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, 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 0-28663
AMERICAN JEWELRY CORP. f/k/a UNITED VENTURES GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-1516192
(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 - 110,194,937 shares outstanding as of September 30, 2000; Series A
Preferred Stock, $.001 par value per share - 200,000 shares outstanding as of
September 30, 2000.
<PAGE>
AMERICAN JEWELRY CORP.
FORM 10-QSB
FOR THE QUARTER ENDED September 30, 2000
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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements.
<S> <C>
Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999 F-2
Consolidated Statements of Operations for the Three Months
ended September 30, 2000 and September 30, 1999 and the Nine
Months ended September 30, 2000 and September 30, 1999 F-3
Consolidated Condensed Statements of Cash Flows for the Nine Months
ended September 30, 2000 and September 30, 1999. F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 6
PART 11. OTHER INFORMATION
Item 1. Legal Proceedings. 8
Item 2. Changes in Securities and Use of Proceeds. 8
Item 3. Defaults upon Senior Securities. 8
Item 4. Submission of Matters to a Vote of Security Holders. 9
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K. 9
</TABLE>
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<PAGE>
AMERICAN JEWELRY CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 2000
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Current assets:
Cash $ 15,691
Accounts receivable, net 3,533,844
Inventory 7,285,730
------------------
Total current assets 10,835,265
Property and equipment, net 624,902
Other Assets:
Deferred financing cost 374,354
Other 226,250
------------------
Total assets $ 12,060,771
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 604,125
Loans payable 1,296,773
------------------
Total current liabilities 1,900,898
------------------
Stockholders' equity:
Common stock, $.001 par value -100,000,000 shares authorized,
110,194,937 shares issued and outstanding 110,195
Preferred stock, $.001 par value - 5,000,000
shares authorized, 200,000 Series A shares
issued and outstanding 200
Additional paid-in capital 20,438,884
Accumulated deficit (10,389,406)
------------------
Total stockholders' equity 10,159,873
------------------
Total liabilities and stockholders' equity $ 12,060,771
==================
</TABLE>
See notes to consolidated financial statements
F-2
<PAGE>
AMERICAN JEWELRY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
-------------------------------- -------------------------------
Three Months Ended September 30, Nine Months Ended September 30,
2000 1999 2000 1999
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Net sales $ 2,311,581 $ 622,352 $ 8,185,985 $ 3,650,994
Cost of goods sold 1,681,672 492,098 5,932,454 2,738,246
------------------- ---------------- ---------------- ----------------
Gross profit 629,909 130,254 2,253,531 912,748
Non cash compensation expense 1,061,667 - 1,511,667 -
Selling, general and administrative 356,242 847,430 1,278,821 3,738,401
Bad debt recovery (400,000) - (1,100,000) -
------------------- ---------------- ---------------- ----------------
Income from operations (388,000) (717,176) 563,043 (2,825,653)
Interest expense (439,694) 148,534 140,600 1,928,676
------------------- ---------------- ---------------- ----------------
Income (loss) before extraordinary items 51,694 (865,710) 422,443 (4,754,329)
Extraordinary item - loss on early
extinguishment of debt, net of taxes - (117,286) - (523,116)
------------------- ---------------- ---------------- ----------------
Net income $ 51,694 $ (748,424) $ 422,443 $ (5,277,445)
=================== ================ ================ ================
Basic and diluted net income (loss) per share
Before extraodinary item $ 0.00 $ (0.33) $ 0.01 $ (1.81)
------------------- ---------------- ---------------- ----------------
Extraordinary item $ 0.00 $ (0.04) $ 0.00 $ (0.20)
------------------- ---------------- ---------------- ----------------
Net income (loss) per share $ 0.00 $ (0.29) $ 0.01 $ (2.02)
=================== ================ ================ ================
Weighted average common shares outstanding 64,555,254 2,608,821 64,555,254 2,608,821
=================== ================ ================ ================
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
AMERICAN JEWELRY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
-------------------------------
Nine Months Ended September 30,
2000 1999
------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES :
