UNITED STATES
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2002
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[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period from to .
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Commission file number 1-14072
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THE AMANDA COMPANY,INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0430260
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
13765 ALTON PARKWAY, SUITE F,
IRVINE, CA 92618 (Address of
Principal Executive Offices) (Zip
Code)
(949) 859-6279
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report) N/A
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 .
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APPLICABLE ONLY TO CORPORATE ISSUERS
As of March 31, 2002, approximately 70,351,927 shares of the Registrant's Common
Stock, $0.01 par value were outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X .
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FORM 10-QSB
THE AMANDA COMPANY, INC.
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Balance Sheets at March 31, 2002
(Unaudited) and September 30, 2001 3-4
Statements of Operations for the three months ended
March 31, 2002 and 2001 (Unaudited) and for the six
months ended March 31, 2002 and 2001 (Unaudited) 5
Statements of Cash Flows for the six months
ended March 31, 2002 and 2001 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7-9
Item 2 Management's Discussion and Analysis or
Plan of Operation 10-11
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 2 Changes in the Securities and Use of Proceeds 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Signatures
2
THE AMANDA COMPANY, INC.
BALANCE SHEET
March 31,2002 and September 31, 2001 (Audited)
ASSETS March 31, September 30,
2002 2001
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $ 15,598 $ 36,394
Accounts receivable, net 103,479 84,069
Other receivable 10,000 -
Inventory 129,444 172,617
Prepaid and other current assets 145,811 51,880
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Total current assets 404,332 344,960
PROPERTY AND EQUIPMENT, NET 25,100 33,020
SECURITY AND OTHER DEPOSITS 29,974 29,436
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Total assets $ 459,406 $ 407,416
============== ==============
The accompanying notes are an integral part of these statements.
3
THE AMANDA COMPANY, INC.
BALANCE SHEET
March 31,2002 and September 31, 2001 (Audited)
LIABILIITIES & STOCKHOLDER'S DEFICIT March 31, September 30,
2002 2001
-------------- --------------
CURRENT LIABILITIES
Accounts payable $ 948,099 $ 778,986
Accrued liabilities 365,686 1,198,496
Leasing financing payble 22,750 22,750
Notes payable 464,500 573,000
Deferred revenue 12,079 15,448
Convertible debentures 900,000 800,000
Accrued dividends payable 503,538 480,324
-------------- --------------
Total current liabilities 3,216,652 3,869,004
LONG-TERM LIABILITIES
Lease financing payable 50,721 72,320
Contingent notes payable 130,300 -
Promissory note - Bristol 300,000 -
Convertible promissory notes 470,000 -
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Total long-term liabilities 951,021 72,320
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Total liabilities 4,167,673 3,941,324
STOCKHOLDERS' DEFICIT
Convertible Preferred stock, $0.01 par value
authorized 5,000,000 shares, Series A; issued 1 1
and outstanding 61 shares at March 31, 2002
and 91 shares at September 30, 2001. Series B: 7 7
issued and outstanding 746 shares at December
31, 2001 and 926 shares at September 30, 2001
Common stock, $0.01 par value, issued and out-
standing 70,351,927 shares at March 31, 2002
and 68,778,960 shares at September 30, 2001 703,519 687,789
Accumulated deficit (4,411,794) (4,221,707)
-------------- --------------
Total stockholders' deficit (3,708,267) (3,533,908)
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Total liabilities and stockholders' deficit $ 459,406 $ 407,416
============== ==============
The accompanying notes are an integral part of these statements.
4
THE AMANDA COMPANY, INC.
STATEMENT OF OPERATIONS
For the Three and Six Months Ended March 31, 2002 and 2001
Three months ended Six months ended
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
-------------- -------------- -------------- ---------------
Net sales $ 794,562 $ 901,071 $ 1,694,939 $ 1,987,298
Cost of sales 447,760 641,171 936,454 1,317,344
-------------- -------------- -------------- ---------------
Gross profit 346,802 259,900 758,485 669,954
-------------- -------------- -------------- ---------------
Selling, general and
administrative expenses 577,304 796,371 1,134,244 1,752,471
-------------- -------------- -------------- ---------------
Operating loss (230,502) (536,471) (375,759) (1,082,517)
Other income (expense):
Interest expense (45,725) (38,566) (83,585) (110,060)
Miscellaneous income, net 34,021 56,096 79,257 138,737
Loss on impairment - - - (63,000)
Loss from discontinued operations - - - (39,323)
Extinguishment of debt - 73,168 - 84,287
-------------- -------------- -------------- ---------------
Loss before extraordinary item (242,206) (445,773) (380,087) (1,071,876)
Merger costs - - (876,000) -
-------------- -------------- -------------- ---------------
Net loss before income taxes (242,206) (445,773) (1,256,087) (1,071,876)
Income taxes - - - -
-------------- -------------- -------------- ---------------
Net loss $ (242,206) $ (445,773) $ (1,256,087) $ (1,071,876)
============== ============== ============== ===============
The accompanying notes are an integral part of these statements.
