<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 (Amended)
For the quarterly period ended: March 31, 1999
--------------
[ ] 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)
110 North Center Street, Suite 202, Hickory, NC 28601
-----------------------------------------------------
(Address of principal executive offices)
(828) 322-2044
--------------
(Issuer's telephone number)
---------------------------------------------------
(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 251,137,560 shares outstanding as of June 29,
1999.
Transitional Small Business Disclosure Format: Yes __ No X
Page 1
</PAGE>
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INDEX
AMERICAN DIVERSIFIED GROUP, INC.
-------------------------------------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet - March 31, 1999 (Unaudited).
Statements of Operations - Three months and ended March 31, 1999
and 1998 (Unaudited).
Statements of Cash Flows - Three months ended March 31, 1999
and 1998 (Unaudited).
Notes to Financial Statements
Page 2
</PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
------------------------------------------------------------
Except for the historical information herein, the matters discussed in this
quarterly report includes forward-looking statements that may involve a number
of risks and uncertainties. Acutal results may vary based upon a number of
factors, including, but not limited to, risk in product availiabilty, product
technology changes, market acceptance of new products and services, questions of
continuing demand, the impact of competitive products and pricing, changes
in economic conditions and other risk factors contained in the Company's most
recent filings with the Securities and Exchange Commission ("SEC").
Results of Operations
- ---------------------
American Diversified Group,Inc.(the "Company") is a development stage
company. The disclosure in the quarterly report should be read in conjunction
with the Company's annual report on Form 10-KSB for its year ended December
31, 1998, which was filed with the SEC. During the Company's three month
period ended March 31, 1999, the Company incurred a net loss of $424,531
($.0018 per Share) compared to a loss of $600,472 ($.0032 per Share) for the
comparable three month period for the prior year.
The Company reported no sales revenues for the three month period ended
March 31, 1999, compared to sales revenues of $52,750 for the three month
period ended March 31, 1998, which were represented by the sales revenues
from generic pharmaceuticals and telecommunication sales.
The Company's net loss for the period ended March 31, 1999, was prin-
cipally the result of the lack of sales revenues during the quarter, the con-
tinued 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 during the period. Such non-cash
compensation expensed during the three month period ended March 31, 1999,
was $ 273,000, compared to $996,400 during the same period in the prior year.
In order for the Company to pay its operating expenses, including office
rents, communication expenses, accounting and bookkeeping fees, prin-
ting 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. In addition, following the first quarter of 1999,
the Company received funds from the exercise of options by certain persons
totalling $70,000 which will be reported in the second quarter. There can
be no assurance of any additional exercise of options. Further, while the
Company raised captial from private investors in the Company's unit private
placement ($122,000 net of commissions during 1997) and ($56,000 net of
commissions dugin 1998), which units were sold at $.04 per unit, each consisting
of one share of common stock and one common stock purchase option exeercisable
at $.08 per share, there can be no assurance based upon present market price
of the shares that it will be able to raise additional private placment fund-
ing, at terms and conditions satisfactory to the Company.
</PAGE>
<PAGE>
The Company, during the first quarter of 1999, has continued to pursue
efforts to genarate further orders for pharmaceutical products in West
Africa. These efforts, the Company presently believes, should result in its
ability to begin to generate sales revenues for pharmaceutical products in
West Africa.
As a result of the recent appointment by the Company of new representatives
for West Africa, the Company believes that there will be an increasing level
of pharmaceutical product orders during successive quarters in 1999, and
projects to expand its orders to other West African countries. The
Company has recently shipped samples, and registration documentation, for
30 generic pharmaceutical products, from which it is awaiting orders.
The Company is presently outsourcing these generic pharmaceutical products
from several third party manufacturers and distributors, located in India,
which have provided quality products at competitive prices necessary for the
Company to meet the pricing structure in West Africa and elsewhere.
The Company was informed in May 1999, that first deliveries of dengue fever
test kits from as US manufacturer have been delivered to Brazil, as part of the
first order for 2000 test kits. The Company projects that it should
be able to ship additional orders to several states in Brazil, depending upon
its successfully concluding an extension of its relationship with Emerging
Trends Linkages Corp. (ETLC), with whom it has had a business arrangement since
1995.
Page 3
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<PAGE>
The Company had previously signed and serviced approximately customers for the
call-back telecommunications service in West Africa, but has had only limited
revenues from such services, with no revenues during 1999. This difficulty was
the result of service interruptions by the local PTT's. As a result of the
continuing effects of interruption of call-back service, the Company and ETLC
agreed to cancel the call-back venture and ETLC agreed to the cancellation of
rights to 47 million shares of the Company's common stock.
