<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000 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: 0-27653
PACIFIC CMA, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1475073
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7331 SOUTH MEADOW COURT
BOULDER, COLORADO 80301
(Address of principal executive offices) (Zip code)
(303) 530-3353
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 __
Applicable only to issuers involved in bankruptcy proceedings during the past
five years. Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
YES __ NO __
Applicable only to corporate issuers. State the number of shares outstanding of
each of the issuer's classes of common equity, as of the latest practicable
date. At September 30, 2000, the following shares of common were outstanding:
Common Stock, no par value, 21,800,000 shares.
Transitional Small Business Disclosure Format (Check one):
YES __ NO X
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL INFORMATION AND EXHIBITS
(a) The unaudited financial statements of registrant for the nine months
ended September 30, 2000, follow. The financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented.
PACIFIC CMA, INC.
FINANCIAL STATEMENTS
Quarter Ended September 30, 2000
Index to Financial Statements:
Balance Sheet
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
<TABLE>
<CAPTION>
PACIFIC CMA, INC.
BALANCE SHEET
(unaudited)
SEPTEMBER 30, 2000
ASSETS
Current Assets
<S> <C>
Cash and Cash Equivalents $ 1,246,839
Trade Receivables 2,754,886
Deposits, Prepayment and Other Debtors (Note 4) 763,851
Bills Receivable (Note 6) 284,386
--------
Total current assets 5,049,962
Goodwill (Note 3) 265,962
Property, Plant and Equipment (Note 5) 238,217
-------
Total Assets $5,554,141
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade Payables 1,552,118
Accrued Charges and Other Creditors 27,758
Amount Due to a Director (Note 7) 193,242
Obligations under Hire Purchase Contracts (Note 10) 88,036
Income Tax Payable 217,856
--------
Total Current Liabilities 2,079,010
Deferred Taxes 6,610
-----
Total Liabilities 2,085,620
=========
</TABLE>
<TABLE>
STOCKHOLDERS' EQUITY
<S> <C>
Common stock, no par value;
100,000,000 shares authorized;
21,800,000 shares issued and outstanding 2,088,677
Reserves (Note 2) 1,379,844
---------
Total Stockholders' Equity 3,468,521
---------
Total Liabilities and Stockholders' Equity 5,554,141
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
PACIFIC CMA, INC.
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Operating Revenue $ 3,435,058 $ 2,442,620
Operating Expenses
Cost of Forwarding (2,832,313) (2,119,400)
Salaries and Bonus (174,596) (156,577)
Rent and Related Expenses (43,752) (18,457)
Depreciation (27,732) (10,000)
Other Selling and Administrative Expenses (199,525) (137,226)
--------- ---------
Total Operating Expenses (3,277,918) (2,441,660)
Financial Expenses (Note 1) (2,377) (451)
------- -----
Total Expenses (3,280,295) (2,442,111)
----------- -----------
Net Income from Operations 154,763 509
Non-Operating Income
Bank Interest 15,590 3
Other Income 27,920 150
------ ------------
Total Non-Operating Income 43,510 153
------ ---
Non-Operating Expenses
Compensation Expenses - for stock granted (Note 9) (165,600) 0
--------- ---
Income before Income Taxes 32,673 662
Provision for Income Taxes (Note 8) (5,227) (105)
------- -----
Profit Attributable to Stock (Note 2) 27,446 557
====== ===
Earnings Per Share $ 0.00133 $ 0.00004
======= =======
Weighted Average Number of Shares 20,600,000 15,000,000
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Operating Revenue $ 9,891,863 $6,393,159
Operating Expenses
Cost of Forwarding (7,721,428) (5,331,060)
Salaries and Bonus (560,006) (335,208)
Rent and Related Expenses (139,480) (47,744)
Depreciation (62,317) (23,743)
Other Selling and Administrative Expenses (512,718) (422,634)
--------- ---------
Total Operating Expenses (8,995,949) (6,160,389)
Financial Expenses (Note 1) (3,677) (452)
------- -----
Total Expenses (8,999,626) (6,160,841)
----------- -----------
Net Income from Operations 892,237 232,318
Non-Operating Income
Bank Interest 25,854 2,548
Other Income 20,255 502
------ ---
Total Non-Operating Income 46,109 3,050
------ -----
Non-Operating Expenses
Compensation Expenses - for stock granted (Note 9) (165,600) 0
--------- -----
Income before Income Taxes 772,746 235,368
Provision for Income Taxes (Note 8) (123,639) (37,659)
--------- --------
Profit Attributable to Stock (Note 2) 649,107 197,709
======= =======
Earnings Per Share $ 0.0321 $ 0.0132
====== ======
Weighted Average Number of Shares 20,200,000 15,000,000
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
PACIFIC CMA, INC.
STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Cash Flow from Operating Activities
Net Income $ 32,673 $ 662
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities
Depreciation 27,732 10,000
Loss on Disposal of Property, Plant and Equipment 464 1,538
Stock Granted 165,600 0
Changes in Working Capital
Trade Receivables (207,577) (72,180)
Deposits, Prepayments and Other Debtors 937,277 (50,268)
Due from Other Related Parties 0 (173,110)
Advances from a Director 360,537 298,341
Trade Payables 139,203 (45,373)
Accrued Charges and Other Creditors 7,804 (13,191)
Provision for Bonus 0 17,307
-------- ------
Net Cash Used in Operating Activities 1,463,713 (26,274)
--------- --------
Taxation
Overseas Tax Paid (34,523) 0
-------- ------
Cash Flow from Investing Activities
Purchase of Subsidiaries (223,975) 0
Acquisition of Property, Plant and Equipment (24,870) (57,084)
Sales Proceeds from Disposal of Property, Plant 95 1,154
------ ------
and Equipment
Net Cash Used in Investing Activities (248,750) (55,930)
--------- --------
Cash Flow from Financing Activities
Capital Element of Hire Purchase Payments (8,334) (1,229)
Net Cash Provided by Financing Activities (8,334) (1,229)
------- -------
Net Decrease in Cash and Cash Equivalents 1,172,106 (83,433)
Cash and Cash Equivalents at Beginning of Period 74,733 101,492
------ -------
Cash and Cash Equivalents at End of Period 1,246,839 18,059
========= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Cash Flow from Operating Activities
Net Income $ 772,746 $ 235,368
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities
Depreciation 62,317 23,743
Loss on Disposal of Property, Plant and Equipment 464 1,538
Stock Granted 165,600 0
Changes in Working Capital
Trade Receivables (951,068) 19,692
Deposits, Prepayments and Other Debtors (846,749) (59,538)
Due from Other Related Parties 385,329 (480,675)
Advances from a Director 245,272 236,756
Trade Payables 511,957 (275,722)
Accrued Charges and Other Creditors (87,329) 31,848
Provision for Bonus 0 30,128
----------- ------
Net Cash Used in Operating Activities 258,539 (236,862)
------- ---------
Taxation
Overseas Tax Paid (38,269) 0
-------- ---------
Cash Flow from Investing Activities
Purchase of Subsidiaries (265,412) 0
Acquisition of Property, Plant and Equipment (42,752) (160,427)
Sales Proceeds from Disposal of Property, Plant 95 1,154
----- -----
and Equipment
Net Cash Used in Investing Activities (308,069) (159,273)
--------- ---------
Cash Flow from Financing Activities
Capital Element of Hire Purchase Payments (18,038) (1,229)
Issue of Shares 1,282,051 0
--------- ---------
Net Cash Provided by Financing Activities 1,264,013 (1,229)
--------- -------
Net Decrease in Cash and Cash Equivalents 1,176,214 (397,364)
Cash and Cash Equivalents at Beginning of Period 70,625 415,423
------ -------
Cash and Cash Equivalents at End of Period 1,246,839 18,059
========= ======
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PACIFIC CMA, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
1. FINANCIAL EXPENSES
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September 30, September 30,
2000 2000
<S> <C> <C>
Hire purchase interest $2,377 $3,677
===== =====
2. RESERVES September 30, 2000
Accumulated profit at 1/1/00 $730,737
Profit for the period 1/1/00-9/30/00 649,107
-------
Accumulated profit at 9/30/00 $1,379,844
=========
</TABLE>
3. GOODWILL
On January 3, 2000, AGI Logistics (Hong Kong) Limited, a Hong Kong
corporation ("AGI"), acquired 100% of the equity interests in Sparkle Shipping,
Godown, Wharf & Transp. Co., Limited and Guangzhou Huasheng International
Forwarding Limited for consideration of HK$100,000 for each entity.
