-----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, V3WbUkbqyneYSe2GiZYsBKJ3K04LYONok1W4IxUULHaJl4WJn+8WUayQ3qUzCJgU +ZfdiLdWUYovTvVkbmg0Eg== 0000910680-01-500694.txt : 20020411 0000910680-01-500694.hdr.sgml : 20020411 ACCESSION NUMBER: 0000910680-01-500694 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN JEWELRY CORP CENTRAL INDEX KEY: 0001098332 STANDARD INDUSTRIAL CLASSIFICATION: JEWELRY, PRECIOUS METAL [3911] IRS NUMBER: 841516192 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28663 FILM NUMBER: 1793077 BUSINESS ADDRESS: STREET 1: 131 WEST 35TH STREET CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2127360880 MAIL ADDRESS: STREET 1: 131 WEST 35TH STREET CITY: NEW YORK STATE: NY ZIP: 10001 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED CEILING SUPPLIES INC DATE OF NAME CHANGE: 19991103 10QSB 1 f760832.txt FORM 10-QSB 09/30/01 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 September 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-28663 AMERICAN JEWELRY CORP. ---------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 65-0675444 -------- ---------- (State of other jurisdiction of (I.R.S. Employer) incorporation or organization) Identification No.) 131 West 35th Street New York, New York 10001 ------------------------ (Address of principal executive offices) (212) 736-0880 (Issuer's Telephone Number, Including Area Code) Not Applicable -------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 |_| State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: Common Stock, $.001 par value per share - 166,418,258 shares outstanding as of September 30, 2001; Series A Preferred Stock, $.001 par value per share - 200,000 shares outstanding as of September 30, 2001. AMERICAN JEWELRY CORP. FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 2001 PART I. FINANCIAL INFORMATION Page ---- Item 1. Financial Statements. Consolidated Balance Sheets as of September 30, 2001 F-1 Consolidated Statement of Operations for the Three Months ended September 30, 2001 and September 30, 2000, and for the Nine Months ended September 30, 2001 and September 30, 2000. F-2 Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2001 and September 30, 2000 F-3 Notes to Consolidated Financial Statements F-4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 6 PART 11. OTHER INFORMATION Item 1. Legal Proceedings. 7 Item 2. Changes in Securities and Use of Proceeds. 7 Item 3. Defaults upon Senior Securities. 7 Item 4. Submission of Matters to a Vote of Security Holders. 7 Item 5. Other Information. 7 Item 6. Exhibits and Reports on Form 8-K. 7 AMERICAN JEWELRY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) September 30, 2001 ASSETS ------ CURRENT ASSETS: Cash $ 3,540 Accounts receivable, net 1,063,811 Inventory 5,618,820 Prepaid expenses 23,850 -------------- TOTAL CURRENT ASSETS 6,710,021 PROPERTY AND EQUIPMENT, net 375,927 OTHER ASSETS: Intangible assets 281,250 Other 36,450 -------------- $ 7,403,648 ============== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable and accrued expenses $ 682,493 Loans payable 520,000 Convertible debentures 335,500 -------------- TOTAL CURRENT LIABILITIES 1,537,993 -------------- DUE TO STOCKHOLDERS 30,433 STOCKHOLDERS' EQUITY: Common stock, $.001 par value -350,000,000 shares authorized, 166,418,258 shares issued and outstanding 166,418 Preferred stock, $.001 par value - 5,000,000 shares authorised, 200,000 Series A shares issued and outstanding 200 Treasury stock (10,428) Additional paid-in capital 50,732,038 Accumulated deficit (45,053,006) -------------- TOTAL STOCKHOLDERS' EQUITY 5,835,222 -------------- $ 7,403,648 ============== See notes to consolidated financial statements F-1 AMERICAN JEWELRY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Restated Restated -------- -------- Net sales $ 907,429 2,036,184 4,395,393 5,583,158 Cost of goods sold 665,842 1,946,996 3,291,281 4,513,625 ------------ ------------ ------------ ------------ Gross profit 241,587 89,188 1,104,112 1,069,533 Non cash compensation expense 32,500 112,500 257,500 337,500 Selling, general and administrative 580,012 356,242 1,795,874 1,278,821 Inventory impairment 3,000,000 -- 3,000,000 -- Stock compensation -- 2,159,805 -- 2,159,805 Bad debt recovery -- (400,000) -- (1,100,000) ------------ ------------ ------------ ------------ Income (loss) from operations (3,370,925) (2,139,359) (3,949,262) (1,606,593) Interest expense 21,958 150,125 83,327 730,419 Beneficial conversion features and inducement expense 3,208,329 19,585,000 5,866,070 19,585,000 ------------ ------------ ------------ ------------ 3,208,329 19,585,000 5,866,070 19,585,000 ------------ ------------ ------------ ------------ Net income (loss) $ (6,601,212) $(21,874,484) $ (9,898,659) $(21,922,012) ============ ============ ============ ============ Basic and diluted net income (loss) per share Net income (loss) per share $ (0.09) $ (64.55) $ (0.38) $ (84.49) ============ ============ ============ ============ Weighted average common shares outstanding 71,860,586 338,891 25,878,358 259,450 ============ ============ ============ ============
