UNITED STATES
SECURITIES AND EXCHANGE COMMISION
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, 2002
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period from to .
Commission file number 1-14072
THE AMANDA COMPANY,INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0430260
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
13765 ALTON PARKWAY, SUITE F, IRVINE, CA 92618
(Address of Principal Executive Offices) (Zip Code)
(949) 859-6279
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report) N/A
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
As of June 30, 2002, approximately 109,672,839 shares of the Registrant's Common
Stock, $0.01 par value were outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X .
FORM 10-QSB
THE AMANDA COMPANY, INC.
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Balance Sheets at June 30, 2002
(Unaudited) and September 30, 2001 3-4
Statements of Operations for the three months ended June 30,
2002 and 2001 (Unaudited) and for the nine months ended June
30, 2002 and 2001 (Unaudited) 5
Statements of Cash Flows for the nine months
ended June 30, 2002 and 2001 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7-9
Item 2 Management's Discussion and Analysis or
Plan of Operation 10-11
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 2 Changes in the Securities and Use of Proceeds 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Signatures
THE AMANDA COMPANY, INC.
BALANCE SHEET
June 30, 2002 and September 31, 2001 (Audited)
ASSETS June 30, September 30,
2002 2001
-------------- ------------------
CURRENT ASSETS
Cash and cash equivalents $ 69,390 $ 36,394
Accounts receivable, net 95,650 84,069
Other receivable 10,000 -
Inventory 58,415 172,617
Prepaid and other current assets 157,525 51,880
-------------- ------------------
Total current assets 390,980 344,960
PROPERTY AND EQUIPMENT, NET 25,100 33,020
SECURITY AND OTHER DEPOSITS - 29,436
-------------- ------------------
Total assets $ 416,080 $ 407,416
============== ==================
The accompanying notes are an integral part of these statements.
3
THE AMANDA COMPANY, INC.
BALANCE SHEET
June 30, 2002 and September 30, 2001 (Audited)
LIABILITIES & STOCKHOLDER'S DEFICIT June 30, September 30,
2002 2001
-------------- ------------------
CURRENT LIABILITIES
Accounts payable $ 1,010,803 $ 778,986
Accrued liabilities 420,926 1,198,496
Leasing financing payable 22,750 22,750
Notes payable 486,500 573,000
Deferred revenue - 15,448
Convertible debentures 900,000 800,000
Accrued dividends payble 523,538 480,324
-------------- ------------------
Total current liabilities 3,364,517 3,869,004
LONG-TERM LIABILITIES
Lease financing payable 50,721 72,320
Contingent notes payble 130,300 -
Promissory note - Bristol 300,000 -
Convertible promissory notes 364,825 -
-------------- ------------------
Total long-term liabilties 845,846 72,320
-------------- ------------------
Total liabilites 4,210,363 3,941,324
STOCKHOLDERS' DEFICIT
Convertible Preferred stock, $0.01 par value
authorized 5,000,000 shares
Series A; issued and outstanding
21 shares at June 30, 2002 and 91 shares
at September 30, 2001. 1 1
Series B; issued and outstanding 631
shares at June 30, 2002 and 926
shares at September 30, 2001 6 9
Common stock, $0.01 par value, issued and
outstanding 139,672,839 shares at
June 30, 2002 and 68,778,960 shares
at September 30, 2001 1,096,728 687,789
Accumulated deficit (4,891,018) (4,221,707)
-------------- ------------------
Total stockholders' deficit (3,794,283) (3,533,908)
-------------- ------------------
Total liabilities and stockholders' deficit $ 416,080 $ 407,416
============== ==================
The accompanying notes are an integral part of these statements.
4
THE AMANDA COMPANY, INC.
