UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2003 Commission File Number 0-29057
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________TO __________________
ALTRIMEGA HEALTH CORPORATION
(Exact name of registrant as specified in charter)
NEVADA 87-0631750
------ ----------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
4702 OLEANDER DRIVE, SUITE 200,
MYRTLE BEACH, SC 29577
---------------- -----
(Address of principal executive offices) (Zip)
Issuer's telephone number, including area code (843) 497-7028
--------------
Securities registered pursuant to section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
NONE NONE
Securities registered pursuant to section 12 (g) of the Act:
Securities registered pursuant to section 12 (g) of the Act:
COMMON STOCK, PAR VALUE $0.001 PER SHARE
----------------------------------------
(Title of Class)
As of September 15, 2003, the Company had 49,139,950 shares of common stock
issued and outstanding.
Transitional Small Business Disclosure Format (check one).
Yes [ ] No [X]
PART I: FINANCIAL INFORMATION
INTRODUCTORY NOTE
FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains "forward-looking statements" relating to
Altrimega Health Corporation ("Altrimega") which represent Altrimega's current
expectations or beliefs including, but not limited to, statements concerning
Altrimega's operations, performance, financial condition and growth. For this
purpose, any statements contained in this Form 10-QSB that are not statements of
historical fact are forward-looking statements. Without limiting the generality
of the foregoing, words such as "may", "anticipation", "intend", "could",
"estimate", or "continue" or the negative or other comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, such as losses, dependence
on management, variability of quarterly results, and the ability of Altrimega to
continue its growth strategy and competition, certain of which are beyond
Altrimega's control. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual
outcomes and results could differ materially from those indicated in the
forward-looking statements.
Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
2
ITEM 1. FINANCIAL STATEMENTS
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(UNAUDITED)
ASSETS
(RESTATED)
CURRENT ASSETS
Cash $ 50,953
Properties held for development or sale 1,134,523
Prepaid expenses 10,841
-----------
Total Current Assets 1,196,317
-----------
OTHER ASSETS
Accounts receivable-related party 12,000
Deposits 35,000
-----------
TOTAL ASSETS $ 1,243,317
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable $ 1,230,178
Accounts payable - related parties 260,740
Accounts payable 64,664
-----------
Total Current Liabilities 1,555,582
-----------
Total Liabilities 1,555,582
Commitments and Contingencies --
MINORITY INTEREST DEFICIENCY 503
STOCKHOLDERS' DEFICIENCY
Preferred stock
10,000,000 shares authorized at $0.001 par value; 1,000,000 shares
issued and outstanding 1,000
Common stock
50,000,000 shares authorized at $0.001 par value; 49,139,950 shares
issued and outstanding 49,140
Additional paid in capital 381,560
Accumulated deficit (744,468)
-----------
Total Stockholders' Deficit (312,768)
-----------
TOTAL LIABILITIES & STOCKHOLDERS DEFICIT $ 1,243,317
===========
The accompanying notes are an integral part of these financial statements.
3
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2003
(UNAUDITED)
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2003
------------- -------------
SALES $ 181,210 $ 363,189
COST OF SALES 167,639 322,248
--------- ---------
Gross Profit 13,571 40,941
--------- ---------
EXPENSES
Consultants 45,000 69,500
Administrative 25,010 29,134
--------- ---------
TOTAL EXPENSES 70,010 98,634
--------- ---------
LOSS FROM OPERATIONS (56,439) (57,693)
Other Expenses Interest Expense (16,868) (16,868)
--------- ---------
Loss before minority interest (73,307) (74,561)
LESS MINORITY INTEREST 2,291 (3,644)
--------- ---------
LOSS BEFORE PROVISION FOR
INCOME TAXES (71,016) (78,205)
PROVISION FOR INCOME TAXES -- --
--------- ---------
NET LOSS $ (71,016) $ (78,205)
========= =========
NET LOSS PER COMMON SHARE
Basic and diluted $ (0.00) $ (0.00)
========= =========
AVERAGE OUTSTANDING SHARES -
(stated in 1,000's)
Basic and Diluted 49,140 49,007
========= =========
The accompanying notes are an integral part of these financial statements.
