UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 2001;
or
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from ________________ to _________________
American Resourses & Development Company
---------------------------------------------------
(Exact name of registrant as specified in its charter)
UTAH 87-0401400
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2035 N.E. 181st
Gresham, OR 97230
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (503) 492-1500
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[ ]
As of February 22, 2002, the Registrant had outstanding 4,571,817
shares of Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
-1-
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - December 31,
2001 and March 31, 2001 3
Condensed Consolidated Statements of Operations -Nine
months ended December 31, 2001 and 2000 and Three
months ended December 31, 2001 and 2000 5
Statements of Stockholders' Equity 7
Condensed Consolidated Statements of Cash Flows - Nine
months ended December 31, 2001 and 2000 and Three
months ended December 31, 2001 and 2000 9
Notes to Condensed Consolidated Financial Statements -
December 31, 2001 11
Item 2: Management's Discussion and Analysis or Plan of Operation 21
Item 1. Legal Proceedings 25
Item 2. Changes in Securities 25
Item 3. Defaults upon Senior Securities 25
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 25
-2-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Balance Sheet
ASSETS
December 31, March 31,
2001 2001
--------------------------------------------------------------------------------------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $ 13,082 $ 23,759
Accounts receivable, net (Note 1) 870,643 609,456
Inventory (Note 1) 548,934 170,065
Prepaid and other current assets 6,458 10,982
------------------ -----------------
Total Current Assets 1,439,117 814,262
------------------ -----------------
PROPERTY AND EQUIPMENT (NOTE 1)
Furniture, fixtures and equipment 492,147 461,954
Capital leases 1,359,241 1,277,899
------------------ -----------------
Total depreciable assets 1,851,388 1,739,853
Less: accumulated depreciation (1,065,192) (878,240)
------------------ -----------------
Net Property and Equipment 786,196 861,613
------------------ -----------------
OTHER ASSETS
Deposits 88,756 87,458
------------------ -----------------
Total Other Assets 88,756 87,458
------------------ -----------------
TOTAL ASSETS $ 2,314,069 $ 1,763,333
================== =================
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31, March 31,
2001 2001
--------------------------------------------------------------------------------------------- -----------------
CURRENT LIABILITIES
Accounts payable $ 1,723,101 $ 1,377,463
Accrued expenses and other current liabilities 1,221,572 897,799
Line of credit (Note 3) 365,372 363,888
Current portion of notes payable (Note 4) 356,491 475,727
Current portion of notes payable, related parties (Note 5) 1,588,349 1,168,269
Current portion of capital lease obligations (Note 7) 149,835 219,930
------------------ -----------------
Total Current Liabilities 5,404,720 4,503,076
------------------ -----------------
LONG-TERM DEBT
Reserve for discontinued operations (Note 2) 840,825 810,842
Notes payable (Note 4) 279,372 220,084
Notes payable, related parties (Note 5) 182,658 210,669
Capital lease obligations (Note 7) 158,797 210,302
------------------ -----------------
Total Long-Term Debt 1,461,652 1,451,897
------------------ -----------------
Total Liabilities 6,866,372 5,954,973
------------------ -----------------
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $0.001 per share: 10,000,000
shares authorized; issued and outstanding: 94,953
Series B shares, 150,000 Series C shares 245 245
Common stock, par value $0.001 per share: 125,000,000
shares authorized; issued and outstanding: 7,404,752
shares issued and 4,421,817 outstanding. (Note 10) 4,422 4,422
Additional paid-in capital 7,855,866 7,845,635
Accumulated deficit (12,412,836) (12,041,942)
------------------ -----------------
Total Stockholders' Equity (Deficit) (4,552,303) (4,191,640)
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 2,314,069 $ 1,763,333
================== =================
The accompanying notes are an integral part of these consolidated
financial statements.
-4-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Statements of Operations
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
--------------------------------- ---------------------------------
2001 2000 2001 2000
--------------- -------------- --------------- --------------
NET SALES $ 5,736,708 $ 4,077,797 $ 1,954,981 $ 1,377,500
COST OF SALES 4,775,583 3,509,941 1,603,066 1,276,317
--------------- -------------- --------------- --------------
GROSS PROFIT 961,125 567,856 351,915 101,183
--------------- -------------- --------------- --------------
GENERAL AND ADMINISTRATIVE EXPENSES
Depreciation and amortization 3,600 8,425 1,200 2,008
General expenses 955,826 1,179,901 318,270 349,469
--------------- -------------- --------------- --------------
Total General and Administrative Expenses 959,426 1,188,326 319,470 351,477
--------------- -------------- --------------- --------------
GAIN (LOSS) FROM OPERATIONS 1,699 (620,470) 32,445 (250,294)
--------------- -------------- --------------- --------------
OTHER INCOME AND (EXPENSES)
Other income and expenses 12,403 16,218 5,882 6,186
Interest expense (384,996) (495,919) (139,654) (183,746)
--------------- -------------- --------------- --------------
Total Other Income and (Expenses) (372,593) (479,701) (133,772) (177,560)
--------------- -------------- --------------- --------------
GAIN (LOSS) BEFORE INCOME TAXES (370,894) (1,100,171) (101,327) (427,854)
--------------- -------------- --------------- --------------
INCOME TAXES - - - -
--------------- -------------- --------------- --------------
NET INCOME (LOSS) $ (370,894) $ (1,100,171) $ (11,327) $ (427,854)
=============== =============== =============== ===============
OTHER COMPREHENSIVE GAIN (LOSS)
Gain (loss) on valuation of marketable securities $ - $ - $ - $ -
Total Other Comprehensive Gain (Loss) - - - -
--------------- -------------- --------------- --------------
NET COMPREHENSIVE GAIN (LOSS) $ (370,894) $ (1,100,171) $ (101,327) $ (427,854)
=============== ============== =============== ==============
The accompanying notes are an integral part of these consolidated
financial statements.
