-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FhgJfvdjdao0nQ5Mlu9LZVknnrVBd5M29qevX7BOXxivcI2ILaZHrwu1XBglKGeQ hwByBEe+Dt7xn3b6Nt17sQ== 0001075636-01-500002.txt : 20020410 0001075636-01-500002.hdr.sgml : 20020410 ACCESSION NUMBER: 0001075636-01-500002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADRIATIC HOLDINGS LTD CENTRAL INDEX KEY: 0001075636 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 911918326 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-32669 FILM NUMBER: 1788586 BUSINESS ADDRESS: STREET 1: 114 MAGNOLIA ST STREET 2: STE 446 CITY: BELLINGHAM STATE: WA ZIP: 98225 BUSINESS PHONE: 8006617830 MAIL ADDRESS: STREET 1: 114 MAGNOLIA ST STREET 2: STE 446 CITY: BELLINGHAM STATE: WA ZIP: 98225 10QSB 1 q93001e.txt 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 2001 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT HAVE 1934 For the quarterly period ending September 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT HAVE 1934 Commission File Number: 333-93383 ADRIATIC HOLDINGS LIMITED (Exact name of registrant as specified in charter) Nevada 91-1918326 (State of Incorporation) (I.R.S. Employer Identification No.) 114 W. Magnolia Street, Suite 446, Bellingham, WA 98225 (Address of principal executive offices) Registrant's telephone number, including area code (800) 661-7830 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 30, 2001 Common Stock, par value $.001 per share 7,090,000 Page 2 Part I. Financial Information Item 1. Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ADRIATIC HOLDINGS CORPORATION BALANCE SHEET September 30, 2001 AND DECEMBER 31, 2000
SEPTEMBER 30, DECEMBER 31, ASSETS 2001 2000 ------ ---------- ------------ (UNAUDITED) Current Asset-Cash $ 211,165 $ 214 Deferred Offering Costs - 34,635 Deposit on Equipment 229,246 - ---------- ---------- $ 440,411 34,849 ========== ========== LIABILITIES ----------- Current liabilities: Accounts payable $ 4,128 36,894 Due to Shareholder 11,829 24,008 ---------- ---------- Total Current Liabilities $ 15,957 60,902 ---------- ---------- SHAREHOLDERS' DEFICIT -------------------- Common stock, par value $0.001 per share 25,000,000 authorized shares, 7,090,000 shares issued and outstanding 7,090 2,090 Paid-in capital 477,347 15,733 Deficit accumulated during the development stage (59,983) (43,876) ---------- ---------- Total shareholders' Equity 424,454 (26,053) ---------- ---------- Total liabilities and shareholders' deficit $ 440,411 $ 34,849 ========== ==========
See notes to financial statements. Page 3 ADRIATIC HOLDINGS CORPORATION STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND FROM INCEPTION THROUGH SEPTEMBER 30, 2001 (UNAUDITED)
Period from Inception For the Nine (July 9, 1998) Month through Ended Sept. 30, Sept. 30, 2001 2000 2001 ------- ------- ------- Revenue $ 0 $ 0 $ 0 Expenses General and Administrative 16,107 7,625 59,983 ------- ------- -------- Total Expenses 16,107 7,625 59,983 ------- ------- -------- Net Loss $(16,107) $(7,625) $(59,983) ======== ======== ======== Basic and Fully Diluted Loss Per Share $ * $ * $ (.03) ======== ======== ======== Weighted Average Number of Common Shares Outstanding 3,848,242 2,090,000 2,365,512 ======== ======== ======== * Less than $0.01 per share
See notes to financial statements. Page 4 ADRIATIC HOLDINGS CORPORATION STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000.
