 31
EXHIBIT 32
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Financial Statements
Balance Sheet as of June 30, 2003
Statements of Operations for the Six and Three Months Ended
June 30, 2003 and 2002
Statements of Cash Flows for the Six Months Ended
June 30, 2003 and 2002
Notes to Condensed Consolidated Financial Statements
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(UNAUDITED)
ASSETS
2003
-----------------
Current Assets:
Cash and cash equivalents $ 37,920
Accounts receivable, net 162,015
-----------------
Total Current Assets 199,935
-----------------
Fixed assets, net of depreciation 27,986
-----------------
Other Assets:
Intangible assets - goodwill, net of impairment 782,800
-----------------
TOTAL ASSETS $ 1,010,721
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current Liabilities:
Notes payable - banks $ 5,000
Taxes payable 143,626
Deferred revenue 56,119
Accounts payable and accrued expenses 350,765
-----------------
Total Current Liabilities 555,510
-----------------
Officers loans payable 489,340
-----------------
Total Liabilities 1,044,850
-----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 shares
issued and outstanding --
Common stock, $.001 Par Value; 40,000,000 shares authorized
12,051,976 shares issued and outstanding 12,051
Additional paid-in capital --
Retained earnings (deficit) (46,180)
-----------------
Total Stockholders' Equity (Deficit) (34,129)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,010,721
=================
The accompanying notes are an integral part of the consolidated financial
statements.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
------------------- ------------------
CASH FLOW FROM OPERATING ACTIVIITES
Net income (loss) $ (80,058) $ 70,390
------------------- -------------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization 13,991 17,873
(Gain) on sale of automobile -- (2,911)
(Gain) on purchase -- (122,816)
Common stock issued for services 250 --
CHANGES IN ASSETS AND LIABILITIES
(Increase) in accounts receivable 7,807 13,150
Increase (decrease) in deferred revenue (3,904) (1,468)
(Decrease) in accounts payable and
accrued expenses 119,067 1,251
------------------- -------------------
Total adjustments 137,211 (94,921)
------------------- -------------------
Net cash provided by (used in) operating activities 57,153 (24,531)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITES
Loans from officer, net (18,011) (24,987)
Proceeds (repayment) of line of credit, net (25,000) 10,000
------------------- -------------------
Net cash (used in) financing activities (43,011) (14,987)
------------------- -------------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 14,142 (39,518)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 23,778 66,453
------------------- -------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 37,920 $ 26,935
=================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest expense $ 470 $ 832
=================== ===================
The accompanying notes are an integral part of the consolidated financial
statements.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
------------- -------------
SUPPLEMENTAL DISCLOSURE OF NONCASH
ACTIVITIES:
Net effect of merger between Spiderfuel and Command Internet
Common stock $ -- $ (1,605)
Additional paid in capital -- (1,802,324)
Deficit -- 2,293,929
Note payable -- (240,000)
Other loans payable -- (250,000)
------------- -------------
$ -- $ --
============= =============
Net effect of merger between CLC and CIGI
Common stock $ -- $ (25,000)
Additional paid in capital -- (184,264)
Deficit -- 81,647
Fixed assets -- 16,982
Other receivable -- 93
Security deposits -- 1,343
Accounts payable -- (13,617)
------------- -------------
Extraordinary item - gain on purchase $ -- $ (122,816)
============= =============
Net effect of merger between Command International Corporation and CIGI
Common stock $ 12,051 $ --
Additional paid in capital -- --
Deficit (22,598) --
Accounts payable 10,547 --
------------- -------------
$ -- $ --
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
----------------------------- -----------------------------
OPERATING REVENUES
Sales $ 404,477 $ 400,694 $ 212,492 $ 132,959
OPERATING EXPENSES
Salaries, commissions and payroll related expenses 353,557 343,683 190,168 138,963
Production expense 1,881 1,505 1,350 740
Rent 24,542 46,345 9,820 21,123
Travel and automobile expenses 1,554 3,145 618 1,424
