U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/AMENDMENT #2
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended: September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from: to:
Commission file Number 0-14039
AMERICAN GENERAL VENTURES, INC.
-------------------------------
(Exact Name of Registrant as Specified in its Charter)
NEVADA 11-2712721
------ ----------
(State or Other Jurisdiction of I.R.S. Employer
Incorporated or Organization) Identification No.
3650 Austin Bluffs Parkway-Suite 138 Colorado Springs, Colorado 80918
---------------------------------------------------------------------
(Address of Principal Executive Offices)
(719) 548-1616
--------------
(Registrant's Telephone Number)
Check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or 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 PRECEDING FIVE YEARS:
Check mark whether the issuer has filed all documents and reports required to be
filed by Sections 2, 12, or 15 (d) of the Securities 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 issuer's classes of common stock,
as of the latest practicable date.
Common Stock $.001 par value, 11,298,268
----------------------------- ----------
(title of class) (Shares outstanding at
September 30, 1998)
<PAGE>
AMERICAN GENERAL VENTURES, INC.
FORM 10-QSB
FOR THREE MONTHS ENDED SEPTEMBER 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
PAGE
Balance Sheet as of September 30, 1998 3
Income Statements for three months and
nine months September 30, 1998 & 1997 4
Statement of Cash Flows for nine months ended
September 30, 1998 & 1997 5
ITEM 2 - Management Discussion and Analysis 6
PART II - OTHER INFORMATION
ITEMS 1-5 8
SIGNATURE PAGE 12
2
<PAGE>
AMERICAN GENERAL VENTURES, INC
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
ASSETS 9-30-98
Current Assets:
Cash 61,781
Accounts Receivable, trade 21,466
Inventory 177,057
Other Current Assets -0-
----------
Total Current Assets 260,304
Net Prop,Plant,Equip, 33,576
Goodwill 20,794
----------
Total Assets 314,674
==========
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable-Shareholder 172,215
Accounts Payable 116,287
Other Current Liabilities 11,437
----------
Total Current Liabilities 299,939
Long Term Liabilities:
Long Term Debt 104,169
----------
Total Liabilities 404,108
Stockholders' Equity:
Common Stock, $001 par value 11,298
11,298,268 shares issued
and outstanding
Paid in Capital 2,613,546
Accumulated Deficit (2,714,278)
----------
Shareholder's equity (89,434)
(deficit)
Total Liabilities & Equity 314,674
==========
3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN GENERAL VENTURES, INC.
CONSOLIDATED INCOME STATEMENT
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
1998 1997 1998 1997
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES 385,961 109,385 579,472 717,961
Cost and Expenses:
Cost of Sales 300,792 86,414 465,848 574,494
Sell & General Admin 44,326 73,372 170,043 268,408
----------- ----------- ----------- -----------
Total Cost & Expenses 345,118 159,786 635,891 842,902
----------- ----------- ----------- -----------
Income (Loss) from Operations 40,843 (50,401) (56,419) (124,941)
Interest Expense (4,987) -0- (4,987) -0-
Net Income(Loss)Before Taxes 35,856 (50,401) (61,406) (124,941)
Income Tax Expense -0- -0- -0- -0-
Net Income (Loss) 35,856 (50,401) (61,406) (124,941)
Net Income Per Common Share .00 .00 .00 .00
Weighted Average Common 11,293,268 9,670,833 11,095,126 9,547,222
Shares Outstanding
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
AMERICAN GENERAL VENTURES, INC.
