UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
[X] ANNUAL REPORT UNDER OR OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2007
----------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to _____________
Commission file number 000-50776
--------------------------------
AMERICAN CAPITAL HOLDINGS, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0895564
-------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1016 CLEMMONS STREET, SUITE 302
JUPITER, FLORIDA 33477
------------------------------------------------------------------------------
(Address of principal executive offices)
(561) 745-6789
------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
As of February 28, 2007 the issuer had 21,110,680 shares of common stock,
$.0001 Par Value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
AMERICAN CAPITAL HOLDINGS, Inc. Form 10-QSB FEBRUARY 28, 2007
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Independent Accountants' Report . . . . . . . . . . . . . . 3
Consolidated Balance Sheets:
February 28, 2007 and May 31, 2006 (Unaudited) . . . . . . 4
Consolidated Statements of Operations:
Nine Months Ended February 28, 2007 and 2006 . . . . . . . 5
Consolidated Statements of Operations:
Three Months Ended February 28, 2007 and 2006 . . . . . . 6
Consolidated Statement of Changes in Shareholders' Equity:
from May 31, 2005 Through February 28, 2007 . . . . . . . 7
Consolidated Statements of Cash Flows:
for the Nine Months Ended February 28, 2007 and 2006 . . . 8
Notes to Consolidated Financial Statements . . . . . . . 10
ITEM 2 Management's Discussion and Analysis or Plan of Operation . . 20
ITEM 3 Controls and Procedures . . . . . . . . . . . . . . . . . . . 23
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 2 Unregistered Sales Of Equity Securities and Use Of
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 3 Defaults Upon Senior Securities . . . . . . . . . . . . . . . 24
ITEM 4 Submission Of Matters to a Vote Of Security Holders. . . . . . 24
ITEM 5 Other Information . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 6 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SIGNATURES AND CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . 25
Exhibit 31.1 Certification required under Section 302 of . . 26
the Sarbanes-Oxley Act of 2002 by the CE0
Exhibit 31.2 Certification required under Section 302 of . . 27
the Sarbanes-Oxley Act of 2002 by the CFO
Exhibit 32 Certification of CEO and CFO Pursuant to . . . . 28
Section 906 of the Sarbanes-Oxley Act
2
Wieseneck, Andres & Company, P.A.
Certified Public Accountants
772 U. S. Highway 1, Suite 100
North Palm Beach, Florida 33408
(561) 626-0400
Thomas B. Andres, C.P.A.*, C.V.A. FAX (561) 626-3453
Paul M. Wieseneck, C.P.A.
*Regulated by the State of Florida
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
American Capital Holdings, Inc.
Jupiter, Florida
We have reviewed the accompanying consolidated balance sheet of American Capital
Holdings, Inc. as of February 28, 2007 and May 31, 2006 and the related
consolidated statements of operations for the nine month and three-month periods
ended February 28, 2007 and 2006, the consolidated statement of cash flows for
the nine-month period ending February 28, 2007 and the consolidated statement of
changes in shareholders' equity from May 31, 2005 through February 28, 2007.
These financial statements are the responsibility of the company's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the U.S. generally accepted auditing standards of the Public Company
Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
/s/Wieseneck, Andres & Company, P.A.
North Palm Beach, Florida
October 9, 2007
3
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 2007 MAY 31, 2006
ASSETS
Current Assets
Cash and Cash Equivalents $ 679 $ 5,287
Notes Receivable 155,785 143,569
Loans Receivable Related Parties (net) 219,978 423,517
Prepaid Expenses 114,178 55,543
------------ ------------
Total Current Assets 490,619 627,916
------------ ------------
Property and Equipment, net 28,180 35,979
------------ ------------
Other Assets
Marketable Securities 433,300 -
Intangible Assets, net 8,938 8,938
Insurance Licenses 19,600 19,600
Security Deposit 2,435 2,435
------------ ------------
Total Other Assets 464,273 30,973
------------ ------------
TOTAL ASSETS $ 983,072 $ 694,868
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts Payable $ 292,908 $ 242,203
Accrued Expenses 290,462 181,999
Loan Payable Related Parties 371,917 183,727
Current Portion of Notes
and Loans Payable 325,450 325,450
------------ ------------
Total Current Liabilities 1,280,737 933,379
------------ ------------
Total Liabilities 1,280,737 933,379
------------ ------------
Stockholders' Equity
Common Stock $.0001 par value, 100 million
shares authorized, 21,110,680 and
18,908,680 shares issued and outstanding
800,000 and 800,000 unissued 2,191 1,971
Paid-in-Capital 17,546,163 17,523,121
Retained Deficit (17,846,019) (17,763,603)
------------ ------------
Total Stockholders' Equity (297,665) (238,511)
------------ ------------
TOTAL LIABILITIES & STOCHHOLDERS' EQUITY $ 983,072 $ 694,868
============ ============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
4
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED
FEBRUARY 28, 2007 AND 2006
FEBRUARY 28, 2007 FEBRUARY 28, 2006
Revenues
Net Sales $ - $ -
Cost of Sales (7,800) (7,531)
------------ ------------
Gross Profit (7,800) (7,531)
------------ ------------
Operating Expenses
General and Administrative, net of 39,213 341,461
reimbursed expenses of
$302,792 and $719,894
Sales and Marketing - 2,000
------------ ------------
Total Operating Expenses 39,213 343,461
------------ ------------
Income/(Loss) from Operations (47,013) (350,992)
------------ ------------
Other Income (Expense)
Interest Income 7,637 6,315
Interest Expense (43,041) (28,053)
Gain / (Loss) on Disposition
of Marketable Securities - (206,403)
------------ ------------
Net Other Expenses (35,404) (228,140)
------------ ------------
Net Loss Before Other Comprehensive Losses (82,416) (579,132)
Other Comprehensive Income / (Loss)
Unrealized Holding Loss During Period - (61,016)