Telephone 8,449 6,955 4,388 2,447
Advertising and promotion 642 4,319 35 4,249
Office and administrative 61,747 12,238 36,657 15
Insurance 1,283 1,896 1,034 901
Professional fees 16,063 15,788 9,906 9,734
---------------------------- ----------------------------
Total Operating Expenses 469,718 435,874 253,976 179,596
---------------------------- ----------------------------
LOSS BEFORE OTHER INCOME (EXPENSE) (65,241) (35,180) (41,484) (46,637)
OTHER INCOME (EXPENSE)
Depreciation and amortization (13,991) (17,873) (6,995) (8,148)
Gain on purchase -- 122,816 -- 122,816
Gain on sale of automobile -- 2,911 -- 2,911
Interest income 5 28 2 5
Interest expense (831) (1,673) (361) (841)
---------------------------- ----------------------------
Total Other Income (Expense) (14,817) 106,209 (7,354) 116,743
---------------------------- ----------------------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES $ (80,058) $ 71,029 $ (48,838) $ 70,106
Provision for Income Taxes -- (639) -- --
---------------------------- ----------------------------
NET LOSS APPLICABLE TO COMMON SHARES $ (80,058) $ 70,390 $ (48,838) $ 70,106
============================ ============================
NET LOSS PER BASIC AND DILUTED SHARES $ (0.01101) $ 46.95797 $ (0.00405) $ 46.76851
============================ ============================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,272,500 1,499 12,051,976 1,499
================================ ============================
The accompanying notes are an integral part of the consolidated financial
statements.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The condensed consolidated unaudited interim financial
statements included herein have been prepared without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. The condensed consolidated financial
statements and notes are presented as permitted on Form 10-QSB
and do not contain information included in the Company's
annual consolidated financial statements and notes. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated
financial statements be read in conjunction with the December
31, 2002 audited financial statements of Algiers Resources,
Inc. and the accompanying notes thereto. While management
believes the procedures followed in preparing these condensed
consolidated financial statements are reasonable, the accuracy
of the amounts are in some respects dependent upon the facts
that will exist, and procedures that will be accomplished by
the Company later in the year.
Spiderfuel, was originally incorporated in the State of
Delaware on February 13, 1997 under the name of Global
Internet Group, Inc. Global Internet Group, Inc. officially
changed its name to PlanetWebcom.com on November 2, 1999, and
on November 21, 2000, to Spiderfuel, Inc. ("Spiderfuel").
On May 21, 2002, Command Internet Corp. ("CIC") was formed. On
May 22, 2002, CIC entered into an Asset Purchase Agreement
with Spiderfuel to acquire the assets and assume a portion of
the liabilities of Spiderfuel for 1,334 shares of CIC common
stock. (See Note 12). For purposes of these financial
statements, CIC is synonymous with Spiderfuel post merger.
Subsequently, on June 3, 2002, CIC entered into a Stock
Purchase Agreement with Command International Group, Inc.
("CIGI"), whereby the companies entered into a share exchange
agreement, thus CIC became a wholly owned subsidiary of CIGI
(See Note 14).
Spiderfuel is a provider of web-based software and
implementation services. Spiderfuel helps companies use
technologies, like the Internet, to build closer customer
relationships, increase their revenues and reduce their
operating expenses. Spiderfuel's completely integrated
applications suite helps mid-sized businesses run their
growing businesses more efficiently.
Command Line Corp. ("CLC") was formed on January 8, 1985 as a
New Jersey corporation licensed to do business in many states.
CLC markets interactive systems used in manufacturing,
purchasing and, maritime management. CLC specializes in
modifying existing application software to fit a customer's
unique business needs. All
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
of CLC's products can be run on either a PC network or in a
Web environment. On May 29, 2002, CLC entered into a Stock
Purchase Agreement with CIGI, whereby CLC received 165 shares
of CIGI common stock in exchange for its shares of common
stock, thus CLC became a wholly owned subsidiary of CIGI (See
Note 13).
