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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amended)
For the quarterly period ended: March 31, 1998
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[ ] 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.
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0292161
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(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
110 North Center Street, Suite 202, Hickory, NC 28601
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(Address of principal executive offices)
(704) 322-2044
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(Issuer's telephone number)
437 Main Avenue, SW, Hickory, NC 28602
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(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 210,212,560 shares outstanding as of July 15,
1998
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 - March 31, 1998 (Unaudited).
Statements of Operations - Three months and ended March 31, 1998
and 1997 (Unaudited).
Statements of Cash Flows - Three months ended March 31, 1998
and 1997 (Unaudited).
Notes to Financial Statements
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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Results of Operations
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American Diversified Group,Inc.(the "Company") is a development stage
company. During the Company's three month period ended March 31, 1998,
the Company incurred a net loss of $600,472 ($.0032 per Share)
compared to a loss of $699,662 ($.0093 per Share) for the comparable
three month period for the prior fiscaly year.
The Company reported sales revenues of $52,750 for the three
month period ended March 31, 1998, represented by the sales revenues
and receivables from generic pharmaceuticals and telecommunication
sales compared to no sales revenues or accounts receivable for the
comparable period of the prior year.The Company's net loss for the
period ended March 31, 1998, was principally the result of the limited
sales revenues during the quarter, the continued expenses associated
with continuing to operate and maintain its offices and expenses
associated with being a reporting public company, which expenses
include professional, accounting and printing/EDGAR preparation and
filing fees, and the non-cash expenses associated with the issuance of
shares to its executive officer, directors and consultants for
continued services to the Company in lieu of cash compensation during
the period. Such non-cash compensation expensed during the three month
period ended March 31, 1998, was $996,400, compared to $975,000 during
the same period in the prior fiscal year. In order for the Company to
pay its operating expenses, including office rents, communication
expenses, accounting and bookkeeping fees, printing and EDGAR
preparation costs, publication costs, and other general and
administrative expenses, the Company was dependent upon the funds
provided by non-interest bearing loans from the Company's executive
officer and directors, from a consultant, as well as from the private
placement of its securities to private investors.The Company has
continuing orders for pharmaceutical products in West Africa, which
will increase in size during successive quarters in fiscal 1998, and
projects to expand its orders to other West African countries. The
Company is increasing its product lines to include a broad spectrum of
generic pharmaceuticals and diagnostic test kits. The Company is in
the final stages of testing and approval for dengue fever test kits in
Brazil, and with final approvals should generate projected gross sales
of $5 million annually.The Company's ability to continue to ship the
products that are the subject of the purchase orders from West Africa
is essential to the Company's goal of generating increased levels of
operating revenues from its pharmaceutical and medical products
business in West Africa. The Company is presently outsourcing these
generic pharmaceutical products from several third party manufacturers
and distributors located in the United States, Canada, Mexico, South
America, Europe, and India, which have provided quality generic
pharmaceutical products at highly competitive prices necessary for the
Company to profitably fulfill existing and future orders for such
products from West Africa and elsewhere.
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The Company, subsequent to the end of the quarter on March 31, 1998,
also shipped additional generic pharmaceuticals to West Africa,
resulting in additional sales revenues and receivables which will be
reported in the Company's quarterly report for the second quarter.
Furthermore, following the installation of additional communications
hardware and software in West Africa, which should be completed during
the third quarter of fiscal 1998, the Company projects significant
increases in call-back revenues during the remainder of fiscal 1998,
as well as higher profit margins from the increased revenues. The
higher profit margins shall result from the fact that the new hardware
and software will facilitate greater use of the multiple lines by more
customers, simultaneously, without increased costs. The Company
presently projects that following such installation, monthly call-back
revenues should be approximately $500 to $1,000 per customer per month
during the 3-6 month call-back start-up period during which time the
Company will actively seek to resign to its enhanced service up to 200
or more customers prior to fiscal year end. The Company had previously
signed and serviced approximately 100 customers for call-back service
in West Africa but has had only limited revenues and receivables from
call-back because of service interruption that has necessitated the
requirement to install the enhanced hardware and software, scheduled
for completion during the third quarter of 1998. This installation
shall permit the Company to expand the market penetration for its call-
back telecommunications service in West Africa.