------------ ------------
Total Comprehensive Loss - (61,016)
------------ ------------
Net Loss $ (82,416) $ (640,148)
============ ============
Basic and Diluted
Net Loss Per Common Share $ (.004) $ (.035)
============ ============
Weighted Average Shares Outstanding 20,501,757 18,317,975
============ ============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
5
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
FEBRUARY 28, 2007 AND 2006
FEBRUARY 28, 2007 FEBRUARY 28, 2006
Revenues
Net Sales $ - $ -
Cost of Sales (2,600) (2,554)
------------ ------------
Gross Profit (2,600) (2,554)
Operating Expenses
General and Administrative, net of 4,584 80,068
reimbursed expenses of
$85,000 and $66,594
------------ ------------
Total Operating Expenses 4,584 80,068
------------ ------------
Loss from Operations (7,184) (82,622)
------------ ------------
Other Income (Expense)
Interest Income 1,969 3,886
Interest Expense (10,643) (9,793)
Gain (Loss) on Disposition
of Marketable Securities - 8,959
------------ ------------
Net Other Income/(Expense) 8,674 (3,052)
------------ ------------
Net Loss (15,858) (79,570)
Comprehensive Income / (Loss)
Unrealized Holding Loss During Period - (12,203)
------------ ------------
Net Loss and Comprehensive Loss $ (15,858) $ (67,367)
============ ============
Basic and Diluted
Net Loss Per Common Share $ (.001) $ (.004)
============ ============
Weighted Average Shares Outstanding 21,110,680 18,658,680
============ ============
Read accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
6
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FROM MAY 31, 2005 THROUGH FEBRUARY 28, 2007
Number of At Par Accum. other Total
Shares Value Add'l Paid Retained Comprehen- Stockholder
Issued $.0001 in Capital Deficit sive Inc. Equity
---------- ------ ----------- ---------- ---------- -----------
Bal 5/31/05 17,398,903 $1,870 $16,581,195 $(15,378,157) $(152,718)$1,052,190
Sale of Common
Stock 143,750 14 259,986 - - 260,000
Conversion of debt
and accrued interest
to equity 590,027 59 632,468 - - 632,527
Issuance of
500,000 shares
previously recorded
as unissued 500,000 - - - - -
Sale of Common
Stock 26,000 3 46,997 - - 47,000
Warrants Issued
and exercised,
Payment for
Accrued Interest
Payable 250,000 25 2,475 - - 2,500
Adjustment to Prior
Years Unrealized
Holding Loss - - - - 152,718 152,718
Dividends Paid - - - (621,327) - (621,327)
Net Loss - - - (1,764,119) - (1,764,119)
----------- ------- ----------- ------------ ---------- ----------
Bal 05/31/06 18,908,680 1,971 17,523,121 (17,763,603) 0 (238,511)
Stock issued 2,202,000 220 23,042 0 0 23,262
Net Operating Loss 0 0 0 (82,416) 0 (82,416)
----------- ------- ----------- ------------ ---------- ----------
Bal. 2/28/07 21,110,680 $2,191 $17,546,163 (17,846,019) $ 0 $ (297,665)
=========== ======= =========== ============ ========== ==========
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
7
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2007 AND 2006
FEB. 28, 2007 FEB. 28, 2006
Cash Flows From Operating Activities
Cash received from customers $ 0 $ 0
Cash paid to suppliers of goods
and services (185,730) (181,430)
Income Taxes Paid - -
Interest Paid (12,740) (12,604)
Interest Received 68 24
_______________ _______________
Net Cash Flows Used in
Operating Activities (198,401) (194,010)
_______________ _______________
Cash Flows From Investing Activities
Purchase of Equipment 0 (6,563)
Deposit Made on Insurance Carrier into Escrow 0 0
Return of Investment Deposit 0 10,000
Sale of Marketable Securities 0 0
Purchase of Marketable Securities 0 0
_______________ _______________
Net Cash Flows Provided By
(Used In) Investing Activities 0 3,437
_______________ _______________
Cash Flows From Financing Activities
Loans from Related Companies 334,986 138,216
Loans to Related Companies 0 0
Repayment of Loans from Related Companies (170,493) (416,145)
Payment for Debtor in Possession financing 0 (115,186)
Proceeds from Sale of Stock 29,300 939,527
Payments on Notes Payable 0 (601,007)
_______________ _______________
Net Cash Flows Provided By
Financing Activities (193,793) (54,595)
_______________ _______________
Net Increase / (Decrease) in Cash (4,608) (245,168)
Cash and Cash Equivalents at
Beginning of Period, June 1, 2006 and 2005 5,287 400,488
_______________ _______________
Cash and Cash Equivalents at
End of Period, February 28, 2007 and 2006 $ 679 $ 155,320
=============== ===============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
8
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2007 AND 2006
Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities
FEBRUARY 28, 2007 FEB. 28, 2006
Net Income (Loss) $ (82,416) $ (640,148)
Add items not requiring cash:
Marketable Securities received for services (285,308) -
Other Comprehensive Income 0 61,016
Valuation Loss 0 206,403
Depreciation 7,800 7,531
Cash was increased by:
Increase in Accrued Expenses 108,463 105,846
Increase in Accounts Payable 50,705 49,069
Decrease in Prepaid Expenses 0 17,848
Cash was decreased by
Increase in Prepaid Expenses (58,635) 0
Increase in Accounts Receivable 0 (1,575)
_______________ _______________
Net Cash Flows Used in
Operating Activities $ (198,401) $ (194,010)
=============== ===============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
9
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE A - DESCRIPTION OF BUSINESS
American Capital Holdings, Inc. (American Capital Holdings) is a Florida
Corporation whose primary business consists of insurance and proprietary
financial products designed to utilize tax incentives, and mitigate the impact
of balance sheet liabilities. The Company's main office is located at 1016
Clemmons Street, Suite 302, Jupiter, Florida 33477, and the telephone number is
(561) 745-6789.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation, Use of Estimates
The Company maintains its accounts on the accrual basis of accounting. The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Revenue and dividends from investments are recognized at the time the investment
dividends are declared payable by the underlying investment. Capital gains and
losses are recorded on the date of sale of the investment.