Command International Acquisition Corporation, a Delaware
corporation formed on June 26, 2002 ("CIAC"), entered into an
Agreement and Plan of Reorganization dated as of July 1, 2002,
as amended as of February 24, 2003 with CIGI and stockholders
of CIGI, whereby CIAC was given the right to acquire all of
the issued and outstanding common stock of CIGI in exchange
for shares of common stock of CIAC.
Algiers Resources, Inc., a Delaware corporation ("Algiers")
was formed on October 6, 1998, as a blind pool. On May 8,
2003, pursuant to an Agreement and Plan of Merger dated as of
March 20, 2003 (the "Merger Agreement"), CIAC merged (the
"Merger") with and into Algiers Merger Co., a Delaware
corporation and wholly-owned subsidiary of Algiers ("Algiers
Merger Co."), with Algiers Merger Co. continuing as the
surviving entity. As a result of the Merger, Algiers Merger
Co. changed its corporate name to Command International
Corporation and each issued and outstanding share of common
stock, par value $0.001 per share, of CIAC was converted into
one share of common stock, par value $0.001 per share of
Algiers. Accordingly, stockholders of CIAC received an
aggregate of 5,239,238 shares of common stock of Algiers. In
addition, pursuant to the Merger, the former president of
Algiers retired 1,272,500 shares of common stock of Algiers.
In connection with the Merger Agreement and pursuant to the
Assignment and Assumption Agreement dated as of March 20,
2003, by and between CIAC and Algiers, CIAC assigned to
Algiers all of its right, title and interest, subject to any
and all liabilities in connection therewith, to acquire 1,500
shares of common stock of CIGI, constituting all of the issued
and outstanding common stock of CIGI, in (a tax-free) exchange
for 5,239,238 shares of common stock of the Algiers under the
CIGI Agreement. In accordance therewith, on April 26, 2003,
Algiers deposited in escrow with Snow Becker Krauss P.C.,
5,239,238 shares of its common stock for issuance to
stockholders of CIGI upon the closing of the CIGI Agreement.
On July 7, 2003, Command International Corporation (f/k/a
Algiers Merger Co.) merged with and into Algiers, with Algiers
continuing as the surviving entity and changed its name from
Algiers Resources, Inc. to Command International Corporation
(the "Company").
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the
accounts of CIC and CLC. All significant intercompany accounts
and transactions have been eliminated in the consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures 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.
REVENUE RECOGNITION
Revenue is recognized under the accrual method of accounting
whereby revenue is recognized as the contracts enter different
phases of completion. Contracts may have different phases
until they are fully completed, and management records revenue
on these contracts as each phase is completed and installed.
Typical contracts take anywhere from six to nine months to
complete. All costs incurred in servicing these contracts are
expensed as incurred.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three
months or less to be cash equivalents.
The Company maintains cash and cash equivalent balances at
financial institutions which are insured by the Federal
Deposit Insurance Corporation up to $100,000.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation is computed
primarily using the straight-line method over the estimated
useful life of the assets.
Machinery and equipment 3-5 Years
Furniture and fixtures 5-7 Years
Automobile 5 Years
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income taxes are computed on the pretax income, offset by
pre-existing net operating losses, based on the current tax
law. Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and
statutory tax rates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the condensed consolidated
balance sheet for cash and cash equivalents, accounts
receivable, accounts payable and loans payable approximate
fair value because of the immediate or short-term maturity of
these financial instruments.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Historical net income (loss) per common share is computed
using the weighted average number of common shares
outstanding. Diluted earnings per share (EPS) includes
additional dilution from common stock equivalents, such as
stock issuable pursuant to the exercise of stock options and
warrants. Common stock equivalents were not included in the
computation of diluted earnings per share at June 30, 2003
when the Company reported a loss because to do so would be
anti-dilutive for periods presented.
The following is a reconciliation of the computation for basic
and diluted EPS:
June 30, June 30,
2003 2002
----------- -----------
Net Income (Loss) ($ 80,058) $ 70,390
----------- -----------
Weighted-average common shares
outstanding (Basic) 7,272,500 1,499
Weighted-average common stock equivalents:
Stock options -- --
Warrants -- --
----------- -----------
Weighted-average common shares
outstanding (Diluted) 7,272,500 1,499
=========== ===========
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
Costs of advertising and promotion are expensed as incurred.
