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 December 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 ($0.001 par
value), as of February 7, 1997 was 4,996,811.
Total Pages: 7
Index of Exhibits on Page: 7
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............4
PART II
ITEM 1. LEGAL PROCEEDINGS.....................................................4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................5
SIGNATURES............................................................6
INDEX TO EXHIBITS.....................................................7
<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 December 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>
PART I
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE
Balance Sheets...........................................................F-1
Statements of Operations.................................................F-2
Statements of Cash Flows.................................................F-3
Notes to Financial Statements............................................F-4
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
December 31, June 30,
1996 1996
---------- -----------
ASSETS
<S> <C> <C>
Film distribution rights (Net of Amortization
of $63,050 at 6/30/96 and $94,575
at 12/31/96) ............................. $ 220,675 $ 252,200
------------ ------------
TOTAL ASSETS ................................... $ 220,675 $ 252,200
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable ........................... $ 214,213 $ 213,904
Accrued expenses ........................... 389,869 379,354
Notes payable-current ...................... 157,500 157,500
------------ ------------
Total Current Liabilities ...................... 761,582 750,758
------------ ------------
Total Liabilities .............................. 761,582 750,758
------------ ------------
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 ........................ (24,751,547) (24,709,198)
------------ ------------
Total Stockholders' Deficit .................... (540,907) (498,558)
------------ ------------
Total Liabilities and Stockholders' Deficit .... $ 220,675 $ 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 Six Months Ended
December 31, December 31,
(Unaudited) (Unaudited)
-------------------------------- ---------------------------
1996 1995 1996 1995
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Sales ................................................ $ -- $ - $ - $ --
Cost of sales ........................................ -- -- -- --
------------ ------------ ------------ -------------
Gross Profit (loss) ............................... -- -- -- --
Operating expenses:
Selling, general and administrative ............... 59 75,957 309 107,684
Amortization ...................................... 15,762 -- 31,525 --
------------ ------------ ------------ ----------
Total operating expenses ............................. 15,821 75,957 31,834 107,864
------------ ------------ ------------ ----------
Loss from operations ................................. (15,821) (75,957) (31,834) --
------------ ------------ ------------ ----------
Other income (expense):
Interest income (expense) ......................... (5,258) (5,257) (10,515) (10,515)
------------ ------------ ------------ ----------
Total other income (expense) ......................... (5,258) (5,257) (10,515) (10,515)
------------ ------------ ------------ ----------
Income (loss) from continuing operations ............. (21,079) (81,214) (42,349) 118,379
Loss from discontinued operations .................... -- -- -- --
------------ ------------ ------------ --------
Net (loss) before preferred dividends ................ (21,079) (81,214) (42,349) 118,379
------------ ------------ ------------ --------
Net loss before extraordinary items .................. (21,079) (81,214) (42,349) 118,379
Extraordinary Items:
Cancellation of Series B Preferred Stock .......... -- 927,250 -- 927,250
------------ ------------ ------------ ---------
Net loss ............................................. $ (21,079) $ 846,036 $ (42,349) $ 808,871
============ ============ ============ ==========
Loss per share:
Loss from continuing operations ................... $ 0.00 $ (0.01) $ (0.01) $ (0.01)
Loss from discontinued operations ................. $ 0.00 $ 0.00 $ 0.00 $ 0.00
Extraordinary item ................................ $ 0.00 $ 0.08 $ 0.00 $ 0.08
------------ ------------ ------------ -----------
Loss per share ....................................... $ 0.00 $ 0.07 $ (0.01) $ 0.07
============ ============ ============ ==========
Weighted average shares outstanding .................. 4,978,580 11,505,481 4,978,580 11,505,481
============ ============ ============ ==========
The accompanying notes are an integral part of these financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
Six Months Ended
December 31,
(Unaudited)
--------------------
1996 1995
----------- --------
Cash flow from operations:
<S> <C> <C>
Loss from continuing operations .................... $ (42,349) $ 808,871
Adjustment to reconcile loss to net cash
provided by (used for) continuing operations:
Depreciation and amortization .................. 31,525 31,525
Extraordinary gain-Cancellation
of Series B Preferred Stock .................... (927,250)
Change in assets and liabilities
net of acquisitions:
Accounts payable and accrued expenses .......... 10,824 91,104
--------- ---------
Cash used for continuing operations .................... -- 4,250
--------- ---------
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 ....... -- 4,250
--------- ---------
Cash flow from investing activities:
Preferred Dividends ................................ 15,750
Settlement Payment ................................. (20,000)
--------- ---------
Cash provided by (used for) investing activities -- (4,250)
--------- ---------
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 statements.
F-3
<PAGE>
ATC II, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 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 footnotes 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 fiscal year ended
June 30, 1996.
In management's opinion, the accompanying consolidated unaudited condensed
financial state contain all adjustments, consisting only of normal recurring
adjustments necessary for a fair statement of the results for the interim
periods presented. The interim operation results are not necessarily indicative
of the results for the fiscal year ending June 30, 1997.
NOTE 2: Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other material
change in the information disclosed in the notes to the financial statements
included in the Company Annual Report on Form 10-KSB for the year ended June 30,
1996. Therefore those footnotes are included herein be 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 its 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 it 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 $0.001 ("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 initially 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."
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company was named in a suit filed by Vincent Liotta ("Liotta") in
the United States District Court for the Eastern District of New York, Civil
Case No. CV-95-1659 on April 25, 1995. The allegations relate to unspecified
damages in excess of $50,000 resulting from Mr. Liotta's purchase of the
Company's Common Stock. The suit also names affiliates of CyberAmerica, Joseph
Roberts & Co., Inc., the broker-dealer from whom Liotta purchased the stock, CFS
and other unnamed defendants. The complaint alleges gross negligence, fraud,
conspiracy and misrepresentation against all defendants, but does not
specifically mention facts upon which its claim against the Company is based.
The Company has filed an answer responding to the petition. However, no further
developments have occurred.
<PAGE>
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 December 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 13 TH day of February 1997.
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/ Gerald Curtis President and Director February 13, 1997
- ---------------------
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S DECEMBER 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-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> 220,675
<CURRENT-LIABILITIES> 761,582
<BONDS> 0
0
0
<COMMON> 24,210,640
<OTHER-SE> (24,751,547)
<TOTAL-LIABILITY-AND-EQUITY> 220,675
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,834
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,515
<INCOME-PRETAX> (42,349)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,349)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,349)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