5
THE AMANDA COMPANY, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
Six months ended
March 31, March 31,
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,256,087) $ (1,071,876)
Adjustment to reconcile net cash provided
(used) in operating activities
Depreciation and amortization 9,181 53,723
Loss on disposal of property and
equipment - 40,545
Allowance for notes receivable - 63,000
Warrant/option compensation expense - 75,145
Common stock issued for compensation
and interest 1,081,729 50,022
Effect on cash of changes in operating
assets and liabilities:
Decrease (increase) in accounts
receivable, net (19,410) 57,003
Decrease (increase) in other receivables (10,000) (2,515)
Decrease (increase) in inventory 43,173 58,454
Decrease (increase) in prepaid and other
current assets (93,931) (17,590)
Decrease (increase) in security deposits - (4,492)
Increase (decrease) in accounts payable 169,113 10,153
Increase (decrease) in accrued expenses (679,596) (121,667)
Increase (decrease) in deferred revenue (3,369) (12,523)
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Net cash provided (used)
in operating activities (759,197) (822,618)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Advaces to perFORMplace - (63,000)
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Net cash provided (used)
in investing activites - (63,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of notes payable (110,000) -
Payments of equipment financing (21,599) -
Proceeds from equipment financing - 97,591
Exercise of warrants - 380,451
Proceeds from notes payable - 470,776
Proceeds from convertible debenture 100,000 -
Proceeds from convertible promissory notes 770,000 -
-------------- --------------
Net cash provided (used)
in financing activities 738,401 948,818
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Net increase (decrease) in cash and
cash equivalents (20,796) 63,200
Cash and cash equivalents at beginning
of period 36,394 48,783
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Cash and cash equivalents at end of
period $ 15,598 $ 111,983
============== ==============
The accompanying notes are an integral part of these statements.
6
The accompanying notes are an integral part of these statements.
Non-cash investing and financing activities
During the first quarter of FY2002 Series A preferred shareholders
converted 30 preferred shares into 2,941,176 common shares at an
average conversion price of $0.0102 per common share. Series B
preferred shareholders converted 150 preferred shares into 15,730,674
common shares at an average conversion price of $0.0095 per common
share. Under the conversion terms of the convertible preferred shares,
a holder has the right to convert preferred shares into common shares
at eighty-five (85%) percent of the average of the two lowest closing
bid prices during the last twenty-two (22) consecutive trading days
prior to conversion. As part of the merger, the Company issued
50,000,000 shares of common stock with a value of $876,000. There were
no conversions of preferred shares into common shares in the second
quarter.
NOTE A - GOING CONCERN
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company had a loss of
$242,206 for the quarter ended March 31, 2002, and a loss of $1,256,087
for the six months ended March 31, 2002. A deficit of $3,708,267 in
stockholders' equity and negative working capital of $2,812,320 for the
period ended March 31, 2002. The Company intends to continue to raise
additional funds in the capital markets for working capital purposes.
The Company must raise additional capital in order to continue as a
going concern.
NOTE B - ACQUISITIONS/DISPOSITIONS
The Company completed its merger with the Automatic Answer Company
(tAA) in the quarter ended December 31, 2001. The merger was accounted
for as a reverse merger. The recapitalization of tAA, the surviving
entity, resulted in a reduction of $2,119,979 in stockholder's equity;
$876,000 of which was attributable to merger expenses and $1,243,979
resulting from the assumption of the net deficit of the registrant.
NOTE C - OPTIONS TO PURCHASE COMMON STOCK
No options were exercised in the second quarter.
NOTE D - WARRANTS TO PURCHASE COMMON STOCK
No warrants were exercised in the second quarter.
NOTE E - OPTIONS/WARRANTS TO PURCHASE COMMON STOCK
No options or warrants were issued in the second quarter.
NOTE F - ACCRUED PREFERRED STOCK DIVIDENDS
The Preferred Shareholders agreed to waive all dividends, effective
October 1, 2001. No accrual for dividends on preferred shares was
recorded in the second quarter ended March 31, 2002.
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Note G - Preferred Stock
The Company has issued two series of Preferred Stock. Series A was
issued in February 1999 consisting of 1,800 shares, par value $0.01 per
share, for $1,000 per share. Series B was issued in April 1999 at the
same price and par value but only 1,000 shares were issued. Both series
of Preferred Stock carry a 16 percent dividend rate, which is paid
quarterly. If and when the Company's stock is listed again on NASDAQ
the dividend rate will drop to 8 percent.