-5-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Statements of Operations (Continued)
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
--------------------------------- ---------------------------------
2001 2000 2001 2000
--------------- -------------- --------------- --------------
BASIC LOSS PER SHARE
OF COMMON STOCK -
CONTINUING OPERATIONS $ (.08) $ (.28) $ (.2) $ (0.11)
============== ============== =============== ==============
BASIC LOSS PER SHARE
OF COMMON STOCK
DISCONTINUED OPERATIONS $ - $ - $ - $ -
============== ============== =============== ==============
The accompanying notes are an integral part of these consolidated
financial statements.
-6-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Statements of Stockholders' Equity
December 31, 2001 and 2000
Common Stock Preferred Stock Other Additional
---------------------------- ------------------------ Comprehensive Paid-In Accumulated
Shares Amount Shares Amount Loss Capital Deficit
------------- ------------ ----------- ----------- ---------------- ---------- ---------------
Balance, April 1, 1999 3,174,286 3,174 244,953 245 (435,188) 7,297,066 (9,180,480)
--------- ------- ------- ----------- ----------- ------------ --------------
Stock issued for Quade
acquisition 451,667 452 - - - 144,099 -
Stock issued for consulting
services 250,000 250 - - - 181,384
Expense recognized for
vested options - - - - - 17,496
Recognition of loss on
valuation of marketable
securities - - - - 435,188 - -
Net loss for the year ended
March 31, 2000 - - - - - - (1,421,111)
--------- ------- ------- ----------- ----------- ------------ --------------
Balance, March 31, 2000 3,875,953 $ 3,876 244,953 $ 245 $ - $ 7,640,045 $ (10,601,591)
========= ======= ======= =========== =========== ============ ==============
Stock issued for consulting
services 192,777 193 - - - 82,841 -
Stock issued for interest
on debt 140,087 140 - - - 45,466 -
Stock exchanged for debt
with related parties 140,000 140 - - - 34,860 -
Stock issued to employees
under Employee Stock
Plan 73,000 73 - - - 24,927 -
Expense recognized for
vested options - - - - - 17,496 -
Net loss for the year
ended March 31, 2001 - - - - - (1,421,111)
--------- ------- ------- ----------- ----------- ------------ --------------
Balance, March 31, 2001 4,421,817 $ 4,422 244,953 $ 245 $ - $ 7,845,635 $ (12,041,942)
========= ======= ======= =========== =========== ============ ==============
Expense recognized for
vested options - - - - - 10,231
Net loss for the nine months
ended December 31, 2001 (370,894)
Balance at
December 31, 2001 4,421,817 $ 4,422 244,953 $ 245 $ - $ 7,855,866 $ (12,412,836)
========= ======= ======= =========== =========== ============ ==============
The accompanying notes are an integral part of these consolidated
financial statements.
-7-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Statements of Cash Flows
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
--------------------------------- ---------------------------------
2001 2000 2001 2000
--------------- --------------- --------------- ---------------
OPERATING ACTIVITIES
Net income (loss) $ (370,894) $ (1,100,171) $ (101,327) $ (427,854)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 189,952 205,135 61,239 64,828
Common stock issued for services and interest 10,231 123,042 1,458 4,373
Changes in operating assets and liabilities:
(Increase) decrease in inventory (378,869) (81,534) 187,817 (136,232)
(Increase) decrease in accounts receivable (261,187) (37,468) 294,206 (102,842)
(Increase) decrease in other current assets 3,226 1,836 (14,525) 766
Increase (decrease) in accounts payable 345,638 1,066,145 (390,947) 518,681
Increase (decrease) in other current liabilities 400,078 247,813 203,373 143,339
--------------- --------------- --------------- ---------------
Net Cash Provided (Used) by Operating Activities (61,825) 424,798 241,294 65,059
--------------- --------------- --------------- ---------------
INVESTING ACTIVITIES
Proceeds from sale of marketable securities - 2,485 - -
Proceeds from sale of USPA, Ltd. - 221,470 - -
Purchases of property and equipment (30,193) (56,980) (19,166) (46,318)
---------------------- ---------- ----------------- ---------------
Net Cash Provided (Used) by Investing Activities (30,193) (54,495) (19,166) (46,318)
---------------------- ---------- ----------------- ---------------
FINANCING ACTIVITIES
Payments on capital lease obligations (202,942) (244,841) (40,084) (85,522)
Proceeds (payments) from notes payable (109,270) (25,181) (50,270) (15,000)
Borrowings (payments) from related party debt 392,069 43,146 416,581 (3,554)
Net borrowings (payments) on factoring line of credit 1,484 (151,612) (539,508) 76,328
--------------- ----------------- --------------- ----------------
Net Cash Provided (Used) by Financing Activities 81,341 (378,488) (213,281) (27,748)
---------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN CASH (10,677) (8,185) 8,847 (9,007)
CASH, BEGINNING OF PERIOD 23,759 8,914 4,235 9,736
--------------- --------------- --------------- ---------------
CASH, END OF PERIOD $ 13,082 $ 729 $ 13,082 $ 729
=============== =============== =============== ===============
The accompanying notes are an integral part of these consolidated
financial statements.