Cash
Cash consists of deposits in banks and other financial institutions having
original maturities of less than ninety days.
Allowance for Doubtful Accounts
It is the policy of management to review the outstanding accounts receivable at
year end, as well as the bad debt write-offs experienced in the past, and
establish an allowance for doubtful accounts for uncollectible amounts.
Depreciation
Property and equipment are recorded at cost and depreciated over the estimated
useful lives of the related assets. Depreciation is computed using the straight-
line method.
Amortization
The accounting for a recognized intangible asset acquired after June 30, 2001 is
based on its useful life to the Company. If an intangible asset has a finite
life, but the precise length of that life is not known, that intangible asset
shall be amortized over management's best estimate of its useful life. An
intangible asset with a indefinite useful life is not amortized. The useful
life to an entity is the period over which the asset is expected to contribute
directly or indirectly to the future cash flows of that entity.
Investments
Investments are stated at the lower of cost or market value.
10
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE C - BUSINESS COMBINATION
The company acquired the net assets of I.S. Direct New York, an unrelated
company, through a reverse merger with its wholly owned subsidiary of I.S.
Direct Agency, Inc. The acquisition was accounted for as a business combination
in accordance with SFAS 141, paragraphs nine through twelve. I.S. Direct, Inc.
issued its shares of American Capital common stock it received in the exchange
of its stock at its inception with American Capital for the net assets of I.S.
Direct New York. The assets acquired by I.S. Direct, Inc., a wholly owned
subsidiary, include life and health insurance licenses to operate in all fifty
states, $980,000 and website and software costs for $20,000. The two assets of
I.S. Direct are included in the Consolidated Balance Sheet of American Capital
Holdings, Inc. All intercompany transactions have been eliminated at
consolidation. The licenses and software costs have been written down to their
estimated fair value at May 31, 2006.
NOTE D - NOTES RECEIVABLE
Notes Receivable at February 28, 2007 and May 31, 2006 consist of the following:
Feb. 28 07 May 31 06
--------- ---------
8% non-collateralized notes due on demand.
Interest is payable quarterly. Included in the balance
is $43,879 and 31,663 of accrued interest receivable. $ 143,879 $ 131,663
Nine 8% promissory notes purchased from holders of notes
with Air Media Now, Inc. By mutual agreement of both
parties, these notes are not accruing interest. 11,906 11,906
--------- ---------
Total Notes Receivable $ 155,785 $ 143,569
========= =========
NOTE E - LOANS RECEIVABLE RELATED PARTIES
The loans receivable from related corporate entities are non-collateralized,
non-interest bearing and are due on demand. As of May 31, 2006, eCom, a
related party, owed American Capital $186,496. As of November 29, 2004, eCom
has been adjudicated as a Chapter 11 Debtor in the involuntary bankruptcy
proceedings of the United States Bankruptcy Court - Southern District of
Florida (In Re: Case No. 04-34535 BKC-SHF). Pending bankruptcy court approval
of eCom's Reorganization Plan, which is expected in due course, there should
not be a material affect on the financial condition of American Capital.
11
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE E - LOANS RECEIVABLE RELATED PARTIES - CONTINUED
The loans due American Capital as of February 28, 2007 and May 31, 2006 are as
follows:
February 28, 2007 May 31, 2006
--------------- ------------
eCom eCom.com Inc. 171,809 186,496
AmEnviro,Inc. 43,098 52,098
USA Performance Products 3,862 3,783
A Super Deal.com 0 25,782
Swap and Shop.net 0 20,930
A Classified Ad 0 21,169
Diamond Energy 0 20,080
Green Energy Group 0 20,043
CRT Holdings, Inc. (FL) 0 26,671
eSecureSoft Company 0 22,580
American Environmental, Inc. 0 22,600
Other 1,208 1,285
--------- --------
Total $ 219,978 $ 423,517
========= ========
NOTE F - INVESTMENTS
Available-for-Sale Securities:
eCom eCom.com, Inc. is a Florida Corporation and trades on the OTC/PINK:ECEC.
The Company, which was the former parent of USA SportsNet Company, now American
Capital Holdings, Inc., owns 1,437,100 common shares of eCom. The Company's
investment amounts to 2.9% of the outstanding shares of eCom.
In the year ending May 31, 2006, by mutual agreement, the Company's entire
investment of marketable securities in eCom eCom.com, Inc was transferred to a
note holder reducing the note payable to zero. The original cost basis for
these marketable securities was $254,869. Through May 31, 2005, a net
unrealized holding loss in the amount of $152,718 had been recognized. As a
result of the transfer, an unrealized holding gain of the amount of $152,718,
which eliminated the Accumulated Comprehensive Loss, and a loss on the
disposition of marketable securities in the amount of $20,339 was recognized in
the Consolidated Statement of Operations at May 31, 2006. Also as a result of
the transfer, the following balance sheet account was adjusted; the company's
remaining investment in eCom eCom, $102,151 was written down to zero.