The Company during the quarter ended March 31, 1999, pursuant its interim stock
purchase/loan agreement with Global Transmedia Communications Corporation (GTCC)
of Miami, Florida, continued efforts to expand the Internet telephony service
business of GTCC in domestic and foreign markets. Following its agreement with
GTCC, initial orders were announced by GTCC for the distribution and sale of
GTCC's telephony service to a distributor in Canada. However, to date, GTCC
has received only limited revenues from the Canadian distribution agreement,
but is pursuing this business opportunity. Further, GTCC has recently intro-
duced enhancements to its Internet telephony business service, to permit its
subscribers/users to use GTCC's service world-wide. Initially, its services
were largely limited to Internet telephony from South America to the US, but
with the new enhancements, GTCC's subscribers may access and place Internet
telephony communications of full voice, data, fax features to and from Asia,
South America and elsewhere, to the US or any other location. While to date,
GTCC has generated only limited operating revenues, the Company has not yet
received any distributions from its arrangement with GTCC. The Company
reasonably believes that during the second half of 1999, GTCC will begin to
generate profitable operations with increased subscriber base and monthly
revenues, with increased calling volume from the Internet telephony business.
GTCC recently entered into an agreement with a group of telecommunication
companies in Venezuela, which provides for the purchase of a minimum 2,100,000
minutes, and up to 3,900,000 minutes in calling volume, with projected revenues
of $780,000. The value to the Company and GTCC is projected to increase during
the next year.
The Company continues to be dependent upon the willingness of the Company's
executive officers/directors and its consultants to accept shares as compensa-
tion for continued services to the Company, which services the Company consid-
ers to be valuable and necessary to its continued operations.
Page 4
</PAGE>
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company, at March 31, 1999, had current assets of $3,104 compared
to current assets of $97,486 at March 31, 1998, and current assets of
$3,016 at the year ended December 31, 1998. To assist the Company in its
cash flow requirements which are presently estimated at $5,000 per month,
the Company has generated $70,000 from the exercise of options. The Company
may determine, depending upon the prevailing stock price of its shares, to
seek subscriptions from the sale of securities to private investors,
although there can be no assurance that it will be successful in securing
any investment from private investors at terms and conditions satisfactory
to the Company, if at all. The Company also hopes to receive revenues from
sales of pharmaceutical products in West Africa, dengue fever test kits in
Brazil and telecommunications products and services from GTCC world-wide.
The Company must conclude at satisfactory terms and conditions the extension
of its consulting relationship with ETLC, in order to secure the benefit it
hopes to derive from pharamceucitacl sales to West Africa and dengue fever
test kits to Brazil. The consulting arrangment with ETLC, which commenced in
1995, and was extended in November 1998 through June 15, 1999, is presently
being discussed and the Company believes that it will successfully conclude
such negotiations in July, 1999.
Based upon the Company's present liquid resources, after the expenses taht were
paid by the Company following receipt of the proceeds from the exercise of
options during the second quarter of 1999, which expenses include office
expense, professional/accounting fees, transfer agent and printing service
fees, and telecommunications costs, among other expenses, and based upon its
present operating expenses of $5,000 per month, the Company will be able to
operate for approximately four months, if no revenues are generated from
operations or other sources. However, the Company anticipates receipt of
increased operating revenues during the second half of 1999, as a result the
business developments by GTCC, as well as revenues from pharmaceutical and
medical product sales.
The Company's monthly operating expenses of approximately $5,000 during
the quarter ended March 31, 1999 and during the second quarter, include rent
for executive office space in Hickory, NC, actual communication costs for
its conference facilities for its Investor Relations offices at Rockefeller
Center in NYC ( the arrangement with ETLC provides that there will be no rent
costs to the Company for use of the space at Rockefeller Center), professional
/accounting fees, telephones, but do not reflect any salary to Dr. Jerrold
R. Hinton, the Company's sole executive officer, which salary has been
accrued at the rate of $8,333 per month, but not paid. The Company does not
contemplate commencing payment to Dr. Hinton of the monthly salary of
$8,333.33 provided in his employment agreement unless and until it begins
to generate positive cash flow from operations.
During the first quarter of 1999, 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 in an aggregate
amount of $429,000 compared to $996,400 for the same quarter in 1998.
Page 5
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<PAGE>
PART II. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings
See Footnote 7 to Notes to Financial Statement for the Year Ended
December 31, 1998, and the disclosure in Item 3 of the Annual
Report on Form 10-KSB for the year ended December 31, 1998.
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
1. Exhibit 27
2. Reports on Form 8-K
Dated May 28, 1999
Page 6
</PAGE>
<PAGE>
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.
Page 7
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<PAGE>
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 1, 1999 By: /s/Jerrold R. Hinton
--------------------
Jerrold R. Hinton
President, Chief Executive Officer and
Chief Financial Officer
Page 8
</PAGE>
<PAGE>
AMERICAN DIVERSIFIED GROUP,
FORMERLY TERA WEST VENTURES, Inc.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
PAGE 9
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<PAGE>
AMERICAN DIVERSIFIED GROUP, Inc.