4
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF
STOCKHOLDERS' DEFICIT
(UNAUDITED)
Additional
Preferred Stock Common Stock Paid-In Accumulated Total
Shares Amount Shares Amount Capital Deficit Deficit
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at July 3, 2002
(Inception) -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock to
founders for cash and
founder services, $0.001 -- -- 18,499,700 18,500 (15,300) -- 3,200
Issuance of common stock for
acquisition of Altrimega
Health Corporation, $0.001 1,000,000 1,000 22,020,000 22,020 (23,020) -- --
Cancellation of shares -- -- (4,879,750) (4,880) 4,880 -- --
Issuance of common stock for
services, weighted average
price of $0.03 -- -- 10,500,000 10,500 338,500 -- 349,000
Net loss -- -- -- -- -- (666,263) (666,263)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 2002
(RESTATED) 1,000,000 1,000 46,139,950 46,140 305,060 (666,263) (314,063)
Issuance of common stock in
satisfaction of accounts
payable and accrued
interest $0.03 -- -- 3,000,000 3,000 76,500 -- 79,500
Net loss -- -- -- -- -- (78,205) (78,205)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at June 30, 2003
(RESTATED) UNAUDITED 1,000,000 $ 1,000 49,139,950 $ 49,140 $ 381,560 $ (744,468) $ (312,768)
=========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
5
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(UNAUDITED)
June 31,
2003
RESTATED
---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (78,205)
Adjustments to reconcile net loss to net cash
provided by operating activities
Changes in
Properties held for development or sale 221,695
Accts receivable-related party (12,000)
Advance deposits (4,441)
Accts payable-related 10,740
Accts payable 71,945
Minority interest 3,664
---------
Net Cash from Operations 166,062
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable (209,478)
---------
Net Increase in Cash 3,900
Cash at Beginning of Period 47,053
---------
Cash at End of Period $ 50,953
=========
The accompanying notes are an integral part of these financial statements.
6
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2004
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The financial statements should be
read in conjunction with the Form 10-KSB for the year ended December 31, 2002 of
Altrimega Health Corporation and Subsidiary (the "Company").
The interim financial statements present the condensed balance sheet, statements
of operations, stockholders' deficit and cash flows of Altrimega Health
Corporation and Subsidiary. The financial statements have been prepared in
accordance with accounting principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of management,
all adjustments necessary to present fairly the financial position of the
Company as of June 30, 2003 and the results of operations and cash flows
presented herein have been included in the financial statements. Interim results
are not necessarily indicative of results of operations for the full year.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
Going concern - The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred a net loss of approximately $666,000 for the year ended December 31,
2002, with an accumulated loss from inception of approximately $666,000. The
Company's current liabilities exceed its current assets by approximately
$352,000 as of December 31, 2002. The Company had a net loss of $78,205 for the
six months ended June 30, 2003 and an accumulated deficit of $744,468 at June
30, 2003. The Company's current liabilities exceeded its current assets by
$359,265 at June 30, 2003.
These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include
adjustments relating to the recoverability and classification of reported asset
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to obtain
additional financing or sale of its common stock as may be required and
ultimately to attain profitability.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Employee stock based compensation - The Company applies Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
Related Interpretations, in accounting for stock options issued to employees.
Under APB No. 25, employee compensation cost is recognized when estimated fair
value of the underlying stock on date of the grant exceeds exercise price of the
stock option. For stock options and warrants issued to non-employees, the
Company applies Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock-Based Compensation, which requires the recognition of
compensation cost based upon the fair value of stock options at the grant date
using the Black-Scholes option pricing model.
The Company issued no stock and granted no warrants or options to employees for
compensation for the six months ended June 30, 2003.
In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS No.
148 amends the transition and disclosure provisions of SFAS No. 123.
7
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2004
(UNAUDITED)
The Company is currently evaluating SFAS No. 148 to determine if it will adopt
SFAS No. 123 to account for employee stock options using the fair value method
and, if so, when to begin transition to that method.
3. NOTES PAYABLE
As of June 30, 2003, the Company has four notes payable totaling $257,152,
$132,976, $445,000 and $395,050. The outstanding balances are secured by real
estate, payable in quarterly installments of interest only at the prime lending
rate plus 0.5% (4.5% as of December 31, 2002), which mature at various dates
between November 2003 and February 2004.
4. RELATED PARTY TRANSACTIONS
Accounts payable - related parties - As of June 30, 2003, officers-directors,
and their controlled entities, after the conversion of the preferred shares to
common shares, have acquired 36% of the outstanding stock of the Company, and
have made non-interest bearing, due on demand loans to the Company totaling
$260,740.
Executive employment agreement - During 2003 the Company entered into an
employment agreement with an officer, which provides for an annual salary of
$100,000 with a 5% increase each year to a maximum of $125,000, provided the
Company has a profit in the previous year.