-8-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
--------------------------------- ---------------------------------
2001 2000 2001 2000
--------------- --------------- --------------- ---------------
CASH PAID FOR
Interest $ 140,160 $ 144,344 $ 45,862 $ 21,284
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ - $ 123,042 $ - $ 4,373
Equipment purchased through capital
lease obligation $ - $ - $ - $ -
The accompanying notes are an integral part of these consolidated
financial statements.
-9-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
a. Quarterly Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates. The accompanying
consolidated unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB but
do not include all of the information and footnotes required by
generally accepted accounting principles and should, therefore,
be read in conjunction with the Company's fiscal 2001 financial
statements in Form 10-KSB. These statements do include all normal
recurring adjustments which the Company believes necessary for a
fair presentation of the statements. The interim operating
results are not necessarily indicative of the results for a full
year. Effective for fiscal quarters ending after March 15, 2000,
the Securities and Exchange Commission adopted a rule requiring
companies' independent auditors review the companies' financial
information prior to the companies filing their Quarterly Reports
on Form 10- QSB with the Commission. The Company's December 31,
2001 Form 10-QSB was not reviewed prior to submission to the
Commission. A Form 8-K will be filed when the review is completed
by the independent auditors.
b. Principles of Consolidation
The accompanying consolidated financial statements include
American Resources and Development Company and its subsidiaries,
Pacific Printing and Embroidery L.L.C. (PPW) and Fan-Tastic, Inc.
(FTI).
c. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
e. Concentrations of Risk
The Company maintains its cash in bank deposit accounts at high
credit quality financial institutions. The balances, at times,
may exceed federally insured limits.
In the normal course of business, the Company extends credit to
its customers.
f. Inventories
Inventories are stated at the lower of cost or market using the
first-in, first-out method. Inventory consists of items available
for resale.
-10-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Property and Equipment
Property, equipment and capital leases are recorded at cost and
are depreciated or amortized over the estimated useful life of
the related assets, generally three to seven years. When assets
are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is reflected in income for the period.
The costs of maintenance and repairs are charged to income as
incurred. Renewals and betterments are capitalized and
depreciated over their estimated useful lives.
h. Accounts Receivable
Accounts receivable are shown net of the allowance for bad debts
of $57,585 at December 31, 2001.
i. Financial Instruments
Statement of Financial Accounting Standards No. 107, "
Disclosures about Fair Value of Financial Instruments" requires
disclosure of the fair value of financial instruments held by the
Company. SFAS 107 defines the fair value of a financial
instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. The
following methods and assumptions were used to estimate fair
value:
The carrying amount of cash equivalents, accounts receivable and
accounts payable approximate fair value due to their short-term
nature.
j. Income Taxes
Income taxes consist of Federal Income and State Franchise taxes.
The Company has elected a March 31 fiscal year-end for both book
and income tax purposes.
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No.109 (SFAS No.
109), "Accounting for Income Taxes," which requires the asset and
liability method of accounting for tax deferrals.
k. Basic Loss Per Common Share
Basic loss per common share is computed based on the weighted
average number of common shares outstanding during the period.
The common stock equivalents are antidilutive and, accordingly,
are not used in the net loss per common share computation. Fully
diluted loss per share is the same as the basic loss per share
because of the antidilutive nature of common stock equivalents.
Basic net loss from continuing operations per common share and
diluted net loss from continuing operations per common share
amounts, calculated in accordance with SFAS 128, were $(0.02) and
$(.11). for the three months ended December 31, 2001 and 2000,
respectively. Basic net (loss) income from discontinued
operations per common share and diluted net loss from
discontinued operations per common share were $0.00 and $.00,
respectively. Weighted average common shares outstanding were
4,421,817 and 4,008,730 for the three months ended December 31,
2001 and 2000, respectively.
-11-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
l. Revenue Recognition
Revenue for contract screen printing, embroidery and product
sales are recognized when the goods have been shipped. Franchise
fees are recognized as revenue when all material services
relating to the sale have been substantially performed by FTI.
Material services relating to the franchise sale include
assistance in the selection of a site and franchisee training.
m. Goodwill
The Company evaluates the recoverability of goodwill and reviews
the amortization period on an annual basis.
The Company evaluates the recoverability of goodwill and reviews
the amortization period on an annual basis. Several factors are
used to evaluate goodwill, including but not limited to:
management's plans for future operations, recent operating
results and projected, undiscounted cash flows.
n. Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income" during the year
ended March 31, 2000. SFAS No. 130 established standards for
reporting and display of comprehensive income (loss) and its
components (revenues, expenses, gains and losses) in a full set
of general purpose financial statements. This statement requires
that an enterprise classify items of other comprehensive income
by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity
section of a balance sheet.
o. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
p. Prior Period Reclassification
Certain 2000 amounts have been reclassified to conform to the
presentation of the 2001 consolidated financial statements.
-12-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 2 - MERGERS AND ACQUISITIONS
Golf Ventures, Inc.
In November 1997, Golf Ventures, Inc., a former Company
subsidiary, merged with U.S. Golf Communities. U.S. Golf
Communities was the controlling company in this merger and
subsequent to the merger the combined company's name changed to
Golf Communities of America (GCA). This merger resulted in a less
than 20% American Resources' ownership in GVI. Therefore,
subsequent to the merger, the Company's investment in GVI is
reflected as an investment in accordance with Financial
Accounting Standards Board Statement No. 121.
