UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 1996
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from
____________________ to _____________________
Commission file number: 0-19069
ATC II, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 75-2395356
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of Principal Executive Offices)
(801) 575-8073
(Issuer'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 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 XX No
The number of shares outstanding of the issuer's common stock ($0.01 par value),
as of October 22, 1996 was 4,996,811.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............3
PART II
ITEM 1. LEGAL PROCEEDINGS.....................................................4
ITEM 5. OTHER INFORMATION.....................................................4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................4
SIGNATURES............................................................5
INDEX TO EXHIBITS.....................................................6
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" refers to ATC II, Inc.
and its predecessors. Interim financial statements including a balance sheet for
the Company as of the fiscal quarter ended September 30, 1996 and statements of
operations and statements of cash flows for the interim period up to the date of
such balance sheet and the comparable period of the preceding fiscal year are
attached hereto on Pages F-1 through F-4 and incorporated herein by this
reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
September 30, June 30,
1996 1996
--------------- ------------
ASSETS
<S> <C> <C>
Film distribution rights
(Net of Amortization of $63,050 at 6/30/96
and $78,812 at 9/30/96) ................... $ 236,438 $ 252,200
------------ ------------
TOTAL ASSETS ................................... $ 236,438 $ 252,200
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable ........................... $ 214,154 $ 213,904
Accrued expenses ........................... 384,612 379,354
Notes payable-current ...................... 157,500 157,500
------------ ------------
Total Current Liabilities ...................... 756,266 750,758
------------ ------------
Total Liabilities .............................. 756,266 750,758
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value;
20,000,000 shares authorized;
4,978,580 shares issued and outstanding . 49,786 49,786
Paid-in capital ............................ 24,160,854 24,160,854
Accumulated deficit ........................ (24,730,468) (24,709,198)
------------ ------------
Total Stockholders' Deficit .................... (519,828) (498,558)
------------ ------------
Total Liabilities and Stockholders' Deficit .... $ 236,438 $ 252,200
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENT OF LOSS
Three Months Ended
September 30,
(Unaudited)
---------------------------------------
1996 1995
----------------- ----------------
<S> <C> <C>
Sales .................................. $ -- $ --
Cost of sales .......................... -- --
Net revenue ............................ -- --
Cost of revenue ........................ -- --
------------ ------------
Gross Profit (loss) ................. -- --
Operating expenses:
Selling, general and administrative . 250 31,908
Amortization ........................ 15,762 --
------------ -------------
Total operating expenses ............... 16,012 31,908
------------ -------------
Loss from operations ................... (16,012) (31,908)
------------ -------------
Other income (expense):
Interest income (expense) ........... (5,258) (5,257)
------------- -------------
Total other income (expense) ........... (5,258) (5,257)
------------- -------------
Income (loss) from continuing operations (21,270) (37,165)
Loss from discontinued operations ...... -- --
------------- -------------
Net (loss) before preferred dividends .. (21,270) (37,165)
------------- -------------
Net loss before extraordinary items .... (21,270) (37,165)
Extraordinary Items: ................... -- --
------------- --------------
Net loss ............................... $ (21,270) $ (37,165)
=============== ===============
Loss per share (Note 1):
Loss from continuing operations ..... $ 0.00 $ 0.00
Loss from discontinued operations ... $ 0.00 $ 0.00
Extraordinary item .................. $ 0.00 $ 0.00
--------------- ------------------
Loss per share ........................ $ 0.00 $ 0.00
================ ==================
Weighted average shares outstanding .... $ 4,978,580 $ 11,505,481
================ ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
Three Months Ended
September 30,
(Unaudited)
---------------------
1996 1995
----------------------
Cash flow from operations:
<S> <C> <C>
Loss from continuing operations ..................... $ (21,270) $(37,165)
Adjustment to reconcile loss to net cash
provided by (used for) continuing operations:
Depreciation and amortization ................... 15,762 15,762
Change in assets and liabilities net of acquisitions:
Accounts payable and accrued expenses ........... 5,508 5,653
------- -------
Cash used for continuing operations ..................... 0 (15,750)
------- -------
Gain (loss) from discontinued operations: ............... -- --
Adjustments to reconcile gain (loss) to net cash
provided by (used for) discontinued operations:
Disposal of Thistle and Filmways ................ -- --
Depreciation .................................... -- --
------- -------
Cash provided by (used for) discontinued operations ..... -- --
------- -------
Cash provided by (used for) operating activities ........ -- (15,750)
------- -------
Cash flow from investing activities:
Preferred Dividends ................................. 15,750
------- -------
Cash provided by (used for) investing activities -- 15,750
------- -------
Cash flow from financing activities:
Proceeds from stock issuances ....................... --
------- -------
Cash provided by (used for) financing activities -- --
------- -------
Net increase (decrease) in cash ......................... -- --
Cash, beginning of year ................................. 0 0
------- -------
Cash, end of year ....................................... 0 0
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statemetns.
F-3
<PAGE>
ATC II, INC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions in Form
10-QSB and, therefore, do not include all information and footnotees required by
generally accepted accounting principles and should, therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
the fiscal year ended June 30, 1996. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim, operations results are not
necessarily indicative of the results for the full year ended June 30, 1997.
2. Additional footnotes included by reference.
Except as indicated in the footnote above, there have been no other
material changes in the information disclosed in the notes to the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended June 30, 1996. Therefore, those footnotes are included herein by
reference.
F-4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Plan of Operation
The Company has not had any revenue from operations in either of the
last two fiscal years. The following discussion should be read together with the
Company's consolidated financial statements and notes thereto included in this
Form 10-QSB.