STATEMENT OF OPERATIONS
For the Three and Nine Months Ended June 30, 2002 and 2001
(Unaudited)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
------------- ------------- ------------- -------------
Net sales $ 776,574 $ 1,071,676 $ 2,471,513 $ 3,081,881
Cost of sales 465,109 568,745 1,401,564 1,887,156
------------- ------------- ------------- -------------
Gross profit 311,465 502,931 1,069,949 1,194,725
------------- ------------- ------------- -------------
Selling, general and
administrative expenses 527,285 537,412 1,531,943 1,578,137
------------- ------------- ------------- -------------
Operating loss (215,820) (34,481) (491,994) (383,412)
Other income (expense):
Interest expense (45,947) (5,651) (106,557) (85,940)
Miscellaneous income, net 163 (15,396) 79,420 69,467
Loss on impairment - - - -
Loss from discontinued operations - - - -
Extinguishment of debt - - - -
------------- ------------- ------------- -------------
Loss before extraxordinary item (261,604) (55,528) (519,131) (399,885)
Merger costs - - - -
------------- ------------- ------------- -------------
Net loss before income taxes (261,604) (55,528) (519,131) (399,885)
Income taxes 600 667 600 1,000
------------- ------------- ------------- -------------
Net loss $ (262,204) $ (56,195) $ (519,731) $ (400,885)
============= ============= ============= =============
The accompanying notes are an integral part of these statements.
5
THE AMANDA COMPANY, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
Nine months ended
June 30, June 30,
2002 2001
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (519,731) $ (400,885)
Adjustments of reconcile net cash provided (used) in
operating activities
Depreciation and amortization 8,971 22,624
Loss on disposal of property and equipment - -
Allowance for notes receivable - 63,000
Warrant/option compensation expense - 75,145
Common stock issued for compensation and interest 1,081,729 -
Effect on cash of changes in operating assets and liabilities:
Decrease (increase) in accounts receivalbe, net (21,421) (48,333)
Decrease (increase) in other receivables (10,000) (337,908)
Decrease (increase) in inventory 86,056 (66,471)
Decrease (increase) in prepaid and other current assets (79,983) 22,092
Decrease (increase) in security deposits - -
Increase (decrease) in accounts payable (54,779) (113,139)
Increase (decrease) in accrued ezpenses (1,191,552) 285,083
Increase (decrease) in deferred revenue (3,370) -
------------- --------------
Net cash provided (used) in operating activites (704,080) (498,792)
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable - (360,000)
Advances to perFORMplace - (63,000)
------------- --------------
Net cash provided (used) in investing activites - (423,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of notes payable (110,000) -
Payments of equipment financing (33,223) -
Accrued dividends on preferred shares - (98,392)
Proceeds from equipment financing - -
Exercise of warrants - -
Proceeds from notes payable - -
Proceeds from sale of common stock - 646,274
Proceeds from issuance of short term note payable - 350,078
Proceeds from convertible debenture 130,300 -
Proceeds from convertible promissory ntes 750,000 -
------------- --------------
Net cash provided (used) in financing activities 737,077 897,960
------------- --------------
Net increase (decrease) in cash and cash equivalents 32,997 (23,832)
Cash and cash equivalents at beginning of period 36,393 36,393
------------- --------------
Cash and cash equivalents at end of period $ 69,390 $ 12,561
============= ==============
NON-CASH ACTIVITIES:
(1) $118,101 of Convertible Notes were converted into 12,205,211 shares of
common stock.
(2) 40 shares of Preferred Stock Series A were converted into 3,796,516 shares
of common stock.
(3) 115 shares of Preferred Stock Series B were converted into 15,192,672
shares of common stock.
(4) 6,126,513 common shares at the cost of $68,540 were issued related to
merger costs.
(5) 2,000,000 common shares at the cost of $18,400 were issued for consulting
expenses.
The accommmpanying notes are an integral part of these statemens.
6
The accompanying notes are an integral part of these statements.
Non-cash investing and financing activities
During the first quarter of FY2002 Series A preferred shareholders
converted 30 preferred shares into 2,941,176 common shares at an average
conversion price of $0.0102 per common share. Series B preferred
shareholders converted 150 preferred shares into 15,730,674 common shares
at an average conversion price of $0.0095 per common share. Under the
conversion terms of the convertible preferred shares, a holder has the
right to convert preferred shares into common shares at eighty-five (85%)
percent of the average of the two lowest closing bid prices during the last
twenty-two (22) consecutive trading days prior to conversion. As part of
the merger, the Company issued 50,000,000 shares of common stock with a
value of $876,000. There were 39,320,912 conversions of preferred shares
into common shares in the third quarter.