Shares issued to American Capital Holdings during the three months ended
February 28, 2007 for services rendered are as follows:
12
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE F - INVESTMENTS - CONTINUED
Shares Total Shares Cost of
issued on held on Shares held
Company Name Feb. 28, 2007 Feb. 28, 2007 on Feb. 28, 07
---------------------- ------------- -------------- --------------
eSecureSoft Company 1,062,500 5,555,064 $ 55,551
USAS Digital 1,062,500 8,414,997 84,150
Green Energy Group 0 3,786,626 37,866
AAB National 1,062,500 5,196,090 51,961
A Classified Ad 1,062,500 5,394,054 53,941
Core Medical Group 1,062,500 5,389,192 53,892
A Super Deal 1,062,500 5,904,920 59,049
MyZipSoft 1,095,000 3,689,058 36,890
---------------------- ------------- -------------- --------------
Marketable Securities 7,470,000 43,330,001 $ 433,300
As a part of an acquisition of ACHI on January 12, 2004, the Company acquired
approximately 53 million shares or 90% of the outstanding common shares of Air
Media Now!, Inc. (Air Media Now). Air Media Now owned the rights to market
certain intellectual property that had never been fully developed by its
previous owners. Air Media Now has no assets but is currently traded on the
pink sheets (AMNW:PK). The stock was trading at $.01 at May 31, 2006. Air
Media Now has not filed financial statements subsequent to December 31, 2002
with the Securities and Exchange Commission. American Capital Holdings, Inc.
wrote off any and all of its recorded investment in Air Media Now as an
impairment expense in the year ended May 31, 2004. Air Media Now is a
consolidated subsidiary of American Capital Holdings at February 28, 2007 and
May 31, 2006.
NOTE G - PROPERTY AND EQUIPMENT
Equipment is stated at cost less depreciation. As of February 28, 2007,
equipment consisted of computer hardware, software, and office furniture and
equipment. Depreciation expense of $7,800 and $10,100 has been recorded for the
periods ending February 28, 2007 and May 31, 2006 respectively.
NOTE H - PREPAID EXPENSES
Prepaid expenses consist primarily of retainers paid for legal work for the
Company, along with prepaid registration fees submitted to the Securities and
Exchange Commission in anticipation of future security registrations.
NOTE I - INTANGIBLE ASSETS
Intangible assets consist of website software development costs, and fees
related to applications for patents and trademarks. The intangible assets are
not in use and are currently not being amortized.
13
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE J - OTHER ASSETS
Other assets consist primarily of security deposits on the lease of office
facilities.
NOTE K - LOAN PAYABLE RELATED PARTY
As of February 28, 2007 and May 31, 2006 loans payable to shareholders in the
amount of $371,917 and $183,727 are due on demand.
NOTE L - NOTES PAYABLE
Promissory Notes as of February 28, 2007 and May 31, 2006 consisted of:
February 28, 2007 May 31, 2006
-------------- -------------
Four interest bearing, non-collateralized loans.
The loans have various maturities throughout 2006. $ 325,450 $ 325,450
---------- ---------
Total Notes Payable 325,450 325,450
Less Current Portion (325,450) (325,450)
---------- ---------
Net Long-term Debt $ 0 $ 0
========== =========
The short-term notes payable mature as follows:
February 28, 2007 $ 325,450 $ 325,450
---------- ---------
Total Notes Payable $ 325,450 $ 325,450
========== =========
The notes and loans can be converted to shares of the Company's $.0001 par
value common stock at the option of the holder. The notes pay interest at 10%
per annum. Interest is paid quarterly. The loan can be converted at 80% of
the average closing price of Company's common stock for the preceding five (5)
consecutive trading days with a floor of $1. Prior to the year ended May 31,
2004, the holder of approximately $830,000 of debt plus accrued interest agreed
to convert $500,000 of his debt to common stock. The $500,000 was recognized as
converted to equity in 2004. The 500,000 of common shares remained unissued at
May 31, 2004 and 2005. In June 2004 (year ended May 31, 2005) the same creditor
loaned another $250,000 to the Company. In the year ended May 31, 2006, the
Company, by mutual agreement, converted the remaining debt plus all accrued
interest outstanding, a total of approximately $581,000, to equity for 590,027
shares of common stock of the company. The 500,000 shares of common stock
unissued in 2004, were issued during August 2005 (year ended May 31, 2006).
NOTE M - WARRANTS
The Company has issued 1,005,000 detachable warrants for each dollar of debt as
described in Note L above. Management has determined that the value of the
detachable warrants to be $.01 on the date of issuance and have charged paid in
capital $10,050 during the period. Each warrant entitles the holder to
14
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2007
NOTE M - WARRANTS - CONTINUED
purchase one (1) share of common stock at $.01. The Company also issued
400,000 warrants to one of the former owners of IS Direct Agency for providing
his insurance licensing in all fifty states. The warrants can be exercised for
$.01 each. An additional 216,209 warrants were issued in connection with the
Spaulding acquisition, one warrant for every ten shares owned. Each unit of
Spaulding entitled the owner to one warrant with an exercise price of $6.00.
The following is a summary of warrants through:
Feb. 28, 2007 May 31, 2006
Outstanding warrants at the beginning of the year 0 1,621,209
Warrants issued 0 0
Warrants expired 0 1,371,209
Warrants exercised 0 250,000
------------ ------------
Warrants outstanding at the end of the year 0 0
============ ============
NOTE N - DIVIDENDS
The Company pays certain expenses on behalf of the various related companies
that were spun off from eCom eCom.com, Inc. The payable on the books of the
spin off company, which is an account receivable on the books of American
Capital Holdings, is then converted to common stock of that company. It is not
the intention of American Capital to be a holding company so it, therefore,
distributed the newly acquired shares of common stock, pro-rata to the current
stockholders of American Capital. During the year ending May 31, 2006, the
Company has converted approximately $1,060,000 and $623,000 from a receivable to
common stock of the spin off companies in each of the respective periods. The
Company distributed those shares to its own shareholders in the form of
dividends paid on August 7, 2006.
