UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 000-32603
Historical Autographs U.S.A.. Inc.
(Name of Small Business Issuer in its charter)
Nevada 91-1955323
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
516 W. Sprague Ave., WA 99201
(Address of principal executive offices)
(509) 744-8590
(Issuer's Telephone Number Including Area Code)
(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 reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date:
Title of each class of Common Stock Outstanding at March 31, 2003
----------------------------------- -----------------------------
Common Stock, $0.001 par value 610,000
Transitional Small Business Disclosure Format (check one):
Yes No x
--- ---
1
TABLE OF CONTENTS
FORM 10-QSB REPORT - FOR QUARTER ENDED MARCH 31, 2003
Historical Autographs U.S.A.. Inc.
PART I
Item 1. Financial Statements
Condensed Balance Sheets -
March 31, 2003 (unaudited) and December 31, 2002 (audited) 3
Condensed Statements of Operations 4
Three Months ended March 31, 2003 and 2002
Condensed Statements of Cash Flows 5
Three Months ended March 31, 2003 and 2002
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Controls and Procedures 14
PART II
Item 1. Legal Proceedings 14
Item 2. Change in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE PAGE 15
CERTIFICATIONS 15
2
PART I
ITEM 1. FINANCIAL STATEMENTS
HISTORICAL AUTOGRAPHS U.S.A., INC.
BALANCE SHEETS
March 31,
2003 Dec 31,
(unaudited) 2002
--------- ---------
ASSETS
CURRENT ASSETS
Cash $ 172 $ 30
Accounts receivable - 6,000
Inventory 78,360 72,960
--------- ---------
TOTAL CURRENT ASSETS 78,532 78,990
--------- ---------
TOTAL ASSETS $ 78,532 $ 78,990
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,153 $ 1,200
Commissions payable - related party 660 660
Note payable 500 500
--------- ---------
TOTAL CURRENT LIABILITIES 8,313 2,360
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized,
$0.001 par value; no shares issued and outstanding - -
Common stock, 25,000,000 shares authorized,
$0.001 par value; 610,000 issued and outstanding 610 610
Additional paid-in capital 114,390 114,390
Accumulated deficit (44,781) (38,370)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 70,219 76,630
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 78,532 $ 78,990
========= =========
See condensed notes to interim financial statements.
3
HISTORICAL AUTOGRAPHS U.S.A., INC.
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
(unaudited)
----------------------
2003 2002
--------- ---------
SALES $ - $ 3,500
COST OF GOODS SOLD - 2,361
--------- ---------
GROSS PROFIT - 1,139
--------- ---------
EXPENSES
Marketing 157 120
Rent 900 900
General and administrative 191 218
Legal and accounting 4,343 2,803
Consulting - 183
Stock transfer and resident agent fees 819 829
Commissions - 210
--------- ---------
TOTAL EXPENSES 6,411 5,263
--------- ---------
LOSS FROM OPERATIONS (6,411) (4,124)
OTHER EXPENSE
Interest expense - 12
--------- ---------
TOTAL OTHER EXPENSE - 12
--------- ---------
LOSS BEFORE INCOME TAXES (6,411) (4,136)
INCOME TAXES - -
--------- ---------
NET LOSS $ (6,411) $ (4,136)
========= =========
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.01) $ (0.01)
========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND DILUTED 610,000 585,000
========= =========
See condensed notes to interim financial statements.
4
HISTORICAL AUTOGRAPHS U.S.A., INC.
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
(unaudited)
------------------
2003 2002
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(6,411) $(4,136)
Adjustments to reconcile net loss
to net cash provided (used) in operating activities:
Decrease in inventory (5,400) 2,361
Increase in accounts receivable 6,000 -
Increase (decrease) in accounts payable 5,953 1,705
Increase (decrease) in sales tax payable - (1,338)
Increase (decrease) in commissions payable - 210
------- -------
Net cash provided (used) by operating activities 142 (1,198)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in loans payable - -
Common stock issued for cash - -
------- -------
Net cash provided (used) by financing activities - -
------- -------
Change in cash 142 (1,198)
Cash, beginning of period 30 1,703
------- -------
Cash, end of period $ 172 $ 505
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ - $ -
======= =======
Income taxes paid $ - $ -
======= =======
See condensed notes to interim financial statements.