5. STOCKHOLDERS' DEFICIT
During the first quarter of 2003, the Company issued 3,000,000 shares of common
stock in satisfaction of accounts payable of $79,500 (including accrued interest
of $39,500).
6. RESTATED FINANCIAL STATEMENTS
Subsequent to the issuance of the Company's financial statements, management
became aware that those financial statements did not reflect account balances
properly for the period from July 3, 2002 (date of inception) through December
31, 2002. The change in the statement of operations primarily related to the
accounting of stock based compensation and the AHC Transaction, which was not
properly reported as a transaction identical to that resulting from a reverse
acquisition, except goodwill or other intangible assets are not recorded. The
net change of $171,756 increased the net loss from $494,507 ($0.01 per weighted
average common share outstanding) to $666,263 ($0.06 per weighted average common
share outstanding) for the period from July 3, 2002 (date of inception) through
December 31, 2002.
Additionally, the issuance of the financial statements as of and for the period
ended June 30, 2003 as reported did not properly reflect certain historical
balances. Therefore, the financial statement presentation has been restated to
conform to the proper reporting of these transactions.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
GENERAL
The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements, and the Notes thereto included
herein. The information contained below includes statements of Altrimega's or
management's beliefs, expectations, hopes, goals and plans that, if not
historical, are forward-looking statements subject to certain risks and
uncertainties that could cause actual results to differ materially from those
anticipated in the forward-looking statements. For a discussion on
forward-looking statements, see the information set forth in the Introductory
Note to this Quarterly Report under the caption "Forward Looking Statements",
which information is incorporated herein by reference.
GOING CONCERN
As reflected in Altrimega's financial statements for the six months
ended June 30, 2003, Altrimega's accumulated deficit of $744,468 and its working
capital deficiency of $359,265 raise substantial doubt about its ability to
continue as a going concern. The ability of Altrimega to continue as a going
concern is dependent on Altrimega's ability to raise additional debt or capital.
The financial statements for June 30, 2003 do not include any adjustments that
might be necessary if Altrimega is unable to continue as a going concern.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires that we make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. At each balance
sheet date, management evaluates its estimates. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The estimates and critical
accounting policies that are most important in fully understanding and
evaluating our financial condition and results of operations include those
listed below.
REVENUE RECOGNITION
Gains from sales of operating properties and revenues from land sales
are recognized using the full accrual method provided that various criteria
relating to the terms of the transactions and any subsequent involvement by the
Company with the properties sold are met. Gains or revenues relating to
transactions which do not meet the established criteria are deferred and
recognized when the criteria are met or using the installment or cost recovery
methods, as appropriate in the circumstances. For land sale transactions under
terms in which the Company is required to perform additional services and incur
significant costs after title has passed, revenues and costs of sales are
recognized proportionately on a percentage of completion basis. Deposits
received prior to closing are recorded as a liability until the consummation of
the sale at which time such amounts are generally applied toward the purchase
price. Cost of land sales is generally determined as a specific percentage of
land sales revenues recognized for each land development project. The cost
percentages used are based on estimates of development costs and sales revenues
to completion of each project and are revised periodically for changes in
estimates or development plans. The specific identification method is used to
determine cost of sales of certain parcels of land.
PROPERTIES
Properties under development are carried at cost reduced for
impairment losses, where appropriate. Properties held for sale are carried at
cost reduced for valuation allowances, where appropriate. Acquisition,
development and construction costs of properties in development and land
development projects are capitalized including, where applicable, salaries and
related costs, real estate taxes, interest and preconstruction costs. The
pre-construction development (or an expansion of an existing property) includes
efforts and related costs to secure land control and zoning, evaluate
feasibility, and complete other initial tasks, which are essential to
development. Provisions are made for potentially unsuccessful preconstruction
efforts by charges to operations. Properties held for sale are carried at the
lower of their carrying values (i.e., cost less accumulated depreciation and any
9
impairment loss recognized, where applicable) or estimated fair values less
costs to sell. Generally, revenues and expenses related to property interests
acquired with the intention to resell are not recognized. Properties held for
sale are carried at the lower of their carrying values (i.e. cost less
accumulated depreciation and any impairment loss recognized where applicable) or
estimated fair value less costs to sell. Generally, revenues and expenses
related to property interests acquired with intentions to resell are not
recognized.
STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees, and Related Interpretations, in
accounting for stock options issued to employees. Under APB No. 25, employee
compensation cost is recognized when estimated fair value of the underlying
stock on date of the grant exceeds exercise price of the stock option. For stock
options and warrants issued to non-employees, the Company applies SFAS No. 123,
Accounting for Stock-Based Compensation, which requires the recognition of
compensation cost based upon the fair value of stock options at the grant date
using the Black-Scholes option pricing model. In December 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure.
SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123.
The Company is currently evaluating SFAS No. 148 to determine if it will adopt
SFAS No. 123 to account for employee stock options using the fair value method
and, if so, when to begin transition to that method.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements shown in this report excludes
the historical operating information of the parent before September 30, 2002,
and includes the operating information of the subsidiary, Creative Holdings,
Inc., from July 3, 2002 (date of inception of the subsidiary), and the operating
information of Sea Garden Funding, LLC from November 2002 ( the date of the
purchase of 80% of the LLC) to March 31, 2003.
All intercompany transactions have been eliminated.
RESTATEMENT OF FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2002
Subsequent to the issuance of the Company's financial statements,
management became aware that those financial statements did not reflect account
balances properly for the period from July 3, 2002 (date of inception) through
December 31, 2002. Properly accounting of these items in the revised financial
statements has the following effect:
For the period from July 3, 2002 (date of inception) through December
31, 2002, the change in the statement of operations primarily related to the
accounting for the share exchange agreement between Altrimega and Creative
Holdings, which was not properly reported as a transaction identical to that
resulting from a reverse acquisition, except goodwill or other intangible assets
are not recorded. The net change of $171,756 increased the net loss from
$494,507 ($0.01 per weighted average common share outstanding) to $666,263
($0.06 per weighted average common share outstanding) for the period from July
3, 2002 (date of inception) through December 31, 2002. The Company has filed
an amendment to its Form 10-KSB for fiscal year ended December 31, 2002.
Additionally, the issuance of the financial statements as of and for
the period ended June 30, 2003 as reported did not properly reflect certain
historical balances. Therefore, the financial statement presentation has been
restated to conform to the proper reporting of these transactions.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED
JUNE 30, 2003
REVENUES
Revenue for the three month period ended June 30, 2003, was $181,210.
Revenue for the six month period ended June 30, 2003 was $363,189.
COST OF REVENUE. There was $167,639 cost of revenues for the three
month period ended June 30, 2003. There was $322,248 and cost or revenues for
the six month periods ended June 30, 2003. The cost of revenue relates to
construction and other costs of units at the Sea Garden project.
GROSS PROFIT. There was $13,571 and $40,941 in gross profit for the
three and six month periods ended June 30, 2003, respectively. The gross profit
relates to the sale of units at the Sea Garden project.
10
OPERATING EXPENSES. Operating expenses for the three month period
ended June 30, 2003 were $70,010. Operating expenses in three month 2003
consisted of $45,000 in consulting fees and $25,010 in general and
administrative expenses. Operating expenses for the six month period ended June
30, 2003 was $98,634, consisting of $69,500 in consultants expenses and $29,134
in administrative expenses.
NET (LOSS) PROFIT. Altrimega realized a net loss of $71,016 for the
three month period ended June 30, 2003. Altrimega realized a net loss of $78,205
for the six month periods ended June 30, 2003.
LIQUIDITY AND CAPITAL RESOURCES
Altrimega's financial statements have been prepared on a going
concern basis that contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. Altrimega incurred
a net loss of $71,016 for the three month period ended June 30, 2003 and has an
accumulated deficit of $744,468 at June 30, 2003. As of June 30, 2003, we had
assets of $1,243,317 and liabilities of $1,555,582, a difference of $312,405.
Additionally, our current assets were $1,196,317 and our current liabilities
were $1,555,582, creating a working capital deficit of $359,265. The majority of
the assets, $1,134,523 consist of building sites contained within the Sea Garden
town home community. Consequently, the majority of our liabilities, $1,230,178,
are mortgage loans on the Sea Garden assets. Accounts payable to related parties
equal to $260,740 are also included in our liabilities. Management recognizes
that Altrimega must generate or obtain additional capital to enable it to
continue operations. Management is planning to obtain additional capital
principally through the sale of equity securities. The realization of assets and
satisfaction of liabilities in the normal course of business is dependent upon
Altrimega obtaining additional equity capital and ultimately obtaining
profitable operations. However, no assurances can be given that Altrimega will
be successful in these activities. Should any of these events not occur, the
accompanying consolidated financial statements will be materially affected.