NOTE O - COMMITMENTS AND CONTINGENCIES
The Company leased approximately 1,231 square feet office facilities in Palm
Beach Gardens, Florida under an operating lease of $2,331 per month which
expired on January 31, 2007. ISDA leased approximately 200 square feet of
office facilities in Buffalo, NY under a month to month agreement of $425.00
per month. The current lease is held by United States Financial Group, Inc.
Future minimum lease payments including sales tax as of February 28, 2007 are:
Fiscal Years ending:
February 28, 2007 $ 0
--------
Total Minimum Lease Payments $ 0
Rent expense for the twelve month period ending May 31, 2006 was $35,124.
Rent expense for the nine month period ending February 28, 2007 was $18,458.
15
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE P - INCOME TAXES
No provision for federal and state income taxes has been recorded
because the Company has incurred net operating losses since inception.
The Company's net operating loss carry-forward as of February 28, 2007 totals
approximately $16,000,000. These carry-forwards, which will be available to
offset future taxable income, and expire beginning in May 31, 2024.
The Company does not believe that the realization of the related net
deferred tax asset meets the criteria required by generally accepted
accounting principles and, accordingly, the deferred income tax asset
arising from such loss carry forward has been fully reserved.
The Company accounts for income taxes in accordance with FASB Statement
No. 109, Accounting for Income Taxes (FASB 109). Under FASB 109, income taxes
are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes related
to certain income and expenses recognized in different periods for financial
and income tax reporting purposes. Deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered
or settled.
Deferred taxes also are recognized for operating losses and tax credits
that are available to offset future taxable income and income taxes,
respectively. A valuation allowance is provided if it is more likely than not
that some or all of the deferred tax assets will not be realized. To facilitate
the purchase of the assets of ACHI, the Company recorded a one for twenty
reverse split on the Effective Date of the currently outstanding common stock,
while maintaining the conversion and exercise prices of the Senior Notes, the
Secured Notes, the Subordinated Notes and the related warrants. All prior
period share and per-share amounts have been restated to account for the reverse
split. Any fractional shares remaining after the reverse split will be paid out
in cash to the shareholder on the Effective Date.
Warrants were granted to Promissory Noteholders with detachable warrants.
Management has determined that the fair value of each warrant is $0.01.
The computation of diluted loss per share before extraordinary item for
the year ended May 31, 2005 does not include shares from potentially dilutive
securities as the assumption of conversion or exercise of these would have an
antidilutive effect on loss per share before extraordinary items. In
accordance with generally accepted accounting principles, diluted loss per share
from extraordinary item is calculated using the same number of potential common
shares as used in the computation of loss per share before extraordinary items.
NOTE Q - DEFERRED TAX ASSET
Deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of the Company's assets and
liabilities. Temporary differences, net operating loss carry forwards
and valuation allowances comprising the net deferred taxes on the balance
16
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Q - DEFERRED TAX ASSET - CONTINUED
sheets is as follows:
Feb. 28, 2007 May 31, 2006
------------- --------------
Loss carry forward for tax purposes $ 16,000,000 $ 16,000,000
============= ==============
Deferred tax asset (34%) 5,600,000 5,600,000
Valuation allowance (5,600,000) (5,600,000)
------------- --------------
Net deferred tax asset $ - $ -
============= ==============
No provision for federal and state income taxes has been recorded because
the Company has incurred net operating losses since inception. The Company's
net operating loss carry-forward as of February 28, 2007 was approximately
$16,000,000. These carry-forwards, which will be available to offset future
taxable income, will expire through the year 2024.
The Company does not believe that the realization of the related net
deferred tax asset meets the criteria required by generally accepted accounting
principles and, accordingly, the deferred income tax asset arising from
such loss carry forward has been fully reserved.
NOTE R - CHANGE IN ACCOUNTING PRINCIPLE/ERROR
For the year ended May 31, 2005, management has determined that marketable
securities with a fair value of $433,956 should be written off due to the fact
that the American Capital Holdings, Inc., owner of approximately 90% of the
outstanding shares of common stock of Air Media Now, Inc., is unable to dispose
of any of their controlling interest because there are no remaining assets in
Air Media Now and to sell them would be unethical. Air Media now is traded on
the pink sheets. This charge off increased the May 31, 2005 Net Loss by
$433,956 and the Retained Deficit by a similar amount.
NOTE S - SUBSEQUENT EVENTS
On or about October 10, 2006, a stockholder of the Company filed suit in the
California Superior Court but the lawsuit was removed to the United States
District Court for the Eastern District Court of California. American Capital
Holdings, the defendant, move to have the case transferred to the United States
District Court for the Southern District of Florida based on the venue being
improper. On February 28, 2007 the U.S. District Judge then presiding over the
case granted defendant's motion and ordered that the case be transferred. The
case has not yet been transferred or re-filed.
17
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE T - RELATED PARTY TRANSACTIONS
The Company has receivables due from nine related entities. eCom eCom.com, Inc.
owes $196,450 for services paid to the Company's transfer agent and accountant,
including $100,000 of debtor-in-possession financing, as authorized by the
United States Bankruptcy Court, Case No. 04-35435-SHF. Freedom 4 Wireless,
Inc. owed the Company $670,199 for working capital and inventory purchased by
ACHI, and for investments into the company between March 2004 and June 2004.
On February 1, 2005, this investment was converted into 47,457,356 shares of
MyZipSoft, Inc. common stock. Additional advances were made after February 1,
2005, resulting in a balance due from MyZipSoft of $108,262. On August 31, 2005
10,826,190 of shares of MyZipSoft were issued to American Capital Holdings.
These MyZipSoft shares where distributed to the shareholders of record of
American Capital Holdings on August 31, 2005. Additional advances to support
operations were made into each of the following eight spin-offs of eCom; A Super
Deal.com, Inc, Swap and Shop.net Corp, A Classified Ad, Inc, AAB National
Company, Pro Card Corporation, USAS Digital Inc, USA Performance Products, and
eSecureSoft Company. The following shares where issued to American Capital
Holdings by the following companies as compensation for these advances
and services.