5
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Historical Autographs U.S.A., Inc. (hereinafter "the Company") was incorporated
on February 1, 1999 under the laws of the State of Nevada for the purpose of
operating retail outlets for signed memorabilia. The Company maintains a retail
business outlet in Spokane, Washington and also offers its products online. The
Company's fiscal year-end is December 31.
NOTE 2 - ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to
assist in understanding the financial statements. The financial statements and
notes are representations of the Company's management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and have been
consistently applied in the preparation of the financial statements.
Accounting Method
-----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Use of Estimates
----------------
The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts. At March 31,
2003, the Company had not participated in consignment or conditional sales;
therefore, there are no unsettled transactions related to sales or cost of
sales.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts for cash, payables and accrued liabilities approximate
their fair value.
Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a remaining maturity of three months or
less to be cash equivalents.
Derivative Instruments
----------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB No.
133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", which is effective for the Company as of January 1,
2001. These standards establish accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. They require that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value.
6
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 2 - ACCOUNTING POLICIES (continued)
Derivative Instruments (continued)
----------------------------------
If certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change.
Historically, the Company has not entered into derivative contracts to hedge
existing risks or for speculative purposes.
At March 31, 2003, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
Inventories
-----------
Inventories are accounted for using the specific identification method, and
stated at the lower of cost or market, with market representing the lower of
replacement cost or estimated net realizable value. The Company has no insurance
coverage on its inventory.
The Company has no inventory on consignment at March 31, 2003. In the future, if
the Company consigns inventory, it will retain title and will insure the
inventory until the inventory is sold, returned, lost, stolen, damaged, or
destroyed.
Basic and Diluted Earnings Per Share
------------------------------------
Basic net income (loss) per share is computed using the weighted average number
of common shares outstanding. Diluted net income (loss) per share is the same as
basic net income (loss) per share as there are no common stock equivalents
outstanding.
Revenue and Cost Recognition.
-----------------------------
Revenues from retail sales are recognized at the time the products are
delivered.
Although the Company does not provide a written warranty on its items sold, the
Company will refund the purchase price paid to any customer in those instances
when an item sold is proven to be non-authentic. In a majority of instances, the
Company receives a certificate of authenticity for documents (items) purchased
from its vendors and is reasonably assured as to the provenance of its products.
Since inception, the Company has made no refunds for the sale of any
non-authentic items nor has the Company received any claims or notice of
prospective claims relating to such items. Accordingly, the Company has not
established a reserve against forgery or nonauthenticity.
If a product proves not to be authentic, a full refund is given to the purchaser
and a charge against sales and related costs is recorded.
7
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 2 - ACCOUNTING POLICIES (continued)
Advertising Costs
-----------------
Advertising costs, including costs for direct mailings, are expensed when
incurred.
Compensated Absences
--------------------
The Company does not offer paid vacation or personal time to its employees.
Accordingly, there is no related accrual of expenses.
Provision for Taxes
-------------------
Income taxes are provided based upon the liability method of accounting pursuant
to SFAS No. 109 "Accounting for Income Taxes." Under this approach, deferred
income taxes are recorded to reflect the tax consequences on future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year end. A valuation allowance is recorded against
deferred tax assets if management does not believe the Company has met the "more
likely than not" standard imposed by SFAS No. 109 to allow recognition of such
an asset.
At March 31, 2003, the Company had net deferred tax assets of approximately
$7,000 principally arising from net operating loss carryforwards for income tax
purposes. As management of the Company cannot determine that it is more likely
than not that the Company will realize the benefit of the net deferred tax
asset, a valuation allowance equal to the net deferred tax asset has been
established at March 31, 2003.
At March 31, 2003, the Company had net operating loss carryforwards of
approximately $44,000 which expire in the years 2019 through 2023.
