UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB/A
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.)
Golden Cross House
8 Duncannon Street
London
WC2N 4JF
(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
F-1
Consolidated Balance Sheets at September 30, 2004 (Unaudited)...............................................
Consolidated Statement of Operations for the Three and Six Months Ended September 30, 2004, respectively and
for the Period from March 1, 2004 to September 30, 2004 (Unaudited)............... .......................... F-2
Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2004 and for the Period from
March 1, 2004 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 3,861,839
Deficit accumulated during Development Stage (1,522,997)
-----------
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 March 1, 2004
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 999,000 1,139,000
Depreciation and amortization 2,335 7,878 7,878
------------ ------------ ------------
Total Costs and Expenses 206,462 1,487,961 1,657,961
------------ ------------ ------------
NET OPERATING LOSS (142,569) (1,367,925) (1,537,925)
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) $ (1,352,997) $ (1,522,997)
============ ============ ============
NET LOSS PER SHARE, basic and diluted $ (0.01) $ (0.02) $ (0.02)
============ ============ ============
Weighted average number of common shares
outstanding 85,830,887 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 March 1, 2004
Months Ended (Inception) to
September 30, September 30,
CASH FLOWS FROM OPERATING ACTIVITIES 2004 2004
----------- -----------
Net loss for period $(1,352,997) $(1,522,997)
Non-cash items included in net loss:
Stock based compensation 999,000 1,139,000
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 the Company and a recapitalization of
Atlantic Wine Agencies, Inc. Since the merger is a recapitalization
of Atlantic Wine Agencies, Inc. and not a business combination,
pro-forma information is not presented.
NOTE C - GOING CONCERN
As indicated in the accompanying financial statements, the Company
has incurred cumulative net operating losses of $1,522,997 since
inception and is considered a company in the development stage.
Management's plans include the raising of capital through the equity
markets to fund future operations and the generating of revenue
through its business. Failure to raise adequate capital and generate
adequate sales revenues could result in the Company having to curtail
or cease operations. Additionally, even if the Company does raise
sufficient capital to support its operating expenses and generate
adequate revenues, there can be no assurances that the revenue will
be sufficient to enable it to develop business to a level where it
will generate profits and cash flows from operations. These matters
raise substantial doubt about the Company's ability to continue as a
going concern. However, the accompanying financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
F-4
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 2004
NOTE D- 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 E - 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 will 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 canceled 20,000,000 shares of its common
stock which were held by certain stockholders.
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.
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 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 proposed canceling 20,000,000 shares of its common stock held
by certain stockholders. The Company anticipates closing that transaction in the
near future.
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 capital contributions from our key shareholders.
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.
3
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 consists of Messrs. Adam Mauerberger and Andrew
Bayley.
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 of certain stockholders and the
assumption of debt 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.
4
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
5
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 31.1 Certification of President and Principal Financial Officer
Exhibit 32.1 Certification of President and Principal Financial Officer
6
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 anticipates acquiring all
of the assets and liabilities of both Dominion Wines and Dominion Estates in the
near future.
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/ Adam Mauerberger
---------------------------
Name: Adam Mauerberger
Title: President, Chief Financial Officer and Chairman of the Board
Date: August 9, 2005
7