Net Income $ 422,443 $ (5,277,445)
------------- ----------------
<S> <C> <C>
Adjustment to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 105,000 232,727
Amortization - 117,050
Compensation expenses 1,375,000 -
Interest expense on conversion benefit 78,000 60,000
Amortization of deferred compensation 136,667 -
Write-off of deferred financing and offering costs 177,000 (523,116)
Change in assets and liabilities;
Increase in accounts receivable (1,160,989) (325,108)
Decrease (increase) in inventories 2,500,000 (254,559)
Decrease in prepaid expenses - (70,368)
Increase in other assets (208,625) -
Decrease (Increase) in accounts payable and accrued expenses (1,136,241) 47,754
------------- ----------------
Total adjustments 1,865,812 (715,620)
------------- ----------------
Net cash provided by (used in) operating activities 2,288,255 (5,993,065)
------------- ----------------
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) (1,446,034)
Proceeds from convertible debentures - 1,000,000
Repayment of loans - -
Proceeds from loan - 660,000
Stock subscription received 957,578 250,000
Proceeds from issuance of stock 2,375,041 350,200
Repayment to stockholders (3,311,551) -
------------- ----------------
Net cash used in (provided by) by financing activities (1,913,430) 814,166
------------- ----------------
Net increase in cash (81,774) (5,178,899)
Cash - beginning of period 97,465 (133,037)
------------- ----------------
Cash - end of period $ 15,691 $ (5,311,936)
============= ================
-
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION :
Interest paid $ 47,412 $ 523,116
============= ================
Taxes paid $ 7,898 $ -
============= ================
NON-CASH FINANICING AND INVESTING ACTIVITIES:
Forgiveness of debt by financial institution $ 4,446,040 $ -
============= ================
Assumption of note payable by stockholders - 3,500,000
============= ================
Beneficial conversion features recorded as additional
paid-in capital - 432,000
============= ================
Conversion of debentures $ 1,300,000 $ -
============= ================
Forgiveness of notes payable by related party $ 2,000,000 $ -
============= ================
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
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 three-month and nine-month periods ended
September 30, 2000 are not necessarily indicative of the results to be
expected for the year ended December 31, 2000. The condensed interim
financial statements should be read in conjunction with the audited
financial statements and notes, contained in the Form 8-K filed on June 15,
2000.
2. ACQUISITIONS
a. On April 11, 2000, American Jewelry Corp., formerly known as United
Ventures Group, Inc. ("UVGI"), completed the acquisition of Advanced
Ceiling Supplies, Inc. ("ACSI") under an agreement dated as of April 3,
2000. As part of the acquisition, UVGI acquired 666 shares of ACSI's
common stock in exchange for 400,000 shares of the capital stock of
UVGI and $110,000 in cash, of which $90,000 were paid to cover closing
costs. As a result of this transaction, UVGI received 100% of the
outstanding common stock of ACSI.
b. On October 2, 2000 UVGI acquired NIGT, Inc. ("NIGT"), a New York based
private jewelry company for $750,000 and. assumption of a senior
subordinated convertible redeemable debenture in the amount of
$1,000,000. The Company has already advanced $200,000 for such
transaction and remaining will be paid at closing in cash and $300,000
promissory note..
3. STOCKHOLDERS EQUITY
During the nine months ended September 30, 2000, the principal shareholders
assumed $2,000,000 of the Company's loans payable to unrelated third
parties. This transaction was recorded as a capital contribution.
4. CHANGE OF NAME
On October 16, 2000, stockholders of the company consented to change its
name from United Venture Group, Inc. to American Jewelry Corp. Accordingly,
Company has changed its ticker symbol to AMJY from UVGI.
5. STOCK COMPENSATION
The Company issued 16,200,000 shares aggregating to $1,037,000. Such amount
is recorded as compensation.
F-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 COMPARED TO NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1999
Net sales amounted to $8,185,985 for the Nine-month period ended
September 30, 2000, compared to $3,650,994, an increase of $4,534,991 or 124%
from the Nine-month period ended September 30, 1999. The increase of 124% is
mainly due to a) the increase in the recognition of sales that were shipped in
1999 but recognized in year 2000 as per certain GAAP and SEC requirements, and
b) the broadening of our product lines.
