awna10-q093007.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

x
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2007

o
Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from __________ to __________

Commission File Number:  333-63432

Atlantic Wine Agencies Inc.
(Exact name of small business issuer as specified in its charter)

Florida
65-1102237
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

Mount Rosier Estate (Pty) Ltd.
Farm 25 A-Sir Lowry’s Pass Village
Somerset West, 7129
South Africa
 (Address of principal executive offices) (Zip Code)

Issuer's telephone number: 011.27.218.581130
(Issuer's telephone number)

Former Name, Address and Fiscal Year, If Changed Since Last Report

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

 
The number of shares of outstanding common stock of Atlantic Wine Agencies, Inc. (the “Company”), which is the only class of its common equity, on November 12, 2007, was 86,323,880.
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes oNo x    

Transitional Small Business Disclosure Format: Yes x    No o



1

Item 1. Financial Statements




Description
Page No.
FINANCIAL INFORMATION:
  
 
Financial Statements
  
 
Consolidated Balance Sheets at September 30, 2007 (unaudited) and March 31, 2007 (audited)
  
 
 
F-1
 
Consolidated Statement of Operations for the Three Months Ended September 30, 2007 and 2006
   respectively (Unaudited)
 
 
F-2
 
Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2007 and 2006 respectively (Unaudited)
 
 
F-3
 
Notes to Consolidated Financial Statements (Unaudited)                                                                                                                                  
 
F-4


2
 

ITEM 1. FINANCIAL STATEMENTS


ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)


CONSOLIDATED BALANCE SHEETS
  
             
   
September 30,
    
March 31,
  
   
2007
    
2007
  
   
(Unaudited)
        
CURRENT ASSETS
            
     Cash
   $
20
     $
341
  
     Accounts receivable
    
84,169
      
37,875
  
     Inventory
    
133,198
      
144,480
  
     Prepaid expenses and other
            
13
  
          Total Current Assets
    
217,387
      
182,709
  
                 
OTHER ASSETS
                
     Property, plant and equipment, net
    
2,606,042
      
2,437,488
  
     Trademark
    
1,286
      
1,207
  
          Total Assets
   $
2,824,715
     $
2,621,404
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
                 
CURRENT LIABILITIES
                
     Bank overdraft
   $
605,762
     $
158,967
  
     Loans from principal shareholders
    
1,259,863
      
1,259,863
  
     Accounts payable
    
129,079
      
208,669
  
     Accrued expenses
    
285,216
      
332,618
  
     Loan payable to principal officer
    
135,320
      
135,320
  
         Total Current Liabilities
    
2,415,240
      
2,095,437
  
                 
STOCKHOLDERS’ EQUITY
                
     Common stock authorized 150,000,000
                
          shares; $0.00001 par value; issued
                
          and outstanding 86,323,880 shares
    
868
      
868
  
     Additional contributed capital
    
7,829,536
      
7,829,536
  
     Accumulated deficit
     (8,007,849 )     (7,749,230 )
     Accumulated other comprehensive income
    
586,920
      
444,793
  
         Total Stockholders’ Equity
    
409,475
      
525,967
  
                 
    $
2,824,715
     $
2,621,404
  








See accompanying notes to financial statements.

F-1

ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
  
             
   
For the Three Months Ended
    
For the Six Months Ended
  
   
September 30,
    
September 30,
  
   
2007
    
2006
    
2007
    
2006
  
NET SALES
   $
68,393
     $
44,640
     $
114,413
     $
100,599
  
                                 
COSTS AND EXPENSES
                                
     Cost of goods sold
    
24,430
      
37,685
      
44,760
      
51,505
  
     Selling, general and administrative
    
98,253
      
124,627
      
255,581
      
169,812
  
     Depreciation and amortization
    
32,172
      
24,779
      
64,344
      
50,865
  
     Interest expense
    
11,169
      
617
      
16,141
      
617
  
          Total Costs and Expenses
    
166,024
      
187,708
      
380,826
      
272,799
  
                                 
OTHER INCOME
                                
     Insurance claims
    
4,834
      
310
              
9,505
  
     Other miscellaneous income
                    
7,794
      
00
  
          Total Other Income
    
4,834
      
310
      
7,794
      
9,505
  
                                 
NET LOSS
     (92,797 )     (142,758 )     (258,619 )     (162,695 )
                                 
NET LOSS PER SHARE, basic and diluted
   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.01 )
                                 
Weighted average number of common shares
                                
     outstanding
    
86,323,880
      
86,323,880
      
86,323,880
      
86,323,880
  























See accompanying notes to financial statements.