Advertising costs were $642 and $4,319 for the six months
ended June 30, 2003 and 2002.
ACCOUNTS RECEIVABLE
CIC has established a reserve for doubtful accounts for
contracts entered into that have the potential of not being
completed due to circumstances out of the control of CIC. The
allowance for doubtful accounts is adjusted by management of
CIC on a regular basis. At June 30, 2003, the allowance for
doubtful accounts was $64,198.
DEFERRED REVENUE
Deferred revenue represents the portion of the contracts that
will be realized in the subsequent reporting period. Deferred
revenue at June 30, 2003 was $56,119.
INTANGIBLE ASSETS
Intangible assets were stated at cost. Amortization was
computed using the straight-line method over fifteen years.
Amortization expense for the year ended December 31, 2001 was
$75,000. Additionally, in 2001, Spiderfuel determined that the
intangible assets that were acquired have been impaired
according to FASB 142, "Goodwill and Other Intangible Assets".
Originally, the intangible assets were recorded by management
at $2 per share for the 750,000 shares given to The Strategy
Factory, Inc. After one full year of operations, Spiderfuel,
impaired the remaining unamortized balance to just over $1 per
share at $782,800. As such, Spiderfuel recorded a one-time
charge to operations in the amount of $608,870 as impairment
of intangible assets in 2001. There was no further impairment
on these intangible assets for the six months ended June 30,
2003 and 2002.
GOODWILL
In the Asset Purchase Agreement between Spiderfuel and CIC,
the fair value of the assets acquired approximated the fair
value of the liabilities assumed by CIC. Therefore, no
goodwill was recorded in the transaction. This transaction did
impact the condensed consolidated financial statements for the
six months ended June 30, 2002.
In the Stock Purchase Agreement between CLC and CIGI, the fair
value of the assets acquired and liabilities assumed by CIGI
resulted in a negative goodwill amount of $141,234. After
applying the negative goodwill amount to fixed assets
($16,982), other receivables ($93), and security deposits
($1,343), the net effect was an extraordinary item for the
gain on purchase of $122,816, which is reflected in the
consolidated statements of operations in 2002. This
transaction did impact the condensed consolidated financial
statements for the six months ended June 30, 2002.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL (CONTINUED)
In the Stock Purchase Agreement between CIC and CIGI,
virtually no change in value occurred due to the transactions
being only two weeks apart, with the fair values unchanged,
and the stock issued to CIC was for the identical number of
shares and par value. Therefore, no goodwill was recorded.
This transaction did impact the condensed consolidated
financial statements for the six months ended June 30, 2002.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the FASB issued Statement No. 142 "Goodwill and
Other Intangible Assets". This Statement addresses financial
accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are
acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted
for in financial statements upon their acquisition. This
Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. This statement has
been considered when determining impairment of intangible
assets in certain transactions.
NOTE 3 - OFFICERS LOANS PAYABLE
The CIC loans represent advances to and from its President.
These loans are interest-free, and not anticipated to be paid
in the next year, and therefore are reflected as long-term
liabilities. The balances due such officer at June 30, 2003
was $489,340.
NOTE 4- OTHER LOANS PAYABLE
Represents amounts due to third parties, unrelated to
Spiderfuel. Amounts were utilized to provide software
implementation for various projects started by Spiderfuel.
These loans were non-interest bearing, had no determined due
date, and Spiderfuel's management had determined its
classification to be long-term. These other loans at June 30,
2002 were not part of CIC due to the fact that they remained
with Spiderfuel and were not assumed by CIC at the time of the
Asset Purchase between CIC and Spiderfuel on May 22, 2002.
These liabilities remain with Spiderfuel and are anticipated
to be paid by that company.