The Company has a reserve for discontinued operations of $840,825
at December 31, 2001. The Company has accrued as of December 31,
$702,825 of accrued interest and dividends in reserve for
discontinued operations which relates to the $187,000 of
convertible subordinated debentures (see note 4) and the series B
preferred stock (see note 9). This liability is included in
reserve for discontinued operations as the funds relating to the
interest were used on discontinued operations including Golf
Ventures, Inc.
Pacific Print and Embroidery, LLC (aka Pacific Print Works)
In May 1998, the Company acquired 83% of the outstanding shares
of Pacific Print Works (PPW). The acquisition was accounted for
by the purchase method of accounting, and accordingly, the
purchase price was allocated to assets acquired and liabilities
assumed based on their fair market value at the date of
acquisition. Liabilities assumed in excess of assets acquired was
$629,252 and 213,472 shares of the Company's common stock were
issued to PPW shareholders with a guaranteed share value of $5.00
resulting in goodwill of $1,686,411. In addition, depending on
PPW's performance from April 1, 1998 through March 31, 2001,
additional shares of the Company's common stock would be issued
to the Sellers if minimum earnings levels were met. Based on the
$5.00 guarantee and the Company's share value from October 1998
through March 1999, the Company is obligated to issue additional
shares of common stock to the Sellers. An amendment to the PPW
Stock Purchase Agreement is being evaluated by the Company and
the Sellers in which the Company would issue another 1,100,000
shares of the Company's common stock to the Sellers and any
additional earnings requirements by PPW or per share value
guarantee by the Company would be eliminated. As of February 27,
2002, Sellers representing 98.3% of the Company stock issued to
the Sellers had agreed to the amendment to the PPW Stock Purchase
Agreement.
Effective May 2, 2001, the Company agreed to buy an additional 7%
of PPW from a PPW shareholder for $100,000, payable in monthly
installments through July 2003 (See Note 4). The $100,000 for the
additional PPW shares were expensed for the year ended March 31,
2001 as the Company had previously written off all goodwill
related to the purchase of PPW.
-13-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 3 - LINE OF CREDIT
In December 2000, the Company entered into an accounts receivable
financing agreement to sell, with recourse, up to $1 million of
receivables, net of a 15% collection reserve. The Company is
charged prime (as defined by Bank of America) plus 8% per annum
for all receivables sold and uncollected under this financing
agreement. At December 31 and March 31, 2001, the Company had a
payable of $365,372 and $363,888, respectively, for net funds
advanced from this accounts receivable line of credit. The
Company received $4,472,119 and $3,355,182 from the sale of
receivables for the Nine months ended December 31, 2001 and 2000
and recognized $61,447 and $69,361 in interest expense from the
discount of selling these receivables, respectively.
NOTE 4 - NOTES PAYABLE
Notes payable are comprised of the following:
December 31,
2001
-------------
Note payable, unsecured, bearing interest at 12%, payable in
monthly installments of $7,000, including interest. Currently in
default. Due on demand. $ 19,916
Convertible subordinated debentures, originally due September 30,
1996 bearing interest at 12% per annum. Interest payable
quarterly. Currently in default. 187,000
Note payable to debtholder of PPW, unsecured. Modified in August
2000 and January 2002. Modified agreement requires payments of
$102,500 through May 2002 without interest. Additional principal
payments of $147,084 will be required if payments are not made
timely plus 9% interest. A gain on the modification of debt for
$137,084 will be recorded when there is no risk of default on
this debt. 212,084
Note payable to shareholder of PPW for purchase of 7% of PPW
shares, unsecured. Note requires monthly payments of $3,000 from
July 2001, increasing to $5,000 in July 2002 with a final $9,000
payment July 2003. The note is non-interest bearing but will
accrue interest at 9% from inception if the Company is
non-timely on payments. 82,000
Note payable to former shareholder of PPW, unsecured. Interest
rate of 9%. Note requires monthly payments of $2,000 through
June 2002, and increasing to $3,000, $4,000 and $5,000 in July
2002, July 2003 and July 2004. Final payment is due July 2005. 134,863
-------------
Subtotal 635,863
Less current portion (356,491)
-------------
Long-term portion $ 279,372
=============
-14-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 4 - NOTES PAYABLE (CONTINUED)
Maturities of long-term debt are as follows:
December 31, 2002 $ 356,491
December 31, 2003 32,854
December 31, 2004 48,391
December 31, 2005 198,127
-------------
$ 635,863
=============
NOTE 5 - NOTES PAYABLE, RELATED PARTIES
December 31,
2001
-------------
Note payable to Miltex Industries, secured by 2,934,193 shares of
the Company's common stock. Interest at 15% with monthly
principal and interest payments of $11,000 with a final balloon
payment December 31, 2001. Note is in default. $ 770,054
Note payable to a shareholder, secured by GCA stock. Interest
payable monthly at 13.5% with interest and principal payments of
$5,000 per month. Due October 31, 2001. Note is in default. 315,859
Notes payable to a Company owned by a shareholder. Interest
payable at 72% with interest and principal payments due
currently. Notes are in default. 66,377
Notes payable to a Company owned by a shareholder. Interest
payable at 18% with interest and principal payments due
currently. 435,000
Notes payable to shareholders (includes officers and directors of
the Company). Interest rates average 10.5%. Unsecured, due on
demand, but not expected to be repaid until 2003. 182,717
-------------
Subtotal 1,771,007
Less current portion (1,588,349)
-------------
Long-term portion $ 182,658
=============
Maturities of notes payable, related parties are as follows:
December 31, 2002 $ 1,588,349
December 31, 2003 182,658
-------------
$ 1,771,007
=============
-15-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 6 - INTEREST PAYABLE
As of December 31, 2001, the Company had $576,576 of interest
payable included in accrued liabilities. This interest payable
includes $572,633 of interest payable to related parties and is
not currently being paid. The Company also has accrued as of
December 31, $702,825 of accrued interest and dividends in
reserve for discontinued operations which relates to the $187,000
of convertible subordinated debentures (see note 4) and the
series B preferred stock (see note 9). This liability is included
in reserve for discontinued operations as the funds relating to
the interest were used on discontinued operations including Golf
Ventures, Inc. (See note 2.)
