U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB/A
(Mark One)
[X] Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended: June 30, 2005
[ ] Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from to .
-------------------- --------------------
Commission File No: 33-9640-LA
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AMERICAN BUSINESS CORPORATION
-----------------------------
(Name of Small Business in its Charter)
Colorado 90-0249312
-------- ----------
(State or Other Jurisdiction of Incorporation) (IRS Employer Id. No.)
222 Grace Church Street, Suite 300, Port Chester, NY 10573
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(Address of Principal Office including Zip Code)
Issuer's telephone Number: (914) 939-5081
--------------
Check whether the Registrant (1) has 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 [ ]
APPLICABLE ONLLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, par value $.001 per share,
69,870,517 shares at June 30, 2005.
Transitional Small Business Disclosure Format
(Check one): Yes [ ] NO [ X ].
1
AMERICAN BUSINESS CORPORATION
FORM 10-QSB - QUARTER ENDED JUNE 30, 2005
INDEX Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements..........................................2
Condensed Balance Sheets at June 30, 2005 (unaudited) and
December 31, 2004...........................................3
Condensed Statements of Operations for the Six Months and
Three Ended June 30, 2005 and 2004 (unaudited)..............4
Condensed Statement of Stockholders' Deficit for the Period
January 1, 2004 through June 30, 2005 (unaudited)...........5
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 2005 and 2004 (unaudited)..........................6
Notes to the Condensed Financial Statements...................7
Item 2. Management's Discussion and Analysis.........................10
Item 3. Controls and Procedures......................................10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................11
SIGNATURES
Signatures...................................................11
Exhibits.....................................................12
--------------------------------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed balance sheet of the Registrant as of June
30, 2005, the audited balance sheet at December 31, 2004, and the
unaudited condensed statements of operations, stockholders' deficit,
and cash flows for the six and three month periods ended June 30, 2005
and 2004 follow. The condensed financial statements reflect all
adjustments that are, in the opinion of management, necessary for a
fair statement of the results for the interim periods presented.
2
AMERICAN BUSINESS CORPORATION
CONDENSED BALANCE SHEETS
June 30, 2005 December 31,
[unaudited] 2004
------------- ------------
Assets
Current assets -
Cash $ 3,986 $ 6,845
------------- ------------
Total current assets 3,986 6,845
Equipment, net 18,216 20,493
------------- ------------
Total Assets $ 22,202 $ 27,338
Liabilities and Stockholders' Deficit
Current Liabilities
Accrued expenses $ 380,564 $ 30,564
Accrued interest 3,273,268 3,273,268
Due to related parties 3,843,090 3,641,375
Loans payable 2,518,000 2,518,000
Convertible debentures 3,793,460 3,793,460
Redeemable Series B
Convertible Preferred Stock 2,000,000 2,000,000
Estimated liability for claims
and litigation 4,440,657 4,440,657
------------- ------------
Total Current Liabilities 20,249,039 19,997,324
Commitments and contingencies -- --
Stockholders' Equity (Deficit)
Preferred stock, no par value;
(10,000,000 shares authorized)
Series A (90,000 shares issued
and outstanding) 76 76
Series B (2,000 shares issued
and outstanding) -- --
Series C (450,000 shares issued
and outstanding) 135,000 135,000
Series D (950 shares issued
and outstanding) 950,000 950,000
Series E (2,300 shares issued
and outstanding) 2,300,000 2,300,000
Common stock, par value $.001 per share;
500,000,000 authorized, 69,870,517
shares issued and outstanding 69,870 69,870
Additional paid-in capital 14,872,987 14,872,987
Accumulated deficit (38,554,770) (38,297,919)
------------- ------------
Total Stockholders' Deficit (20,226,837) (19,969,986)
------------- ------------
Total Liabilities and Stockholders' Deficit $ 22,202 $ 27,338
============= ============
See notes to condensed financial statements.
3
AMERICAN BUSINESS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues
Depreciation and
amortization 2,277 2,500 1,139 2,500
Interest expense 61,715 58,147 31,087 29,290
Administrative
expenses 192,859 354,037 110,866 262,975
---------- ---------- ---------- ----------
Total operating
expenses 256,851 414,684 143,092 294,765
---------- ---------- ---------- ----------
Net loss $(256,851) $(414,684) $(143,092) $(294,765)
========== ========== ========== ==========
Net loss per common
share - basic and
fully-diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 69,870,517 62,299,093 69,870,517 68,245,524
========== ========== ========== ==========
See notes to condensed financial statements.