* Prior periods share restated 1:300 reverse split. See notes to consolidated financial statements F-2 AMERICAN JEWELRY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, ------------------------------- 2001 2000 ------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES : Restated -------- Net loss $ (9,898,659) $ (21,922,012) ------------ ------------- Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 98,220 67,520 Amortization 56,250 37,500 Compensation expenses-noncash 257,500 2,360,638 Interest and discount on convertible debentures 83,124 320,693 Beneficial conversion feature and Inducement expense 5,866,070 20,174,819 Amortization of deferred compensation -- 136,667 Write-off of deferred financing and offering costs -- 551,354 Change in assets and liabilities; Accounts receivable 670,324 1,441,838 Inventories 3,300,000 1,081,171 Prepaid expenses (23,850) -- Other assets 4,450 (208,625) Accounts payable and accrued expenses (214,238) (1,163,271) ------------ ------------- Total adjustments 10,097,850 24,800,304 ------------ ------------- Net cash provided (used in) by operating activities 199,191 2,878,292 ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES : Acquisition of property and equipment -- (456,599) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of notes payable - financial instituions -- (1,934,498) Proceeds from convertible debentures 600,000 2,350,000 Stock subscription received -- 157,582 Redemption of treasury stock (10,428) -- Repayment to stockholders (884,531) (3,076,551) ------------ ------------- Net cash provided (used in) by financing activities (294,959) (2,503,467) ------------ ------------- Net increase in cash (95,768) (81,774) Cash - beginning of year 99,308 97,465 ------------ ------------- Cash - end of period $ 3,540 $ 15,691 ============ ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION : Interest paid $ -- $ 47,412 ============ ============= Taxes paid $ 26,381 $ 7,898 ============ ============= NON-CASH FINANICING AND INVESTING ACTIVITIES: Forgiveness of debt by financial institution $ -- $ 4,446,040 ============ ============= Conversion of debentures $ 1,368,821 $ 1,300,000 ============ ============= Forgiveness of notes payable by related party $ -- $ 2,000,000 ============ =============
See notes to consolidated financial statements F-3 AMERICAN JEWELRY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying condensed financial statements have been prepared in accordance with generally accounting principles for interim financial information and with instructions to Form 10-QSB. 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 for a fair presentation have been included. The results of operations for the nine-month period ended September 30, 2001 are not necessarily indicative of the results to be expected for the year ended December 31, 2001. The condensed interim financial statements should be read in conjunction with the audited financial statements and notes, contained in the Form 8-KSB filed on April 16, 2001. 2. INVENTORIES IMPAIRMENT During the nine-month period ended September 30, 2001, the Company recorded an impairment of inventories for $3,000,000 due to current market conditions. 3. STOCKHOLDERS EQUITY Convertible Debentures: During the nine-month period ended September 30, 2001, the Company received $600,000 for debentures issued during the year ending December 31, 2000. Such amounts received were converted into 55,415,742 shares of the Company's Common Stock with the recording of $2,657,838 in inducement expenses and beneficial convertible features. Furthermore, the Company issued 2,199,031 shares of Common Stock to convert old debentures outstanding in the amount of $204,321 and recorded a $34,020 inducement expense. The Company exchanged the old debentures in the aggregate amount of $900,000 with amended debentures, which were issued to new debenture holders. The new debenture holders converted the new debentures in the amount of $564,500 into 107,775,957 shares of Common Stock. The Company recorded $3,174,212 in inducement expenses and beneficial convertible features for this conversion. F-4 4. COMMON STOCK On April 30, 2001, the Company effected a 1-for-300 reverse stock split of its Common Stock. Concurrent with the reverse stock split, the Company's ticker symbol was changed to AMJC (OTC BB). 5. RESTATEMENT The financial statements for September 30, 2000 included herein have been restated to properly record the revenue under the cost recovery method, whereby revenue is recorded only when collection occurs for the circumstances where there is significant uncertainty to reasonably estimate the extent of payments to be received. Furthermore, stock compensation, inducement expense and conversion beneficial features for stock issued are also recorded. The effect of such restatements on the Company's 2000 financial statements are as follows:
As As Reported Adjustments Restated ------------------- -------------------- --------------------- Balance Sheet Adjustments Assets $ 12,060,771 $ (1,558,352) $ 10,502,419 Liabilities & Equity 12,060,771 1,558,352 10,502,419 Statement of Operations Adjustments Revenue 8,185,985 (2,602,827) 5,583,158 Cost of goods sold 5,932,454 (1,418,829) 4,513,625 Non-cash compensation - 337,500 337,500 Stock compensation $ 1,511,667 $ 648,138 $ 2,159,805 Income (loss) from Continuing Operations 563,043 (2,169,636) (1,606,593) Inducement expense and conversion beneficial feature - 20,174,819 20,174,819 Net Income (loss) 422,443 (22,344,455) (21,922,012) Net income (loss) per Common share basic $ 1.96* $ (86.45) $ (84.49) * Net loss per common share has been restated for 1:300 reverse split.