NOTE 7 - CAPITAL LEASES
Property and equipment payments under capital leases as of March
31, 2001 is summarized as follows:
Year End
March 31,
2002 $ 240,765
2003 125,335
2004 87,408
2005 32,379
------------
Total minimum lease payments 485,887
Less interest and taxes (55,655)
------------
Present value of net minimum lease payments 430,232
Less current portion (219,930)
------------
Long-term portion of capital lease obligations $ 210,302
============
The Company recorded depreciation expense on capitalized lease
equipment of $210,689 and $232,589 for the years ended March 31,
2001 and 2000, respectively.
NOTE 8 - INCOME TAXES
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax
bases. Other temporary differences are created by the use of the
equity method for reporting investments in subsidiaries. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
The Income tax benefit for the year ending March, 31, 2001
differs from the amount computed at the federal statutory rates
as follows:
Income tax Benefit at statutory rate $ 46,200
Valuation allowance (46,200)
------------
$ -
============
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AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 8 - INCOME TAXES (CONTINUED)
Deferred tax assets for the year ending March 31, 2001 are
comprised of the following:
Net Operating Loss Carryforward $ 1,318,000
Valuation allowance (1,318,000)
-------------
$ -
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At March 31, 2001, the Company had a net operating loss
carryforward of approximately $4,700,000 that may be offset
against future taxable income through 2021. These losses will
start to expire in the year 2014 and not included in this
carryforward is about $1,600,000 in carryforwards net operating
losses created from Golf Ventures, Inc. that most likely will not
be allowed to be offset by any future operations of the Company.
No tax benefit has been reported in the financial statements
because the Company believes there is a 50% or greater chance the
carryforward will expire unused. Accordingly, the potential tax
benefits or the loss carryforward are offset by a valuation
allowance of the same amount.
NOTE 9 - PREFERRED STOCK
The shareholders of the Company have authorized 10,000,000 shares
of preferred stock with a par value of $0.001. The terms of the
preferred stock are to be determined when issued by the board of
directors of the Company.
SERIES B:
At March 31, 2000, there are 94,953 shares of series B preferred
stock issued and outstanding. The holders of these series B
preferred shares are entitled to an annual cumulative cash
dividend of not less than sixty cents per share. At March 31,
2001, there is a total of $466,533 of accrued and unpaid
dividends related to the series B preferred stock which have been
included in the reserve for discontinued operations. These series
B preferred shares were convertible into shares of the Company's
common stock which conversion option expired March 31, 1995.
NOTE 10 - COMMON STOCK ISSUED BUT NOT OUTSTANDING
The Company has issued 160,820 shares of common stock which had
been offered to the holders of the Series B preferred stock and
the debentures. The shares have not been accepted by the holders
of those investments as of the date of the consolidated financial
statements. Additionally, the Company has issued 2,934,193 shares
of common stock as collateral for the note payable to Banque SCS
(Note 5).
-17-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 11 - STOCK OPTIONS
In March 2001 and August 1997, the Company's Board of Directors
approved the 2001 and 1997 American Resources and Development
Company Stock Option Plans, respectively (Option Plans). Under
the Option Plans, 1,500,000 shares of the Company's common stock
are reserved for issuance to Directors and employees. Options are
granted at a price and with vesting terms as determined by the
Board of Directors.
In August 1999 and January 2001, the Board of Directors granted
options to purchase 696,291 and 599,723 shares of common stock at
$0.25. The options issued in August 1999 are currently vested.
The options issued in January 2001 vest over four years. The
options were issued to various employees, officers and directors
of the Company for past services, risk associated with various
debt incurred by officers for the Company and guarantees by
officers of Company debt, and for future services. No
compensation expense was recognized, as the option price was
greater than the fair market value of the stock at the date of
the option grant.
In December 1997, the Board of Directors granted options to
purchase 39,000 shares of stock at $2.00. These options are
exercisable beginning March 31, 1998, are exercisable over
staggered periods and expire after ten years. No compensation
expense was recognized as the option price was greater than the
fair market value of the stock at the date of the option grant.
In October 1997, the Board of Directors granted options to
purchase 140,000 shares of stock at $2.00. These options are
exercisable beginning March 31, 1998, over staggered periods and
expire after ten years. Compensation expense of $1,458 per month
will be recognized for 40,000 of the options issued over a 4 year
vesting period. In July 1998, the Board of Directors changed the
terms of the 100,000 options vesting over 10 years. 25,000 of
these options were fully vested and the remainder of the options
were canceled. As a result, compensation expense of $52,498 was
recognized for the year ended March 31, 1998 for the vesting of
these options.
Pro forma net income and net income per common share was
determined as if the Company had accounted for its employee stock
options under the fair value method of Statement of Financial
Accounting Standards No. 123.