4
AMERICAN BUSINESS CORPORATION
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
Preferred Preferred Preferred Preferred Preferred
Stock Stock Stock Stock Stock
Series A Series B Series C Series D Series E
Shs Amt Shs Amt Shs Amt Shs Amt Shs Amt
---------------------------------------------------------------------------------
Balance,
January 1, 2004 990,000 $ 762 2,000 $ - 450,000 $135,000 950 $950,000 2,300 $2,300,000
Shares
converted (900,000) (686) - - - - - - - -
Shares for
services - - - - - - - - - -
Shares as
deposit - - - - - - - - - -
Deposit
cancelled - - - - - - - - - -
Rent
contributed - - - - - - - - - -
Net loss - - - - - - - - - -
--------------------------------------------------------------------------------
Balance,
December 31,
2004 90,000 $ 76 2,000 $ - 450,000 $135,000 950 $950,000 2,300 $2,300,000
[unaudited]
Net loss - - - - - - - - - -
--------------------------------------------------------------------------------
Balance,
June 30, 2005 90,000 $ 76 2,000 $ - 450,000 $135,000 950 $950,000 2,300 $2,300,000
--------------------------------------------------------------------------------
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
(Continued)
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shs Amt Capital Deficit Deficit
---------- ------- ----------- ------------- -------------
Balance,
January 1, 2004 54,370,517 $54,370 $14,538,201 $(37,320,521) $(19,342,188)
Shares
Converted 9,000,000 9,000 (8,314) - -
Shares
for services 6,500,000 6,500 333,500 - 340,000
Shares as
deposit 5,000,000 5,000 145,000 - 150,000
Deposit
cancelled (5,000,000) (5,000) (145,000) - (150,000)
Rent
contributed - - 9,600 - 9,600
Net loss - - - (977,398) (977,398)
----------------------------------------------------------
Balance,
December
31, 2004 69,870,517 $69,870 $14,872,987 $(38,297,919) $(19,969,986)
[unaudited]
Net loss - - - (256,851) (256,851)
-----------------------------------------------------------
Balance
June 30, 2005 69,870,517 $69,870 $14,872,987 $(38,554,770) $(20,226,837)
-----------------------------------------------------------
See notes to condensed financial statements.
5
AMERICAN BUSINESS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
302:
Six Months Ended June 30,
2005 2004
[unaudited] [unaudited]
------------- ------------
Cash flows from operating activities -
Net loss $ (256,851) $ (414,684)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation and amortization expense 2,277 2,500
Issuance of common shares for services -- 132,500
Increase in liabilities
Accrued expenses 50,000 15,221
Accrued interest - related party 61,715 58,147
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Net cash used by operating activities (142,859) (206,316)
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Net proceeds from related parties 140,000 275,981
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Net cash provided by financing activities 140,000 275,981
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Net change in cash (2,859) 69,665
Cash at beginning of period 6,845 --
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Cash at end of period $ 3,986 $ 69,665
============= ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
None.
See notes to condensed financial statements.
6
AMERICAN BUSINESS CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The interim financial statements included herein are presented in
accordance with United States generally accepted accounting principles
and have been prepared by the Registrant, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission
(the "SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Registrant believes that
the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal
recurring adjustments, which, in the opinion of management, are
necessary for fair presentation of the information contained therein.
The Registrant's operating results for the six and three month periods
ended June 30, 2005, and 2004 are not necessarily indicative of the
results that may be or were expected for the years ended December 31,
2005, and 2004. It is suggested that these interim financial
statements be read in conjunction with the audited financial statements
and notes thereto of the Registrant included in its Form 10-KSB for the
period ended December 31, 2004.
Reclassifications - Certain amounts have been reclassified to conform
with the current presentation. The reclassifications had no impact on
previously reported results of operations or stockholders' deficit.
Note 2 - Related Party Transactions
As previously reported, and by virtue of (i) a 6% secured convertible
promissory note due to Brentwood Capital Corp., an affiliated privately
owned New York merchant banking corporation ("Brentwood"), dated
September 27, 2002, in the aggregate amount of $2,103,582, including
principal and accrued interest through June 30, 2005, which is
convertible into 210,358,161 shares of the Registrant's common stock;
and (ii) Brentwood's record ownership of 1,435,000 shares of the
Registrant's common stock, Brentwood is the owner of 65% of the
Registrant's voting securities. The Registrant may be deemed to be
controlled by Brentwood.
Similarly, and as previously reported, Midwest Merger Management, LLC,
a Kentucky limited liability company and its affiliated entities
("Midwest") is the record owner of 12,459,800 shares of the
Registrant's common stock, 90,000 shares of Series A preferred stock
which, assuming conversion, are the equivalent of 900,000 common
shares, and 450,000 shares of Series C preferred stock which are
convertible into 45,000,000 common shares, for an aggregate of 15% of
the Registrant's voting securities. Accordingly, the Registrant may
be deemed to be controlled by M idwest. During the six month period
ended June 30, 2005, and in connection with its ongoing support of the
Registrant, Midwest contributed an aggregate of $140,000 to the
Registrant to fund its activities during the six months ended June 30,
2005.