Going Concern
-------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. For the three months ended March 31,
2003, the Company has a net loss of $6,411, an accumulated deficit of $44,781
and limited cash resources. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The future of the Company is
dependent upon its ability to obtain financing and upon future profitable
operations from the commercial success of its retail venture. Management's plans
are to seek additional capital through sales of the Company's stock.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
Accounting Pronouncements
-------------------------
In June 2002, the Financial Accounting Standards Board (hereinafter "FASB")
issued Statement of Financial Accounting Standards No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities" (hereinafter "SFAS No. 146").
SFAS No. 146 addresses significant issues regarding the recognition,
measurement, and reporting of costs associated with exit and disposal
activities, including restructuring activities. SFAS No. 146 also addresses
recognition of certain costs related to terminating a contract that is not a
capital lease, costs to consolidate facilities or
8
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 2 - ACCOUNTING POLICIES (continued)
Accounting Pronouncements (continued)
-------------------------------------
relocate employees, and termination benefits provided to employees that are
involuntarily terminated under the terms of a one-time benefit arrangement that
is not an ongoing benefit arrangement or an individual deferred-compensation
contract. SFAS No. 146 was issued in June 2002 and is effective for activities
after December 31, 2002. There has been no impact on the Company's financial
position or results of operations from adopting SFAS No. 146.
In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, "Rescission of FASB Statements No. 44, 4 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" (hereinafter "SFAS No. 145"), which
updates, clarifies and simplifies existing accounting pronouncements. SFAS No.
4, which required all gains and losses from the extinguishment of debt to be
aggregated and, if material, classified as an extraordinary item, net of related
tax effect was rescinded. As a result, SFAS No. 64, which amended SFAS No. 4,
was rescinded, as it was no longer necessary. SFAS No. 44, Accounting for
intangible Assets of Motor Carriers, established the accounting requirements for
the effects of transition to the provisions of the Motor Carrier Act of 1980.
Since the transition has been completed, SFAS No. 44 is no longer necessary and
has been rescinded. SFAS No. 145 amended SFAS No. 13 to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. The Company adopted
SFAS No. 145 and does not believe that the pronouncement will have an effect on
the financial statements of the Company as it has not entered into any of the
aforementioned transactions.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (hereinafter "SFAS No. 144"). SFAS No. 144
replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." This standard establishes a single
accounting model for long-lived assets to be disposed of by sale, including
discontinued operations. SFAS No. 144 requires that these long-lived assets be
measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or discontinued operations. This
statement is effective beginning for fiscal years after December 15, 2001, with
earlier application encouraged. The Company adopted SFAS No. 144 and the
adoption has no effect on the financial statements of the Company at December
31, 2003.
In October 2001, the FASB issued Statement of Accounting Financial Standards No.
143, "Accounting for Asset Retirement Obligations" (hereinafter "SFAS No. 143").
SFAS No. 143 establishes guidelines related to the retirement of tangible
long-lived assets of the Company and the associated retirement costs. This
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived assets. This
statement is effective for financial statements issued for the fiscal years
beginning after June 15, 2002 and with earlier application encouraged.
9
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting Pronouncements (continued)
-------------------------------------
The Company adopted SFAS No. 143 and its adoption has no effect on the financial
statements of the Company at December 31, 2003, as the Company has no long-lived
assets.
In June 2001, the FASB issued Statement of Accounting Financial Standards No.
141, "Business Combinations" (hereinafter "SFAS No. 141"), and Statement of
Accounting Financial Standards No. 142, "Goodwill and Other Intangible Assets"
(hereinafter "SFAS No. 142"). SFAS No. 141 provides for the elimination of the
pooling-of-interests method of accounting for business combinations with an
acquisition date of July 1, 2001 or later. SFAS No. 142 prohibits the
amortization of goodwill and other intangible assets with indefinite lives and
requires periodic reassessment of the underlying value of such assets for
impairment. SFAS No. 142 is effective for fiscal years beginning after December
15, 2001. An early adoption provision exists for companies with fiscal years
beginning after March 15, 2001. The Company has adopted SFAS No. 142.
Application of the nonamortization provision of SFAS No. 142 will have no effect
on the Company's financial statements as the Company does not currently have
amortizable assets.