NOTE 5 - LINE OF CREDIT
CLC has lines of credit with two banks. Under each line of
credit the maximum borrowing amount is $50,000 each. Only one
of these lines of credit was borrowed against. This line of
credit had a current interest rate of 5.75% at June 30, 2003.
The outstanding balance at June 30, 2003 was $5,000. The
interest expense on this line of credit was $470 and $832 for
the six months ended June 30, 2003 and 2002, respectively.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 6- NOTES PAYABLE
Spiderfuel had entered into various promissory notes and
receivable lines with individuals. These were short-term
agreements, and interest had been accrued for at March 31,
2002. These notes remained with Spiderfuel and were not
assumed by CIC at the time of the Asset Purchase between CIC
and Spiderfuel on May 22, 2002. These liabilities remain with
Spiderfuel and are anticipated to be paid by that company.
NOTE 7- FIXED ASSETS
Fixed assets consist of the following at June 30, 2003:
Machinery and equipment $ 116,438
Furniture and fixtures 48,858
---------
Subtotal 165,296
Accumulated depreciation (137,310)
---------
Total $ 27,986
=========
Depreciation expense was $13,991 and $17,873 for the six
months ended June 30, 2003 and 2002. During 2002, when CLC was
merged into CIGI, the fair value of the net assets acquired
was greater than the amount paid by CIGI creating a negative
goodwill amount. As required by accounting principles
generally accepted in the United States of America, the
negative goodwill amount must first be applied against fixed
assets and other assets prior to be recognized as an
extraordinary item. As such, the net fixed assets amount on
CLC's books of $16,982 was written off during the quarter
ended June 30, 2002. Additionally, there was a gain on the
sale of an automobile in 2002 prior to the merger between CLC
and CIGI of $2,911 in the quarter ended June 30, 2002.
NOTE 8- COMMITMENTS AND CONTINGENCIES
RELATED PARTY TRANSACTIONS
The Company, as noted in Note 3, is advanced and repays
amounts regularly with its officers. These amounts were funded
by the respective officers for, among other things, working
capital for development of certain products and marketing of
those products, and to float working capital at various times
due to the inconsistent collections based on the nature of the
contracts entered into.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 8- COMMITMENTS AND CONTINGENCIES (CONTINUED)
LEASES
Spiderfuel beginning in 2001entered into a sublease agreement
in Mineola, New York, for approximately $5,000 per month. This
sublease agreement was terminated in 2002, and Spiderfuel's
corporate headquarters was relocated to Edison, New Jersey in
the offices of CLC simultaneously with the merger between
Spiderfuel and CIC and CIC's merger with CIGI. All related
party rent has been eliminated in the consolidation.
In addition to the office rental lease, Spiderfuel has entered
into other agreements with a term of one year or
month-to-month terms, which are not considered to be material.
Due to the length of the terms, there are no annual future
minimum rentals for CIC due at June 30, 2003.
CLC entered into a lease agreement for office space in Edison,
New Jersey that expired at the end of 2001. The Company paid
$3,863 per month. In addition to the rent, the Company paid an
initial security deposit of $1,343, which was subsequently
adjusted for by the negative goodwill at the time of the Stock
Purchase Agreement between CLC and CIGI. The lease has been
extended for another few years.
In addition to the office rental lease, CLC has entered into
other agreements with a term not exceeding one-year that are
not considered to be material. Due to the length of the terms,
there are no annual future minimum rentals due at June 30,
2003.
NOTE 9- INCOME TAXES
Deferred income taxes will be determined using the liability
method for the temporary differences between the financial
reporting basis and income tax basis of the Company's assets
and liabilities. Deferred income taxes will be measured based
on the tax rates expected to be in effect when the temporary
differences are included in the Company's consolidated tax
return. Deferred tax assets and liabilities are recognized
based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
At June 30, 2003, deferred tax assets consist of the
following:
Net operating loss carryforwards $ 18,450
Less: valuation allowance (18,450)
--------
$ -0-
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 9- INCOME TAXES (CONTINUED)
At June 30, 2003, the Company had deficits accumulated during
the development stage in the approximate amount of $46,129,
available to offset future taxable income through 2019. The
Company established valuation allowances equal to the full
amount of the deferred tax assets due to the uncertainty of
the utilization of the operating losses in future periods.