F-5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations NINE-MONTH AND THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE- MONTH AND THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 Net sales amounted to $4,395,393 for the nine-month period ended September 30, 2001, compared to $5,583,158 a decrease of $1,187,765 or 21% from the nine-month period ended September 30, 2000. Net sales for the three months ended September 30, 2001 were $907,429 compared to $2,036,184 for the same period in 2000, a decrease of 55%. The decline in sales was due to a slow down in the economy during this period. Gross profit increased by $34,579 or 3%, to $1,104,112 for the nine-month period ended September 30, 2001 from $1,069,533 for the nine-month period ended September 30, 2000. Gross profit for the three months ended September 30, 2001 increased by $152,399 to $241,587 in 2001 from $89,188 for the same period in 2000. Gross profit, estimated by management for interim periods was 25% for the nine-month period ended September 30, 2001 and 19% for the nine-month period ended September 30, 2000, as restated. This change is not deemed material and is subject to adjustments in later periods. Selling, General and Administrative expenses increased by $517,053, or 40% to $1,795,874, or 41% of net revenues, for the nine-month period ended September 30, 2001, from $1,278,821 or 23% of net revenues for the nine-month period ended September 30, 2000. Selling, General and Administrative expenses increased by $223,770, or 63% to $580,012, or 64% of net revenues, for the three-month period ended September 30, 2001, from $356,242 or 13% of net revenues for the three-month period ended September 30, 2000. The principal increase in expenses was due to increased costs related to acquisitions and restructuring of Company's debt and equity. Inventory impairment expenses of $3,000,000 were incurred during the three and nine months ended September 30, 2001. These were non-recurring charges recorded in the current year to reflect current market conditions. Interest expenses decreased to $83,327 for the nine-month period ended September 30, 2001 from $730,419 for the nine-month period ended September 30, 2000. Interest expenses decreased to $21,958 for the three-month period ended September 30, 2001 from $150,125 for the three-month period ended September 30, 2000. The decrease is primarily due to the elimination of note payable to financial institution and reduction of outstanding debentures payable that were in place in 2000. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Historically the Company financed operations principally through collections of accounts receivable, loans from financing institutions, issuance of stock and advances from officers. In the nine months ended September 30, 2001, the Company financed operations from proceeds from sales. We believe the Company will be able to finance future operations from cash generated from operations. Working capital decreased by $2,425,613 to $5,172,028 at September 30, 2001, from $7,597,641 at September 30, 2000. Such decrease is attributable to the reduction in valuation of inventory due to market conditions. The Company's operating activities generated cash in the amount of $199,191 for the nine month period ended September 30, 2001 as compared to $2,878,292 for the same period in 2000. There were no investing activities in 2001. In the nine months ended September 30, 2000 the Company acquired property and equipment for $456,599. The Company used net cash in financing activities in the amount of $294,959 during the nine month period ended September 30, 2001, as compared to $2,503,467 during the nine month period ended September 30, 2000. The principal use of cash in financing activities in 2001 was repayment of debt and advances to stockholders. The principal use of cash in financing activities in 2000 was repayment of loans payable to stockholders and financial institutions. 6 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Incorporated by reference herein to the Company's Form 10-KSB for the fiscal year ended December 31, 2000, as filed with the Securities and Exchange Commission on April 17, 2001. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. The holders of certain 8% Convertible Debentures due 2002 of the Company (the "Debentures") entered into a purchase agreement with third parties (the "Purchasers") to sell $400,000 of the Debentures to the Purchasers. The Company exchanged the Debentures purchased by the Purchasers with debentures issued by the Company that were amended to extend the maturity date an additional year and to amend the conversion price to the lower of (i) 92% of the average of the closing sale price of the Company's Common Stock for the five trading days prior to the applicable conversion rate or (ii) $.015, subject to typical adjustments in the event of stock splits and the like. The Company has also entered into an agreement with the purchasers of the amended debentures, which provides for limitations on the amount of debentures that may be converted. 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) Exhibits None. (b) Reports on Form 8-K None. 7 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 15, 2001 AMERICAN JEWELRY CORP. By: /s/ Isaac Nussen ------------------------------ Name: Isaac Nussen Title: President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----