From 1984 to 1993, the Company's business was in telecommunications and
producing and distributing feature length motion pictures. In June 1992, the
Company began to divest its interests in certain unprofitable subsidiaries.
Similar divestitures followed in fiscal 1993 and 1994. In fiscal 1994, the
Company focused its efforts on discontinuing or winding down unsuccessful
operations and resolving existing and potential liabilities. Since 1994, the
Company has been searching for an attractive merger or acquisition candidate and
potentially profitable business opportunities.
The Company does not currently produce any goods or provide any
services, and has no employees aside from it current president. The Company's
business plan involves merging with or acquiring a suitable business entity that
can provide the Company with a basis for successful operations. While the
Company is currently in negotiation with potential merger or acquisition
candidates, all discussions are currently in the preliminary stages and no
definitive agreements have been reached. The Company can provide no assurances
that the Company will be able to locate an entity with which to combine or that,
if such a combination is achieved, that it will be profitable, worthwhile or
sustainable.
Since the Company no longer has any significant assets, any merger or
acquisition that the Company ultimately effects will involve the issuance of the
Company's common stock, par value $0.01 ("Common Stock"). Such an issuance of
Common Stock could substantially dilute the existing ownership position of the
Company's current shareholders. A merger or acquisition will also likely result
in the Company's recruitment of additional employees.
The Company is in the process of attempting to obtain a quotation for
its Common Stock pursuant to the provisions of Rule 15c2-11 under the Securities
Exchange Act of 1934. The Company hopes that obtaining a quotation will
facilitate the Company's efforts to acquire merger or acquisition candidates
through the issuance of Common Stock. However, the Company can provide no
assurances that it will be able to obtain a quotation of its Common Stock or
that, if it is successful in obtaining a quotation, that the Company will
successfully effect a merger or acquisition.
In order to help it find a suitable merger or acquisition partner, the
Company has retained the services of Canton Financial Services Corporation, a
Nevada corporation which provides professional business consulting services
("CFS"). CFS assists the Company in preparing the documentation necessary to
raise capital, finding suitable business opportunities, and handling shareholder
and public relations work. CFS was originally retained pursuant to a June 30,
1994 Consulting Agreement which originally had a one year term, but has been
renewed on a month-to-month basis since that time. According to that Agreement,
CFS receives a $30,000 monthly fee which the Company can pay in cash or
restricted common stock. CFS is the wholly-owned subsidiary of CyberAmerica
Corporation, a Nevada corporation. For more information on CyberAmerica, see
Part II, "Item 1 - Legal Proceedings."
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
On June 25, 1996, Walden L. Gibbs submitted a Statement of Claim to the
National Association of Securities Dealers Arbitration & Mediation Division (the
"Claim"). The Claim alleged that Joseph Roberts & Company, a registered
broker-dealer, had unfairly and illegally profited from transactions it advised
Gibbs to make with respect to the Company's Common Stock. The Company was also
named as a respondent to Claim, as was CyberAmerica Corporation (f/k/a The
Canton Industrial Corporation), a Nevada corporation who allegedly sold shares
of the Company's Common Stock to Joseph Roberts & Company. Gibbs' Claim does not
specify any cause of action against the Company or allege any actions or
omission of the Company upon which any cause of action is premised, except that
the Company's Common Stock was the object of the transaction. The Claim also
fails to specify what relief Gibbs seeks, although the Company assumes that
Gibbs seeks the return of $58,000 which Gibbs asserts was spent on the Common
Stock.
Since the Company is not a broker-dealer and has not signed an
agreement to arbitrate, the Company is not required to submit to arbitration.
The Company is currently considering whether or not it will consent to
arbitration and file an answer to Gibbs' Claim. If the Company does not submit
the arbitration, it is possible that Gibbs will initiate a civil suit against
the Company.
ITEM 5. OTHER INFORMATION
On August 20, 1996, the Company appointed Dr. Gerald Curtis as its
president and director. Upon the appointment of Dr. Curtis, Jack Hartgrove
resigned as the Company's chief financial officer and director and James
Thompson resigned as the Company's director.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits. Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits beginning on page 6
of this Form 10-QSB, which is herein incorporated by reference.
(b) Reports on Form 8-K. The Company did not filed any reports on Form 8-K
during the fiscal quarter ended September 30, 1996.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 28TH day of October 1996.
ATC II, INC.
/s/ Dr. Gerald Curtis
---------------------
Dr. Gerald Curtis
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Dr. Gerald Curtis President and Director October 28, 1996
- -----------------------
Dr. Gerald Curtis
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NUMBER NUMBER DESCRIPTION
3(a) * Articles of Incorporation of the Company, filed as
Exhibit 3(i) to Registrant's Registration Statement on
Form S-4 filed June 2, 1990, as amended.
3(b) * Bylaws of the Company, filed as Exhibit 3(ii) to
Registrant's Registration Statement on Form S-4 filed
June 2, 1990, as amended.
* Incorporated herein by reference from the Company's
Form 10-KSB filed with the Commission on August 23,
1994.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S SEPTEMBER 30,
1996 QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000865286
<NAME> ATC II, INC.
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 236,438
<CURRENT-LIABILITIES> 756,266
<BONDS> 0
0
0
<COMMON> 24,210,640
<OTHER-SE> (24,730,468)
<TOTAL-LIABILITY-AND-EQUITY> 236,438
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,258
<INCOME-PRETAX> (21,270)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,270)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