The provision for income taxes at June 30, 2002 consisted of
the following:
State tax expense $ 639
=========
NOTE 10- STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK
The Company is authorized to issue up to 40,000,000 shares of
common stock, $0.001 par value per share. Prior to the Merger,
2,596,000 shares (includes 51,000 issuable pursuant to
outstanding warrants) of common stock were issued and
outstanding. At the closing of the Merger, 1,272,500 shares of
common stock were cancelled and an aggregate of 10,478,476
shares of common stock were issued in connection with the
Merger. Accordingly, following the Merger, an aggregate of
11,801,976 shares of common stock of the Company were issued
and outstanding.
The Company issued 250,000 additional shares in June 2003 for
legal services rendered to bring the total issued and
outstanding shares to 12,051,976. The value of the issuance of
the 250,000 shares were $250, the fair value of the stock at
the time (par value).
PREFERRED STOCK
The Company has 5,000,000 shares of preferred stock, $0.001
par value per share, authorized, and none have been issued.
NOTE 11- INTANGIBLE ASSETS
In December 2000, Spiderfuel acquired The Strategy Factory,
Inc., a Texas software development corporation for $1,500,000.
In consideration of the assets acquired, Spiderfuel issued
750,000 shares of its common stock to the former stockholders
of The Strategy Factory, Inc. At December 31, 2001, Spiderfuel
management determined that the unamortized amount of the
intangible assets was impaired in accordance with FASB 142,
and $608,870 of the unamortized balance of the intellectual
property was charged to expense. The balance of $782,800
remains on the condensed consolidated balance sheet at June
30, 2003, and the management of the Company believes that this
balance is reflective of the value of the software developed
by The Strategy Factory, Inc., and the customers utilizing
such software.
COMMAND INTERNATIONAL CORPORATION
(FORMERLY ALGIERS RESOURCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 12- ASSET PURCHASE AGREEMENT - SPIDERFUEL
On May 22, 2002, Spiderfuel entered into an Asset Purchase
Agreement with CIC. In the agreement, Spiderfuel sold a
majority of its assets including the accounts receivable and
fixed assets and all of its intangible assets that they owned
the rights to, and CIC also assumed a portion of the
liabilities that related to the operation of the business
including vendor payables and deferred revenue relating to the
contracts they had. At the time of this transaction it was
determined that the fair values of the net assets of
Spiderfuel approximated the amount paid by CIC, and therefore
no goodwill was recognized in the transaction.
NOTE 13- STOCK PURCHASE AGREEMENT - CLC
On May 29, 2002, CLC entered into a Stock Purchase Agreement
with CIGI, whereby CLC acquired shares of CIGI for shares of
CLC. With this stock purchase, CIGI acquired all the rights,
title and interest in the various products and properties
owned by CLC. At the time of this transaction, it was
determined that the fair values of the net assets of CLC were
greater than the amount paid by CIGI, and therefore a negative
goodwill amount was generated. As such, according to
accounting principles generally accepted in the United States
of America, CLC initially applied this amount against fixed
assets, other receivables and security deposits, and the
balance was then reflected as an extraordinary item for the
gain on the purchase.
NOTE 14- STOCK PURCHASE AGREEMENT - COMMAND INTERNET
On June 3, 2002. CIC entered into a Stock Purchase Agreement
with CIGI. As a result of this agreement, CIC exchanged its
issued and outstanding shares for shares of CIGI, and thus
became a wholly owned subsidiary of CIGI. Due to only a two
week lapse between CIC`s acquisition of Spiderfuel and CIGI's
acquisition of CIC, the fair values of CIC did not
significantly change, and therefore the transaction netted on
goodwill as the fair values were considered identical to the
acquisition price.