We had limited operations and revenues during the period ended June
30, 2003. Our shortfall in working capital has been met through advances from
our president, John Gandy, and other shareholders who have advanced funds to pay
expenses incurred by the Company from time to time. At no time during the period
did these short term loans exceed $50,000.
For the six months ended June 30, 2004, Altrimega had net cash from
operations of $213,378, no cash from investing activities and used $209,478 in
cash in financing activities.
We anticipate that we will require significant capital to maintain
our corporate viability and execute our plan to develop real estate projects. We
anticipate necessary funds will most likely be provided by our existing
shareholders, our officers and directors, and outside investors. We will require
significant loan guarantees to acquire properties for development and to
complete construction on any additional construction projects. We may be
required to pledge equity in the Company to induce individuals, officers or
directors or other shareholders to guarantee our loans when necessary.
Altrimega is at present meeting its current obligations from its
monthly cash flows, which during 2002, and to date in 2003 has included cash
from operations, investor capital, and loans from related parties. However, due
to insufficient cash generated from operations, Altrimega currently does not
have internally generated cash sufficient to pay all of its accrued expenses
and other liabilities. As a result, Altrimega is dependent on investor capital
and loans to meet its expenses and obligations. Although related party loans
have allowed Altrimega to meet its obligations in the recent past, there can be
no assurances that Altrimega's present methods of generating cash flow will be
sufficient to meet future obligations. There can be no assurances that Altrimega
will be able to raise sufficient additional capital in the future.
We have incurred losses since inception. Management believes that it
will require approximately $150,000 in additional capital to fund overall
Company operations for the next twelve months. This amount does not include
monies necessary to construct new townhouse units at Sea Garden. Altrimega had
$50,953 in cash and cash equivalents as of June 30, 2003.
PLAN OF OPERATION
The Company derives it revenue from the sale of developed or
undeveloped real estate parcels. At present, the Company has one project
generating revenues, Sea Garden Town Homes, located in North Myrtle Beach, South
Carolina These Town Homes sell in the $95,000 to $105,000 range per Town Home
unit. The Company owns the building sites for an additional 49 units and is
under construction on 15 units. It is important for the Company to raise capital
funds through the sell of its common stock in order to provide funding for
additional projects. The projected revenues and subsequent net earnings from the
Sea Garden project are not adequate to cover the Company's annual operating
costs on an ongoing basis.
11
Altrimega intenda to strive to locate, evaluate and proceed to finance
and develop multiple projects located primarily in the Myrtle Beach, South
Carolina area and the Carolinas area of the United States. Management believes
that these areas provide the population growth necessary to achieve profits from
new construction projects. For the last three years, Horry County, South
Carolina has been one of the top three fastest growing counties in the United
States. In 1997, Horry County showed a population of only 180,000. Based on
current projections and the 2000 census data, the county will have a permanent
population of 500,000. The principal industries of the area are tourism related.
Myrtle Beach is considered a drive-in market, where tourists will drive their
cars rather than fly to the destination. The tourism industry in Myrtle Beach
has developed three seasons, spring golf, summer beach vacations and fall golf.
The spring and fall golf seasons bring approximately 150,000 visitors per week
to play on the areas over 100 golf courses. The summer vacation season brings in
approximately 400,000 per week. The average tourist stay is one week.
Altrimega's business strategy includes a focus on interval ownership
properties, also known as time-share properties, that cater to this major
tourism industry. As well, we intend to develop projects in the medium price
ranges for the areas permanent service industry population.
Management intends to attempt to seek out low-risk projects that do
not require large financing commitments. In addition, we will continue to
evaluate projects throughout the Carolinas in high growth areas.
Our continuation as a going concern is dependent on our ability to
meet our obligations and obtain additional debt or equity financing required
until our current and proposed real estate projects are under way and generating
earnings. Until such time as these projects are generating earnings, we have
taken the following steps to revise our operating and financial requirements in
an effort to enable us to continue in existence:
o We have reduced administrative expenses to a minimum by consolidating
management responsibilities to our president and chief executive
officer.
o We intend to seek either equity or further debt funding.
o We intend to attempt to obtain the professional services of
third-parties through favorable financing arrangements or payment by
the issuance of our common stock.
We believe that the foregoing plan should enable us to generate
sufficient funds to continue its operations for the next twelve months.
Management has implemented this plan to overcome the Company's
serious going concern conditions. The first step is to reduce operating costs.