CONSOLIDATED CASH FLOW
FOR NINE MONTHS ENDING SEPTEMBER 30, 1998 & 1997
(UNAUDITED)
1998 1997
----------------------
Cash Flow from Operating Activities
Net Income (Loss) (61,406) (124,941)
Adjustments to Reconcile Net Income
to Net Cash:
Depreciation and Goodwill 5,815 -0-
Inc (Dec) in Accounts Receivable (20,041) (46,921)
Inc (Dec) in Inventory -0- (108,013)
Inc (Dec) in Other Assets 198 2,000
Inc (Dec) in Accounts Payable (173,559) 14,247
Inc (Dec) in Other Accrued 134,870 (172,402)
Liabilities
Net Cash Provided by (Used In)
Operating Activities (114,123) (436,030)
Cash Flow from Investing Activities:
Inc (Dec) in Marketable Sec -0- -0-
Plant and Equipment -0- (29)
Net Cash Provided by (Used in)
Investing Activities -0- (29)
Cash Flow from Financing Activities:
Inc (Dec) in Notes Payable -0- -0-
Inc (Dec) in Notes Pay-Walker (11,046) 260,061
Inc (Dec) in Long Term Debt (14,217) (35,496)
Inc (Dec) in Common Stock 703 842
Inc (Dec) in Paid in Capital 182,758 203,741
Net Cash Provided by (Used in)
Financing Activities 158,198 429,148
Inc (Dec) in Cash 44,075 (6,911)
Cash (Beginning) 17,706 23,984
Cash (Ending) 61,781 17,073
5
<PAGE>
AMERICAN GENERAL VENTURES, INC.
FORM 10-QSB
FOR THE THREE MONTHS ENDED SEPTEMBER, 1998
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS
Results of Operations
During the period from July 1, 1998 through September 30, 1998 the Company
revenues were $385,961 compared with $109,385 for the same period in 1997. The
increase in revenues was due to the Company's subsidiary ACI Micro Systems, Inc.
restructuring its strategy by concentrating on web site online sales. In
addition to selling its products through Wal-Mart Online, the Company developed
its own web site offering its branded computers at extremely competitive price
points. The combination of sales through Wal-Mart Online and the Company's web
site increased it computer sales by more than 350 percent.
Net income for this period was $35,856 compared to a loss of ($50,401) for the
same period in 1997. The increase in income was due to the increase in sales
generated through Wal-Mart Online and the Company's web site. During this
current period Wal-Mart Online introduced the Company's build to order (BTO)
computer. The BTO accounted for an eighty percent increase in sales generated by
Wal-Mart Online.
The increase in profits was also due to the Company reducing its costs incurred
by returns from Wal-Mart retail outlets. The company's strategy of marketing its
product solely through the internet has proven effective in reducing returns.
The Company's sales through its own web site were nearly sixty percent of its
revenues. The Company's success in online sales is directly correlated to its
banner ads that ran on Hotmail, the world's largest free e-mail company that was
recently acquired by Microsoft. The Company continues to use Hotmail to
advertise its products, but plans to expand its banner ads on additional web
site promoters and expects that the additional exposure will result in increased
revenues and profits.
6
<PAGE>
The results of Operations for the first three quarters of 1998 are as follows:
1st 2nd 3rd Nine
Quarter Quarter Quarter Months
------- ------- ------- ------
Revenues $ 73,193 $ 120,318 $ 385,961 $ 579,472
Total Cost & Expenses 127,556 163,217 345,118 635,891
--------- --------- --------- ---------
Income/(Loss) From (54,363) (42,899) 40,843 (56,419)
Operations
Other Income/Expense (4,987)
Net Income/(Loss) (54,363) (42,899) 35,856 (61,406)
Revenues
In the first quarter of 1998, revenue was impacted by the Company's decision to
sell its products only through Wal-Mart Online web page (www.Wal-Mart.com) and
not in Wal-Mart's retails stores. During this period, Wal-Mart Online was in its
development stage and there was essentially no marketing for Online products.
In the second quarter of 1998, the Company offered seven pre-configured computer
systems on Wal-Mart's web page favorably impacting revenue in the quarter.
In the third quarter of 1998, the Company developed its own web site offering
its branded computers at extremely competitive price points in addition to
selling its products through Wal-Mart Online. The combination of sales through
Wal-Mart Online and the Company's Web site increased its computer sales by more
than 350 percent. It should be noted that nearly sixty percent of the Company's
sales are through its own web site.
The fourth quarter revenues for 1998 will be adversely impacted by the fact that
the Wal-Mart agreement has been put on hold. The Wal-Mart contract was put on
hold as a result of materials provided by the Company's third party suppliers
not meeting Wal-Marts and Company's specifications.