For the Three Month Ended Sept. 30, 2001 2000 ------- ------- Revenue $ 0 $ 0 Expenses General and Administrative 4,233 1,416 ------- ------- Total Expenses 4,233 1,416 ------- ------- Net Loss $(4,233) $(1,416) ======== ======== Basic and Fully Diluted Loss Per Share $ * $ * ======== ======== Weighted Average Number of Common Shares Outstanding 7,090,000 2,090,000 ======== ======== * Less than $0.01 per share
See notes to financial statements. Page 5 ADRIATIC HOLDINGS LIMITED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND FROM INCEPTION THROUGH SEPTEMBER 30, 2001 (UNAUDITED)
Period from Inception For the Nine (July 9, 1998) Month Period through Ended Sept. 30, Sept. 30, 2001 2000 2001 ------ ------ ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (Loss) $(16,107) $(7,625) $(59,983) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Rental Expense Contributed by Shareholder 1,249 1,248 6,022 Decrease (Increase) in Accounts Payable (5,024) 6,369 - ------- ------- ------ Total cash from operating activities (19,882) (8) (53,961) CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Deposit on Equipment (229,246) - (229,246) CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Issuance of Common Stock 470,000 0 483,050 Increase in due to Shareholders 17,821 0 41,829 Payment of Offering Costs (27,742) 0 (30,507) ------ ------ ------ Total cash from financing activities 460,079 0 494,372 ------ ------ ------ Net Increase (Decrease) in Cash 210,951 (8) 211,165 Cash at Beginning of Period 214 82 0 Cash at End of Period 211,165 74 211,165 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of Common stock in repayment of shareholder loan $ 30,000 $ 0 $ 30,000 -------- ------- --------- Acquisition of offering costs with Accounts payable $ 0 $ 0 $ 4,128 -------- ------- ---------
See notes to consolidated financial statements. Page 6 ADRIATIC HOLDINGS LIMITED NOTES TO FINANCIAL STATEMENTS NOTE-1 UNAUDITED FINANCIAL INFORMATION The unaudited financial information included for the three months and nine months interim period ended September 30, 2001 and 2000 were taken from the books and records without audit. However, such information reflects all adjustments (consisting only of normal, recurring adjustments) which are in the opinion of management necessary to reflect properly the results of the interim periods presented. The results of operations for the nine month period ended September 30, 2001 are not necessarily indicative of the results expected for the fiscal year ended December 31, 2001. NOTE-2 PUBLIC OFFERING In June 2001, the Company completed a public offering of its common stock of 5,000,000 shares for $0.10 per share. Proceeds to the Company from the offering were $500,000, including a subscription receivable at June 30, 2001 of $30,000. This subscription receivable was from a shareholder that had loaned the Company approximately $40,000 as of September 30, 2001. The subscription receivable of $30,000 was applied to the shareholder loan. Offering costs in the amount of $34,635 were charged to paid-in capital in connection with this offering. NOTE-3 DEPOSIT ON EQUIPMENT In July 2001, the Company paid a deposit of $229,246 to purchase equipment. as of September 30, 2001, the Company had not yet received the equipment, therefore the amount paid is shown as a deposit on the accompanying balance sheet. NOTE-4 FINANCIAL STATEMENTS For a complete set of footnotes, reference is made to the Company's report on Form SB-2 for the period from inception through December 31, 2000 as filed with the Securities and Exchange Commission and the audited financial statements included therein. NOTE-5 LICENSE AGREEMENT The Company has the right to manufacture and distribute an underground electrical junction box patented by J.A. Canada. J.A. Canada has settled its lawsuit with regards to its product. The statement of claims, among other things, alleged that the Canadian patent issued on the electrical box is invalid. The plaintiffs were successful in this action, and the patent has been declared invalid and will not provide the Company with protection from competition. Since the patent was declared invalid, the design of the J.A. Canada junction box has reverted to the public domain and no further patents will be able to be issued on such a design. Since the patent is declared invalid, the Company at its option has cancelled the licensing agreement without affecting the manufacturing of the product. Since the patent is declared invalid by the courts, the Company will (a) not assert any exclusive rights to the patent and (b) will cancel its licensing agreement with J.A. Canada. The Company will also be able to manufacture the junction box using the J.A. Canada design without any recourse from or payments to J.A. Canada. As the design will belong to the public domain and no patent will be available on the J.A. Canada junction box design, the Company may have to compete directly with other manufacturers of the J.A. Canada junction box design. Page 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION The information contained below includes statements of Adriatic management's beliefs, expectations, hopes, goals and plans that are forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially form those anticipated in the forward-looking statements. For a description of such risks and uncertainties, see the information set forth under the caption "Forward-Looking Statements," which information is incorporated herein by reference. The following discussion and analysis should be read in conjunction with the information set forth under the caption "Selected Financial Data" and the financial statements and notes thereto included elsewhere in this prospectus. Plan of Operation Since our inception on July 9, 1998, we have not been engaged in any significant operations nor have we had any revenues, as we are in the development stage. Our only recent activities through September 30, 2001 include organization of the Company and the raising of equity capital. In June 2001 the Company issued 5,000,000 shares of common stock in connection with a private placement offering for $500,000. The Company has just completed the SB-2 offering and will now be able to commence operations. It is our plan to search out appropriate manufacturing space and begin to acquire the necessary equipment to start manufacturing. We