F-2

ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  
       
   
For the Six Months Ended
  
   
September 30,
  
   
2007
    
2006
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
     Net loss for period
   $ (258,619 )   $ (162,695 )
     Non-cash item included in net loss:
                
          Depreciation and amortization
    
64,344
      
50,865
  
          Provision for Doubtful Accounts
            
75,600
  
     Changes in operating assets and liabilities:
                
          Accounts receivable
     (46,294 )    
237,014
  
          Inventory
    
11,282
       (274,623 )
          Prepaid expense and other
    
13
      
606
  
          Accounts payable
     (79,590 )     (70,208 )
          Accrued expenses
     (47,402 )    
7,601
  
Accrued payroll taxes
             (25,207 )
          Net Cash Used In Operating Activities
     (356,266 )     (161,047 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
     Bank overdraft
    
446,795
          
     Loan from principal shareholders
             (2,200 )
     Due to factoring agent
             (99,595 )
          Net Cash Used In Financing Activities
    
446,795
       (101,795 )
CASH FLOWS FROM INVESTING ACTIVITIES
                
     Capital expenditures
     (42,494 )        
     Disposal of fixed assets
            
191,316
  
          Net Cash Provided by (Used in) Investing Activities
     (42,494 )    
191,316
  
                 
EFFECT OF EXCHANGE RATE CHANGES  ON
                
     CASH
     (48,356 )    
7,323
  
                 
NET DECREASE IN CASH
     (321 )     (64,203 )
                 
CASH AND CASH EQUIVALENTS AT
                
     BEGINNING OF PERIOD
    
341
      
78,145
  
                 
CASH AT END OF PERIOD
   $
20
     $
13,942
  








See accompanying notes to financial statements.

F-3
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2007
(Unaudited)


NOTE A - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included.  Results for the six months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending March 31, 2008.  For further information, refer to the financial statements and footnotes thereto included in the Atlantic Wine Agencies, Inc., formerly New England Acquisitions, Inc., annual report on Form 10-KSB for the year ended March 31, 2007.

NOTE B - GOING CONCERN

As indicated in the accompanying financial statements, the Company has an Accumulated deficit of $8,007,849. Management’s plans include the raising of capital through the equity markets to fund future operations and the generating of revenue through its business. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations.  Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern.  However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE C - OVERDRAFT FACILITY

 On April 17, 2007, the Company entered into an additional overdraft facility arrangement with ABSA,  a South African Bank for R 7,000,000 (U.S. $1,000,000).  The loan is secured by the assets of the South African Winery and bears interest at the South African prime rate 12.5% per annum.  The balance at September 30, 2007 is $605,762.

F-4
Item 2. Management’s Discussion and Analysis or Plan of Operation
 
On October 13, 2006, we entered into an agreement with Auction Alliance, a South African auction firm, to sell our Myrtle Grove Property and Estates, subject to the minimum reserve being met. Assets including land, vineyards, winery equipment and stock were included in the auction sale. The initiation of the auction process resulted from the conclusions that (i) after expending considerable resources and efforts in developing our business and building world class wine brands from South Africa, significantly more capital is necessary to further grow the business which are unable to procure on commercially acceptable terms, (ii) The ZAR (South African Rand) has shown considerable volatility related to uncertainty regarding future political situation and (iii) the best time to maximize our South African property and operations is by selling through the public auction process locally in South Africa prior to the growing season in the southern hemisphere. We failed to agree to the terms to sell our assets in the auction process and thus continue operating our winery business.  However, we will continue to seek alternative business operations and any transaction that would involve the sale of most or all of our assets.  If and when such sale has been completed, we will seek to use the proceeds from such sale, after satisfying our current liabilities, to develop or acquire a business or businesses which we believe will best serve the long term interests of our shareholders. Such businesses may or may not be related to the wine industry.
 