NOTE A - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company had a loss of
$262,204 for the quarter ended June 30, 2002, and a loss of $519,731 for
the nine months ended June 30, 2002. A deficit of $3,794,283 in
stockholders' equity and negative working capital of $2,973,537 for the
period ended June 30, 2002. The Company intends to continue to raise
additional funds in the capital markets for working capital purposes. The
Company must raise additional capital in order to continue as a going
concern.
NOTE B - ACQUISITIONS/DISPOSITIONS
The Company completed its merger with the Automatic Answer Company (tAA) in
the quarter ended December 31, 2001. The merger was accounted for as a
reverse merger. The recapitalization of tAA, the surviving entity, resulted
in a reduction of $2,119,979 in stockholder's equity; $876,000 of which was
attributable to merger expenses and $1,243,979 resulting from the
assumption of the net deficit of the registrant.
NOTE C - OPTIONS TO PURCHASE COMMON STOCK
No options were exercised in the second quarter.
NOTE D - WARRANTS TO PURCHASE COMMON STOCK
No warrants were exercised in the second quarter.
NOTE E - OPTIONS/WARRANTS TO PURCHASE COMMON STOCK
No options or warrants were issued in the second quarter.
NOTE F - ACCRUED PREFERRED STOCK DIVIDENDS
The Preferred Shareholders agreed to waive all dividends, effective October
1, 2001. No accrual for dividends on preferred shares was recorded in the
third quarter ended June 30, 2002.
7
NOTE G - PREFERRED STOCK
The Company has issued two series of Preferred Stock. Series A was issued
in February 1999 consisting of 1,800 shares, par value $0.01 per share, for
$1,000 per share. Series B was issued in April 1999 at the same price and
par value but only 1,000 shares were issued. Both series of Preferred Stock
carry a 16 percent dividend rate, which is paid quarterly. If and when the
Company's stock is listed again on NASDAQ the dividend rate will drop to 8
percent.
Both issuances of Preferred Stock are convertible into shares of the
Company's Common Stock. Each share of Series A Preferred Stock is
convertible into an amount of shares of Pen Common Stock equal to $1,000
divided by the average of the two lowest closing bid prices for Pen Common
Stock during the period of 22 consecutive trading days ending with the last
trading day before the date of conversion, after discounting that market
price by 15 percent (the "Conversion Price"). The maximum Conversion Price
for the Series A Preferred Stock is $1.17 per share. The shares of Series B
Preferred Stock are convertible into Common Stock at the same Conversion
Price as the Series A Preferred Stock except for a maximum Conversion Price
of $0.79 per share. Warrants to acquire 320,000 shares of Common Stock at
prices ranging from $0.86 to $1.28 per share were also issued to the
purchasers of the Series A and Series B Preferred Stock. The Warrants
expire three years from date the Preferred Stock and warrants were
initially issued.
NOTE H - CONVERTIBLE DEBENTURE
In the first quarter ended December 31, 2001 the Company issued $100,000 in
one year convertible debentures with interest at eight (8) percent, payable
quarterly. These debentures are convertible into the Company's common stock
at the lower of $.04 or 70% of the average of the three lowest closing
prices during the 30 days prior to the conversion. These debentures are due
one year from the date of the issuance.
NOTE I - CONVERTIBLE PROMISSORY NOTE
In the first quarter ended December 31, 2001 the Company issued a
convertible promissory note totaling $450,000 at an interest rate of eight
(8) percent per annum. In the second quarter ended March 31, 2002 the
issued a convertible promissory note totaling $300,000 at an interest rate
of eight (8) percent per annum. These notes are convertible into the
Company's common stock at $.01 per share and a 8,055,853 warrant
exercisable for common stock at $.02 per share and 1,500,000 warrants at
$.01 per share.