Pro forma expense in year 1 would be $77,660, and $75,335,
28,579, $22,933 in years 2 , 3, and 4, respectively, with an
increase in pro forma expenses per share of $0.02 in year 1,
$0.02 in year 2 and $0.01 in years 3 and 4.
-18-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 11 - STOCK OPTIONS (Continued)
For the pro forma disclosures, the options' estimated fair value
was amortized over their expected ten-year life. The fair value
for these options was estimated at the date of grant using an
option pricing model which was designed to estimate the fair
value of options which, unlike employee stock options, can be
traded at any time and are fully transferable. In addition, such
models require the input of highly subjective assumptions,
including the expected volatility of the stock price. Therefore,
in management's opinion, the existing models do not provide a
reliable single measure of the value of employee stock options.
The following weighted-average assumptions were used to estimate
the fair value of these options:
March 31,
2001
---------
Expected dividend yield 0%
Expected stock price volatility 70%
Risk-free interest rate 6.5%
Expected life of options (in years) 10
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Office Lease
The Company leases office and warehouse space in Portland,
Oregon. Lease commitments for the years ended March 31, 2002
through March 31, 2003 are $318,832 and $49,366, respectively.
Legal Proceedings
The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
-19-
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 12 - GOING CONCERN
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. In order to carry
out its operating plans, the Company will need to obtain
additional funding from outside sources. The Company has received
funds from a private placement and debt funding and plans to
continue making private stock and debt placements. There is no
assurance that the Company will be able to obtain sufficient
funds from other sources as needed or that such funds, if
available, will be obtainable on terms satisfactory to the
Company.
-20-
Item 2. Management's Discussion and Analysis or Plan of Operations
Forward Looking Statements
The statements in this report concerning certain expected future expenses as a
percentage of net sales, future financing and working capital requirements and
availability constitute forward - looking statements that are subject to risks
and uncertainties. These risks could cause actual results or activities to
differ materially from those expected. Factors that could adversely affect cost
of sales and general expenses as a percentage of net sales include, but are not
limited to, increased competitive factors, changes in consumer preferences, as
well as an inability to increase sales. Other factors could include a failure to
adequately fund operations. In addition, unfavorable business conditions, or
changes in the general economy could have adverse effects. Factors that could
materially affect future financing requirements include, but are not limited to,
the ability to obtain additional financing on acceptable terms. Factors that
could materially affect future working capital requirements include, but are not
limited to, the factors listed above and the industry factors and general
business conditions noted above.
The following table sets forth, for the periods indicated, selected Company
income statement data expressed as a percentage of net sales.
Three Months Nine Months
Ended December 31, Ended December 31,
---------------------- --------------------
2001 2000 2001 2000
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 82.0% 92.7% 83.2% 86.1%
Gross profit 18.0% 7.3% 16.8% 13.9%
General expenses 16.3% 25.4% 16.7% 28.9%
Depreciation and amortization 0.1% 0.1% 0.1% 0.2%
Gain (Loss) from operations 1.7% -18.2% 0.0% -15.2%
Other income and expenses 0.3% 0.4% 0.2% 0.4%
Interest expense -7.1% -13.3% -6.7% -12.2%
Gain (Loss) before income taxes -6.8% -31.1% -6.5% -27.0%
Income taxes 0.0% 0.0% 0.0% 0.0%
Net Income (loss) -5.2% -31.1% -6.5% -27.0%
For the three months ended December 31, 2001 ("third quarter fiscal 2002"),
compared to the three months ended December 31, 2000 ("third quarter fiscal
2001"):
Sales for the three months ended December 31, 2001 were $1,954,9816 compared to
$1,377,500 for the three months ended December 31, 2000. Pacific Print Works
("PPW") sales for the third quarter fiscal 2002 were $1,886,728 compared to
$1,300,605 for the third quarter fiscal 2001. PPW sales for the third quarter
fiscal 2002 included production, finishing and design revenues of $805,557 and
garment revenues of $1,081,171 as compared to production, finishing and design
revenues of $670,605 and garment revenues of $630,000 in the third quarter
fiscal 2001. (The garments are sold as part of a "package" that includes the
printing and finishing of the garment.) Production and garment revenue increased
by $48,000 and $298,000, respectively, in the third fiscal quarter 2002 due to
sales of U.S.A. patriotic T-shirts. The remaining increase in sales was
primarily due to an increase in sales to PPW's largest customers.
Gross profit and the gross profit as a percentage of sales increased for the
third quarter fiscal 2002 as compared to the third quarter fiscal 2001, $351,915
and 18.0% compared to $101,183 and 7.3%. The increase in gross profit was
primarily due to an increase in gross profit margin on garment sales third
quarter fiscal 2002 (32%) compared to third quarter fiscal 2001 (4%). The gross
profit margin on garment sales improved in the third quarter fiscal 2002 because
of better gross margins on sales of U.S.A. patriotic T-shirts in addition to an
improvement in gross margins of other garment sales.
-21-
General and administrative expenses for the third quarter fiscal 2002 were
$318,270 as compared to $349,649 for the third quarter fiscal 2001. Cost cutting
measures were implemented in the fourth quarter fiscal 2001which resulted in the
decline of general and administrative expenses from the third quarter fiscal
2002 compared to third quarter fiscal 2001.
The gain (loss) from operations before other income and expenses for the third
quarter fiscal 2002 was a gain of $32,445 as opposed to a loss of $250,294 of
for the third quarter fiscal 2001.
Interest expense for the third quarter fiscal 2002 was $139,654 compared to
$183,746 for the prior year.