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The services of the Company's consultants, together with that of the
Company's management, have enabled the Company to reach its present
stage of development, which includes having:
(i) shipped additional generic pharmaceutical products subject to
orders from West Africa, after generating its purchase orders for such
products in fiscal 1997 and its first shipments during the third
quarter of fiscal 1997;
(ii) received a letter of credit in the aggregate initial amount of
approximately $70,000, which sums were paid to the Company during the
first and second quarters of fiscal 1998, as payment of generic
pharmaceutical products from West Africa;
(iii) received approximately $192,000 from private investors in the
Company's unit private placement during fiscal 1997;
(iv) secured third party manufacturers from whom the Company can
continue to source generic pharmaceuticals at competitive pricing so
as to enable it to sell such products at satisfactory profit margins
during fiscal 1998, in the highly competitive and price sensitive
developing world markets;
(v) secured all preliminary approvals and preliminary testing results
of dengue fever test kits, which are prerequisite for the anticipated
purchase orders for dengue fever test kits from the National Health
Foundation of Brazil, State of Roraima, and in Brazil nationally;
(vi) established a business venture that is presently marketing call-
back telecommunication services to major multinational corporations,
domestic business corporations and foreign embassies in West Africa,
from which the Company first began to generate accounts receivable
commencing in September, 1997, with increasing revenues and accounts
receivable being generated subsequent to the quarter ending June 30,
1998;
(vii) commenced business relationship with manufacturers of complete
lines of generic pharmaceuticals for the purpose of satisfying the
Company's existing purchase orders and its expected increasing level
of orders in West Africa;
(viii) entered into a joint venture and equity participation agreement
with Global Transmedia Communication Corporation, Miami, FL, which is
engaged in the sale of Internet telephony products and services, and
on-hold messaging and advertising products and services; and
(ix) entered into exclusive agreements with a generic pharmaceutical
manufacturer as well as an international medical products distributor,
giving the Company exclusive rights to sell in Africa, Asia, Europe
and South America The Company continues to be dependent upon the
willingness of the Company's executive officer, directors and each of
its consultants to accept shares in lieu of cash compensation for
continued services to the Company. As a direct result of the foregoing
business advances and pending business developments, the Company has
been able to raise $150,000 through September 30, 1997, from the
private placement of its units, at the unit offering price of $.04.
This funding, together with the recent payments for generic
pharmaceutical products from the letter of credit for the shipments to
West Africa, and anticipated increased levels of telecommunications
revenues in the coming months, 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 subsequent fiscal periods, perhaps
as early as the second quarter of 1998.
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Liquidity and Capital Resources
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The Company, at March 31, 1998, had current assets of $97,486,
compared to $6,336 at the March 31, 1997, and $64,460 at the fiscal
year ended December 31, 1997. To assist the Company in its cash flow
requirements which are presently estimated at $15,000 per month, the
Company may determine to continue to seek subscription proceeds from
private investors, as well as revenues from sales of products and
telecommunications products and services, and anticipated commencement
of sales revenues from dengue fever test kits in Brazil. Further, the
Company projects that with the increased revenues from call-back
following the installation of enhanced telecommunications hardware and
software, the Company shall also have higher profit margins on such
revenues for the reasons stated above.There can be no assurance that
additional subscriptions shall be received under the unit private
placement, and in fact the Company has not received additional
subscriptions since the end of the 1997 fiscal year, during which it
received private placerment proceeds of $192,000. The trading price of
shares of the Company's common stock during the six months ended June
30, 1998, has been primarily in the range of $.025 to $.05, but during
several days in March, 1998, the trading range increased to the level
of $.06 to $.10 range. Following the end of the quarter ended March
31, 1998, the trading price of the shares has again been in the range
of $.025 to $.05 per share. The Company shall be dependent upon the
continued shipment of orders, including potential revenues from
participation in recent requests fro products from West Africa, which
if accepted could lead to significantly increased sales levels.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,
professional/accounting fees, transfer agent and printing service
fees, and certain other expenses, and based upon its present monthly
operating expenses of $15,000, the Company will be able to operate for
approximately four months if no additional revenues are generated from
operations. However, the Company is generating increased operating
revenues during the first and second quarters of fiscal 1998, as a
result of additional shipments of generic pharmaceuticals to West
Africa, and projects increasing receivables from sales of call-back
service in West Africa and anticipates revenues from Brazil,
commencing as early as July 1998.The Company's monthly operating
expenses of approximately $15,000 during the quarter ended March 31,
1998 and during the second quarter, include rent for executive office
space in Hickory, NC, use of conference facilities for its Investor
Relations offices at Rockefeller Center in NYC,
professional/accounting fees, telephones, but do not reflect any
salary to Dr. Jerrold R. Hinton, the Company's sole executive officer.
