<PAGE>
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 EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number 0-023532
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AMERICAN DIVERSIFIED GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0349523
------ ----------
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
501 South Dixie Highway, West Palm Beach, FL 33401
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(Address of principal executive offices)
(407) 832-5208
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(Issuer's telephone number)
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 report (s),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
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 54,962,560 shares outstanding as of
September 30, 1996.
Transitional Small Business Disclosure Format: Yes No X
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INDEX
AMERICAN DIVERSIFIED GROUP, INC.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet - September 30, 1996 (Unaudited).
Statements of Operations - Three months and Nine months ended
September 30, 1996 and 1995 (Unaudited).
Statements of Cash Flows - Three months and Nine months ended
September 30, 1996 and 1995 (Unaudited).
Financial Data Schedule
Notes to Financial Statements
2
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AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
BALANCE SHEET
(UNAUDITED)
AS OF SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash $1,797
Stock Subscriptions Receivable 49,500
Advances Receivable -
Inventories 5,000
Deferred Consulting Fees 603,500
-----------------
Total Current Assets 659,797
Fixed Assets:
Property and Equipment (Net) 18,870
Other Assets:
Deferred Consulting Fees-Long Term 155,125
Deposits 570
-----------------
Total Other Assets 155,695
----------------
Total Assets $834,362
================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable and Accrued Expenses $640,811
Due to Related Parties 109,658
Note Payable to Related Party 52,500
-----------------
Total Current Liabilities 802,969
Shareholders' Equity:
Preferred Stock, Series A, $10 par value
authorized 50,000 shares; none outstanding -
Common Stock, par value $.001 per share,
authorized 200,000,000 shares; issued and
outstanding 54,962,560 shares 54,962
Additional Paid-In Capital 12,593,019
Accumulated Deficit (12,616,588)
-----------------
Total Shareholders' Equity 31,393
----------------
Total Liabilities and Shareholders' Equity $834,362
================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
9 MONTHS 9 MONTHS 3 MONTHS 3 MONTHS
ENDED ENDED ENDED ENDED
SEPT 30, SEPT 30, SEPT 30, SEPT 30,
1996 1995 1996 1995
============= ============ =============== =============
<S> <C> <C> <C> <C>
Revenues:
Other Income $0 $0 $0 $0
Expenses:
General and Administrative 3,664,714 519,009 1,580,767 136,624
------------- ------------ --------------- -------------
Loss From Operations (3,664,714) (519,009) (1,580,767) (136,624)
Other Losses (Gains):
Loss on Disposal of Subsidiary 2,545,076
Losses on Possible Acquisitions 144,880 250,000 144,880
Loss on Settlement of Litigation 375,000
Loss (Gain) on Settlement (4,795)
------------- ------------ --------------- -------------
Total Other Losses (Gains) 140,085 3,170,076 144,880 0
------------- ------------ --------------- -------------
Net Loss ($3,804,799) ($3,689,085) ($1,725,647) ($136,624)
============= ============ =============== =============
Net Loss Per Share ($0.0709) ($0.0926) ($0.0314) ($0.0034)
============= ============ =============== =============
Average Number of Shares Outstanding 53,650,020 39,840,408 54,962,560 39,821,631
============= ============ =============== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
9 MONTHS 9 MONTHS 3 MONTHS 3 MONTHS
ENDED ENDED ENDED ENDED
SEPT 30, SEPT 30, SEPT 30, SEPT 30,
1996 1995 1996 1995
================ =============== ================ ===============
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net Loss ($3,804,799) ($3,689,085) ($1,725,647) ($136,624)
Depreciation 3,254 870 1,232 870
General and Administrative Expenses
Paid by Stock 2,905,875 412,100 924,208 37,500
Other Losses Paid by Stock 375,000
Loss on Disposal of Subsidiary 2,545,076
Losses on Possible Acquisitions 144,880 250,000 144,880
Increase in Deposits (570)
Increase (Decrease) In Accounts Payable
and Accrued Expenses 622,985 (3,290) 615,030 (4,274)
---------------- --------------- ---------------- ---------------
Net Cash Flows From Operating Activities (128,375) (109,329) (40,297) (102,528)
---------------- --------------- ---------------- ---------------
Cash Flows From Investing Activities:
Increase in Advances Receivable (100,000) (137,955) (54,518) (137,955)
Acquisition of Property and Equipment (550) (8,866) (8,866)
Payments for Prepaid Acquisition Costs (44,880) (25,482)
---------------- --------------- ---------------- ---------------
Net Cash Flows From Investing Activities (145,430) (146,821) (80,000) (146,821)
---------------- --------------- ---------------- ---------------
Cash Flows From Financing Activities:
Sales of Common Stock 112,500 250,000 31,500 250,000
Proceeds from Loans Payable to Related Parties 142,658 77,658
Payments on Loans Payable to Related Parties (33,000)
Proceeds from Note Payable to Related Party 52,500 1,500
---------------- --------------- ---------------- ---------------
Net Cash Flows From Financing Activities 274,658 250,000 110,658 250,000
---------------- --------------- ---------------- ---------------
</TABLE>
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
9 MONTHS 9 MONTHS 3 MONTHS 3 MONTHS
ENDED ENDED ENDED ENDED
SEPT 30, SEPT 30, SEPT 30, SEPT 30,
1996 1995 1996 1995
============= ============= ============= ============
<S> <C> <C> <C> <C>
Net Increase (Decrease) In Cash 853 (6,150) (9,639) 651
Cash, Beginning of Period 944 6,801 11,436 -
------------- ------------- ------------- ------------
Cash, End of Period $1,797 $651 $1,797 $651
============= ============= ============= ============
</TABLE>
Non-Cash Transactions:
1. Issued 17,850,000 shares of common stock for services of $3,034,500 in 1996
and 4,960,000 shares for services of $412,100 in 1995.
