<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: MARCH 31, 1997
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number: 0-023532
--------
AMERICAN DIVERSIFIED GROUP, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0292161
------ ----------
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
700 CANAL STREET, 3RD FLOOR, STAMFORD, CT 06902
-----------------------------------------------
(Address of principal executive offices)
(203) 328-3092
--------------
(Issuer's telephone number)
501 SOUTH DIXIE HIGHWAY, WEST PALM BEACH, FL 33401
--------------------------------------------------
(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 86,212,560 shares outstanding as of March 31,
1997
Transitional Small Business Disclosure Format: Yes __ No X
-
<PAGE>
INDEX
AMERICAN DIVERSIFIED GROUP, INC.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets - December 31, 1996 and March 31, 1997 (Unaudited).
Statements of Operations - Three months and ended March 31, 1997
and 1996 (Unaudited).
Statements of Cash Flows - Three months ended March 31, 1997 and 1996
(Unaudited).
Notes to Financial Statements
<PAGE>
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
The Company has never had revenues from operations. During the period from
1994 and through the first quarter of fiscal 1995, the Company, through
Aimrite, endeavored to develop and market a computer controlled shock absorber
system Before the shock absorber system could be completed, of which there was
no assurance, the Company divested itself of ownership of Aimrite, upon the
exercise by Kenneth Coleman of his option to repurchase Aimrite, because of a
change in management of the Company and management's determination that it did
not have the intensive capital resources necessary to complete the
development, of which there was no assurance of success. The Company commenced
a plan to acquire ADMC and thereafter determined to terminate the acquisition
of ADMC, because of ADMC's failure to satisfy the net worth requirements of
the agreement.
However, during and subsequent to fiscal 1995, the Company began to
develop its plan to devote its business energies and limited resources to
become a medical products company, with intention to seek operations involving
the sale of products manufactured by others, principally in the medical field.
During the last half of fiscal 1995 and throughout fiscal 1996, the Company
entered into consulting agreements with third parties for the purpose of
exploring potential acquisitions of operating businesses, seeking advise and
assistance in identifying business opportunities in the medical products and
services fields and also contemplated other business opportunities.
The Company did not generate any operating revenues in fiscal 1996.
Therefore, the Company was dependent upon the funds provided by non-interest
bearing loans from the Company's executive officer and directors, as well as
the willingness of the Company's executive officer and consultants to accept
shares in lieu of cash compensation for continued services to the Company.
With the assistance of the Company's consultants the Company's management
determined that its best business opportunities were in the area of medical
products and principally in its ability of generating revenues the sale of
products manufactured by third parties.
To that end, the Company entered into consulting agreements during fiscal
1996 with AVIX International Pharmaceutical Corp. ("AVIX"), and with United
Biomedical Inc. ("UBI"), which agreements were intended to assist the Company
in entering into the medical products field and becoming an operating company.
In connection with the consulting agreement with ETLC, the Company received
$81,000 from the exercise of options to acquire 450,000 shares at $.18 per
share, the price of the stock on the date of the grant to ETLC. The Company
deems that this payment may also be considered as payment by ETLC for the
rights to market the Company's test kits and HSA in ETLC's territory, which
includes Ivory Coast, Guinea, Mali and Congo. In addition, during the last
quarter of 1996 and through February, 1997, ETLC paid an additional $36,000
for the exercise of 200,000 option shares. The Company and ETLC have agreed to
negotiate whether any payment shall be required with respect to the remaining
250,000 option shares.
<PAGE>
The Company during fiscal 1996 and the first quarter of 1997 has been
dependent upon the willingness of its consultants to accept shares of the
Company's common stock, issued pursuant to registration statements on Form S-
8, in consideration for providing services to the Company. Such services have
enabled the Company to reach its present level of development, which includes:
having received product registration and approved purchase orders aggregating
approximately $1,000,000 for generic pharmaceuticals, vitamins, test kits and
HSA from the Republic of Guinea; having secured a commitment for pre-export
financing from an institutional investment banking firm; having received from
private lenders pre-export funding for its initial shipment to Guinea in May,
1997; having secured purchase orders for 100,000 dengue fever and 100,000
malaria vivex test kits from the National Health Foundation of Brazil, State
of Roraima, subject only to approval of sample test kits submitted, which
order may result in additional orders for up to 1,000,000 test kits in Brazil,
nationally; having submitted samples of blood derivative products,
manufactured by the Bayer Corporation, Biological Products Division, pursuant
to the request of the National Blood Bank of the Ivory Coast, which samples,
when approved, should result in additional orders for such products.