 
RESULTS OF OPERATIONS
 
 
Operating costs for the three-months ended September 30, 2007 aggregated $166,024 or $(0.01) per share as compared to 187,091 or $(0.01) per share for the three-months September 30, 2006.
 
 
LIQUIDITY AND CAPITAL RESOURCES
 
 
For the three-months ended September 30, 2007 net cash used to fund operating activities aggregated $(356,266), net cash utilized by investing activities aggregated $(42,494) and net cash provided by financing activities aggregated $446,795.  By way of comparison, for the three months ended September 30, 2006,  net cash used to fund operating activities aggregated $(161,047), net cash utilized by investing activities aggregated $191,316 and net cash provided by financing activities aggregated $(101,795).
 
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
 
The Company's discussion and analysis of its financial condition and results of operations are based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation 48, “Accounting for Income Tax Uncertainties” (“FIN 48”). FIN 48 defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. Recently issued literature also provides guidance on the derecognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. FIN 48 also includes guidance concerning accounting for income tax uncertainties in interim periods and increases the level of disclosures associated with any recorded income tax uncertainties. FIN 48 is effective for fiscal years beginning after December 15, 2006.  The Company expects to adopt the provisions of FIN 48 beginning in the first quarter of 2007.  The Company is currently in the process of determining the impact, if any, of adopting the provisions of FIN 48 on its financial position, results of operations and liquidity.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under other accounting pronouncements that permit or require fair value measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effect of certain of the measurements on earnings (or changes in net assets).
 
SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption, as of the beginning of an entity’s fiscal year, is also permitted, provided interim financial statements have not yet been issued.  The Company is currently evaluating the potential impact, if any, that the adoption of SFAS No. 157 will have on its consolidated financial statements.
 
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB No. 108”). SAB No. 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in the current year financial statements. SAB No. 108 requires registrants to quantify misstatements using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB No. 108 does not change the guidance in SAB No. 99, “Materiality,” when evaluating the materiality of misstatements. SAB No. 108 is effective for fiscal years ending after November 15, 2006. Upon initial application, SAB No. 108 permits a one-time cumulative effect adjustment to beginning retained earnings. The Company adopted SAB No. 108 for the fiscal year ended March 31, 2007.  Adoption of SAB No. 108 did not have a material impact on the consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”).  SFAS 159 allows entities to measure at fair value many financial instruments and certain other assets and liabilities that are not otherwise required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company has not determined what impact, if any, that adoption will have on our results of operations, cash flows or financial position.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s discussion and analysis of its financial condition and results of operations are based upon the its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, the Company evaluates its estimates, including those related to bad debts, income taxes and contingencies and litigation.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.


Item 3.   Controls and Procedures.

Our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the filing date of this quarterly report and have concluded that our disclosure controls and procedures are adequate.

There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 

 
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PART II
 
Item 1. Legal Proceedings
None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None

Item 3. Defaults Upon Senior Securities
None

Item 4. Submission of Matters to a Vote of Security Holders
None

Item 5. Other Information
None

Item 6. Exhibits

Exhibit 31.1
Certification of Chief Executive Officer
Exhibit 31.2
Certification of Chief Financial Officer (1)
Exhibit 32.1
Certification of Chief Executive Officer
Exhibit 32.2
Certification of Chief Financial Officer (2)
 

(1)
Included in Exhibit 31.1
(2)
Included in Exhibit 32.1

4


 
SIGNATURES
 
 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  ATLANTIC WINE AGENCIES INC.  
       
Date: November 13, 2007
By:
/s/ Adam Mauerberger  
    Adam Mauerberger  
    President, Chief Financial Officer and Chairman of the Board  
       

 
 

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