2. Issued 450,000 shares of common stock for stock subscriptions receivable of
$81,000 in 1996 for which $9,000 was collected and $22,500 applied against
obligations owed to the stockholder; $49,500 balance outstanding at 9/30/96.
3. Issued 2,000,000 shares of common stock for possible acquisition; recorded
at par value ($.001 per share) in 1996.
4. Issued 8,100,000 shares of common stock for possible acquisitions valued at
$250,000 in 1995.
5. Issued 150,000 shares of common stock in settlement of litigation of
$375,000 in 1995.
6. Issued 80,000 shares of common stock for inventory and equipment valued at
$20,000 in 1995.
7. Consulting services valued at approximately $600,000 were paid for with
company stock held by a shareholder in 1996; the company recorded a
corresponding liability which is to be paid with company stock with equal
value.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements reflect all adjustments, which,
in the opinion of management, are necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented.
Certain financial information and footnote disclosures which are normally
included in financial statements prepared in accordance with generally accepted
accounting principles, but which are not required for interim reporting
purposes, have been condensed or omitted. The accompanying financial statements
should be read in conjunction with the financial statements and notes thereto as
of December 31, 1995 contained in the Company's Annual Report on Form 10-KSB.
NOTE 2 - EARNINGS (LOSS) PER SHARE
Per share information is computed based upon the weighted average number of
shares outstanding during the period.
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Item 2. Management's Plan of Operation
The Company has never had revenues from operations. During the
third quarter of 1996, the Company paid it operating expenses, including its
general and administrative expenses, principally by loans from officers and
directors. Further, a shareholder, at the request of the Company, transferred
shares of the Company's common stock to third party consultants and others as
payment, on behalf of the Company of its obligations to such third parties. the
Company has agreed to reimburse the shareholder for the value of the advances
made during the quarter by the issuance of shares of the Company in a
registration statement on Form S-1 which the Company contemplates filing, in or
about the first quarter of 1997.
Reference is made to the Company's Financial Statements, the
Report of the Independent Auditors, and Notes to Financial Statements with
respect to questions of "going concern" in the event that the Company does not
generate revenues from operations. The Company is also in the process of
completing a private placement of its securities, which include one share and an
option to acquire one additional share, for the purposes of raising a minimum of
$100,000 and a maximum of $500,000. The Company has received commitments to date
for a total of $150,000 pursuant to the private placement, but has not yet
received any subscription proceeds.
Since the end of the quarter ended June 30, 1996, the Company
has received firm initial order from the Ministry of Health of the Republic of
Guinea, located in West Africa, for Test Kits (for cholera, strep, gonorrhea and
syphilis) and for Human Serum Albumin ("HSA"), the serum component of whole
blood. HSA is commonly used in accidents, as well as in operations and warfare
conditions where there is a significant loss of blood. HSA serves as a short
term blood substitute that can help prevent shock and death from loss of blood.