Gross profit increased by $1,340,783 or 147% to $2,253,531 for the
Nine-month period ended September 30, 2000 from $912,748 for the Nine-month
period ended September 30, 1999. Gross profit as a percentage of net revenues
increased to 27.6% for the Nine-month period ended September 30, 2000 from 25.0%
for the Nine-month period ended September 30, 1999. The increase in gross profit
as a percentage of net revenues is attributable to global sourcing of
production, improved production and cost controls.
Selling, General and Administrative expenses decreased by $2,459,580 or
66% to $1,278,821 or 15.7% of net revenues, for the Nine-month period ended
September 30, 2000, from $3,738,401. or 103% of net revenues for the Nine-month
period ended September 30, 1999. The principal decrease in expenses were due to
a reduction of approximately $1,500,000 in bad debt expenses for the nine months
ended September 30, 2000 compared to the nine-month period ended September 30,
1999. Expenses in 1999 were extraordinarily large due to certain uncollectible
sales, which did not recur in 2000. Management was also successful in the
recovery of $1,000,000 of bad debts that were incurred in 1999.
Interest expenses decreased to $140,600 for the Nine-months ended
September 30, 2000 from $1,928,676 for the Nine-months ended September 30, 1999.
This decrease is primarily due to substantial reduction of financing debts and
the non-recurrence of 1999 expenses of approximately $500,000 related to the
beneficial conversion benefits of debentures issued in April 1999 recorded as
interest.
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,
2000, the Company financed operations from proceeds from issuance of common
stock and from net income from operations. As a result of repayment of all debts
to finance institutions, forgiveness of other debts and conversions of
outstanding debentures, we believe it will be able to finance future operations
from cash generated from operations.
Working capital increased from a deficit of $1,300,000 at December 31,
1999 to a positive position of $8,900,000 (an increase of $10,200,000) at
September 30, 2000. The increase of working capital was generated by the
forgiveness of debt to finance institutions of $4,400,000 (net of cash payment
required), forgiveness of debt to third parties of $2,000,000, decrease in
inventories of $2,000,000, proceeds from sale of stock of $1,000,000 offset by
net reduction of accounts receivable, accounts payables and other expenses of
$800,000.
-6-
<PAGE>
On April 5, 2000 a settlement agreement was reached with a finance institution
canceling a certain Term Promissory Note in the original principal amount of
$2,000,000 from the Company to the finance institution; and a certain Term
Promissory in the original principal amount of $3,500,000.
We made a payment of $1,200,000 to the finance institution in
immediately available funds.
The finance institution received 4,000,000 restricted common stock
shares of the company, subject to certain terms and conditions, more fully
explained in the Company's financial statements for the year ended December 31,
1999 (Note 8).
As a result of this settlement the Company recognized a net gain from
the extinguishment of debt of $4,400,000 recorded as addition to Additional Paid
in Capital.
-7-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
(a) Date of Annual Meeting of Stockholders - October 13, 2000
(b) Directors Elected at the Annual Meeting - Isaac Nussen, George Weisz,
Eric J. Rothschild and Israel Braun.
(c) The election of four directors:
STOCKHOLDER VOTES
FOR WITHHELD
--- --------
Isaac Nussen 189,495,879 1,497,523
George Weisz 189,664,879 1,328,523
Eric J. Rothschild 189,695,579 1,297,823
Israel Braun 189,654,379 1,339,023
Amendment to Certificate of Incorporation to Increase Authorized Shares
of Common Stock:
STOCKHOLDER VOTES
-----------------
For: 187,022,137
Against: 3,907,050
Abstentions: 64,215
Broker non-votes: 0
Amendment to the Certificate of Incorporation to Change the Company's
Name to "American Jewelry Corp."
STOCKHOLDER VOTES
-----------------
For: 190,239,052
Against: 679,606
Abstentions: 74,744
Broker non-votes: 0
-8-
<PAGE>
Item 5. Other Information.
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
-9-
<PAGE>
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 14, 2000
American Jewelry Corp.
By: /s/ Isaac Nussen
-------------------------------------------
Name: Issaac Nussen
Title: President and Chief Executive Officer
-10-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
-11-