FORMERLY TERS WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1999
PAGE
BALANCE SHEET 11
STATEMENTS OF OPERATIONS 12
STATEMENTS OF CASH FLOWS 13
NOTES TO FINANCIAL STATEMENTS 14
Page 10
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<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash $ 118
Accounts Receivable (Net) 2,986
Inventories -
---------
Total Current Assets 3,104
Fixed Assets:
Property and Equipment
(Net of $7,260 Accum. Depr.) 6,958
Other Assets:
Deposits 570
Notes Receivable from Related Part 270,350
Miscellaneous Receivable
(Net of $100,000 Allowance) -
---------
270,920
--------
Total Assets $280,982
========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
(DEFICIT) EQUITY
Current Liabilities:
Bank Overdraft $ 3,378
Accounts and Accrued Expenses Payable $ 18,114
Accounts and Accrued Expenses Payable
to Related Parties 250,000
Notes Payable to Related Parties 210,921
-------
Total Current Liabilities 482,413
-------
Shareholders' (Deficit) Equity:
Preferred Stock, Series A, $10 par value
authorized 50,000 shares; none outst. -
Common Stock, par value $.001 per share,
authorized 350,000,000 shares; issued
and outstanding 254,637,520 shares 254,637
Additional Paid-In Capital 18,473,744
Deferred Consulting Fees (214,381)
Deficit Accumulated During
Development Stage (9,903,642)
Deficit Accumulated Prior to
Development Stage (8,811,789)
-----------
Total Shareholders' (Deficit) Equity (201,431)
---------
Total Liabilities and Shareholders'
(Deficit) Equity $280,982
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 11
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<PAGE>
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>
1999 1998
---- ----
Revenues $ 0 $ 52,750
Costs of Revenues - 45,495
-------- -------
Gross Profit 0 7,255
Selling, General and Administrative Expenses 424,531 607,727
-------- -------
Loss From Operations (424,531) (600,472)
Other Income:
Reimbursement of Losses - 7,802
---------- ----------
Net Loss $(424,531) ($592,670)
========== ==========
Net Loss Per Share ($0.0018) ($0.0032)
========== ==========
Average Number of Shares Outstanding 232,855,615 182,459,226
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 12
</PAGE>
<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>
<S> <C> <C>
1999 1998
---------- -----------
Cash Flows From Operating Activities:
Net Loss ($424,531) ($592,670)
Depreciation 1,795 1,711
Amortization of Deferred Consulting Fees 182,779 168,971
General and Administrative Expenses Paid
by Stock 225,000 388,400
Increase In Accounts Receivable - (13,464)
Increase In Accounts Payable and Accrued
Expenses 16,417 22,188
-------- --------
Net Cash Used In Operating Activities 1,460 (24,864)
-------- --------
Cash Flows From Investing Activities:
Acquisitions of Property and Equipment - (516)
-------- --------
Net Cash Used In Investing Activities 0 (516)
-------- --------
Cash Flows From Financing Activities:
Brokers' Fees Paid on Sales of Common Stock - (6,000)
Proceeds from Notes Payable to Related Parties 11,000 50,942
Payments on Notes Payable to Related Parties (15,750) -
Cash Overdraft 3,378 -
--------- --------
Net Cash Provided By Financing Activit (1,372) 44,942
--------- --------
Net Increase in Cash 88 19,562
Cash, Beginning of Period 30 11,069
--------- --------
Cash, End of Period $118 $30,631
========= ========
</TABLE>
Non-CashNon-Cash Transactions in 1999:
1. Issued 12,375,000 shares common stock for current and future services
of $225,000.
2. Issued 3,000,000 shares of common stock for expansion of Internet Telephony
business valued at $48,000.
3. Issued 8,500,000 shares of common stock for stock options.
Non-Cash Transactions in 1998:
1. Issued 52,700,000 shares of common stock for current and
future services of $996,400.
SEE NOTES TO FINANCIAL STATEMENTS
Page 13
</PAGE>
<PAGE>
AMERICAN DIVERSIFIED GROUP, INC.
FORMERLY TERA WEST VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
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, 1998 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.
</PAGE>
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet (unaudited) as of March 31, 1999 and the statement of operations
(unaudited) for the three mounths ended March 31, 1999 and 1998.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 118 30,631
<SECURITIES> 0 0
<RECEIVABLES> 2,986 61,855
<ALLOWANCES> 0 0
<INVENTORY> 0 5,000
<CURRENT-ASSETS> 3,104 97,486
<PP&E> 14,218 34,266
<DEPRECIATION> 7,260 15,009
<TOTAL-ASSETS> 280,982 117,313
<CURRENT-LIABILITIES> 482,413 413,264
<BONDS> 0 0
0 0
0 0
<COMMON> 254,637 212,062
<OTHER-SE> 18,473,744 17,846,819
<TOTAL-LIABILITY-AND-EQUITY> 280,982 117,313
<SALES> 0 52,750
<TOTAL-REVENUES> 0 52,750
<CGS> 0 45,495
<TOTAL-COSTS> 0 45,495
<OTHER-EXPENSES> 424,531 607,727
<LOSS-PROVISION> (424,531) (600,472)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (424,531) (600,472)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (424,531) (592,670)
<EPS-BASIC> (0.002) (0.003)
<EPS-DILUTED> (0.002) (0.003)
</TABLE>