NOTE 15- SUBSEQUENT EVENTS
On July 7, 2003, Algiers Resources, Inc. merged with and into
its wholly owned subsidiary, Algiers Merger Co., and changed
its name to Command International Corporation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Statements contained in this Plan of Operation of this Quarterly Report on Form
10-QSB include "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 as amended (the "Securities Act") and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which could cause the actual results of Command International
Corporation, formerly known as Algiers Resources, Inc. (sometimes referred to as
"we", "us" or the "Company"), performance (financial or operating) or
achievements expressed or implied by such forward-looking statements not to
occur or be realized. Such forward-looking statements generally are based upon
the Company's best estimates of future results, general merger and acquisition
activity in the marketplace, performance or achievement, current conditions and
the most recent results of operations. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may," "will,"
"project," "expect," "believe," "estimate," "anticipate," "intends," "continue",
"potential," "opportunity" or similar terms, variations of those terms or the
negative of those terms or other variations of those terms or comparable words
or expressions. (See the Company's Form 10-SB and its Annual Report on Form
10-KSB for the fiscal year ended December 31, 2002 for a description of certain
of the known risks and uncertainties of the Company.)
GENERAL
The Company was formed on October 6, 1998, as a blind pool to seek, investigate,
and if such investigation warrants, consummate a merger or other business
combination, purchase of assets or other strategic transaction (i.e., Merger)
with a corporation, partnership, limited liability company or other business
entity desiring the perceived advantages of becoming a publicly reporting and
publicly held corporation.
On May 8, 2003, pursuant to an Agreement and Plan of Merger dated as of March
20, 2003 (the "Merger Agreement"), by and among the Company, Algiers Merger Co.,
a Delaware corporation and wholly-owned subsidiary of the Company, and Command
International Acquisition Corporation, a Delaware corporation ("CIAC"), CIAC
merged with and into Algiers Merger Co., with Algiers Merger Co. continuing as
the surviving entity. As a result of such merger, Algiers Merger Co. changed its
corporate name to Command International Corporation and each issued and
outstanding share of common stock of CIAC was converted into one share of common
stock of the Company.
In connection with the Merger Agreement and pursuant to the Assignment and
Assumption Agreement dated as of March 20, 2003, by and between CIAC and the
Company, CIAC assigned to the Company all of its right, title and interest,
subject to any and all liabilities in connection therewith, to acquire all of
the issued and outstanding common stock of Command International Group Inc.
("CIGI") in exchange for shares of common stock of the Company under the
Agreement and Plan of Reorganization dated as of July 1, 2002, as amended as of
February 24, 2003, by and between CIAC, CIGI and stockholders of CIGI.
On July 7, 2003, Algiers Merger Co. merged with and into the Company, with the
Company continuing as the surviving entity and changed its name from Algiers
Resources, Inc. to Command International Corporation.
MATERIAL CHANGES IN FINANCIAL CONDITION AS OF JUNE 30, 2003
The Company is concentrating its efforts in finding potential merger partners
that share the same qualities as the Company, and similar business plans. The
Company has devoted substantially all of its efforts in this area. The Company
anticipates that with additional acquisitions and product enhancement that
positive earnings and increased cash flow will occur prior to the Company's year
end.
The Company had significantly paid down its working capital line due to improved
current cash flow by the end of the quarter. The Company has secured a working
capital line commitment from a different financial institution on more favorable
and appropriate terms.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 2003 AS COMPARED WITH SIX MONTH PERIOD ENDED
JUNE 30, 2002.
Sales in the six month period ended June 30, 2003 as compared with the same
period in 2002 were relatively flat, as were salaries and other variable
expenses. Sales of enhancements and upgrades to existing installed systems to a
loyal ERP customer base have been strong, and a number of clients have been
converted from unpredictable "pay as you go" to monthly retainers with minimum
paid hours of service. In addition, the Company showed a 50% decrease in the
rent as compared with previous year due to consolidating the offices in Edison,
NJ. An increase in certain administrative costs due to the merger between CIAC
and Algiers resulted in a $30,000 larger operating loss for the period ended
June 30, 2003 as compared with the same period in 2002. Despite the reported
loss, however, several factors contributed to a net increase in cash: improved
receivables collection, controlling labor costs coupled with a soon-to-be
enacted stock option plan in the parent company, and a sale/leaseback of certain
computer hardware, peripherals and office equipment.