Note J - EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per common share is computed by dividing net earnings
(loss) available to common shareholders by the weighted average number of
common shares outstanding during each period. Diluted earnings (loss) per
common share are similarly calculated, except that the weighted average
number of common shares outstanding includes common shares that may be
issued subject to existing rights with dilutive potential except for
periods when such calculations would be anti-dilutive.
8
The calculation of earnings (loss) per share is included in Exhibit 11.
NOTE K - INTERIM PERIOD COST OF GOODS SOLD
Inventory costing is based on specific identification. An inventory count
is taken at the end of each quarter.
NOTE L - INCOME TAXES
The future benefits of loss carried forward are fully reserved. The company
accrued $600 for California Franchise Tax during the quarter.
NOTE M - COMMON STOCK OUTSTANDING
On February 8, 2002, the company executed a reverse split of one new share
for each ten outstanding shares of common stock. The resultant effect was
that the number of shares to be outstanding of 703,519,273 become
70,351,927 post split.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS. This report contains certain 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,
that involve risks and uncertainties. In addition, the Company may from time to
time make oral forward-looking statements. Actual results are uncertain and may
be impacted by the following factors. In particular, certain risks and
uncertainties that may impact the accuracy of the forward-looking statements
with respect to revenues, expenses and operating results include without
limitation, cycles of customer orders, general economic and competitive
conditions and changing consumer trends, technological advances and the number
and timing of new product introductions, shipments of products and components
from foreign suppliers, and changes in the mix of products ordered by customers.
As a result, the actual results may differ materially from those projected in
the forward-looking statements.
Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
The following discussion and analysis provides certain information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition for the three months
and nine months ended June 30, 2002 and 2001. This discussion should be read in
conjunction with the audited financial statements of the Company and notes
thereto included in the Annual Report of the Company on Form 10-KSB for the year
ended September 30, 2001.
General. On October 1, 2001, the Company completed a reverse merger with tAA.
tAA is the surviving entity for accounting purposes. The following discussion is
based upon the merged activities of both companies for all periods presented.
Net sales. Net sales for the Company decreased $295,102 or approximately 28
percent for the three months ended June 30, 2002, as compared to the same period
in the prior year. Net sales for the Company decreased $610,368 or approximately
20 percent for the nine months ended June 30, 2002 as compared to the same
period in the prior year. The events of September 11, 2001 as well as the
general economic condition in the country today has contributed to the general
decrease in sales experienced not only by the Company, but the industry as a
whole.
Cost of sales. Cost of sales as a percentage of net sales decreased to 60
percent of net sales for the three months ended June 30, 2002 as compared to 53
percent for the same period in the prior year. Cost of sales as a percentage of
net sales decreased to 43 percent of net sales for the nine months ended June
30, 2002 as compared to 39 percent for the same period in the prior year. Gross
profit increased due to an increase in product margins, reduced shipping costs
due to increased efficiency in product scheduling, both for incoming and
10
outgoing shipments, and a reduction in replacement of defective product due to
increased product testing prior to shipment to customers.
Selling, general and administrative expenses. Selling, general and
administrative expenses decreased $10,127 or approximately 2 percent for the
three months ended June 30, 2002 as compared to the same period in the prior
year. Selling, general and administrative costs decreased $16,194 or
approximately 1 percent for the nine months ended June 30, 2002 as compared to
the same period in the prior year. The merger of Pen Interconnect and The
Automatic Answer (tAA) resulted in the elimination of several executive
positions, thereby eliminating significant salary and related payroll and
employee benefit expenses. In addition, the consolidation of offices, along with
the reduction in rent for both the California corporate office and the Danbury,
CT sales office contributed significantly to expense reduction in the current
quarter and nine months. The Company has concentrated on reviewing all recurring
expenses and has made reductions when possible.