Shares issued to American Capital Holdings during the twelve months ended
May 31, 2006 and distributed to the shareholders of American Capital
Holdings, Inc. to shareholders of record of American Capital Holdings as of
August 31, 2005 and November 30, 2005 and February 28, 2006 are as follows:
Shares Shares Shares
Distributed on Distributed on Distributed on
Company name August 31, 2005 November 30, 2005 February 28, 2006
---------------------- --------------- ----------------- -----------------
eSecureSoft Company 6,560,606 743,531 702,425
USAS Digital 4,502,351 1,050,875 1,266,658
Pro Card Corporation 5,265,896 1,463,125 593,125
AAB National 7,099,350 952,500 836,453
A Classified Ad 3,694,725 1,722,500 728,750
Swap and Shop 3,886,226 747,475 869,375
A Super Deal 6,757,351 856,750 916,005
MyZipSoft 10,826,190 0 510,550
The Company has received loans from various Officers and Directors. As of
February 28, 2007, the company owes $124,471 to Barney Richmond and $11,799 to
Richard Turner. During the nine months ended February 28, 2007 the Company
received an advance from Green Energy Group (f/k/a MyZipSoft Inc.) of $122,575.
NOTE U - RECENT ACCOUNTING PRONOUNCEMENTS
The FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations
with an effective date for financial statements issued for fiscal years
beginning after June 15, 2002. The statement addresses financial accounting
and reporting for obligations related with the retirement of tangible
long-lived assets and the costs associated with asset retirement. The
statement requires The recognition of retirement obligations which will,
18
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U - RECENT ACCOUNTING PRONOUNCEMENTS - CONTINUED
therefore, generally increase liabilities; retirement costs will be added to
the carrying value of long-lived assets, therefore, assets will be increased;
and depreciation and accretion expense will be higher in the later years of an
assets life than in earlier years. The Company adopted SFAS No. 143 at January
1, 2002. The adoption of SFAS No. 143 had no impact on the Company's operating
results or financial positions.
The FASB also issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets and is effective for financial statements issued
for fiscal years beginning January 1, 2002. This statement addresses
financial accounting and reporting for the impairment or the disposal of long-
lived asset. An impairment loss is recognized if the carrying amount of a
long-lived group exceeds the sum of the undiscounted cash flow expected to
result from the use and eventual disposition of the asset group. Long-lived
assets should be tested at least annually or whenever changes in circumstances
indicate that its carrying amount may not be recoverable. This statement
does not apply to goodwill and intangible assets that are not amortized.
The Company adapted SFAS No. 144 in the first quarter of 2002, and there was
no impact on the Company's operating results or financial position.
In April 2002, the FASB issued SFAS No. 145, "Rescission of the FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
("SFAS No. 145"). SFAS No. 145 eliminates the requirement to classify gains
and losses from the extinguishment of indebtedness as extraordinary, requires
certain lease modifications to be treated the same as a sale-leaseback
transaction, and makes other non-substantive technical corrections to
existing pronouncements. SFAS No. 145 is effective for fiscal years beginning
after May 15, 2002. SFAS No. 145 was adopted on June 1, 2003 and did not have a
material effect on the Company's financial position or results of operations.
The FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity" and is effective for
financial instruments entered into after May 31, 2003. This Statement
establishes standards for how an issuer classifies and measures in its
statement of financial position certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability because
that financial instrument embodies an obligation of the issuer. The Company
has adopted SFAS No. 150, and there has been no impact on the Company's
operating results or financial position.
Goodwill and intangible assets acquired prior to July 1, 2001 will continue
to be amortized and tested for impairment in accordance with pre- SFAS
No. 142 requirements until adoption of SFAS No. 142. Under the provision of
SFAS No.142, intangible assets with definite useful lives will be amortized to
their estimated residual values over those estimated useful lives in proportion
to the economic benefits consumed. Such intangible assets remain subject to the
impairment provisions of SFAS No. 121. Intangible assets with indefinite useful
lives will be tested for impairment annually in lieu of being amortized. The
impact of adopting SFAS Nos. 141 and 142 will not cause a material change in
the Company's consolidated financial statements as of the date of this report.
19
AMERICAN CAPITAL HOLDINGS, INC.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
American Capital Holdings, Inc., ("ACH") is a holding company which owns five
(5) proprietary financial products. These products are known as Guaranteed
Principle Insured Convertible Securities ("GPICS (TM)"), Energy Tax Incentive
Preferred Securities ("ETIPS(TM)"), Equipment Tax Incentive Convertible
Securities ("ETICS(TM)"), Guaranteed Pension Accounting Contract Solutions
("GPACS(TM)") and Government Pension Accounting Contract Solutions
("GPACS(TM)"). The GPACS(TM) products are designed to provide solutions for
unfunded government and private sector pension plan liability. The GPICS(TM),
ETIPS(TM) and ETICS(TM) products are investment structures designed to
facilitate the use of energy and depreciation tax incentives while insuring the
capital investment through guarantees of principal. Our Chairman, Barney A.
Richmond, has applied for a patent for one of these products, known as
Government Pension Accounting Contract Solutions (GPACS(TM)). If and when the
patent is granted, Mr. Richmond will assign the patent to ACH.
The GPACS(TM) and some of our other products use insurance as a part of their
structures. The insurance contracts will be written through several licensed
insurance carriers.