In September 2000, the FASB issued Statement of Accounting Financial Standards
No. 140 "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities" (hereinafter "SFAS No. 140"). This statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities and also provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS No. 140 is effective for recognition
and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000, and is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March 31, 2001. The
adoption of this standard does not have a material effect on the Company's
results of operations or financial position.
NOTE 3 - PREFERRED AND COMMON STOCK
The Company has 5,000,000 shares of preferred stock authorized and none issued.
The Company has 25,000,000 shares of common stock authorized. Upon
incorporation, the Company issued 500,000 shares of common stock to officers and
directors for $5,000 in cash. During 1999, the Company issued 67,900 shares of
common stock for cash at $1.00 per share and 17,100 shares at $1.00 per share
for subscriptions receivable, which were paid in January of 2000.
During 2002, the Company issued 25,000 shares of common stock for cash at $1.00
per share.
All shares of preferred and common stock are non-assessable and non-cumulative.
The common stock has no preemptive rights.
10
HISTORICAL AUTOGRAPHS U.S.A., INC.
Notes to Financial Statements
March 31, 2003
--------------------------------------------------------------------------------
NOTE 4 - STOCK OPTION PLAN
The Company's board of directors approved the adoption of the "2001
Non-Qualified Stock Option and Stock Appreciation Rights Plan" by unanimous
consent on March 5, 2001. This plan was initiated to encourage and enable
officers, directors, consultants, advisors and other key employees of the
Company to acquire and retain a proprietary interest in the Company by ownership
of its common stock. A total of 1,000,000 of the authorized shares of the
Company's common stock may be subject to, or issued pursuant to the terms of the
plan. No options have been issued under the plan as of March 31, 2003.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Rental Agreement
----------------
The Company has a month-to-month rental agreement for office space in Spokane,
Washington. The minimum monthly rent is $300. Rent expense for the three months
ended March 31, 2003 was $900.
Concentration
-------------
As of March 31, 2003, the Company had $78,360 of its total assets of $78,532
invested in inventory.
NOTE 6 - RELATED PARTY TRANSACTIONS
The occasional usage of used computer equipment, provided to the Company by the
Company's officers at no charge, is considered immaterial for financial
reporting purposes.
The Company pays a 3% commission on every sale to both of the Company's two
officers. Commissions unpaid, but accrued, are unsecured, payable upon demand
and non-interest bearing.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
--------
Historical Autographs U.S.A., Inc. was organized as a Nevada Corporation on
February 1, 1999. The original Articles of Incorporation authorize the issuance
of thirty million (30,000,000) shares of stock, including twenty five million
(25,000,000) shares of common stock at par value $0.001 per share and five
million (5,000,000) shares of Preferred stock at par value $0.001 per share. As
of March 31, 2003 and the date of this report, the Company has six hundred ten
thousand shares (610,000) shares of its $0.001 par value common voting stock
issued and outstanding.
The Company is an e-Commerce firm engaged in the business of acquiring and
marketing historical documents such as letters, photographs and signatures of
governmental, political and military figures, inventors, Nobel Prize winners,
significant physicians, scientists, explorers, aviators and astronauts,
entertainers, musicians, composers, authors, artists, clergymen, judges,
lawyers, and well-known athletes, among others.
The Company's executive offices are located at 516 W. Sprague Ave., Spokane, WA
99201 and its telephone and facsimile numbers are (509) 744-8590 and (509)
623-0121, respectively.
(a) Plan of Operation:
FORWARD-LOOKING STATEMENTS
--------------------------
The securities of the Company are speculative and involve a high degree of risk,
including, but not necessarily limited to, the factors affecting operating
results described in the Form 10KSB which includes audited financial statements
for the year ended December 31, 2002. The statements which are not historical
facts contained in this report, including statements containing words such as
"believes," "expects," "intends," "estimates," "anticipates," or similar
expressions, are "forward looking statements" (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and uncertainties.
The foregoing and subsequent discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created thereby. These
forward-looking statements include the plans and objectives of management for
future operations, including plans and objectives relating to the possible
further capitalization and future acquisitions of telecommunications, computer
related or other cash flow business. The forward-looking statements included
herein are based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Form 10-QSB will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
The Company has a limited operational history and from inception (February 1999)
has generated limited revenues. The Company has financed its operations during
its initial operational stage from the sale of its common stock.