For the Nine months ended December 31, 2001 ("YTD fiscal 2002"), compared to the
Nine months ended December 31, 2000 ("YTD fiscal 2001"):
Sales for the Nine months ended December 31, 2001 were $5,736,708 compared to
$4,077,797 for the Nine months ended December 31, 2000. Pacific Print Works
("PPW") sales YTD fiscal 2002 were $5,557,369 compared to $3,951,939 for the YTD
fiscal 2001 sales. PPW sales YTD fiscal 2002 included production, finishing and
design revenues of $2,632,000 and garment revenues of $3,105,000 as compared to
production, finishing and design revenues of $2,835,000 and garment revenues of
$1,116,000 in the YTD fiscal 2001. (The garments are sold as part of a "package"
that includes the printing and finishing of the garment.) Production and garment
revenue increased by $166,800 and $1,162,000, respectively, in the YTD fiscal
2002 due to sales of U.S.A. patriotic T-shirts. The remaining increase in
garment sales was primarily due to an increase in garment sales to PPW's largest
customers.
Gross profit and the gross profit as a percentage of sales increased for YTD
fiscal 2002 as compared to the YTD fiscal 2001, $961,125 and 16.8% compared to
$567,856 and 13.9%. The increase in gross profit was primarily due to an
increase in gross profit margin on garment sales YTD fiscal 2002 (24%) compared
to YTD fiscal 2001 (6%). The gross profit margin on garment sales improved in
the YTD fiscal 2002 because of better gross margins on sales of U.S.A. patriotic
T-shirts in addition to an improvement in gross margins of other garment sales.
General and administrative expenses for the YTD fiscal 2002 were $955,826 as
compared to $1,179,901 for the YTD fiscal 2001. The decline in general and
administrative expenses is primarily due to $110,000 in investor relation
expenses incurred in the first quarter fiscal 2001. Fan-Tastic general and
administrative costs were also reduce in YTD fiscal 2002 versud YTD fiscal 2001
by $124,000 due to a decline in rent and payroll expenses from store closings. .
The gain (loss) from operations before other income and expenses for the YTD
fiscal 2002 was a gain of $1,699 as opposed to a loss of $620,470 for the YTD
fiscal 2001.
Interest expense for the YTD fiscal 2002 was $384,996 compared to $495,919 for
the prior year. In December 2000, PPW entered into an accounts receivable
financing agreement to sell receivables at prime plus 8%. This was a significant
improvement from PPW's previous factoring agreement and has resulted in
significant interest savings. The Company's interest on capital leases has also
declined approximately $36,000 YTD fiscal 2002 compared to YTD fiscal 2001
because of the reduction in capitalized lease payables outstanding. The Company
has notes payables to related parties of $1,771,007with various rates of
interest. The Company has accrued but not paid approximately $194,000 of
interest expense for these notes payables to related parties YTD fiscal 2001.
-22-
The following table sets forth, for the periods indicated, selected Company
income statement data expressed as a percentage of net sales.
Three Months Nine Months
Ended December 31, Ended December 31,
--------------------- --------------------
2000 2000 2000 2000
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 92.7% 70.8% 86.1% 73.6%
Gross profit 7.3% 29.2% 13.9% 26.4%
General expenses 25.4% 24.0% 28.9% 30.4%
Depreciation and amortization 0.1% 0.5% 0.2% 0.7%
Loss from operations -18.7% 6.9% -23.0% -7.8%
Other income and expenses 0.5% 0.0% 0.6% 1.0%
Interest expense -13.7% -15.9% -18.4% -20.7%
Loss before income taxes
and discontinued operations -32.0% -9.0% -40.7% -27.5%
Discontinued operations 0.0% 0.0% 0.0% 41.9%
Income taxes 0.0% 0.0% 0.0% 0.0%
Net Income (loss) -32.0% -9.0% -40.7% 14.4%
For the three months ended December 31, 2001 ("third quarter fiscal 2001"),
compared to the three months ended December 31, 2000 ("third quarter fiscal
2000"):
Sales for the three months ended December 31, 2001 were $1,340,986 compared to
$1,397,538 for the three months ended December 31, 2000. Pacific Print Works
("PPW") sales for the third quarter fiscal 2001 were $1,300,605 compared to
$1,217,906 for the third quarter fiscal 2000. Sales to two of PPW's largest
customers in the third quarter fiscal 2001included garment sales, primarily
T-shirts. (The garments are sold as part of a "package" that includes the
printing and finishing of the garment.) As a result, PPW sales for the third
quarter fiscal 2001 included production, finishing and design revenues of
$711,000 and garment revenues of $630,000 as compared to production, finishing
and design revenues of $1,212,000 and garment revenues of $5,000 in the third
quarter fiscal 2000.
Gross profit and the gross profit as a percentage of sales declined for the
third quarter fiscal 2001 as compared to the third quarter fiscal 2000, $101,183
and 7.3% compared to $408,067 and 14.6%. The decline in gross profit was caused
partially by the decrease in production revenues which resulted in a higher
percentage of fixed production costs to production revenues. Direct labor costs
for production, finishing and design were $362,000 or 50.9% of non- garment
revenue in the third quarter fiscal 2001 as compared to $513,000 or 42.3% of
non-garment revenue for the third quarter fiscal 2000. In addition, the gross
profit as a percentage of sales decrease was partially due to the lower margins
on garment sales. The cost of garments was $575,000 or 91.3% of garment sales in
the third quarter fiscal 2001.
