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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTER PERIOD ENDED MARCH 31, 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 0-26943
AMERICAN INFLATABLES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4702570
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
947 NEWHALL STREET, COSTA MESA, CA 92627
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 949-515-1776
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR
VALUE $.01 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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[ ]
As of December 7, 2000, there were 8,475,330 shares of the Registrant's common
stock, $.01 par value per share, issued and outstanding.
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PAGE
PART I FINANCIAL INFORMATION................................. 2
Item 1. Financial Statements (Unaudited)...................... 3
Balance Sheet......................................... 3
Statement of Operations for the Three Months
Ended March 31, 2000 and 1999....................... 4
Statement of Cash Flows For the Three Months
Ended March 31, 2000 and 1999....................... 5
Notes to Financial Statements
as of March 31, 2000................................ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 7
PART II OTHER INFORMATION..................................... 8
Item 1: Legal Proceedings..................................... 8
Item 2: Changes in Securities................................. 8
Item 3: Defaults Upon Senior Securities....................... 8
Item 4: Submission of Matters to a Vote of Security Holders... 8
Item 5: Other Information..................................... 8
Item 6(a): Exhibits.............................................. 8
Item 6(b): Reports on Form 8.K................................... 8
SIGNATURES....................................................... 9
1
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PART I - FINANCIAL INFORMATION
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This Form 10-QSB/A contains forward-looking statements within the meaning of the
"safe harbor" provisions under Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We use
forward-looking statements in our description of our plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may," "expects," "believes,"
"anticipates," "intends," "projects," or similar terms, variations of such terms
or the negative of such terms. These forward-looking statements are based on
management's current expectations and are subject to factors and uncertainties,
which could cause actual results to differ materially from those, described in
such forward-looking statements. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained in this Form 10-QSB/A to reflect any change in our
expectations or any changes in events, conditions or circumstances on which any
forward-looking statement is based. Factors, which could cause such results to
differ materially from those described in the forward-looking statements, and
elsewhere in, or incorporated by reference into this Form 10-QSB/A.
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ITEM 1 Financial Statements
AMERICAN INFLATABLES, INC.
BALANCE SHEET
MARCH 31, December 31,
2000 1999
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(UNAUDITED)
ASSETS
Current assets:
Cash ............................................$ 10,200 $ 900
Inventory........................................ 66,400 59,600
Prepaid expenses and other current assets........ 119,600 53,300
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Total current assets....................... 196,200 113,800
Fixed assets
Display and promotional blimps, net.............. 25,100 22,300
Computers, furniture and office equipment, net... 33,900 34,000
Leasehold improvements, net..........................54,300 51,600
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Total fixed assets.......................... 113,200 107,900
Deposits........................................... 7,000 7,000
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Total assets...............................$ 316,400 $ 228,700
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable....................................$ 323,000 $ 323,000
Accounts payable................................. 102,500 113,300
Accrued payroll liabilities...................... 293,100 289,500
Accrued liabilities.............................. 33,300 48,700
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Total current liabilities.................. 751,900 774,500
Stockholders' equity
Common stock..................................... 46,550 45,400
Additional paid in capital....................... 327,450 213,600
Accumulated deficit.............................. (809,500) (804,800)
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Total stockholders' equity (deficit)....... (435,500) (545,800)
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Total liabilities and
stockholders' (deficit) equity $ 316,400 $ 228,700
========= =========
See accompanying notes to financial statements
3
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AMERICAN INFLATABLES, INC.
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31,
2000 1999
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(UNAUDITED) (UNAUDITED)
Revenues.........................................$ 441,100 $ 217,000
Cost of goods sold.......................... 198,600 100,400
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Gross profit..................................... 242,500 116,600
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Administrative expenses
Depreciation and amortization............... 5,300 5,200
Legal and accounting........................ 13,800 17,000
Office expense.............................. 38,300 20,900
Other administrative expenses............... 16,000 6,200
Salaries and payroll expenses............... 67,700 40,700
Selling expenses............................ 11,300 1,300
Marketing................................... 11,200 7,600
Trade show.................................. 62,600 20,600
Travel & entertainment...................... 21,000 3,400
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Total.................................. 247,200 122,900
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Net loss from operations........... (4,700) (6,300)
Income tax (benefit)
Income tax expense (benefit)................ (7,100) (2,600)
Valuation allowance (benefit)............... 7,100 2,600
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Total.................................. 0 0
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Net loss $ (4,700) $ (6,300)
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Loss per share..............................$ (0.00) $ (0.00)
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Weighted average shares..................... 4,565,000 4,540,000
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See accompanying notes to financial statements
4
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AMERICAN INFLATABLES, INC.