In addition, because HSA does not require refrigeration, it is most suitable for
use in areas such as West Africa, as well as in Central and South America, where
health care is often provided in the field. The initial order for HSA and Test
Kits was in the amount of $200,000. The Company also received an additional
order from the Republic of Guinea for generic pharmaceutical products in the
amount of $718,000. The Company is presently pursuing the outsourcing of the
generic pharmaceutical products from third-party manufacturers. The Company
believes that it will begin to ship products, including Test Kits and HSA by
December 31, 1996 or shortly thereafter. The Use of Proceeds from the private
placement specifically contemplates the use of certain proceeds to facilitate
the initial purchase and shipment of the products under both orders. The Company
reasonably expects that operating revenues will be generated during no later
than the first quarter of 1997 and should continue as the Company continues to
deliver products, including the increasing orders for generic pharmaceutical
products during fiscal 1997.
In connection with the orders for generic pharmaceutical
products from the Republic of Guinea, the Company has been informed that its
consultant, Emerging Trends Linkages Corp., of New York, has recently received
bank guarantees from the National Bank of Guinea, a correspondent of Credit
Lyonnais, to guaranty that the Company shall be paid for all products delivered
to the Republic of Guinea under existing orders. Based upon the bank guarantees
and the anticipated proceeds from the private placement, the Company has
negotiated with several manufacturers for the purpose of supplying the generic
pharmaceutical products subject to the order. The Company believes that it will
be able to outsource all of the generic pharmaceutical products from third
parties at prices that will enable it to generate satisfactory profit margins.
In addition, the Company has recently received an increased
commitment from Emerging Trends, pursuant to which it has agreed to deliver up
to $15,000,000 in future orders for generic pharmaceuticals during the period
through December 31, 1997. Emerging Trends has represented to the Company that
it reasonably believes that such level of orders may be expected from the
Republic of Guinea and from other countries in West Africa where Emerging Trends
has representatives. Such orders are presently being negotiated by Emerging
Trends and its West African representatives with the Republic of Guinea, the
Government of Mali and elsewhere in West Africa. Based upon these
representations and the amount of orders received from the Republic of Guinea
during the second half of 1996, following the
8
<PAGE>
engagement by the Company of Emerging Trends as a consultant, the Company
believes that Emerging Trends will be able to fulfill its increased commitment
to the Company during fiscal 1997.
The Company shall be dependent upon at least the minimum
proceeds from the private placement and from generating operating revenues from
the shipment of products. Further, the Company is presently exploring the
possibility of financing the purchase of products subject to the orders,
utilizing as collateral the bank guarantees. While the Company believes that
such efforts will be successful, at least in part, there can be no assurance
that it will in fact be able to secure such financing in a timely manner, or at
terms satisfactory to the Company. any delay in securing financing or completing
the private placement would likely result in the delay of the commencement of
shipping orders to the Republic of Guinea, which would have an adverse effect
upon the Company. However, the Company is not subject to any specific timetable
with respect to these orders, nor is any penalty or cancellation provision
applicable.
During the quarter ended September 30, 1996, and principally as
a result of the Company's development of its medical pharmaceutical business in
West Africa, the Company determined to terminate or otherwise not pursue certain
business opportunities that it previously contemplated or in one instance a
proposed candidate for purchase reneged on its obligations to the Company
following a preliminary contract with the Company. As a result, the Company
recorded "other losses" totaling $144,880 during the quarter, with respect to
the following matters: expenses incurred in initially evaluating the Aptek
Communication Products Inc. acquisition that the Company did not pursue; losses
recorded for monies advanced in connection the acquisition of Imaging System
Synergies, Inc., which acquisition ISS terminated after receiving approximately
$100,000 from the Company. The Company is presently pursuing ISS for the sums
advanced in good faith in connection with the proposed acquisition, by at this
time the Company is unable to determine whether it shall recover any of the
monies advanced to ISS.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K and 8-K/A
Exhibit 27 (attached as last page to Financial Statements,
following Notes to Financial Statements)
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AMERICAN DIVERSIFIED GROUP, INC..
(Registrant)
December 18, 1996 By: /s/Jerrold R Hinton
- ----------------- -------------------
Jerrold R. Hinton
President, Chief Executive Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET (UNAUDITED) AS OF 9/20/96 AND THE STATEMENT OF OPERATIONS (UNAUDITED) FOR
THE THREE MONTHS ENDED 7/30/96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,797
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 5,000
<CURRENT-ASSETS> 659,797
<PP&E> 24,616
<DEPRECIATION> 5,746
<TOTAL-ASSETS> 834,362
<CURRENT-LIABILITIES> 802,969
<BONDS> 0
0
0
<COMMON> 54,962
<OTHER-SE> (23,569)
<TOTAL-LIABILITY-AND-EQUITY> 834,362
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,725,647
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,725,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,725,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,725,647)
<EPS-PRIMARY> (.031)
<EPS-DILUTED> (.031)
</TABLE>
