UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
Commission file number 333-63432
ATLANTIC WINE AGENCIES INC.
(Exact name of small business issuer as specified in its charter)
Florida 65-110237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 Knightsbridge
London, UK
SW1X
(Address of principal executive offices)
011-44-797-905-7708
(Issuer's telephone number)
Check whether the issuer (1) has 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_______
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
The number of shares of the issuer's outstanding common stock, which is the only
class of its common equity, on November 18, 2004 was 104,063,027.
1
ITEM 1 FINANCIAL STATEMENTS
Description Page No.
FINANCIAL INFORMATION:
Financial Statements
Consolidated Balance Sheets at September 30, 2004 (Unaudited)............................................... F-1
Consolidated Statement of Operations for the Three Months Ended September 30, 2004
and for the Period from December 16, 2003 to September 30, 2004 Unaudited)................................ F-2
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 2004 and for the Period from December 16, 2003 to September 30, 2004 (Unaudited)..........
F-3
Notes to Consolidated Financial Statements (Unaudited)...................................................... F-4
2
ITEM 1. FINANCIAL STATEMENTS
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
CURRENT ASSETS
Cash ........................................................ $ 156,109
Accounts receivable ......................................... 30,000
Inventory ................................................... 1,145,949
-----------
Total Current Assets .................................. 1,332,058
OTHER ASSETS
Property, plant and equipment, net
2,547,076
Trademarks .................................................. 47,521
-----------
$ 3,926,655
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................................ $ 659,423
Accrued expenses ............................................ 32,197
-----------
Total Current Liabilities ............................. 691,620
LONG-TERM DEBT
Due to principal stockholders ............................... 895,152
STOCKHOLDERS' EQUITY
Common stock authorized 150,000,000
shares; $0.00001 par value; issued
and outstanding 104,063,027 shares ........................ 1,041
Additional contributed capital .............................. 2,862,839
Deficit accumulated during Development Stage ................ (523,997)
-----------
Total Stockholders' Equity ............................ 2,339,883
-----------
$ 3,926,665
See accompanying notes to financial statements.
F-1
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period
For the Three For the Six December 16, 2003
Months Ended Months Ended (Inception) to
September 30, September 30, September 30,
2004 2004 2004
------------ ------------ ------------
NET SALES .............................. $ 63,893 $ 120,036 $ 120,036
COSTS AND EXPENSES
Cost of goods sold .................. (27,659) 100,448 100,448
Selling, general and administrative . 231,786 380,635 410,635
Stock based compensation ............ 140,000
Depreciation and amortization ....... 2,335 7,878 7,878
------------ ------------ ------------
Total Costs and Expenses ...... 206,462 488,961 658,961
------------ ------------ ------------
NET OPERATING LOSS ..................... (142,569) (368,925) (538,925)
OTHER EXPENSE
Currency exchange gain .............. 14,937 14,937 14,937
Interest expense .................... (9) (9)
------------ ------------ ------------
14,937 14,928 14,928
------------ ------------ ------------
NET LOSS ............................... $ (127,632) $ (353,997) $ (523,997)
============ ============ ============
NET LOSS PER SHARE, basic and diluted .. $ (0.004) $ (0.006)
============ ============
Weighted average number of common shares
outstanding ......................... 85,830,887 85,830,557
============ ============
Note: The Company had no operating abilities for the comparable period ending
September 30, 2003.
See accompanying notes to financial statements.
F-2
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period
For the Six December 16, 2003
Months Ended (Inception) to
September 30, September 30,
CASH FLOWS FROM OPERATING ACTIVITIES 2004 2004
----------- -----------
Net loss for period ............................. $ (353,997) $ (523,997)
Non-cash items included in net loss:
Stock based compensation ...................... 140,000
Depreciation and amortization ................. 7,878 7,878
Changes in operating assets and liabilities:
Accounts receivable ........................... (30,000) (30,000)
Inventory ..................................... (1,145,949) (1,145,949)
Accounts payable .............................. 659,423 659,423
Accrued expenses .............................. 2,197 32,197
Increase in due to principal stockholders ..... 895,152 895,152
----------- -----------
Net Cash Provided by Operating
Activities ........................ 34,704 34,704
CASH FLOWS FROM INVESTING ACTIVITIES ............... (2,602,475) (2,602,475)
----------- -----------
Net Cash Used in Investing Activities ..... (2,602,475) (2,602,475)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution ............................ 2,723,880 2,723,880
----------- -----------
Net Cash Provided by Financing Activities 2,723,880 2,723,880
----------- -----------
NET INCREASE IN CASH .............................. 156,109 156,109
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
----------- -----------
CASH AT END OF PERIOD .............................. $ 156,109 $ 156,109
=========== ===========
See accompanying notes to financial statements.