During the period ended June 30, 2003, Command Internet Corp. ("CIC") took major
steps to improve the stability and reliability of its web hosting environment by
outsourcing the equipment and the hosting service together. This reduced a
significant risk to the Company. Previously, CIC had owned its own equipment and
leased hosting space, a setup which was beginning to prove inadequate to meet
the needs of its clients. This project was successfully completed in early
August 2003. This represented a significant drain on administrative resources
late in the second quarter and into the first part of the third quarter, but
will make it possible to expand the client base beyond previous limitations.
ITEM 3. CONTROL AND PROCEDURES.
Within the 90 days prior to the filing of this quarterly report, the Company's
President, acting as its principal executive officer and principal financial
officer, evaluated the effectiveness of the design of the Company's disclosure
controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934. Based on that evaluation, the President
concluded that the Company's disclosure controls and procedures were effective,
in all material respects, to ensure that the information required to be
disclosed in the reports the Company files and submits under the Exchange Act is
recorded, processed, summarized and reported as and when required.
There have been no significant changes (including corrective actions with
regards to significant deficiencies and material weaknesses) in the Company's
internal controls or in other factors subsequent to the date the Company carried
out its evaluation that could significantly affect these controls.
PART II
OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES - RECENT SALES OF UNREGISTERED SECURITIES.
On May 8, 2003, pursuant to an Agreement and Plan of Merger dated as of March
20, 2003, by and among the Company, Algiers Merger Co., a Delaware corporation
and wholly-owned subsidiary of the Company, and Command International
Acquisition Corporation, a Delaware corporation ("CIAC"), CIAC merged with and
into Algiers Merger Co., with Algiers Merger Co. continuing as the surviving
entity. As a result of such merger, an aggregate of 5,239,238 shares of common
stock of CIAC was converted into an aggregate of 5,239,238 shares of common
stock of the Company. The issuance of such shares of common stock of the Company
to CIAC was made pursuant to an exemption from registration under Regulation D
promulgated under the Securities Act of 1933, as amended.
In connection with the Merger Agreement and pursuant to the Assignment and
Assumption Agreement dated as of March 20, 2003, by and between CIAC and the
Company, CIAC assigned to the Company all of its right, title and interest,
subject to any and all liabilities in connection therewith, to acquire 1,500
shares of common stock of Command International Group Inc. ("CIGI"),
constituting all of issued and outstanding shares of common stock of CIGI, in
exchange for an additional 5,239,238 shares of common stock of the Company
pursuant to the Agreement and Plan of Reorganization dated as of July 1, 2002,
as amended as of February 24, 2003, by and between CIAC, CIGI and stockholders
of CIGI. Accordingly, the Company deposited into escrow with Snow Becker Krauss
P.C., counsel to the Company, an aggregate of 5,239,238 shares of its common
stock to be delivered to CIGI in exchange for all 1,500 shares of common stock
of CIGI issued and outstanding upon the closing of the CIGI Agreement. As of the
date of this report, the 5,239,238 shares of common stock of the Company
continue to be held in escrow with Snow Becker Krauss P.C. The issuance of such
shares of common stock was made pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
31* Certification of the Chief Executive Officer and Chief Financial
Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32* Certification of the Chief Executive Officer and Chief Financial
Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.
1350.
- ---------
* Filed with this report
(B) REPORTS ON FORM 8-K
1. Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission on April 4, 2003 reporting under Item 4.
2. Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission on May 12, 2003 reporting under Item 2. This report was
amended on July 10, 2003 to include the required financial statements and
pro forma financial information.
SIGNATURE
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
COMMAND INTERNATIONAL CORPORATION
Date: August 14, 2003 BY: /s/ Robert Fallah
----------------------------------------
Robert Fallah, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial Officer