The Company is accruing but 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
positive cash flow from operations. During fiscal 1997 and the first
quarter of fiscal 1998, 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.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Footnote 3 to Notes to Financial Statement for Fiscal Year Ended
December 31, 1997.
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
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EXHIBIT 27
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE BALANCE SHEET (UNAUDITED) AND THE
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report caused this amended report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN DIVERSIFIED GROUP, INC..
(Registrant)
July 16, 1998 By: /s/Jerrold R. Hinton
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Jerrold R. Hinton
President, Chief Executive Officer and
Chief Financial Officer
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AMERICAN DIVERSIFIED GROUP,
FORMERLY TERA WEST VENTURES, Inc.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998
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AMERICAN DIVERSIFIED GROUP, Inc.
FORMERLY TERS WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998
PAGE
BALANCE SHEET 12
STATEMENTS OF OPERATIONS 13
STATEMENTS OF CASH FLOWS 14
NOTES TO FINANCIAL STATEMENTS 15
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AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
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Current Assets:
Cash $30,631
Accounts Receivable (Net) 61,855
Inventories 5,000
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Total Current Assets 97,486
Fixed Assets:
Property and Equipment
(Net of $15,009 Accum. Depr.) 19,257
Other Assets:
Deposits 570
Miscellaneous Receivable
(Net of $100,000 Allowance) -
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570
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Total Assets $117,313
========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
Accounts and Accrued Expenses Payable $30,622
Accounts and Accrued Expenses Payable
to Related Parties 176,179
Notes Payable to Related Parties 206,463
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Total Current Liabilities 413,264
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Shareholders' (Deficit) Equity:
Preferred Stock, Series A, $10 par value
authorized 50,000 shares; none outstandi -
Common Stock, par value $.001 per share,
authorized 350,000,000 shares; issued
and outstanding 212,062,520 shares 212,062
Additional Paid-In Capital 17,846,819
Stock Subscriptions Receivable (10,500)
Deferred Consulting Fees (1,197,305)
Deficit Accumulated During
Development Stage (8,335,238)
Deficit Accumulated Prior to
Development Stage (8,811,789)
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Total Shareholders' (Deficit) Equity (295,951)
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Total Liabilities and Shareholders'
(Deficit) Equity $117,313
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDE MARCH 31
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
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Revenues $52,750 $0
Costs of Revenues 45,495 0
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Gross Profit 7,255 0
Selling, General and Administrative Expenses 607,727 699,662
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Loss From Operations (600,472) (699,662)
Other Income:
Reimbursement of Losses 7,802 -
Net Loss ($592,670) ($699,662)
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Net Loss Per Share ($0.0032) ($0.0093)
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Average Number of Shares Outstanding 182,459,226 75,090,337
=========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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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>
<S> <C> <C>
1998 1997
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Cash Flows From Operating Activities:
Net Loss ($592,670) ($699,662)
Depreciation 1,711 1,303
Amortization of Deferred Consulting Fees 168,971 175,181
General and Administrative Expenses Paid
by Stock 388,400 425,000
Increase In Accounts Receivable (13,464) -
Increase In Accounts Payable and Accrued
Expenses 22,188 10,755
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Net Cash Used In Operating Activities (24,864) (87,423)
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Cash Flows From Investing Activities:
Acquisitions of Property and Equipment (516) (3,801)
Decrease In Deposits - 570
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Net Cash Used In Investing Activities (516) (3,231)
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Cash Flows From Financing Activities:
Sales of Common Stock - 100,000
Brokers' Fees Paid on Sales of Common Stock (6,000) -
Proceeds from Notes Payable to Related Parties 50,942 -
Payments on Notes Payable to Related Parties - (4,000)
Cash Overdraft - (4,010)
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Net Cash Provided By Financing Activit 44,942 91,990
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Net Increase in Cash 19,562 1,336
Cash, Beginning of Period 11,069 -
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Cash, End of Period $30,631 $1,336
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</TABLE>
Non-CashNon-Cash Transactions in 1998:
1. Issued 52,700,000 shares common stock for current and future services
of $996,400.
Non-Cash Transactions in 1997:
1. Issued 19,500,000 shares of common stock for current and
future services of $975,000.
SEE NOTES TO FINANCIAL STATEMENTS
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AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998
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 disclosure 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, 1997 contained in the Company's Form 10-KSB/A.
Note 2 - EARNINGS ( LOSS) PER SHARE
Per share information is computed based on the weighted average number of
shares outstanding during the period.
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