The amount of goodwill that arose from these acquisitions are as follows:
Sparkle Shipping, Godown, Wharf & Transp. Co., Limited $34,312
Guangzhou Huasheng International Forwarding Limited 7,675
-----
$41,987
Pursuant to the Stock Exchange Agreement dated July 25, 2000 (and effective
August 28, 2000), Buller Services Corporation, a British Virgin Islands
International Business Company ("Buller"), exchanged 100% of the issued and
outstanding shares of AGI for 8,000,000 newly issued shares of the Company. As a
result, AGI became a wholly owned subsidiary of Pacific CMA, Inc. (the
"Company").
The amount of goodwill that arose from this "reverse acquisition" is as
follows:
AGI $223,975
-------
Total goodwill $265,962
=======
4. DEPOSITS, PREPAYMENT AND OTHER DEBTORS
Temporary receivable $ 9,617
Short-term loan receivable 651,709
Rental and utility deposits 75,034
Prepayment 27,491
------
$763,851
<PAGE>
Short-term loan receivable is unsecured, interest bearing at 10% per annum
and with a 3-month term of repayment. The loan had been settled before November
15, 2000.
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
GUANGZHOU SPARKLE
AGI HUASHENG SHIPPING TOTAL
<S> <C> <C> <C> <C>
Office equipment $ 68,110 5,563 5,236 78,909
Furniture and fixtures 115,883 1,791 296 117,970
Motor vehicles 66,194 -- 87,179 153,373
Leasehold improvement -- 841 172 1,013
Less: Accumulated (101,672) (2,258) (9,118) (113,048)
--------- ------- ------- ---------
Depreciation
Net book value $148,515 5,937 83,765 238,217
======= ===== ====== =======
</TABLE>
6. BILLS RECEIVABLE
Bills receivable represent checks which have not been presented for payment
at the period end and subsequently cleared in October 2000.
7. AMOUNT DUE TO A DIRECTOR
The balance due to a director is unsecured, interest-free and with no fixed
date of repayment.
8. TAXATION
Overseas tax has been provided at a rate of 16% on the Company's estimated
assessable profits for the period. The charge comprises of Hong Kong profits tax
of US$123,639.
9. COMPENSATION EXPENSES
Compensation expenses represent the fair market value of 1,800,000 shares
of the Company's common stock granted to six consultants to the Company on
September 1, 2000. The Company's board of directors determined that fair market
value was $0.092 per share, for an aggregate value of $165,600.
10. OBLIGATIONS UNDER HIRE PURCHASE CONTRACTS
Hire purchase contracts represent the finance leases for purchasing fixed
assets by monthly installments.
<PAGE>
11. SHARE CAPITAL
20,000,000 shares @ $0.0961 per share $1,923,077
1,800,000 shares granted @ $0.092 per share $ 165,600
-----------
$2,088,677
12. BASIS OF PRESENTATION
The financial statements of the Company for the three and nine months ended
September 30, 2000 are unaudited. Certain information and note disclosures
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been omitted. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Current Report on Form 8-K filed
August 30, 2000. In the opinion of management, the financial statements contain
all adjustments, consisting of normal recurring adjustments, necessary to
present fairly the financial position of the Company for the periods presented.
The interim operating results may not be indicative of operating results for the
full year or for any other interim periods.
13. THE COMPANY
The Company was incorporated on August 12, 1998 according to the laws of
the state of Colorado. Prior to the transaction described in the immediately
following paragraph, the Company had been in the development stage and primarily
engaged in administrative functions.
Pursuant to a Stock Exchange Agreement, effective August 28, 2000, the
Company completed a transaction whereby AGI became a wholly owned subsidiary of
the Company. The transactions was recorded as a "reverse acquisition" where AGI
was considered to be the accounting acquirer, as AGI's parent company, Buller,
and Buller's sole shareholder (who is the president of AGI) had control of the
combined entity after the transactions were completed.
Since the Company is a holding company and its operations as of September
30, 2000 were insignificant, the Company has presented only AGI's results
of operations for the current quarter and for prior quarters. In addition,
consolidated pro forma financial statements as of and for the period ended
September 30, 2000 are not presented here.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AGI and AGI's
wholly owned and operating subsidiaries, Guangzhou Huasheng International
Forwarding and Sparkle Shipping, Godown, Wharf & Transp. Co., Ltd. All
significant intercompany balances and transactions have been eliminated in
consolidation.