Directly as a direct result of the foregoing business advances and
pending business developments, the Company has been able to raise
approximately $150,000 from the private placement of its units, with
additional commitments form private financing, as described below. This
funding, together with the shipment in June, 1997, of the initial generic
pharmaceutical order to the Republic of Guinea, and the anticipated continued
shipment of orders for generic pharmaceuticals, diagnostic test kits, and
blood derivative products to the Republic of Guinea, as well as revenues that
the Company believes will be generated from orders for dengue fever and
malaria vivex test kits from Brazil and blood derivative products from the
Ivory Coast, as well as additional sales of generic pharmaceutical to West
Africa, should enable the Company to become operational and hopefully will
permit the Company's independent auditors to remove from their report the
qualification regarding the Company as a "going concern".
During 1996, AVIX advanced to the Company the sum of $50,000 pursuant to
a convertible promissory note (the "AVIX Note") to assist the Company in its
cash flow. The AVIX Note provided for conversion into shares of the Company's
common stock at a price of $.25 per share, which conversion would have been
required upon the filing by the Company of a registration statement on Form S-
1 under the Act. The AVIX Note provided for interest at 12% per annum and
would have been due July 30, 1997, unless the Company filed a registration
statement prior to such date and the AVIX Note was converted.
AVIX was also instrumental in the Company's negotiations with respect to
the initial consulting agreement between the Company and ETLC, dated February
12, 1996. However, prior to the end of the Company's fiscal year, AVIX
confirmed that it did not continue to have sources for HSA. As a result, the
Company and AVIX agreed that the principal and interest due under the AVIX
Note be forgiven, which indebtedness was forgiven during the first quarter of
1997.
<PAGE>
The Company's ability to ship these products that are the subject of the
purchase orders is the result of the Company having received a commitment from
an institutional investment banking firm for pre-export financing, which
commitment involves a revolving credit line that will be used for continued
shipments of orders as future orders are received. The Company is outsourcing
through 10-15 third party manufacturers and distributors located in the United
States, Canada, Mexico, South America and Europe and may utilize sources in
China as well as India, for the products that are the subject of the purchase
orders. The Company is presently seeking the best prices that are available
from such manufacturers, consistent with the Guinean pharmaceutical products
budget allocated for such products. Neither the Company nor ETLC presently can
estimate the length of time that will be required to secure the supply from
third party manufacturers for all of the pharmaceutical products in the
required quantities to satisfy the orders generated from Guinea or the
anticipated orders that the Company hopes to generate from other West African
country within the territory granted to ETLC. However, the Company firmly
believes that all such products are available, at prices and in quantities
sufficient to satisfy the orders in a timely manner.
To assist the Company in its cash flow requirements while the initial
orders are shipped, and in order to pay the operating expenses of the Company,
which are estimated to be approximately $10,000 per month, the Company from
January, 1997 to early June, 1997, has raised approximately $150,000 from the
private placement of units, each unit comprised of one (1) share and one (1)
common stock purchase option exercisable at $.08 per share. The units were
priced at $.04 per unit, which was the price of the Company's shares on
January 15, 1997, the date of the private placement subscription agreement.
The Company has also received indications of interest from certain private
investors for additional subscriptions of up to $120,000 in units, at a per
unit price to be determined on the date(s) of subscription. However, there can
be no assurance that any additional subscriptions shall be received under the
unit private placement. The trading price of shares of the Company's common
stock during the past three months has been in the range of $.027 to $.04.
While the Company has been successful in raising capital in the unit private
placement, there can be no assurance that the Company will be able to continue
to raise private capital if the Company's shares continue to trade at the
levels that have prevailed since the beginning of the 1997 fiscal year.
Based upon the Company's present liquid resources after the expenses that
were paid by the Company following receipt of the private placement funds,
which expenses included office expenses, relocation expenses,
professional/accounting fees, transfer agent fees, and certain other expenses,
and based upon its present monthly operating expenses, the Company will be
able to operate for approximately 5 to 7 months if no revenues are generated
from operations. However, the Company believes that it will begin to generate
operating revenues during the second quarter of 1997, following the initial
shipment in June, 1997, of the generic pharmaceutical products pursuant to the
order from the Republic of Guinea, as well as from the anticipated
commencement of orders from the Ivory coast and Brazil. The Company presently
estimates that it will begin to receive monies from its initial shipments
within thirty to sixty days from the first shipment. This is based upon the
<PAGE>
terms of the purchase orders with the Republic of Guinea, which are backed by
Bicgui Bank, the National Bank of Guinea, and a letter of credit provided in
the purchase order. Further, such operating revenues, supplemented by the
Company acceptance of up to an additional $120,000 in private placement
subscriptions, should permit the Company to operate, at present levels, for up
to one additional year or longer, depending upon the timing of shipments and
receipt of payments on the orders.
