U.S. SECURITIES AND EXCHANGE COMMISSION New York, N.Y. 15697 FORM 10-QSB/A (Mark One) [X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001. [ ] TRANSACTION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from .......... to .......... Commission file number: 1-23456 ABC, CO. (Exact name of registrant as specified in its charter) Maine 12-34567890 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 89 S. 10th Street, Suite 135 Lewiston, Maine 54321 (514) 987-3548 (Address and telephone number of registrant's principal executive offices and principal place of business) 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 preceding 12 months (or for such shorter period that the registrant was required to file such reports, or (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 practicable date. 48,505,824 shares of common, $.001 par value as of October 31, 2001. 1 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS....................3 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS..............................................................4 Financial Overview:...............................................5 Financial Overview:...............................................6 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS.........................7 NOTE 1 - STOCK-BASED COMPENSATION.......................................8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS....................9 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 10-K.............................10 SIGNATURES.............................................................12 CERTIFICATIONS.........................................................13 2 ABC, CO. PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) SEPTEMBER 30, DECEMBER 31, 2001 2000 As Adjusted (Note 2) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,859 $ 29,542 Accounts receivable 37,204 10,371 Prepaid and other assets 398,028 5,942 Total current assets 437,091 45,855 Property and equipment, net of accumulated depreciation 763,753 730,539 Other Assets: Technology rights, net of accumulated amortization of $286,838 and $235,380 at September 30, 2001 598,166 649,624 and December 31, 2000, respectively Total assets $ 1,799,010 $ 1,426,018 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Note payable $ 225,807 $ - Accounts payable and accrued expenses 637,329 842,416 Due to XYZ shareholder 2,536,948 - Advances from related parties 28,788 250,950 Total current liabilities 3,428,872 1,093,366 Commitments and contingencies STOCKHOLDERS' EQUITY (DEFICIT): Common stock, $.001 par value; authorized, 500,000,000 shares; issued and outstanding 48,505,824 48,505 44,547 and 44,547,524 at September 30, 2001 and December 31, 2000, respectively Additional paid-in capital 6,949,031 6,029,499 Common stock subscriptions (600,000 and 636,000 shares, respectively) 150,000 117,000 Accumulated deficit (8,777,398) (5,858,394) Total stockholders' equity (deficit) (1,629,862) 332,652 Total liabilities and stockholders' equity (deficit) $ 1,799,010 $ 1,426,018
See notes to condensed consolidated financial statements on page 7. 3
ABC, CO. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2001 2000 2001 2000 As Adjusted As Adjusted (Note 2) (Note 2) Revenue - management fees $330,000 $ - $990,000 $ - Expenses: Research and development 13,098 23,294 96,445 89,174 General and administrative 1,227,894 468,924 3,691,363 1,267,066 Depreciation and amortization 47,321 63,000 118,950 189,000 Interest, net 1,591 1,712 2,246 16,728 Total expenses 1,289,904 556,930 3,909,004 1,561,968 Net loss (959,904) (556,930) (2,919,004) (1,561,968) Translation adjustment - - 1,186 - Comprehensive loss $(959,904) $(556,930) $(2,917,818) $(1,561,968) Net loss per share, basic and diluted $(0.02) $(0.01) $(0.06) $(0.04) Weighted average common shares outstanding, basic and diluted 47,700,824 40,532,000 45,829,031 39,962,000 See notes to condensed consolidated financial statements
4 ABC, CO. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS[1] (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 As Adjusted (Note 2) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(2,919,004) $(1,561,968) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 118,950 189,000 Shares issued for wages 175,000 - Write-off of business acquired for note payable 263,307 - Shares issued for services and acquisition 255,375 - Other 8,456 - (Increase) decrease in operating assets: Trade receivables (26,834) - Prepaid expenses and other current assets (392,086) - Increase (decrease) in operating liabilities: Accounts payable and accrued expenses (205,087) (46,611) Net cash used in operating activities (2,721,923) (1,419,579) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (108,371) (251,309) Net cash used in investing activities (108,371) (251,309) CASH FLOWS FROM FINANCING ACTIVITIES: Payments made on note payable (37,500) - Advances from XYZ, shareholder, net of payments applied to managed company 2,536,948 - Proceeds from issuance of common stock and subscriptions 525,325 1,355,347 Net advances (payments) to/from related parties (222,162) 310,959 Net cash provided by investing activities 2,802,611 1,666,306 Net decrease in cash and cash equivalents (27,683) (4,582) Cash and cash equivalents, beginning of period 29,542 10,042 Cash and cash equivalents, end of period $ 1,859 $ 5,460
5