7
At June 30, 2005, the aggregate indebtedness to related parties was
as follows:
Brentwood Capital Corp. $2,103,582
Midwest Merger Management LLC $1,739,508
----------
$3,843,090
==========
The Registrant intends to settle its obligations to related parties in
the course of its planned reorganization with a privately held
viable business candidate.
Note 3 - Per Share Results
The common share equivalents associated with the Registrant's issued
and outstanding convertible notes and Preferred Stock were not included
in computing per share results as their effects were anti-dilutive.
Note 4 - Income Taxes (Benefits)
At December 31, 2004, the Registrant had available approximately
$37,000,000 of net operating loss carry-forward, which expires between
December 31, 2008 and December 31, 2021, that may be used to reduce
future taxable income. As utilization of this carry-forward is less
than certain, its potential tax benefit to the Registrant of
approximately $8,000,000 is fully reserved.
Note 5 - Series B Preferred Stock
The provisions of the Series B Preferred Stock allow the holders to
redeem their shares upon the occurrence of certain events including the
Registrant's inability to issue free trading common stock to such
holders because the shares have not been registered under the
Securities Act. As the effectiveness of a registration statement under
the Securities Act is outside of Registrant's control, the Series B
Preferred Stock has been classified on the Registrant's balance sheet
as a liability.
Note 6 - Going Concern
The Registrant's condensed consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the
normal course of business.
As shown in the accompanying financial statements, the Registrant had
negative working capital at June 30, 2005, of $20,245,053. In
addition, the Registrant has incurred an accumulated deficit of
$(38,554,770) through June 30, 2005. The Registrant is dependent upon
the efforts of Midwest to raise proceeds for its continued survival.
The Registrant's ability to continue to receive this level of support
from Midwest is uncertain. The condensed consolidated financial
statements do not include any adjustments that might be necessary if
the Registrant is unable to continue as a going concern.
8
Item 2. Management's Discussion and Analysis
The following discussion contains forward-looking statements regarding
the Registrant, its business, prospects and results of operations that
are subject to certain risks and uncertainties posed by many factors
and events that could cause the Registrant's actual business, prospects
and results of operations to differ materially from those that may be
anticipated by such forward-looking statements. Factors that may
affect such forward-looking statements include, without limitation, the
Registrant's ability to resolve the affairs of its creditors and other
investors; or to locate and thereafter negotiate and consummate a
business combination with a profitable privately owned company.
When used in this discussion, words such as "believes," "anticipates,"
"expects," "intends," and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of
identifying forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this report. The Registrant undertakes no
obligation to revise any forward-looking statements in order to reflect
events or circumstances that may subsequently arise. Readers are urged
to carefully review and consider the various disclosures made by us in
this report and other reports filed with the SEC that attempt to advise
interested parties of the risks and factors that may affect the
Registrant's business.
Six Month Periods Ended June 30, 2005 and 2004:
Revenues - As a direct result of the Registrant's inability to continue
its failing freight transportation services beyond November 2000, the
Registrant had no revenues during either the six month period ended
June 30, 2005 ("6M05") or the six month period ended June 30, 2004
("6M04"). The Registrant continues working through the restructure of
its debt and the mitigation of outstanding litigation.
Expenses and Income Taxes - General and administrative expenses for
6M05 were $256,851 compared to $414,684 for 6M04. This decrease is
consistent with the Registran's strategy of redirecting its focus
toward becoming a candidate to acquire or merge with a profitable,
privately-held business operation. Accordingly, the Registrant's
recurring administrative expenses only include: (i) professional fees
(legal and accounting) associated with the resolution of the
Registrant's affairs with its former creditors and investors, and the
maintenance of its reporting requirements and good standing, (ii)
interest on its outstanding convertible note due to Brentwood
(commencing on October 1, 2003), (iii) other ancillary expenses, and
(iv) the payment of minimum franchise taxes.
Net Income (Loss) - Accordingly, the Registrant experienced a net loss
of $(256,851) for 6M05 compared to a net loss of $(414,684) for 6M04.
When related to the weighted average number of common shares
outstanding during 6M05 and 6M04, per share loss results were $0.00 and
$0.00, respectively.
9
Quarters Ended June 30, 2005 and 2004:
Revenue - As a direct result of the Registrant's inability to continue
its failing freight transportation services beyond November 2000, the
Registrant had no revenues during either the second quarter June 30,
2005 ("2Q05") or the second quarter ended June 30, 2004 ("2Q04"). The
Registrant continues working through the restructure of its debt and
the mitigation of outstanding litigation.