STATEMENTS of CASH FLOWS
QUARTER ENDED MARCH 31,
2000 1999
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(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)............................... $ (4,700) $ (6,300)
Adjustments to Reconcile
Net Income (Loss) to Net Cash Provided
By (Used In) Operating Activities
Depreciation and amortization................... 5,300 5,200
(Increase) Decrease in:
Prepaid expense and other assets................ (62,300) (19,200)
Inventory....................................... (6,800) (4,200)
Increase (Decrease) in:
Accounts payable............................... (10,800) 2,000
Accrued expenses............................... (11,800) 25,500
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NET CASH USED IN OPERATING ACTIVITIES........... (91,100) 2,500
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment/leaseholds................ (10,600) (32,100)
Advances to officer............................. (4,000) (24,000)
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NET CASH USED IN INVESTMENT ACTIVITIES.......... (14,600) (56,100)
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CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common stock........................ 115,000 0
Increase in long term debt, net...... ...... ... 0 100,000
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NET CASH PROVIDED BY FINANCING ACTIVITIES....... 115,000 100,000
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NET INCREASE (DECREASE) IN CASH................. 9,300 46,400
CASH AT BEGINNING OF PERIOD..................... 900 5,700
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CASH AT END OF PERIOD........................... $ 10,200 $ 52,100
=========== ===========
See accompanying notes to financial statements
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Notes to Financial Statements (Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
American Inflatables, Inc.,(the "Company")(a Delaware Corporation) which
provides, manufactures and markets alternative advertising products such as,
inflatables, blimps and other custom inflatable products.
Prior to December 27, 1999 (the merger date) the Company operated as Can/Am
Marketing Group, LLC. On the merger date, the Company completed a "reverse
merger" transaction and changed its name to American Inflatables, Inc. This
"reverse merger" has been accounted for as an equity transaction. The Company's
historical financial statements are those of Can/Am Marketing Group, LLC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING: The Company uses the accrual method of accounting and
prepares and presents financial statements that conform to generally accepted
accounting principles. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affects the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
BASIS OF PRESENTATION: The accompanying unaudited condensed financial statements
and related notes have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission for 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 a normal recurring nature and
considered necessary for a fair presentation, have been included. It is
suggested that these financial statements are read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB/A for the year ended December 31, 1999. The results of operations
for the three month period ended March 31, 2000 are not necessarily indicative
of the operating results for the year ended December 31, 2000. For further
information, refer to the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB/A for the fiscal year December 31, 1999.
RECLASSIFICATIONS: Certain March 31, 1999 balances have been reclassified to
conform to the March 31, 2000 financial statement presentation.
INVENTORY: Finished goods and raw materials are valued at the lower of cost
(first in first out) or market. Work-in-process, consisting of labor, materials,
and overhead on partially completed projects, are recorded at cost but not in
excess of net realizable value.
PROPERTY, PLANT, AND EQUIPMENT: Property, plant, and equipment are stated at
cost. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which generally range from three years for computer
software to seven years for equipment. Leasehold improvements and Goodwill are
amortized on a straight-line method over ten years.
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Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company has authorized 20,000,000 shares of $0.01 par value common stock. As
of March 31, 2000 there were 4,655,000 shares issued and outstanding.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
RESULTS OF OPERATIONS. net sales were $441,100 for the three months ended March
31, 2000, an increase of $224,100 or 103.3% compared to net sales of $217,000
for the three months ended March 31, 1999. The increase in sales is due to the
Company increasing its customer base. Sales for the Company continue to grow at
an increasing rate not just from repeat customers but from new customers. The
Company continues to increase its presence and exposure in the advertising
markets through increased attendance at trade shows and other advertising
mediums that provide greater exposure.
Gross margin for the three months ended March 31, 2000 was 54.9%, compared to
53.7% for the three months ended March 31, 1999. The Company earned $242,500 in
the three months ended March 31, 1999. The increase in net sales and production
efficiencies contributed to the increase in gross margin as a percentage of
sales. The Company through its use of higher quality materials for production,
decreased replacements and warranty coverage and provides a stronger product for
sale to the customer. During Fiscal 1999 and the first quarter of 2000 the
Company increased production and manufacturing staff, in order to increase
sales, enabling the Company to fully utilize its production staff to increase
gross margins. This is evident by the Company's continuing ability to increase
its sales and maintain a production facility that keeps up with this growth.
The Company's selling expense (which consists of sales expense, marketing costs
and trade show expense) totaled $85,100 for the three months ended March 31,
2000 compared to $29,500 for the three months ended March 31, 1999, an increase
of $55,600 or 188.5%. The Company during Fiscal 1999 substantially increased its
trade show presence 700% fold from Fiscal 1998. Management believes that the
additional trade show costs associated with this presence will be realized in
increased sales over the next year as evidenced by the Company's first quarter
sales for Fiscal 2000.
The Company's total general and administrative expenses (less selling expense
mentioned above) increased by $82,000 or 87.8% for the three months ended March
31, 2000 due to increased costs related to the Company's activities in
preparation for going public and legal fees as well as an increase in personnel.
The Company continues to add management to its staff.
7
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is currently a
party or to which the property of the Company is subject.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFULATS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
a) Exhibits
27 Amended Financial Data Schedule
b) Reports on Form 8-K
Subsequent to the quarter ended March 31, 2000 the Company filed
on April 5, 2000, a Current Report on Form 8-K/A with a date of
report of April 10, 2000. This Current Report disclosed the
acquisition of Can/Am Marketing Group, LLC.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: December 13, 2000 By: /s/ Gregg Mulholland
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Gregg Mulholland
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: December 13, 2000 By: /s/ Gregg Mulholland
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Gregg Mulholland
Chairman of the Board
Chief Executive Officer
Date: December 13, 2000 By: /s/ Jeffrey Jacobsen
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Jeffrey Jacobsen
Chief Operating Officer
Director
Date: December 13, 2000 By: /s/ David Ariss
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David Ariss
Director
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