To this end the Company's President and Chief Executive Officer, John Gandy, has
assumed almost all of the Company's functions from sales and marketing, locating
and evaluating new real estate projects, most accounting functions, shareholder
relations and general administrative functions. The Company's Chief Financial
Officer is receiving no compensation. The Company anticipates reduced consulting
expense in the next fiscal year. Only one consultant is on hand for additional
help in evaluating projects and working with the accounting and reporting
functions of the Company. Administrative expenses, including mostly legal and
accounting charges, will constitute the largest expense items for the year. The
Company has made arrangements with these outside professionals to work more
efficiently with them to help reduce the overall costs associated with these
services.
In addition, the Company has located some potential sources of equity
financing that could contribute to the Company's financial requirements in the
upcoming fiscal year. This element is especially critical to the Company's going
concern situation. Before these sources can be fully explored, the Company must
correct some of its prior filings with the Securities and Exchange Commission.
Management is in the process of correcting its prior 1934 Securities Act
filings, including its annual report of for 10-KSB for the fiscal year ended
December 31, 2002, and its quarterly reports on Forms 10-QSB for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003, including this
amended report for the June 30, 2003 period.
For the next 12 months we anticipate that we will need $150,000 to
continue to fund basic operations, in addition to funding necessary to acquire
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and develop real estate projects. The Company anticipates approximately $50,000
in consulting fees in the next fiscal year and only minor operating expenses.
Any new real estate projects will require debt financing. In summary, we expect
expenses to decline in the coming fiscal year due to a decrease in consulting
fees and no other increases in operating expenses.
The Company plans to continue operating with small administrative and
consulting fees in the next fiscal year in order to continue operations.
Continuing to work with its accounting and legal professionals more efficiently,
the Company plans to reduce its fees for such services. In addition, the Company
plans to utilize only one consultant for accounting services.
From time to time, Altrimega may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. Altrimega has no
present agreements or understanding with respect to any such acquisition.
Altrimega's future capital requirements will depend on many factors, including
an increase in Altrimega's real estate projects, and other factors including the
results of future operations.
ITEM 3. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's Principal Executive Officer and Principal Financial Officer of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. The Company's disclosure controls and procedures are designed to
provide a reasonable level of assurance of achieving the Company's disclosure
control objectives. The Company's Principal Executive Officer and Principal
Accounting Officer have concluded that the Company's disclosure controls and
procedures are, in fact, effective at this reasonable assurance level as of the
period covered.
(B) CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
In connection with the evaluation of the Company's internal controls
during the Company's quarter ended June 30, 2003, the Company's Principal
Executive Officer and Principal Financial Officer have determined that there are
no changes to the Company's internal controls over financial reporting that has
materially affected, or is reasonably likely to materially effect, the Company's
internal controls over financial reporting.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEDURES
None.
ITEM 2. CHANGES IN SECURITIES
(a) Effective September 30, 2002, Altrimega issued Series A Preferred
Stock. The rights of holders of Series A Preferred Stock are set forth in the
Certificate of Designation filed as an Exhibit 4.01 to Altrimega's Form 10-KSB,
filed on May 20, 2003. Each share of the series is convertible, at the option of
the holder, into three hundred shares of common stock.
(b) None.
(c) None.
(d) None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A)(1) EXHIBITS. The following exhibits are included as part of this
report:
SEC
EXHIBIT REFERENCE
NUMBER NUMBER TITLE OF DOCUMENT LOCATION
-------- --------- ---------------------------- --------------------------
2.01 2 SHARE EXCHANGE AGREEMENT Incorporated by reference
among Altrimega Health to the Company's report
Corporation, Creative on Form 8-K, dated
Holdings, Inc. and the October 2, 2002
Shareholders of Creative
Holdings, Inc., dated as
of September 2, 2002
4.01 4 CERTIFICATE OF DESIGNATION Incorporated by reference
AS OF SEPTEMBER 30, 2002 to Exhibit 4.01 to the
Company's Form 10-KSB
filed on May 20, 2003
14
(B) REPORTS ON FORM 8-K. During the quarter ended March 31, 2003 we
filed current reports on Form 8-K with the Commission reporting that:
May 20, 2003 Altrimega filed Amendment No. 2 to Form 8-K/A, filing the
financial statements required under reporting that under Item 7,
as a result of the Share Exchange Agreement with Creative
Holdings, Inc.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
August 6, 2004 ALTRIMEGA HEALTH CORPORATION
By: /s/ John Gandy
---------------------------
John Gandy,
Chief Executive Officer and
Director
August 6, 2004 By: /s/ Ron Hendrix
---------------------------
Ron Hendrix,
Chief Financial Officer and
Secretary
16