<TABLE>
<CAPTION>
DATE AND
PLACE OF ISSUED AND FULLY REGISTERED PRINCIPAL
NAME INCORPORATION PAID CAPITAL SHARE CAPITAL ACTIVITIES
<S> <C> <C>
AGI Hong Kong 1,923,077 1,923,077 Freight
8/12/98 (HK$15,000,000) (HK$15,000,000) Forwarding
Subsidiaries of AGI:
Guangzhou Hong Kong 128,205 128,205 Freight
Huasheng 12/2/98 (HK$1,000,000) (HK$1,000,000) Forwarding
Sparkle Hong Kong 641,026 641,026 Freight
Shipping June 2, 1999 (HK$5,000,000) (HK$5,000,000) Forwarding
</TABLE>
RISKS AND UNCERTAINTIES
The Company has a limited operating history on which an evaluation of its
business and prospects can be based. Although the Company has generated net
income for the nine months ended September 30, 2000, there is no assurance that
the Company will continue to generate income in the future. Management believes
that its positive cash balance of $1,246,839 and revenues projected to be
generated will be sufficient to fund its operations for the next 12 months. In
the event the Company does not generate sufficient funds to operate the
business, there is no assurance that the Company will be able to obtain the
needed funds, or that such funds, if available, will be obtained on terms
satisfactory to the Company.
FOREIGN CURRENCY ADJUSTMENT
The functional currency of AGI is the Hong Kong Dollar. However, the
Company uses the peg rate of US$1:HK$7.8 to record its transactions on its
financial statements. Accordingly, no material foreign currency adjustments are
required in the Company's financial statements.
EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing income available to common shareholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB issued Statement of Financial Accounting Standards No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities on the balance sheet at their fair value. This
statement, as amended by SFAS 137, is effective for financial statements for all
fiscal quarters to all fiscal years beginning after June 15, 2000. The Company
does not expect the adoption of this standard to have a material impact on its
results of operations, financial position or cash flows as it currently does not
engage in any derivative or hedging activities.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition," which outlines the basic
criteria that must be met to recognize revenue and
<PAGE>
provides guidance for presentation of revenue and for disclosure related to
revenue recognition policies in financial statements filed with the Securities
and Exchange Commission. The effective date of this pronouncement is the fourth
quarter of the fiscal year beginning after December 15, 1999. The Company
believes that adopting SAB 101 will not have a material impact on the Company's
financial position and results of operation.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation," an
interpretation of APB Opinion No. 25 ("APB 25"). FIN 44 clarifies the
application of APB 25 for (a) the definition of employee for purposes of
applying APB 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence for various modification to
the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation award in a business combination. FIN 44 is
effective July 1, 2000, but certain provisions cover specific events that occur
after either December 15, 1998, or January 12, 2000. The Company believes that
adopting FIN 44 will not have a material impact on the financial statements.
14. STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company's articles of incorporation authorize up to 10,000,000 shares
of preferred stock, no par value per share. As of September 30, 2000, no
preferred shares had been designated or issued.
COMMON STOCK
The Company's articles of incorporation authorize up to 100,000,000 shares
of common stock, no par value per share. From the Company's date of
incorporation to August 28, 2000, the Company had issued an aggregate of
12,000,000 shares of common stock.
On August 28, 2000, the Company issued 8,000,000 shares of its common stock
in exchange for all 15,000,000 outstanding shares of AGI in a transaction known
as a reverse acquisition.
On September 1, 2000, the Company issued 1,800,000 shares of its common
stock to certain consultants for services rendered valued at $165,600, subject
to the Company's right to repurchase the shares as follows: If the consultant is
not performing services for the Company through and including June 1, 2000, then
two-thirds of the shares may be repurchased; if the consultant is not performing
services for the Company through and including March 1, 2001, one-third of the
shares may be repurchased.