have suffered recurring losses from operations. We believe that the maximum proceeds of this offering will enable us to maintain our operations and working capital requirements approximately for the next 12 months, without taking into account any internally generated funds from operations. We will need to raise $500,000 to continue operations for the next 12 months based on our capital expenditure requirements. We have the authority to issue 25,000,000 shares of common stock, $0.001 par value. Prior to this filing, we have raised all funds through private placements. In July 1998, we issued 1,000,000 shares of common stock to one of our founders for $1,000 and 50,000 shares of common stock to another founder for $50. In September 1998, we issued 1,000,000 shares of common stock in connection with an additional private offering for $10,000. In February 1999, we issued 40,000 shares of common stock in connection with an additional private placement offering for $2,000. In September 2001 the Company issued 5,000,000 shares of common stock in connection with a private placement offering for $500,000. After the current SB-2 offering, we will require additional funds to maintain and expand our operations. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of the shares being offered in this prospectus. There is still no assurance that, even with the funds from this offering, we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. At the current time, we have not begun manufacturing any junction boxes, but expect to do so when the additional funds have been made available. Currently we have $22,940 in liabilities. Our financial statements report a loss of $12,303 for the fiscal period ended December 31, 1998. For this period, we paid $4,444 in office expenses and $1,050 in management fees to the original founding shareholders. For the period ended December 31, 1999, we report a loss of $11,875. We paid $176 in office expenses and $8,103 in license fees. For the period ended December 31, 2000 we report a loss of $19,698 and for the nine month period ended September 30, 2001 we report a loss of $16,107. After we raise additional funds through this current offering, we anticipate an increase in the number of employees to five. Management believes that the J.A. Junction Box has a competitive advantage over the traditional steel and concrete junction boxes. The J.A. Junction Box is manufactured with high impact polyurethane. Polyurethane is an oil-based product which is readily available in the market place. Its price and supply are stable now, and is expected, in management's opinion, to remain so in the foreseeable future, although there can be no assurance. The design of the Junction box is cylindrical so that the lid, which provides access to the wiring connections, cannot fall into the box while installation or repairs are being made. Polyurethane construction allows for a much lighter product in comparison with steel or concrete, allowing for easier production, installation and transportation of the junction boxes. Further, the polyurethane J.A. Junction Box is earthquake proof, impact resistant, and does not corrode or deteriorate. The equipment needed to manufacture J.A. Junction Boxes includes RIM cell machinery, presses and molds. The RIM cell machinery is used to compress certain materials into polyurethane. The polyurethane is then poured into moulds where it solidifies into the shape of the junction box. Upon receipt of the funds from the SB-2 offering, we plan to use $220,000 to purchase the mentioned plant equipment. It is evident that the production process will use an above normal amount of electricity and will require facility upgrades and improvements to electrical sources. We anticipate spending a further $50,000 on such facility upgrades in the first year of production. There is a patent on the junction box and we do not anticipate any further need for Research and Development at this time. The Company entered into a licensing agreement with J.A. Canada, the terms require the Company to pay a monthly royalty fee of $1,000 CDN for use of the license. The Company anticipates first year production costs to be $200,000 for supplies and $60,000 for labor. The Company has the right to manufacture and distribute an underground electrical junction box patented by J.A. Canada. J.A. Canada has settled its lawsuit with regards to its product. The statement of claims, among other things, alleged that the Canadian patent issued on the electrical box is invalid. The plaintiffs were successful in this action, and the patent has been declared invalid and will not provide the Company with protection from competition. Since the patent was declared invalid, the design of the J.A. Canada junction box has reverted to the public domain and no further patents will be able to be issued on such a design. Since the patent is declared invalid, the Company at its option has cancelled the licensing agreement without affecting the manufacturing of the product. Since the patent is declared invalid by the courts, the Company will (a) not assert any exclusive rights to the patent and (b) will cancel its licensing agreement with J.A. Canada. The Company will also be able to manufacture the junction box using the J.A. Canada design without any recourse from or payments to J.A. Canada. As the design will belong to the public domain and no patent will be available on the J.A. Canada junction box design, the Company may have to compete directly with other manufacturers of the J.A. Canada junction box design. The Company has suffered recurring losses from operations. The continuation of the Company as a going concern is dependent upon the Company attaining and maintaining profitable operations and raising additional capital. Management's plans in this regard is to raise additional capital through an equity offering. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company discontinue operations. Our functional currency is the United States Dollar and our consolidated financial statements are reported in United States Dollars unless otherwise stated. Page 8 ADRIATIC HOLDINGS LIMITED SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. ADRIATIC HOLDINGS LIMITED (Registrant) DATE: November 5, 2001 BY: /s/ Robert Knight/ -------------------- -------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----