Both issuances of Preferred Stock are convertible into shares of the
Company's Common Stock. Each share of Series A Preferred Stock is
convertible into an amount of shares of Pen Common Stock equal to
$1,000 divided by the average of the two lowest closing bid prices for
Pen Common Stock during the period of 22 consecutive trading days
ending with the last trading day before the date of conversion, after
discounting that market price by 15 percent (the "Conversion Price").
The maximum Conversion Price for the Series A Preferred Stock is $1.17
per share. The shares of Series B Preferred Stock are convertible into
Common Stock at the same Conversion Price as the Series A Preferred
Stock except for a maximum Conversion Price of $0.79 per share.
Warrants to acquire 320,000 shares of Common Stock at prices ranging
from $0.86 to $1.28 per share were also issued to the purchasers of the
Series A and Series B Preferred Stock. The Warrants expire three years
from date the Preferred Stock and warrants were initially issued.
NOTE H - CONVERTIBLE DEBENTURE
In the first quarter ended December 31, 2001 the Company issued
$100,000 in one year convertible debentures with interest at eight (8)
percent, payable quarterly. These debentures are convertible into the
Company's common stock at the lower of $.04 or 70% of the average of
the three lowest closing prices during the 30 days prior to the
conversion. These debentures are due one year from the date of the
issuance.
NOTE I - CONVERTIBLE PROMISSORY NOTE
In the first quarter ended December 31, 2001 the Company issued a
convertible promissory note totaling $450,000 at an interest rate of
eight (8) percent per annum. These notes are convertible into the
Company's common stock at $.01 per share and a 8,055,853 warrant
exercisable for common stock at $.02 per share and 1,500,000 warrants
at $.01 per share.
Note J - Earnings (loss) per share
Basic earnings (loss) per common share is computed by dividing net
earnings (loss) available to common shareholders by the weighted
average number of common shares outstanding during each period. Diluted
earnings (loss) per common share are similarly calculated, except that
the weighted average number of common shares outstanding includes
common shares that may be issued subject to existing rights with
dilutive potential except for periods when such calculations would be
anti-dilutive.
For the six ended March 31, 2002, net earnings (loss) attributable to
common shareholders includes accrued dividends at the stated dividend
rate from date of issuance and a non-cash imputed dividend to the
preferred shareholders related to the beneficial conversion feature on
8
the 1999 Series A and B Preferred Stock and related warrants. The
beneficial conversion feature is computed as the difference between the
market value of the common stock into which the Series A and B
Preferred Stock can be converted and the value assigned to the Series A
and B Preferred Stock in the private placement. The imputed dividend is
a one-time non-cash charge against the earnings (loss) per common
share. The calculation of earnings (loss) per share is included in
Exhibit 11.
NOTE K - INTERIM PERIOD COST OF GOODS SOLD
Inventory costing is based on specific identification. An inventory
count is taken at the end of each quarter.
NOTE L - INCOME TAXES
The future benefits of loss carried forward are fully reserved. There
were no income taxes during the quarter.
NOTE M - COMMON STOCK OUTSTANDING
The number of common shares issued to shareholders as of December 31,
2001 was 321,760,040. As of December 31, 2001, the Company was
obligated to issue an additional 381,759,233 pursuant to the merger
agreement with The Automatic Answer, Inc. (tAA), for a total of
703,519,273 shares.
The number of shares issued due to the merger with The Automatic
Answer, Inc., was not determined until February, 2002 due to the
dilution effect of the merger agreement.
On February 8, 2002, the company executed a reverse split of one new
share for each ten outstanding shares of common stock. The resultant
effect was that the number of shares to be outstanding of 703,519,273
become 70,351,927 post split.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS. This report contains certain
forward-looking statements within the meaning of section 27A of the
Securities Act of 1933 as amended, and section 21E of the Securities
Exchange Act of 1934, as amended, that involve risks and uncertainties.
In addition, the Company may from time to time make oral
forward-looking statements. Actual results are uncertain and may be
impacted by the following factors. In particular, certain risks and
uncertainties that may impact the accuracy of the forward-looking
statements with respect to revenues, expenses and operating results
include without limitation, cycles of customer orders, general economic
and competitive conditions and changing consumer trends, technological
advances and the number and timing of new product introductions,
shipments of products and components from foreign suppliers, and
changes in the mix of products ordered by customers. As a result, the
actual results may differ materially from those projected in the
forward-looking statements.
Because of these and other factors that may affect the Company's
operating results, past financial performance should not be considered
an indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
The following discussion and analysis provides certain information
which the Company's management believes is relevant to an assessment
and understanding of the Company's results of operations and financial
condition for the three months and six months ended March 31, 2002 and
2001. This discussion should be read in conjunction with the audited
financial statements of the Company and notes thereto included in the
Annual Report of the Company on Form 10-KSB for the year ended
September 30, 2001.