STOCK OPTIONS
From time to time, the Company may issue stock options pursuant to various
agreements with other compensatory arrangements. Under the terms of various
employment agreements with employees, the Company issued options to purchase
400,000 shares of the Company's common stock at an exercise price of $0.092 (the
estimated fair market value on the date of grant was $0.092). The options vest
over an 18-month period from the date of grant and expire on August 31, 2005.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Pacific CMA, Inc. (the "Company") was formed as a "blind pool" or "blank
check" company, whose business plan was to seek to acquire a business
opportunity through completion of a merger, exchange of stock, or other similar
type of transaction. On August 28, 2000, the Company carried out its business
plan by acquiring AGI Logistics (Hong Kong) Limited, a Hong Kong corporation
("AGI"). The acquisition was brought about by transactions that are memorialized
in two agreements:
(1) Stock Purchase Agreement, by and among Lam King Ko, Alfred ("Mr. Lam")
and by Dean F. Sessions, Grant W. Peck, Gary S. Joiner, Mark DiSalvo, John
Stearns, Richard Stearns, Scott Olson, and Jay Lutsky (collectively, the
"Selling Stockholders"). Pursuant to the terms of the Stock Purchase Agreement,
Mr. Lam purchased 9,000,000 shares of the Company's common stock from the
Selling Stockholders.
(2) Stock Exchange Agreement, by and between the Company's then-current
management and an authorized representative of Buller Services Corporation, a
British Virgin Islands International Business Company ("Buller"). Mr. Lam is the
sole beneficial owner of Buller, which, prior to the Stock Exchange Agreement
becoming effective, was the sole shareholder of AGI. Pursuant to the terms of
the Stock Exchange Agreement, the Company acquired 15,000,000 shares of AGI's
common stock from Buller, and, in exchange, the Company issued 8,000,000 shares
of its common stock to Buller. AGI became a wholly owned subsidiary of the
Company.
AGI was incorporated in Hong Kong with limited liability on August 12,
1998, under the Hong Kong Companies Ordinance. AGI is engaged in the business of
providing international air freight, sea freight, river freight, rail freight
forwarding services, local and inland trucking, and warehousing for the import
and export markets in or through Hong Kong and South China to the United States,
Europe, and other areas of Asia. AGI offers full logistics services to its
customers through its network of offices and warehouses, subcontractors and
overseas agents.
AGI's executive office is in Hong Kong. AGI maintains the following branch
offices in the PRC: Futian, Shenzhen; Yantian, Shenzhen; and Guangzhou. There
are currently 47 employees in AGI's Hong Kong office; seven employees in the
Futian, Shenzhen, office; seven employees in the Yantian, Shenzhen, office; and
18 employees in the Guangzhou office. AGI has also entered into agency
agreements with 104 freight-forwarding companies worldwide.
AGI has two wholly owned subsidiaries that are also engaged in the freight
forwarding business: Guangzhou Huasheng International Forwarding Ltd. and
Sparkle Shipping, Godown, Wharf & Transp. Co. Ltd.
The Company expects to continue, and, if appropriate, expand, the existing
business operations of AGI.
RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
For the nine months ended September 30, 3000, the Company's net income
increased to $649,107, representing an increase of $451,398 from the
corresponding 1999 period. This increase in net income is
<PAGE>
a direct result of the increase in operating revenue, which is primarily
attributable to Guangzhou Huasheng and Sparkle Shipping penetrating the
logistics market in China. AGI acquired these two entities in January 2000.
The Company's operating expenses also increased during this period.
Salaries and bonus expenses increased by $224,798 to $560,006 due to recruitment
of additional employees to develop overseas logistics markets. Rent and related
expenses increased by $91,736 to $139,480, due to the acquisition of additional
office space to accommodate the Company's expansion in operations. Other
selling, general and administrative expenses increased by $90,084 to $512,718,
the majority of which increase is due to an increase in marketing, promotional
and communications expenses and other overhead costs in connection with the
expansion of the Company's business in Asia and overseas. Notwithstanding these
increases, the Company's gross profit increased by $1,108,336 to $2,170,435 from
the corresponding 1999 period.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
For the three months ended September 30, 2000, the Company's net income
increased to $27,446, representing an increase of $26,889 from the corresponding
1999 period. This increase in net income is attributable to the same factors
discussed above for the nine-month period.
The Company's operating expenses also increased during this period.