Current Status and Operations
-----------------------------
Historical Autographs U.S.A., Inc. is in its initial operational stage as an
e-Commerce based company engaged in the business of acquiring and marketing
historical documents such as letters, photographs and signatures of
governmental, political and military figures, inventors, Nobel Prize winners,
significant physicians, scientists, explorers, aviators and astronauts,
entertainers, musicians, composers, authors, artists, clergymen, judges,
lawyers, and well-known athletes, among others. Our document inventory currently
consists of approximately 30 different documents, with an inventory cost of
$78,360 at March 31, 2003, including photographs and signatures of entertainers,
letters, documents and signatures of political figures, letters and signatures
of scientists and signatures of historic sports figures. The Company purchases
documents principally at auctions, from private collectors, dealers in
historical documents, estates and various individuals who are not collectors but
are in possession of documents.
12
2
These avenues of supply are likely to continue to be the Company's main sources
of inventory. Retail sales of documents are primarily facilitated through our
web site: http://www.historical-autographs.com.
Marketing efforts principally target individuals who appreciate or collect
antiques, paintings, lithographs, other works of art and collectibles, but who
may not be aware of the availability of historical documents for purchase. In
addition, autograph and document collectors, consignment to auction houses,
interior decorators, interior designers, private clients and corporations are
being targeted as these groups may have an appreciation for historical documents
displayed in aesthetically pleasing presentations. The Company's primary
marketing strategy is a direct sales approach via an internet retail site. Upon
accessing the site, interested parties are able to read about the Company,
browse the majority of inventory items and place orders.
From inception the Company has had minimal operations and limited revenues. From
inception the Company accumulated an operating deficit (unaudited) of $44,781.
For the quarter ended March 31, 2003, the Company had a net loss of $6,411 with
zero revenues. As of March 31, 2003, the Company had cash of $172 and resale
inventories of $78,360 for total assets of $78,532.
Management believes that the Company could, potentially, experience negative
operating cash flow for the foreseeable future as a result of significant
increased spending on advertising, augmentation of inventory, etc. If the
Company needs to raise additional capital in order to fund expansion, develop
new or enhanced services or products, respond to competitive pressures or
acquire complementary products, businesses or technologies, additional funds may
be raised through the issuance of equity or convertible debt securities. If
equity or convertible debt securities are issued, the percentage ownership of
our stockholders will be reduced, stockholders may experience additional
dilution and such securities may have rights, preferences or privileges senior
to those of the Company's common stock. The Company does not currently have any
contractual restrictions on our ability to incur debt. Accordingly, the Company
could incur significant amounts of debt to finance its operations. Any such
indebtedness could contain covenants that would restrict our operations. There
can be no assurance that additional financing will be available on terms
favorable to the Company, or at all. If adequate funds are not available or are
not available on acceptable terms, the Company may not be able to continue in
business, or to a lesser extent not be able to take advantage of acquisition
opportunities, develop or enhance services or products or respond to competitive
pressures.
Management believes that our future growth and success will depend on our
ability to find additional products and suppliers whose documents will be sold
over the Internet, and to find customers for these products. Management plans to
continually evaluate potential products to determine what additional products or
enhancements may be required in order to be competitive in the Internet
marketplace.
Due to our limited operating history, our financial statements are not
indicative of anticipated revenues that may be attained or expenditures that may
be incurred by the Company in future periods. Our ability to achieve profitable
operations is subject to the validity of our assumptions and risk factors within
the industry and pertaining to the Company.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Historical Autographs U.S.A., Inc. has limited assets. As of March 31, 2003, our
assets consisted of cash of $172 and resale inventories of $78,360 for total
assets of $78,532. Our officers own the computer equipment the Company utilizes.
Current liabilities totaled $8,313, with available working capital at $70,219.
The Company has had minimal operations and limited revenues. From inception the
Company accumulated an operating deficit of $44,781. For the three months ended
March 31, 2003, the Company had a net loss of $6,411 on zero gross revenues.
Management believes that its current capital will cover our anticipated capital
needs until approximately December 31, 2003.