The Company's monthly operating expenses of $10,000 include rents, office
expenses, professional/accounting fees, telephones and salaries to an
employee, but excluding Dr. Hinton, the Company's sole executive officer. The
Company does not contemplate commencing payment to Dr. Hinton of the monthly
salary of $8,333.33 provided in his three year employment agreement unless and
until it begins to generate revenues from operations. The monies received from
the Company's unit private placement and any pre-export funding will not be
used to pay salaries to officer or fees to directors or consultants, each of
whom have agreed receive compensation for services by the issuance of shares
in registration statements on Form S-8 and/or Form S-1. During 1996 and
through early 1997, the Company's executive officer, directors and consultants
were issued shares in registration statements on Form S-8 in consideration for
their continued services to the Company and in lieu of any cash compensation.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Footnote E to Financial Statement
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
Exhibit 27
<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)
July 16, 1997 By: /s/ Jerrold R. Hinton
----------------------
Jerrold R. Hinton
President, Chief Executive Officer and
Chief Financial Officer
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
Page
----
Balance Sheet 1
Statements of Operations 2
Statements of Cash Flows 3
Notes To Financial Statements 4
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash $ 1,336
Inventories 5,000
----------
Total Current Assets 6,336
Fixed Assets:
Property and Equipment (Net of
$8,277 Accum. Depr.) 20,140
Other Assets:
Miscellaneous Receivable (Net of
$100,000 Allowance) --
---------
TOTAL ASSETS $ 26,476
=========
LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY
- ----------------------------------------------
Current Liabilities:
Accounts Payable and Accrued Expenses $ 79,249
Notes Payable to Related Parties 121,521
----------
Total Current Liabilities 200,770
Shareholder's (Deficit) 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 82,962,520 shares 82,962
Additional Paid-In Capital 14,469,019
Stock Subscribed 100,000
Deferred Consulting Fees (982,569)
Deficit Accumulated During
Development Stage (5,031,917)
Deficit Accumulated Prior to
Development Stage (8,811,789)
----------
Total Shareholders' (Deficit) Equity (174,294)
---------
TOTAL LIABILITIES AND SHAREHOLDERS'
(DEFICIT) EQUITY $ 26,476
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
1
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Revenues: $ 0 $ 0
----------- ------------
Expenses:
General and Administrative 699,662 1,414,206
----------- ------------
Loss From Operations (699,662) (1,424,206)
Other Income:
Gain on Settlement -- 4,795
----------- ------------
Net Loss ($699,662) ($1,419,411)
=========== ============
Net Loss Per Share ($0.0093) ($0.0251)
=========== ============
Average Number of Shares
Outstanding 75,090,337 56,598,015
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss ($699,662) ($1,419,411)
Depreciation 1,303 800
General and Administrative Expenses
Paid by Stock 600,181 1,388,917
Increase (Decreases) in Accounts Payable
and Accrued Expenses 10,755 (1,059)
----------- -----------
Net Cash Used in Operating Activities (87,423) (30,753)
----------- -----------
Cash Flows From Investing Activities:
Acquisitions of Property and Equipment (3,801) --
Payments for Possible Acquisition -- (2,000)
Decrease (Increase) in Deposits 507 (570)
----------- -----------
Net Cash Used in Investing Activities (3,231) (2,570)
----------- -----------
Cash Flows From Financing Activities:
Sales of Common Stock 100,000 --
Proceeds from Notes Payable to Related
Parties -- 43,000
Payments on Notes Payable to Related
Parties (4,000) --
Cash Overdraft (4,010) --
----------- -----------
Net Cash Provided By Financing
Activities 91,990 43,000
----------- -----------
Net Increase in Cash 1,336 9,677
Cash, Beginning of Period -- 944
----------- -----------
Cash, End of Period $ 1,336 $ 10,621
</TABLE>
Non-Cash Transactions in 1997:
- -----------------------------
1. Issued 19,500,000 shares of common stock for services of $975,000.
Non-Cash Transactions in 1996:
- -----------------------------
1. Issued 17,850,000 shares of common stock for services of $3,034,500.
2. Issued 2,000,000 shares of common stock for possible acquisition; recorded at
par value.
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
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 period
presented. All adjustments are of a normal recurring nature.
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, 1996 contained in the Company's Form 10-KSB.
NOTE 2 - EARNINGS (LOSS) PER SHARE
Per share information is computed based on the weighted average number of shares
outstanding during the period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET (UNAUDITED) AS OF 3/31/97 AND THE STATEMENT OF OPERATIONS
(UNAUDITED) FOR THE THREE MONTHS ENDED 3/31/97 & 3/31/96.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 1,336 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 5,000 0
<CURRENT-ASSETS> 6,336 0
<PP&E> 28,417 0
<DEPRECIATION> 8,277 0
<TOTAL-ASSETS> 26,476 0
<CURRENT-LIABILITIES> 200,770 0
<BONDS> 0 0
0 0
0 0
<COMMON> 82,962 0
<OTHER-SE> (257,256) 0
<TOTAL-LIABILITY-AND-EQUITY> 26,476 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 699,662 1,419,411
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (699,662) (1,419,411)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (699,662) (699,662)
<EPS-PRIMARY> (.009) (.025)
<EPS-DILUTED> (.009) (0.25)
</TABLE>