Salaries and bonus expenses increased by $158,919 to $174,596 due to recruitment
of additional employees to develop overseas logistics markets. Rent and related
expenses increased by $25,295 to $43,752, due to the acquisition of additional
office space to accommodate the Company's expansion in operations. Other
selling, general and administrative expenses increased by $62,299 to $199,525,
the majority of which increase is due to an increase in marketing, promotional
and communications expenses and other overhead costs in connection with the
expansion of the Company's business in Asia and overseas. Notwithstanding these
increases, the Company's gross profit increased by $279,525 to $602,745 from the
corresponding 1999 period.
The Company incurred compensation expenses of $165,600 during this period
due to the issuance of 1,800,000 shares of its common stock to six consultants
for past services rendered. This non-operating expense is not a recurring item
on the Company's financial statements.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company currently finances its operations primarily through available
cash and cash equivalents, cash flow from operations, and issue of its common
stock. As of September 30, 2000, the Company had cash and cash equivalents of
$1,246,839. The Company believes that its current cash and cash equivalents and
cash flow generated from operations will provide adequate operating capital to
fund its operations at currently anticipated levels and to expand its logistic
service centers through the next 12 months. The Company does not expect any
material adverse change in its short-term and long-term liquidity. The Company
does not have material capital commitments.
The increase in the Company's cash position during the nine months ended
September 30, 2000, was attributable to cash flows generated from operations,
issue of its common stock, and an advance from its director.
The Company has determined to expand the operations of AGI. Such expansion
may require capital resources in excess of its current available resources. To
fund such expansion, the Company may seek to obtain such additional funds
through private equity or debt financings. Such additional financing may result
in dilution to current stockholders. There can be no assurance that any
additional financing, if required, can be obtained on terms acceptable to the
Company, if at all. If additional funds are not available, the Company may be
required to curtail or abandon its expansion objectives.
PART II OTHER INFORMATION
ITEM 5 OTHER INFORMATION
On November 15, 2000, the Company dismissed its independent accountants,
Comiskey & Company, P.C., of Denver, Colorado. The reports of Comiskey &
Company, P.C. for fiscal years ended December 31, 1999 and 1998, contained no
adverse opinion, disclaimers of opinion nor were they modified as to
uncertainty, audit scope or accounting principles. The decision to dismiss the
firm of Comiskey & Company, P.C. was made by the Board of Directors of the
Company. At no time during the engagement of Comiskey & Company, P.C. as
independent accountants for the Company were there disagreements, whether or not
resolved, on any matter of accounting principles or practices, financial
statement or disclosure or auditing scope of procedure. On November 16, 2000,
the Company provided a draft copy of its Quarterly Report on Form 10-QSB, for
the period ended September 30, 2000, to Comiskey & Company, P.C. requesting
their comments on the information contained therein including the disclosures
set forth in Item 5 of this Quarterly Report on Form 10-QSB. On November 16,
2000, Comiskey & Company, P.C. provided the Company with a letter stating they
agree with such information, a copy of which letter is filed as an exhibit on
this Quarterly Report on Form 10-QSB.
On November 15, 2000, the Company engaged the firm of Messrs. Paul W.C. Ho
& Company, C.P.A., of Hong Kong as independent accountants for the Company.
Prior to November 15, 2000, neither the Company, nor anyone on its behalf, had
consulted with Messrs. Paul W.C. Ho & Company, C.P.A., concerning the accounting
principles of any specific completed or contemplated transaction, any type of
audit opinion on the Company's financial statements nor any other material
factor which might be considered by the Company in reaching a decision as to any
accounting, auditing or financial reporting issue.
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The Exhibits listed below are filed as part of this Quarterly Report.
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
<S> <C>
2.1 Stock Purchase Agreement, dated as of July 25, 2000, among Lam King Ko, Alfred and Dean F.
Sessions, Grant W. Peck, Gary S. Joiner, Mark DiSalvo, John Stearns, Richard Stearns, Scott
Olson, Jay Lutsky, and Frank Jackson (collectively, the "Selling Stockholders") (Incorporated
by reference from Exhibit 2.1 to the registrant's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 30, 2000 (the "August 8-K")).
2.2 Promissory note of Lam King Ko, Alfred, dated as of July 25, 2000, in favor of the Selling
Stockholders' designated agent, in the principal amount of $45,000.00 (Incorporated by
reference from Exhibit 2.2 to the August 8-K).
2.3 Stock Exchange Agreement, dated as of July 25, 2000, between Pacific CMA, Inc. and Buller
Services Corporation (Incorporated by reference from Exhibit 2.3 to the August 8-K).