F-3
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary in order to make the financial
statements not misleading have been included. Results for the six
months ended September 30, 2004 are not necessarily indicative of the
results that may be expected for the year ending March 31, 2005. For
further information, refer to the financial statements and footnotes
thereto included in the Atlantic Wine Agencies, Inc., formerly New
England Acquisitions, Inc., annual report on Form 10-KSB for the year
ended March 31, 2004 and the Form 8-K filed in September 2004.
NOTE B - REVERSE MERGER
On May 4, 2004, the stockholders of New Heights 560 Holdings, LLC a
Cayman Island Limited Liability Company, acquired 100,000,000 shares of
Atlantic Wine Agencies, Inc. common stock in an exchange of shares,
thereby obtaining control of the company. Subsequent to the
acquisition, New Heights 560 Holdings, LLC controlled 99% of the
outstanding common stock of the company. In this connection, New
Heights 560 Holdings, LLC became a wholly owned subsidiary of Atlantic
Wine Agencies, Inc. and its officers and directors replaced New Heights
560 Holdings', LLC officers and directors. Prior to the acquisition,
Atlantic Wine Agencies, Inc. was a non-operating public shell
corporation. Pursuant to Securities and Exchange Commission rules, the
merger or acquisition of a private operating company into a
non-operating public shell corporation with nominal net assets is
considered a capital transaction. Accordingly, for accounting purposes,
the acquisition has been treated as an acquisition of New Heights 560
Holdings, LLC by Atlantic Wine Agencies, Inc. and a recapitalization of
such. Since the merger is a recapitalization of Atlantic Wine Agencies,
Inc. and not a business combination, pro-forma information is not
presented.
NOTE C - DUE TO PRINCIPAL STOCKHOLDERS
At September 30, 2004, principal stockholders have advanced the Company
$895,152 for working capital. Such loans are non-interest bearing and
have no specific maturity date for repayment.
NOTE D - ACQUISITION OF AUSTRALIAN WINERY AND VINEYARD
On September 13, 2004, Atlantic Wine Agencies, Inc. ("Company") entered
into an agreement to issue 20,000,000 shares of its common stock to the
stockholders of Dominion Wines, Ltd. and Dominion Estates Pty., Ltd. in
exchange for all of the issued and outstanding shares of each of those
entities. Additionally, the Company agreed to make payments of
$3,136,202.87 Australian dollars to National Australian Bank to settle
a loan facility held by Dominion Wines, Ltd., advance Dominion wines
$223,797.13 Australian dollars for working capital and assume a
$4,081,387.11 Australian dollar loan held by the commonwealth Bank of
Australia. The Company also canceled 20,000,000 shares of its common
stock which were held by certain stockholders.
F-4
NOTE D - ACQUISITION OF AUSTRALIAN WINERY AND VINEYARD (CONTINUED)
Since the Company is currently in the process of completing its
acquisition audit and obtaining asset valuations, the effect of this
transaction has not been included in the Company's balance sheet as at
September 30, 2004 nor has it been included in the statement of
operations for the three and six months ended September 30, 2004.
Preliminary and unaudited financial data is presented below:
Balance Sheet:
Current assets $ 4,714,506
Fixed assets, net 14,528,830
Trademarks 46,958
-------------
Total Assets 19,290,294
Less: current liabilities
Bank debt 7,441,387
Other liabilities 2,380,307
-------------
Net Assets $ 9,468,600
=============
Preliminary and unaudited operating data for the year ended June 30,
2004 is as follows:
Total revenue $ 4,660,705
Cash and expenses:
Cost of goods sold 3,024,348
General and administrative expense 1,600,599
-------------
Total Expense 4,624,947
Net Income $ 35,758
=============
F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following should be read in conjunction with our financial statements
and the related notes that appear elsewhere in this Annual Report. The
discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from
those discussed in the forward-looking statements. Factors that could cause
or contribute to these differences include, but are not limited to, those
discussed below.
GENERAL
On December 16, 2003, the Company had a change in control of its issued and
outstanding common stock. On this date, Rosehill Investments Limited
acquired 11,937,200 shares of the Company's common stock pursuant to a
Stock Purchase Agreement among Rosehill Investments Limited and the
Company, Mr. Jonathan Reisman and Mr. Gary Cella. The agreement provided
for the shares to be sold as follows: 9,234,520 shares from the Company;
1,379,600 shares from Mr. Reisman and 1,323,100 shares from Mr. Cella
("Stock Sale").
As a result of the Stock Sale: (i) the directors of the Company resigned
and new directors were appointed; (ii) obligations to the Company's
auditors, lawyers and service providers were satisfied; and (iii) the
Company spun off its two subsidiaries to its shareholders of record
immediately prior to the Stock Sale.