Expenses and Income Taxes - General and administrative expenses for
2Q05 were $143,092 compared to $294,765 for 2Q04. This decrease is
consistent with the Registrant's strategy of redirecting its focus
toward becoming a candidate to acquire or merge with a profitable,
privately-held business operation. Accordingly, the Registrant's
recurring administrative expenses only include: (i) professional fees
(legal and accounting) associated with the resolution of the
Registrant's affairs with its former creditors and investors, and the
maintenance of its reporting requirements and good standing, (ii)
interest on its outstanding convertible note due to Brentwood
(commencing on October 1, 2003), (iii) other ancillary expenses, and
(iv) the payment of minimum franchise taxes.
Net Income (Loss) - Accordingly, the Registrant experienced a net loss
of $(143,092) for 2Q05 compared to a net loss of $(294,765) for 2Q04.
When related to the weighted average common shares outstanding during
each quarter, per share results were $0.00 and $0.00, for 2Q05 and
2Q04, respectively.
Liquidity and Capital Resources
The Registrant does not have any permanent capital resources.
Consistent with the inability to continue its failing freight
transportation services business beyond November 2000, and its
subsequent disposition in connection with arranging the funding of the
GE Credit Corp. settlement in September 2002, the Registrant's
principal activity has been centered in resolving the remaining claims
of its former creditors so it may seek a business combination. In this
connection, Midwes t has agreed to provide Registrant with reasonable
legal, accounting and administrative resources to resolve its affairs
and conduct its search for a business combination candidate.
Accordingly, the Registrant is entirely dependent upon: (i) Midwest
providing the Registrant with certain advisory services in connection
with the resolution of its affairs on favorable terms; (ii) the
willingness of Midwest to provide the Registrant with certain office
and administrative facilities and to fund virtually all of the
Registrant's settlements with its creditors; and (iii) the Registrant's
successfully implementing a business combination with a profitable
operating company. There can be no assurances that Midwest will be
successful in resolving all or substantially all of Registrant's
affairs, that Midwest will fund any further settlements, or that the
combined efforts of Midwest and the Registrant will lead to a
successful business combination. Midwest has advanced the Registrant
$1,739,509 a June 30, 2005, $85,000 of which occurred during the three
months ended June 30, 2005, demonstrating its continued support during
the current quarter.
10
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Registrant maintains controls and procedures designed to ensure
that information required to be disclosed in the reports that the
Registrant files or submits under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and
Exchange Commission. Based upon their evaluation of those controls and
procedures performed as of the end of the period covered by this
report, the Chief Executive and Chief Financial officers of the
Registrant concluded that the Registrant's disclosure controls and
procedures were effective as more further described in Rule 13a-15(c)
of the Securities Exchange Act of 1934.
(b) Changes in Internal Controls
The Registrant made no significant changes in its internal controls or
in other factors that could significantly affect these controls
subsequent to the date of the evaluation of those controls by the Chief
Executive and Chief Financial officers.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
31.1 - Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32.2 - Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Reports on Form 8-K:
None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
American Business Corporation
By: /s/ Anthony R. Russo
------------------------
Chief Executive Officer and Director
By: /s/ Anthony R. Russo
------------------------
Chief Financial Officer
Dated: April 20, 2006
11
Exhibit Index
Exhibit
Number Description
--------- -----------
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
12
EXHIBIT 31.1
AMERICAN BUSINESS CORPORATION
CERTIFICATIONS PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony R. Russo, the Registrant's Chief Executive and Chief
Financial Officer, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB
of American Business Corporation;
2. Based on my knowledge, this amended 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 quarterly 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 amended quarterly report; and
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Registrant and have:
a) Designed and recently commenced the implementation of such
disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under my supervision, 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 amended
quarterly report is being prepared; and
b) Evaluated the increasing effectiveness of the Registrant's
disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation.
Dated: April 20, 2006
/s/ Anthony R. Russo
-----------------------
Chief Executive Officer
and Chief Financial Officer
13
EXHIBIT 32.1
AMERICAN BUSINESS CORPORATION
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amended Quarterly Report of American
Business Corporation on Form 10-QSB for the quarterly period ended
June 30, 2005, as filed with the Securities and Exchange Commission on
April 20, 2006 (the "Report"), the undersigned, in the capacities
and on the dates indicated below, hereby certifies pursuant to 18
U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes
-Oxley Act of 2003, that:
(1) The Report fully complies with 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 results of operations of
American Business Corporation.
Date: April 20, 2006
/s/ Anthony R. Russo
-----------------------
Chief Executive Officer
and Chief Financial Officer
14