NOTE 1 - STOCK-BASED COMPENSATION THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 2003 2002 2003 2002 Net income, as reported $ 210,597 $ 32,647 $ 374,254 $ 50,124 Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects (123,654) - (123,654) - Pro Forma Net Income $ 86,943 $ 32,647 $ 250,600 $ 50,124 Income (Loss) per Common Share Basic, as reported $ 0.03 $ (0.04) $ 0.06 $ (0.04) Basic, pro forma $ 0.01 $ (0.04) $ 0.04 $ (0.04) Diluted, as reported $ 0.03 $ (0.04) $ 0.06 $ (0.04) Diluted, pro forma $ 0.01 $ (0.04) $ 0.04 $ (0.04)
6 ABC, CO. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("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. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000. The unaudited condensed consolidated financial statements included herein reflect all adjustments (which include only normal recurring adjustments), which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the year ending December 31, 2001. This is an amended report for the period presented and replaces the 10-QSB filed with the Securities and Exchange Commission on November 14, 2001. 2. ACQUISITION OF XYZ COMPUTERS, INC. The Company had no revenues from operations and was considered to be in the development stage through December 31, 2000. Effective January 8, 2001, the Company entered into a management agreement with the owner of XYZ Computers, Inc. (XYZ) to manage the company until a purchase agreement can be finalized. In February 2002, a purchase agreement was finalized. Starting January 8, 2001, the Company was paid $110,000 per month to manage XYZ. During the nine months ended September 30, 2001, the Company received advances from the owner of XYZ in excess of the amounts applied to XYZ, in the amount of $2,536,948. During 2001, the Company erroneously consolidated the results of XYZ with the Company in its financial statements. This report is to amend the previously filed 10-QSB filed for the three months and nine months ended September 30, 2001. 7 ITEM 6. EXHIBITS AND REPORTS ON FORM 10-K Exhibit No. Description of Exhibit 3.1. Restated Certificate of Incorporation of XYZ Computers, Inc., filed on January 12, 1970, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.2. Certificate of Agreement of Merger between XYZ Computers, Inc. and ABC, Co., filed on January 12, 1970, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.3. Certificate of Amendment to the Articles of Incorporation, changing the name XYZ Computers, Inc. to ABC, Co., filed on September 21, 1970, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.4. Certificate of Amendment to the Articles of Incorporation of ABC, Co., filed on August 6, 1971, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.5. Certificate of Reduction of Capital of ABC, Co., filed on June 5, 1978, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.6. Certificate of Amendment to Articles of Incorporation of ABC, Co., filed on February 12, 1993, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.7. Composite of Amendments to Articles of Incorporation of ABC, Co. (prepared by the Registrant and not filed with the Secretary of State of the State of Maine) , incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 3.8. Bylaws of the Company, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.1. Employment Agreement, dated May 14, 2000, between ABC, Co. and E. John Adams, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.2. Employment Agreement, dated May 14, 2000, between ABC, Co. and Stephanie Williams, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.3. Employment Agreement, dated May 14, 2000, between ABC, Co. and Edward S. Smith, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.4. Employment Agreement, dated May 14, 2000, between ABC, Co. and Jennifer Caruso, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.5. Consulting Agreement, dated May 20, 2000, between ABC, Co. and Jean Tait, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 8 10.6. Supplemental Pension Plan, dated January 1, 1998, between ABC, Co. and William E. Simmons, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.7. Supplemental Pension Plan, dated as of January 1, 2001, between ABC, Co. and William E. Simmons, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 2000, filed on October 31, 2000. 10.31. Loan Agreement, dated February 24, 2001, between ABC, Co. and Maine Bank. 10.32. Promissory Note, dated February 16, 2001, issued by ABC, Co. and QRS, Inc. to Maine Bank. 10.33. Term Promissory Note, dated February 16, 2001, issued by ABC, Co. and QRS, Inc. to Maine Bank. 10.34. Revolving Promissory Note, dated February 16, 2001, issued by ABC, Co. and QRS, Inc. to Maine Bank. 31.1. Section 302 Certifications 31.2. Section 302 Certifications 32.1. Section 906 Certifications 32.2. Section 906 Certifications 9 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 thereunder duly authorized.
Date: April 25, 2002s/n/s E. John Adams E. John Adams - Chairman of the Board, President and Chief Executive Officer s/n/s Edward S. Smith Edward S. Smith - Vice President and Chief Financial Officer
10 EXHIBIT 31.1 CERTIFICATIONS I, E. John Adams, certify that: 1. I have reviewed this Quarterly report on Form 10-Q of ABC, Corporation; 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 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-15(e) and 15d-15(e)) for the registrant and have: 4.1.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 being prepared; 4.2.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our 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; and 4.3.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: 5.1.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 5.2.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 25, 2002 /s/ E. John Adams E. John Adams Chief Executive Officer Footnotes [1] See notes to condensed consolidated financial statements. 11