On May 4, 2004, the stockholders of New Heights 560 Holdings, LLC a Cayman
Island Limited Liability Company, acquired 100,000,000 shares of Atlantic
Wine Agencies, Inc. common stock in an exchange of shares, thereby
obtaining control of the company. Subsequent to the acquisition, New
Heights 560 Holdings, LLC controlled 99% of the outstanding common stock of
the company. In this connection, New Heights 560 Holdings, LLC became a
wholly owned subsidiary of Atlantic Wine Agencies, Inc. and its officers
and directors replaced New Heights 560 Holdings', LLC officers and
directors. Prior to the acquisition, Atlantic Wine Agencies, Inc. was a
non-operating public shell corporation. Pursuant to Securities and Exchange
Commission rules, the merger or acquisition of a private operating company
into a non-operating public shell corporation with nominal net assets is
considered a capital transaction. Accordingly, for accounting purposes, the
acquisition has been treated as an acquisition of New Heights 560 Holdings,
LLC by Atlantic Wine Agencies, Inc. and a recapitalization of such.
On September 13, 2004, Atlantic Wine Agencies, Inc. ("Company") entered
into an agreement to issue 20,000,000 shares of its common stock to the
stockholders of Dominion Wines, Ltd. and Dominion Estates Pty., Ltd. in
exchange for all of the issued and outstanding shares of each of those
entities. Additionally, the Company agreed to make a payment of
$3,136,202.87 Australian dollars to National Australian Bank to settle a
loan facility held by Dominion Wines, Ltd., advance Dominion wines
$223,797.13 Australian dollars for working capital and assume a
$4,081,387.11 Australian dollar loan held by the commonwealth Bank of
Australia. The Company also proposed canceling 20,000,000 shares of its
common stock held by certain stockholders.
F-6
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
We are currently in the development stage and have generated $120,036 from sales
of our wines for the six months ending September 30, 2004. We have financed our
operations to date through the sale of our securities.
Operating costs for the period from inception to September 30, 2004 aggregated
$658,691. The majority of these costs were maintenance and marketing expenses
related to our South African vineyard operation. As a result of the above we
realized a cumulative loss of $523,997 or .006 per share.
Operating costs for the six-month period ended September 30, 2004 aggregated
$488,691. Again, the majority of these costs were due to maintaining the South
African winery operation. As a result of the above we realized a loss of
$368,925 for the six-month period ended September 30, 2004 or $.004 per share.
Atlantic's Board of Directors added Messrs. Andrew Bayley and Colin Baird both
of whom are expected to enhance Atlantic's position in the wine industry.
LIQUIDITY AND CAPITAL RESOURCES
From inception through September 30, 2004, net cash used to fund operating
activities totaled $2,723,880, net cash utilized by investing activities totaled
$(2,602,475). For the six-month period ended September 30, 2004, net cash used
to fund operating activities totaled $2,723,880.
The Company has generated minimal revenues and has financed its operations to
date primarily through the capital contributions and loans from certain
stockholders. To date the company owes $895,152 to stockholders in the form of a
demand promissory note, the specific terms of which remain open. As a result,
cash on hand was $156,109 as of September 30, 2004.
2
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial condition and results of
operations are based upon the its financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to bad debts, income taxes and contingencies and
litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
DEVELOPMENT AND INTEGRATION OF BUSINESS MODEL
It is the Company's current intention to continue developing its South African
wine-growing and wine distribution business as well as its newly acquired
Australian wine-growing and wine distribution business. Presently, the Company
is investigating potential acquisitions of assets and is in discussions with
possible joint venture candidates in South Africa, Australia and elsewhere.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Our principal executive officer and principal financial officer has
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90
days prior to the filing date of this quarterly report and has concluded
that our disclosure controls and procedures are adequate.
(b) There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
(c) Not applicable
3
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit Index
Exhibit 99.1 Certification of President and Principal Financial Officer
Exhibit 99.2 Certification of President and Principal Financial Officer
4
b. Reports on Form 8-K
On September 16, 2004, the Company filed an 8-K with the Securities and Exchange
Commission with respect to the entry into a material definitive agreement which
occurred on September 13, 2004. On such date, the Company agreed to issue
20,000,000 shares of its common stock to the shareholders of Dominion Wines Ltd
and Dominion Estates Pty Ltd in exchange for all of the issued and outstanding
ordinary shares of each of those entities. Dominion Wines and Dominion Estates
are Australian based winery operations with potential leisure development.
As a result of the Exchange Transaction, the Company has acquired all of the
assets and liabilities of both Dominion Wines and Dominion Estates.
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.
ATLANTIC WINE AGENCIES INC.
/s/ Harry Chauhan
-----------------
Name: Harry Chauhan
Title: President, Chief Financial Officer and Chairman of the Board
Date: November 18, 2004
5