In 1998, the Company adopted a "just in time" inventory method. A physical
inventory of materials on will be performed in the fourth quarter of 1998 and
any excess or obsolete material will be written off to P&L. There is over one
month's worth of inventory on hand due to the fact that a considerable amount of
dollars represent accessory or specialty products that are not components of the
basic computer systems sold.
7
<PAGE>
Working Capital and Capital Resources
Working capital at September 30, 1998 (current assets less current liabilities)
totaled ($39,635) compared to $163,634 at September 30, 1997. The decrease in
working capital was due to a decrease in inventory and an increase in short term
debt to its President Steven H. Walker.
The Company has adopted a "just in time" method of inventory that has resulted
in the need for using capital to purchase products before they are sold. This
strategy allows the Company to maintain its cash position and reduces the cost
of inventory that depreciates rapidly in the computer industry.
The Company has determined that its working capital is sufficient to continue
operations and that no significant adjustments were necessary during this
current quarter.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
The Company's subsidiary, ACI Micro Systems, Inc. suit by Cal IC was tentatively
accepted with no judgement against the Company. The settlement when finalized in
the fourth quarter of 1998 will result in a reduction of $20,000 claimed by Cal
IC.
The Company was also successful in negotiating a settlement reducing the amount
of a debt claimed by Worldnet from $110,000 to $32,000. Settlement to be
formalized in the fourth quarter of 1998.
Two other suppliers have recently made demands for payment. Daytek alleges
$27,000 is due and Altura PC Systems claims $21,350. Both claims are in dispute
and negotiations will likely result in settlement of both at reduced amounts.
The Denver Regional office of the FCC has fined ACI Micro Systems, Inc. $10,000
for not complying with rules and regulations that are no longer applicable to
computer manufacturers and resellers. ACI Micro Systems, Inc. denies that they
were in violation and have appealed the action to the FCC in Washington, D.C.
The fine was imposed more than five years ago and no litigation by the FCC has
been pursued.
Item 2 Changes in Securities - 10,000 shares of common stock were issued to an
investor.
8
<PAGE>
<TABLE>
<CAPTION>
AGV Changes in Equity
Nine Months Ending September 30, 1998
1st Quarter 2nd Quarter 3rd Quarter YTD
12/31/97 Change 3/31/98 Change 6/30/98 Change 9/30/98 Change
-------- ------ ------- ------ ------- ------ ------- ------
Stockholders' Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock 10,594 105 10,699 589 11,288 10 11,298 704
Paid In Capital 2,430,788 21,345 2,452,133 110,723 2,562,856 50,690 2,613,546 182,758
Accumulated Deficit (2,652,872) (54,363) (2,707,235) (42,899) (2,750,134) 35,856 (2,714,278) (61,406)
-----------------------------------------------------------------------------------------------------
Total Stockholders' Equity (211,490) (32,913) (244,403) 68,413 (175,990) 86,556 (89,434) 122,056
-----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Par Value
Common .0010 Paid In Additional
Activity Date Bid Price Per Share Shares $ Capital Compensation
-------- ---- --------- --------- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance 12/31/97 10,593,666 $ 10,594 $ 2,430,768
1st Quarter Change
Shares Issued For Cash
Mahoney 3/31/98 $ 0.28 $ 0.28 100,000 100 19,900 $ 8,000
Shares Issued For Wages Or Services
Neal 3/31/98 $ 0.28 $ 0.28 357 -- 100
Hansen 3/31/98 $ 0.28 $ 0.28 4,285 4 1,196
Ryan 3/31/98 $ 0.28 $ 0.28 535 1 149
------- --- ------
Total 1st Quarter Change 105,177 105 21,345 8,000
------- --- ------ -----
2nd Quarter Change
Shares Issued For Cash
Mahoney 5/26/98 $ 0.28 $ 0.32 85,000 85 16,915 10,200
Mahoney 6/3/98 $ 0.28 $ 0.28 65,000 65 12,935 5,200
Giasone 6/3/98 $ 0.28 $ 0.28 7,500 7 1,493 600
Mahoney 6/16/98 $ 0.28 $ 0.28 140,000 140 20,860 18,200
Shares Issued For Debt Conversion
Walker 5/15/98 $ 0.28 $ 0.22 285,000 285 56,715 5,700
Shares Issued For Wages Or Services
Lohman 5/15/98 $ 0.28 $ 0.22 5,000 5 1,095