General. On October 1, 2001, the Company completed a reverse merger
with tAA. tAA is the surviving entity for accounting purposes. The
following discussion is based upon the merged activities of both
companies for all periods presented.
Net sales. Net sales for the Company decreased $106,509 or
approximately 12 percent for the three months ended March 31, 2002, as
compared to the same period in the prior year. Net sales for the
Company decreased $292,359 or approximately 15 percent for the six
months ended March 31, 2002 as compared to the same period in the prior
year. The events of September 11, 2001 as well as the general economic
condition in the country today has contributed to the general decrease
in sales experienced not only by the Company, but the industry as a
whole.
Cost of sales. Cost of sales as a percentage of net sales decreased to
44 percent of net sales for the three months ended March 31, 2002 as
compared to 29 percent for the same period in the prior year. Cost of
sales as a percentage of net sales decreased to 45 percent of net sales
for the six months ended March 31, 2002 as compared to 34 percent for
the same period in the prior year. Gross profit increased due to an
increase in product margins, reduced shipping costs due to increased
efficiency in product scheduling, both for incoming and outgoing
10
shipments, and a reduction in replacement of defective product due to
increased product testing prior to shipment to customers.
Selling, general and administrative expenses. Selling, general and
administrative expenses decreased $219,067 or approximately 28 percent
for the three months ended March 31, 2002 as compared to the same
period in the prior year. Selling, general and administrative costs
decreased $618,227 or approximately 35 percent for the six months ended
March 31, 2002 as compared to the same period in the prior year. The
merger of Pen Interconnect and The Automatic Answer (tAA) resulted in
the elimination of several executive positions, thereby eliminating
significant salary and related payroll and employee benefit expenses.
In addition, the consolidation of offices, along with the reduction in
rent for both the California corporate office and the Danbury, CT sales
office contributed significantly to expense reduction in the current
quarter and six months. The Company has concentrated on reviewing all
recurring expenses and has made reductions when possible.
Other income and expenses. Other income decreased by $95,243, while
interest expense increased by $7,159 for the three months ended March
31, 2002 as compared to the same period in the prior year. In the prior
year the Company was able to negotiate settlements on outstanding
vendor debt resulting in a gain of $73,168. There were no settlements
in the quarter ended March 31, 2002.
Extraordinary costs. There were no extraordinary costs in the quarter
ended March 31, 2002.
Liquidity and capital resources. For the quarter ended March 31,2002
and for the six months ended March 31, 2002, the Company sustained
losses of $242,206 and $1,256,087, respectively. The Company borrowed
$40,000 from a potential investor in the quarter ended March 31, 2002.
Inflation and seasonality. The Company does not believe that it is
significantly impacted by inflation or seasonality.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time the Company has been a party to various legal proceedings
arising in the ordinary course of business
1. On October 28, 1999 Color Savvy Systems, Ltd., filed suit to recover
$165,750 in past due uncontested vendor obligations. On February 16, 2000,
Color Savvy obtained a judgment against the Company for $165,750.
2. On February 15, 2000, Amistar Corporation filed suit against the Company to
recover $95,733 in uncontested past due vendor obligations. As of this
writing, Amistar has accepted the Company's stock for debt offer.
3. On March 21, 2000, Interworks Computer Products, Inc., filed suit to
recover $35,771 in past due uncontested vendor obligations. Settled in
January 2001.
4. On July 22, 2000, Force Electronics filed suit to recover $68,816 in past
due uncontested vendor obligations, and obtained a judgment on September
15, 2000. Settled in January 2001.
5. Control Design Supply/Nedco filed suit to recover $6,788 in past due
uncontested vendor obligations. Settled in January 2001.
6. On March 20, 2000, DHL Airways Inc. obtained a judgment in the amount of
$3,868 for past due uncontested vendor obligation.
7. In January 2001 Fidelity Leasing, Inc. filed suit to recover $26,608.91 and
obtained a judgment for uncontested past due lease obligations. Settled in
February 2001.
On November 15, 1999, Alan L. Weaver, former CEO of Pen Interconnect, Inc.,
obtained a judgment against the Company in the amount of $135,300 for
breach of a settlement agreement relative to Mr. Weavers' employment
agreement with the Company. The Company has reserved $135,300 as a
contingent liability as of September 30, 2000 for this agreement.
Item 2. Changes in Securities and Use of Proceeds:
None during the quarter
Item 3. Defaults Upon Senior Securities:
None during the quarter
Item 4. Submission of Matters to a Vote of Security Holders:
None during the quarter.
12
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
April 04, 2002 Item 6
Resignation of William Prevot for personal reasons
Resignation of Jose Candia due to disagreements with
the Company which are disclosed on Form 8-K.
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.
THE AMANDA COMPANY, INC.
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(Registrant)
May 24, 2002 By: /s/ Brian Bonar
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Brian Bonar,
CEO and Chairman of the Board of Directors
13