Management currently anticipates that cash flow from operations will increase in
the long-term as the Company increases its sales and marketing activities.
However, management also anticipates that our operating expenses will increase
in the long-term as a result of the increase in sales and marketing activities
as well as general and administrative activities. To the extent that available
funds from operations are insufficient to fund the Company's activities, the
Company may need to raise additional funds through public and private financing.
No assurance can be given that additional financing will be available or that,
if available, can be obtained on terms favorable to the Company and its
stockholders. Failure to obtain such financing could delay or prevent our
planned expansion, which could adversely affect our business, financial
condition and results of operations. If additional capital is raised through the
sale of additional equity or convertible securities, dilution to the Company's
stockholders could occur. For the quarter ending March 31, 2003, the Company
reported a net loss of $6,411 on zero revenues compared to sales of $3,500, a
gross profit of $1,139 and a net loss of $4,136 in the quarter ended March 31,
2002. The Company
13
incurred operating expenses of $6,411 in the quarter ended March 31, 2003, a
decrease of $1,148 from the quarter ending March 31, 2002, when the Company
incurred similar expenses totaling $5,263. The major difference in the two
periods being attributable to increased legal and accounting costs. The
Company's Quarter ended March 31, 2003 financial statements reflect adjustments
and nonrecurring cost items and are not indicative of anticipated revenues which
may be attained or expenditures which may be incurred by the Company in future
periods.
The Company's independent public accountants have included explanatory
paragraphs in their reports on the Company's financial statements for the years
ended December 31, 2002 and 2001, which express substantial doubt about the
Company's ability to continue as a going concern. As discussed in Footnote 2 to
the Company's financial statements, included with the Company's Form 10-KSB, the
Company has suffered recurring losses from operations and accumulated deficit
that raises substantial doubt about its ability to continue as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
Within 90 days prior to the date of filing of this amended report on Form
10-QSB, we carried out an evaluation, under supervision and with the
participation of our management, including our CEO and CFO, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 13a-14. Based upon that evaluation, our CEO and CFO
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to us required to be included in
our periodic SEC filings. Subsequent to the date of that evaluation, there have
been no changes in internal controls or in other factors that could
significantly affect internal controls, nor were any corrective actions required
with regard to significant deficiencies and material weaknesses.
PART II
ITEM 1. LEGAL PROCEEDINGS
No non-course of business or other material legal proceedings, to which the
Company is a party or to which the property of the Company is subject, is
pending or is known by the Company to be contemplated.
ITEM 2. CHANGE IN SECURITIES. NONE
ITEM 3. Defaults Upon Senior Securities. NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 28, 2003 the Company held its annual meeting of shareholders for the
purpose of electing two directors to serve until the next annual meeting of
shareholders. At the meeting the following persons were elected by a majority of
the votes cast at the election: Cindy Swank and Scott Wetzel.
ITEM 5. OTHER INFORMATION: NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.5 Certification Pursuant to Sarbanes-Oxley Act of 2002
(b) The Company filed the following reports on Form 8-K:
None.
14
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report signed on its
behalf by the Undersigned, thereunto duly authorized.
HISTORICAL AUTOGRAPHS U.S.A. INC.
Date: August 21, 2003 By: /s/ Cindy Swank
------------------------------------
Cindy Swank, Chief Financial Officer
Date: August 21, 2003 By: /s/ Cindy Swank
------------------------------------
Cindy Swank, Chief Executive Officer
Date: August 21, 2003 By: /s/ Scott Wetzel
------------------------------------
Scott Wetzel, Secretary
CERTIFICATIONS
I, Cindy Swank, certify that:
1. I have reviewed this amended report on Form 10-QSB of Historical
Autographs U.S.A., Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this annual report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the Registrant and have;
a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to me by others within
those entities, particularly during the period in which this
annual report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within ninety (90) days of
the filing date of this annual report (the "Evaluation Date");
and
c. presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
Registrant's auditors and the Audit Committee of the Registrant's
Board of Directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weakness in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
15
6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: August 21, 2003 s/Cindy Swank
------------------------------------
Cindy Swank, Chief Executive Officer
And Chief Financial Officer
16