2.4 Consulting Agreement, dated as of June 1, 2000, between AGI Logistics (Hong Kong) Limited and
PCMA, Inc. (Incorporated by reference from Exhibit 2.4 to the August 8-K).
2.5 Promissory note of AGI Logistics (Hong Kong) Limited, dated as of June 1, 2000, in favor of
PCMA, Inc. in the principal amount of $175,000.00 (Incorporated by reference from Exhibit 2.5
to the August 8-K).
3.1 Articles of Incorporation (Incorporated by reference from Exhibit 3.1 to the registrant's
Registration Statement on Form 10SB/A, filed with the Securities and Exchange Commission
on October 26, 1999 (the "Registration Statement").
3.2 By-laws (Incorporated by reference from Exhibit 3.2 to the Registration Statement).
4.1 Specimen Stock Certificate (Incorporated by reference from Exhibit 4.1 of the Registration
Statement).
16.1* Letter on Change in Certifying Accountant
27* Financial Data Schedule
-------------------------
* Filed herewith.
</TABLE>
(b) A Current Report on Form 8-K was filed by the Company on August 30,
2000. The report covered the change in control of the Company and the
acquisition of AGI on August 28, 2000, as
<PAGE>
memorialized in the Stock Purchase Agreement and the Stock Exchange Agreement.
In connection with these transactions, each of the Company's then-current
directors and officers resigned their positions after having appointed the
designees of Mr. Lam and Buller.
The report also covered a consulting agreement ("Consulting Agreement"), by
and between AGI and PCMA, Inc., a Nevada corporation on June 1, 2000.
The audited financial statements as of December 31, 1999, the unaudited
financial statements as of June 30, 2000, and the unaudited pro forma financial
statements as of June 30, 2000, of AGI were filed with the Current Report on
Form 8-K.
Copies of the Stock Purchase Agreement, the Stock Exchange Agreement, the
Consulting Agreement and other documents related to the acquisition of AGI were
filed as exhibits to the Company's Current Report on Form 8-K and are
incorporated in their entirety herein. The foregoing descriptions are modified
by such reference.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 20, 2000
PACIFIC CMA, INC.
BY: /S/ LAM KING KO, ALFRED
----------------------------------------
Lam King Ko, Alfred
President
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
<S> <C>
2.1 Stock Purchase Agreement, dated as of July 25, 2000, among Lam King Ko, Alfred and Dean F.
Sessions, Grant W. Peck, Gary S. Joiner, Mark DiSalvo, John Stearns, Richard Stearns, Scott
Olson, Jay Lutsky, and Frank Jackson (collectively, the "Selling Stockholders") (Incorporated
by reference from Exhibit 2.1 to the registrant's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 30, 2000 (the "August 8-K")).
2.2 Promissory note of Lam King Ko, Alfred, dated as of July 25, 2000, in favor of the Selling
Stockholders' designated agent, in the principal amount of $45,000.00 (Incorporated by
reference from Exhibit 2.2 to the August 8-K).
2.3 Stock Exchange Agreement, dated as of July 25, 2000, between Pacific CMA, Inc. and Buller
Services Corporation (Incorporated by reference from Exhibit 2.3 to the August 8-K).
2.4 Consulting Agreement, dated as of June 1, 2000, between AGI Logistics (Hong Kong) Limited and
PCMA, Inc. (Incorporated by reference from Exhibit 2.4 to the August 8-K).
2.5 Promissory note of AGI Logistics (Hong Kong) Limited, dated as of June 1, 2000, in favor of
PCMA, Inc. in the principal amount of $175,000.00 (Incorporated by reference from Exhibit 2.5
to the August 8-K).
3.1 Articles of Incorporation (Incorporated by reference from Exhibit 3.1 to the registrant's
Registration Statement on Form 10SB/A, filed with the Securities and Exchange Commission
on October 26, 1999 (the "Registration Statement").
3.2 By-laws (Incorporated by reference from Exhibit 3.2 to the Registration Statement).
4.1 Specimen Stock Certificate (Incorporated by reference from Exhibit 4.1 of the Registration
Statement).
16.1* Letter on Change in Certifying Accountant
27* Financial Data Schedule
-------------------------
* Filed herewith.
</TABLE>