General and administrative expenses for the third quarter fiscal 2001 were
$351,477 as compared to $342,970 for the third quarter fiscal 2000. This 2.4%
increase was primarily due to an increase in payroll costs at PPW. Cost cutting
measures were implemented in the fourth quarter fiscal 2001which will result in
a decline of approximately $40,000 general and administrative payroll costs per
quarter.
The gain (loss) from operations before other income and expenses for the third
quarter fiscal 2001 was a loss of $250,294 as opposed to a gain of $65,097 for
the third quarter fiscal 2000.
Interest expense for the third quarter fiscal 2001 was $146,622 compared to
$132,311 for the prior year.
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For the Nine months ended December 31, 2001 ("YTD fiscal 2001"), compared to the
Nine months ended December 31, 2000 ("YTD fiscal 2000"):
Sales for the Nine months ended December 31, 2001 were $4,077,797 compared to
$3,466,627 for the Nine months ended December 31, 2000. Pacific Print Works
("PPW") sales YTD fiscal 2001 were $3,951,939 compared to $3,104,767 for the YTD
fiscal 2000 sales. Sales to two of PPW's largest customers in the YTD fiscal
2001included garment sales, primarily T-shirts. (The garments are sold as part
of a "package" that includes the printing and finishing of the garment.) As a
result, PPW sales for the YTD fiscal 2001 included production, finishing and
design revenues of $2,835,000 and garment revenues of $1,116,000 as compared to
production, finishing and design revenues of $2,971,000 and garment revenues of
$131,000 in the YTD fiscal 2000.
Gross profit and the gross profit as a percentage of sales declined for YTD
fiscal 2001 as compared to the YTD fiscal 2000, $567,856 and 13.9% compared to
$915,267 and 26.4%. The decline in gross profit was caused partially by the
decrease in production revenues which resulted in a higher percentage of fixed
production costs to production revenues. Direct labor costs for production,
finishing and design were $1,260,000 or 44.4% of non-garment revenue in the YTD
fiscal 2001 as compared to $1,296,000 or 43.6% of non-garment revenue for the
YTD fiscal 2000. In addition, the gross profit as a percentage of sales decrease
was partially due to the lower margins on garment sales. The cost of garments
was $1,046,000 or 93.7% of garment sales in the YTD fiscal 2001. Rent costs
increased by $95,000 because PPW expanded its warehouse space due to an
anticipation of storing and processing additional garments due to increased
sales. In addition, the gross profit from Fan-Tastic, Inc. operations declined
by $124,000 in the YTD fiscal 2001 compared to YTD fiscal 2000 primarily due to
a decrease of approximately 2 equivalent stores. Fan-Tastic closed its last
store in September 2000 in order to reduce general costs.
General and administrative expenses for the YTD fiscal 2001 were $1,188,326 as
compared to $1,075,733 for the YTD fiscal 2000. The increase in general and
administrative expenses is primarily due to $110,000 in investor relation
expenses incurred in the first quarter fiscal 2001. An increase of approximately
$110,000 in PPW general and administrative costs was offset by a decrease in
Fan-Tastic general and administrative costs. Cost cutting measures were
implemented in the fourth quarter fiscal 2001which will result in a decline of
approximately $40,000 in PPW general and administrative costs per quarter.
The gain (loss) from operations before other income and expenses for the YTD
fiscal 2001 was a loss of $620,470 as opposed to a loss of $160,466 for the YTD
fiscal 2000.
Interest expense for the YTD fiscal 2001 was $495,919 compared to $428,223 for
the prior year.
The Company had a $869,336 gain from the sale of its 50% ownership in USPA Ltd.
in the YTD fiscal 2000 without any similar gain for YTD fiscal 2001.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2001, the Company had total assets of $2,314,069, total
liabilities of $6,866,372 and total stockholders' deficit of $4,552,303 compared
with total assets of $1,763,333, total liabilities of $5,954,973 and total
stockholders deficit of $4,191,640 at March 31, 2001. The increase in the
Company's stockholders deficit is due primarily to interest expense. At
September 30, 2001 the Company's current ratio of current assets to current
liabilities was approximately .267. The Company will seek to convert certain
debt to equity which will improve its current ratio. The Company's current
liabilities include $572,633 and $1,769,948 of interest and notes payable to
related parties, respectively. Currently, limited cash payments are being made
to these related parties because of the Company's poor financial condition.
Management intends to improve its overall financial structure and provide
operating capital through private placement of the Company's common stock and
seeking the conversion of debt and preferred stock to common stock. There is no
assurance that the Company will be able to obtain sufficient funds from other
sources as needed or that such funds, if available, will be obtainable on terms
satisfactory to the Company.
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Part II - Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Default upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Effective for fiscal quarters ending after March 15, 2000, the
Securities and Exchange Commission adopted a rule requiring companies'
independent auditors review the companies' financial information prior to the
companies filing their Quarterly Reports on Form 10-QSB with the Commission. The
Company's December 31, 2001 Form 10-QSB was not reviewed prior to submission to
the Commission. A Form 8-K will be filed when the review is completed by the
independent auditors.
Item 6. Exhibits and Reports on Form 8-K
Not applicable.
-25-
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
(Registrant)
/s/ B. Willes Papenfuss President, Chief Executive February 22, 2001
----------------------- Officer and Director
B. Willes Papenfuss (Principal Executive Officer)
/s/ Timothy M. Papenfuss Secretary / Treasurer and February 22, 2001
------------------------ Director (Chief Financial
Timothy M. Papenfuss Officer, Chief Accounting
Officer and Controller)
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