IS Direct is a wholly-owned subsidiary of ACH, and is a licensed insurance
agency through which we will sell our products. On May 1, 2006 Vince Cherrix
became President of IS Direct. Mr. Cherrix is currently licensed for property
and casualty insurance, and life and health insurance and annuities in Florida,
South Carolina, Pennsylvania and Maryland. With the hiring of Mr. Cherrix, the
business plan of IS Direct has changed. IS Direct had expected to obtain the
necessary licenses for it to operate in all 50 states, it will now focus on
selling its GPAC's products through agents of licensed insurance carriers. Due
to the fact that the company will no longer incur the cost of maintaining
licenses in all 50 states, the company wrote down the value of its goodwill
associated with the insurance licenses. The company also wrote down the value
of the company's website during the current fiscal year.
On October 30, 2004, we entered into an agreement to purchase 80% of
Cosmopolitan Life Insurance Company. On July 8, 2005 management withdrew its
application to acquire Cosmopolitan Life Insurance due to financial issues
uncovered during our due diligence investigation. Management is currently
looking at recovering the surplus note which requires Arkansas Department of
Insurance approval.
A special meeting of the shareholders of the Company was held on December 7,
2005. A motion was passed to remove Barry M. Goldwater, Jr., Norman E. Taplin
and Michael Pickens from the Board of Directors of the Company. The Company
also accepted the resignations of Michael Camilleri and Matthew Salmon.
On January 6, 2006, the Company accepted the resignation of Douglas Sizemore
from the Board of Directors of the Company.
ACH's principal executive offices are currently located at 1016 Clemmons St.,
Suite 302, Jupiter, FL 33477, and our telephone number is (561) 745-6789. The
Company's fiscal year ends May 31, 2007.
20
AMERICAN CAPITAL HOLDINGS, INC.
Business Strategy
We intend to use the financial products of our subsidiaries as solutions,
addressing the needs of governmental and private sector businesses regarding
unfunded pension liabilities and other post-employment benefit ("OPEB")
liabilities. We also plan to sell annuities and other insurance products,
through our subsidiaries, to both the public and private sectors. We also
intend to invest and/or sell our proprietary ETIPS(TM) and ETICS(TM) products
in the public marketplace.
Our GPACS(TM) products, which refers to both the Guaranteed Pension Accounting
Contract Solutions product and the Government Pension Accounting Contract
Solutions product, relate to a business method of adjusting the balance sheet of
a business or governmental organization, and particularly to a system for
organizing the unfunded obligations of the organization so that the liability on
the balance sheet becomes offset by an asset. The product also provides a
systematic investing capability to enhance the profitability of the organization
and the improved treatment of tax obligations.
GPACS was created in response to the General Accounting Standards Board ("GASB")
Statement 45, which generally requires state and local governmental employers to
account for and report the annual cost of OPEB and the outstanding obligations
and commitments related to OPEB in essentially the same manner as currently
required pension obligations. Annual OPEB costs for most employers will be based
on actuarially determined amounts that, if paid on an ongoing basis, generally
would provide sufficient resources to pay benefits as they come due. The
provisions of Statement 45 do not require governments to fund their OPEB plans.
An employer may establish its OPEB liability at zero as of the beginning of the
initial year of implementation. However, the unfunded actuarial liability is
required to be amortized over future periods. Statement 45 is effective for
periods beginning after December 15, 2006, 2007, or 2008, depending on the size
of the government entity based on annual revenues used for GASB 34
implementation requirements.
In May of 2004, the GASB issued a corresponding "plan" statement, Statement 43 -
Financial Reporting for Postemployement Benefit Plans Other than Pension Plans.
Statement 43 is effective one year prior to Statement 45. This statement
requires a statement of plan net assets, statement of changes in plan net
assets, schedule of funding progress, and schedule of employer contributions in
the stand-alone financial reports of OPEB plans, as well as in the financial
statements of governments having OPEB trust funds.
Actuarial services will be required one year earlier if the "plan" Statement 43
is applicable, unless an alternative measurement method is utilized. However,
the alternative measurement method is only an option for plans with a total
membership of fewer than one hundred. Many OPEB plans are currently paying
benefits on a pay-as-you-go basis. If a government does not have an acceptable
trust or equivalent arrangement established, actuarial valuations will not be
necessary until Statement 45 is effective. Establishing a trust may be an option
for funding OPEB benefits; employers should consider the impact of required
actuarial services.
21
AMERICAN CAPITAL HOLDINGS, INC.
Our GPICS(TM), ETIPS(TM) and ETICS(TM) products are each investment structures
designed to maximize the benefit of energy and equipment tax incentives, in
order to facilitate investment in energy related and other business enterprises.
An essential feature of these products is a guarantee of the principal invested,
as a result of the structuring of the investment.
Our plan of operation includes the underwriting of the insurance aspects of our
products through our subsidiaries. Pending approvals of our recent acquisitions
of Universe and Cosmopolitan, we will use third party insurance carriers.
However, upon receiving the approvals, which are expected in due course, we will
retain as much premium and commission money as possible within our subsidiaries.
IS Direct currently sells primarily term and whole life insurance products.
However, upon the completion of our pending proposed acquisition of Universe,
the scope of products available for sale by IS Direct is expected to broaden.
Universe is a life insurance company which we expect to use to underwrite the
insurance policies required by our GPACS products.
Comparison of the nine months ended February 28, 2007 with the nine months
ended February 28, 2006.
Revenue for the nine month period ended February 28, 2007 was $0 compared to
$0 recorded during the same period of the prior year.
Gross profit reflects a loss of $7,800 in the current year versus a loss of
$7,531 for the prior years nine month period. Depreciation expense contributed
$7,800 to the current years deficit in gross profit and $7,531 to the prior
years nine month period deficit.
General and administrative costs of $39,213 for the current nine month period
reflect costs of staffing our administrative and sales offices. This represents
a $302,248 decrease from the administrative costs incurred for the nine months
ending February 28, 2006. This decrease is due to the fact that overhead costs
are being distributed to the spin-off companies for services rendered by staff
and management of American Capital Holdings.