Other income and expenses. Interest expense increased by $40,296 for the three
months ended June 30, 2002 as compared to the same period in the prior year. In
the prior year the Company was able to negotiate settlements on outstanding
vendor debt resulting in a gain of $73,168. There were no settlements in the
quarter ended June 30, 2002.
Liquidity and capital resources. For the quarter ended June 30,2002 and for the
nine months ended June 30, 2002, the Company sustained losses of $262,204 and
$519,731, respectively.
Inflation and seasonality. The Company does not believe that it is significantly
impacted by inflation or seasonality.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time the Company has been a party to various legal proceedings
arising in the ordinary course of business
1. On October 28, 1999 Color Savvy Systems, Ltd., filed suit to recover
$165,750 in past due uncontested vendor obligations. On February 16, 2000,
Color Savvy obtained a judgment against the Company for $165,750.
2. On February 15, 2000, Amistar Corporation filed suit against the Company to
recover $95,733 in uncontested past due vendor obligations. As of this
writing, Amistar has accepted the Company's stock for debt offer.
3. On March 21, 2000, Interworks Computer Products, Inc., filed suit to
recover $35,771 in past due uncontested vendor obligations. Settled in
January 2001.
4. On July 22, 2000, Force Electronics filed suit to recover $68,816 in past
due uncontested vendor obligations, and obtained a judgment on September
15, 2000. Settled in January 2001.
5. Control Design Supply/Nedco filed suit to recover $6,788 in past due
uncontested vendor obligations. Settled in January 2001.
6. On March 20, 2000, DHL Airways Inc. obtained a judgment in the amount of
$3,868 for past due uncontested vendor obligation.
7. In January 2001 Fidelity Leasing, Inc. filed suit to recover $26,608.91 and
obtained a judgment for uncontested past due lease obligations. Settled in
February 2001.
On November 15, 1999, Alan L. Weaver, former CEO of Pen Interconnect, Inc.,
obtained a judgment against the Company in the amount of $135,300 for breach of
a settlement agreement relative to Mr. Weavers' employment agreement with the
Company. The Company has reserved $135,300 as a contingent liability as of
September 30, 2000 for this agreement.
Item 2. Changes in Securities and Use of Proceeds:
None during the quarter
Item 3. Defaults Upon Senior Securities:
None during the quarter
Item 4. Submission of Matters to a Vote of Security Holders:
None during the quarter.
12
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
April 04, 2002 Item 6
Resignation of William Prevot for personal reasons
Resignation of Jose Candia due to disagreements with the Company
which are disclosed on Form 8-K.
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.
THE AMANDA COMPANY, INC.
(Registrant)
August 16, 2002 By: /s/ Brian Bonar
Brian Bonar,
CEO and Chairman of the Board of Directors
13
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of The Amanda Company, Inc. (the
"Company") on Form 10-QSB for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Brian
Bonar, Chief Executive Officer and Chairman of the Board of Directors of the
Company, 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 result of operations of the Company.
/s/ Brian Bonar
-----------------------------
Brian Bonar
CEO and Chairman of the Board of Directors
August 16, 2002
14
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of The Amanda Company, Inc.. (the
"Company") on Form 10-QSB for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Brian
Bonar, Chief Accounting Officer of the Company, 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 result of operations of the Company.
/s/ Brian Bonar
-----------------------------
Brian Bonar
Chief Accounting Officer
August 16, 2002
15
THE AMANDA COMPANY, INC.
CALCULATION OF EARNINGS (LOSS) PER SHARE
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2002 AND 2001
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
------------- ------------- ------------- -------------
Net profit (loss) $ (262,204) $ 13,700 $ (519,731) $ (454,399)
============= ============= ============= =============
Common Shares Outstanding entire
period 109,672,839 34,454,731 108,886,306 27,596,946
Weighted Average common shares
issued 13,106,971 5,622,373 12,098,478 10,092,188
------------- ------------- ------------- -------------
Weighted Average common shares
outstanding during period 122,779,810 40,077,104 120,984,784 37,689,134
Loss per common share - basic $ (0.00) $ 0.00 $ (0.00) $ (0.01)
============= ============= ============= =============
16