Neely 6/3/98 $ 0.28 $ 0.37 1,925 2 710
------- --- ------- ------
Total 2nd Quarter Change 589,425 589 110,723 39,900
- ------- --- ------- ------
3rd Quarter Change
Shares Issued For Cash
Mahoney 8/3/98 $ 0.28 $ 0.28 10,000 10 1,990 800
Record Additional Compensation 48,700 (48,700)
------ --- ------ ------
Total 3rd Quarter Change 10,000 10 50,690 (47,900)
------ --- ------ ------
------ --- ------ ------
YTD Change 704,602 704 182,758 --
======= === ======= ======
9
</TABLE>
<PAGE>
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Securities Holders - The shareholders
elected three directors to the Company's Board of Directors. Steven H. Walker
was elected as a Director and Chair of the Board. Adrian Belinne and Christopher
Walker were also elected as directors to the Board of Directors.
Item 5 Other Information - Year 2000 Compliance
The Company is in the process of a comprehensive assessment of all Year 2000
issues and how the business will be affected. Computer systems and
computer-controlled devices that can be potentially affected by the Year 2000
issue have been reviewed. These include the following:
Telephones and fax machines
Information technology hardware
Financial and financial reporting applications
Operations and operational support applications
Scheduling systems
Operating systems
Preliminarily, each of the above cases it was found that the Year 2000 issue did
not have any significant potential impact on future core business operations or
financial reporting.
The Company is reviewing the ability of key suppliers to continue to provide
materials and services. All key suppliers either are compliant or have programs
in place to be compliant by the Year 2000.
10
<PAGE>
The Company plans to hire an outside consultant to evaluate and test the
Company's internal systems in the first quarter of 1999.
COSTS
No external conversion cost has been incurred to date. Only cost to be
considered is a salary allocation of the employees involved in the Year 2000
study. The Company plans to hire an outside consultant to evaluate and test the
Company's internal systems in the first quarter of 1999.
WORST-CASE SCENARIOS
The Company's own web site does not function or its suppliers will be unable to
provide equipment for resale.
CONTINGENCY PLANNING
The Company is developing a contingency plan that would enable it to continue
uninterrupted service to its customers in the event a critical supplier of
materials and services develops a problem in implementing Year 2000 plans.
SUMMARY
Based on the activities reviewed above, the Company expects to be 100 percent
internally compliant with Year 2000 requirements by May, 1999. The Company does
not believe that the Year 2000 issues will have a material adverse effect on its
financial condition or results of operations. It is anticipated that the Year
2000 issue is not substantial with respect to the Company's property and
equipment, though the Company is continuing to assess and modify computer
systems, facilities, and business processes to provide for their continuing
functionality. The Company believes that modification of existing software and
conversions to new software and systems will result in Year 2000 compliance.
However, given the complexity of the Year 2000 issue, and the massive changes
required of government agencies and large corporations, the impact on business
operations because of failure by the Company to achieve compliance, or failure
of external entities to achieve compliance, which the Company cannot control,
could adversely affect the Company's consolidated results of operations.
Information contained in this Year 2000 Compliance Summary other than historical
information, may be considered forward-looking in nature. As such, it is based
upon certain assumptions and is subject to various risks and uncertainties,
which may not be controllable by the Company.
11
<PAGE>
To the extent that these assumptions prove to be incorrect, or should any of
these risks or uncertainties, the actual results may vary materially from those
which were anticipated.
Item 6 Exhibits and Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN GENERAL VENTURES, INC.
By: /s/ Steven Walker
-------------------------------
President/CEO
Date: January 26, 1999
12