Our operations for the nine months ended February 28, 2007 resulted in a net
loss of $47,013 versus $350,992 for the nine months ended February 28, 2006.
Unrealized holding losses during the prior year nine month period of $61,016 was
the result of a decline in the market value of the Company's holdings in eCom
eCom.com.
Liquidity and Capital Resources
As of February 28, 2007 current assets totaled $490,619 compared to $627,916
at May 31, 2006. The $137,297 decrease in total current assets was the
result of related companies paying off notes by issuing securities to the
Company during the period ending February 28, 2007.
22
AMERICAN CAPITAL HOLDINGS, INC.
Accounts Payable increased from $242,203 to $292,908 during the current nine
month period. Current Liabilities increased from $933,379 at the end of the
prior fiscal year to $1,280,737 at the end of the current quarter, an increase
of $347,358 due to the increase in accounts payable and accrued expenses during
the nine months period ending February 28, 2007.
To the extent that additional funds are required to support operations or to
expand our business, we may sell additional equity, issue debt or obtain other
credit facilities through financial institutions. Any sale of additional equity
securities will result in dilution to our shareholders.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of the Company's Disclosure Controls and Internal Controls:
Within the 90 days prior to the date of this Quarterly Report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
'disclosure controls and procedures'("Disclosure Controls"). This 'evaluation'
("Controls Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive Officer/Chairman
("CEO")and Chief Financial Officer ("CFO"). As a result of this review, the
Company adopted guidelines concerning disclosure controls and the establishment
of a disclosure control committee made up of senior management.
Limitations on the Effectiveness of Controls:
The Company's management, including the CEO/CHAIRMAN and CFO, does not expect
that its Disclosure Controls or its 'internal controls and procedures for
financial reporting' ("Internal Controls")will prevent all error and all fraud.
control system, no matter how well conceived and managed, can provide only
reasonable assurance that the objectives of the control system are met. The
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, control may become inadequate because of
changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may occur and not
be detected.
Conclusions:
Based upon the Controls Evaluation, the CEO/CHAIRMAN and CFO have concluded
that, subject to the limitations noted above, the Disclosure Controls are
effective to timely alert management to material information relating to the
Company during the period when its periodic reports are being prepared.
23
AMERICAN CAPITAL HOLDINGS, INC.
In accordance with SEC requirements, the CEO/CHAIRMAN and CFO note that, since
the date of the Controls Evaluation to the date of this Quarterly Report, there
have been no significant changes in Internal Controls or in other factors that
could significantly affect Internal Controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company is not a party to any legal proceedings.
ITEM 2. Unregistered sales of equity securities and use of proceeds.
In July 2005, the Company issued 100,000 shares of common stock to an accredited
investor. In August 2005, the Company issued 43,750 shares of common stock to
an accredited investor. In August 2005, 1,090,027 shares of commons stock were
issued in cancellation of debt. In September 2005, 6,000 shares were issued to
an accredited investor. In October 2005, 20,000 shares were issued to an
accredited investor. In April 2006, 250,000 shares were issued to an accredited
investor. In August 2006, the Company issued 2,202,000 shares of common stock
for services rendered. All these shares were issued in reliance upon Section
4(2) of the Securities Act. A legend was placed on the certificates stating
that the securities were not registered under the Securities Act and setting
forth appropriate restrictions on their transfer or sale.
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.
(a) Exhibits:
Exhibit 31.1 Certification required under Section 302 of
the Sarbanes-Oxley Act of 2002 by the CE0 on page 26
Exhibit 31.2 Certification required under Section 302 of
the Sarbanes-Oxley Act of 2002 by the CFO on page 27
Exhibit 32 Section 1350 Certification on page 28
24
AMERICAN CAPITAL HOLDINGS, INC.
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
October 9, 2007 By: /s/ Barney A. Richmond
Barney A. Richmond,
Chief Executive Officer
October 9, 2007 By: /s/ Richard C. Turner
Richard C. Turner,
Chief Financial Officer
25
SIGNATURES AND CERTIFICATIONS
EXHIBIT 31.1
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Barney A. Richmond, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of American Capital
Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities,
particularly during the period in which this report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this report
(the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
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 weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
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: October 9, 2007
/s/ Barney A. Richmond
--------------------------
Barney A. Richmond
Principal Executive Officer
EXHIBIT 31.2
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard C. Turner, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of American Capital
Holdings, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities,
particularly during the period in which this report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this report
(the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
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 weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
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: October 9, 2007
/s/ Richard C. Turner
---------------------------
Richard C. Turner
Chief Financial Officer
27
EXHIBIT 32
CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of American Capital Holdings
Inc., a Florida corporation (the "Company"), on Form 10-QSB for the period
ending February 28, 2007 as filed with the Securities and Exchange Commission
(the "Report"), Barney A. Richmond, President of the Company and Richard C.
Turner, Chief Financial Officer of the Company, respectively, do each hereby
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
1350), that to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ Barney A. Richmond
---------------------------
Barney A. Richmond
Principal Executive Officer
Date: October 9, 2007
/s/ Richard C. Turner
--------------------------
Richard C. Turner
Chief Financial Officer
Date: October 9, 2007
[A signed original of this written statement required by Section 906 has been
provided to American Capital Holdings, Inc. and will be retained by American
Capital Holdings, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request.]
Exhibits to Form 10-QSB will be provided to shareholders of the Registrant upon
written request addressed to American Capital Holdings, Inc., 1016 Clemmons St.,
Suite 302, Jupiter, Florida 33477. Any exhibits furnished are subject to a
reasonable photocopying charge.
The Securities and Exchange Commission has not approved or disapproved of this
Form 10-QSB nor has it passed upon its accuracy or adequacy.
28