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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 333-63432
NEW ENGLAND ACQUISITIONS, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 65-1102237
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation Identification Number)
tion or Organization)
5 Ridge Road, Cos Cob, CT 06807
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: 203-622-1848
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Securities Registered under Section 12(b) of the Exchange Act:
None
Securities Registered under Section 12(g) of the Exchange Act:
None
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 the filing requirements for at least the past 90 days:
YES _X_ NO ___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year
$13,246
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days:
$685,240 as of May 22, 2003
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
3,557,875 shares of Common Stock as of June 17, 2003
If the following documents are incorporated by reference, briefly describe them
and identify the Part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) under the Securities Act of 1933:
Not Applicable
Transitional Small Business Disclosure Format (check one):
YES ___ NO _X_
2
INDEX
Page
Part I
Item 1. Description Of Business.....................................................4
Item 2. Description Of Property....................................................13
Item 3. Legal Proceedings..........................................................13
Item 4. Submission of Matters to a Vote of Security Holders........................13
Part II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters............................................13
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................15
Item 7. Financial Statements and Supplementary Data
Report of Independent Auditor.............................................F-1
Balance Sheet
March 31, 2003............................................................F-2
Statement Of Stockholders' Equity
For The Period April 18, 2001 (Inception) To March 31, 2003...............F-3
Statement Of Net Loss
For The Period Inception (April 18, 2001) To March 31, 2003...............F-4
Statement Of Cash Flows
For The Period April 18, 2001 (Inception) To March 31, 2003...............F-5
Notes To Financial Statements
March 31, 2003.....................................................F-6 to F-15
Item 8. Changes in and Disagreements with Accountants on Accounting
And Financial Disclosures..................................................16
Part III
Item 9. Directors and Executive Officers of the Registrant.........................16
Item 10. Executive Compensation.....................................................18
Item 11. Security Ownership of Certain Beneficial Owners and Management.............20
Item 12. Certain Relationships and Related Transactions.............................22
Part IV.
Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K............22
Item 14. Controls And Procedures.....................................................23
Signatures...........................................................................24
Certification........................................................................25
3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
We are a Florida corporation formed on April 8, 2001. We were organized to be a
blank check company.
ACQUISITION OF ASSETS AND RIGHTS FROM ADM TRONICS UNLIMITED, INC.
In November 2002, we purchased from ADM Tronics Unlimited, Inc. certain rights
to an ethnic shave cream, a burn lotion and a medical device known as the
Aurex-3 which has been designed to treat a condition known as tinnitus. The
purchase price was 150,375 shares of our common stock and our agreement to make
the payments as described below.
We also entered into an exclusive manufacturing agreement with ADM Tronics under
which ADM Tronics will manufacture the ethnic shave cream, burn lotion and the
Aurex-3 for us. ADM Tronics will also maintain raw material supplies and
finished goods as necessary and provide oversight and guidance with respect to
regulatory requirements regarding the marketing of the products. Under the
manufacturing agreement, we have agreed with ADM Tronics that ADM Tronics will
be the exclusive manufacturer of the products that we purchase from it as well
as all other medical products, topical and cosmetic products which we may
acquire and distribute. The price that we will pay to ADM Tronics for products
that it manufactures for us will be 120% of ADM Tronics' cost of all raw
materials and all supplies and direct labor and an overhead allocation. In
addition, we will reimburse ADM Tronics for any tooling or non-recurring
engineering services that are required to be secured in support of the
manufacturing of our products.
We will pay ADM Tronics a royalty of 6% of gross sales of the products, less
discounts, returns and allowances. We will also pay consulting fees and related
expenses for any time expended by ADM Tronics' employees for any services
related to the products other than manufacturing activities. The fees and
expenses, which we do not expect will be material, will be agreed upon by ADM
Tronics and us in advance of any of the services.
4
THE PRODUCTS
ETHNIC SHAVE CREAM
The term "ethnic shave cream" as used in this Annual Report refers to a shave
cream that has been designed to be particularly suited to persons with thick,
curly hairs which are prevalent in the African-American, Hispanic-American and
other ethnicities with such type of hair. According to ADM Tronics, its ethnic
shave cream has an extremely high degree of lubricity due to a chemical
technology developed by Dr. Alfonso Di Mino, the founder of ADM Tronics. ADM
Tronics has told us that, because of its lubricity, the ethnic shave cream
allows for very close shaves with reduced nicks, cuts and discomfort and leaves
the skin with an improved feel and softness.
We have been advised by ADM Tronics that the ethnic shave cream is considered to
be a cosmetic and, as such, does not require regulatory approval prior to
distribution.
ADM Tronics has told us that because of the characteristics of the ethnic shave
cream, it is especially well suited for use by men with a debilitating and
painful skin condition known as pseudofollicullitus barbae, commonly referred to
as PFB or razor bumps. Razor bumps are created when the growing beard hairs
exit the skin, curl over, and burrow into the adjacent skin. This creates a
foreign body reaction resulting in an unsightly "bump." According to an article
entitled Men: "Play It Safe" With Your Skin by Tamar Nordenberg on the website
of discoveryhealth.com, "..for men with curly hair, shaving can have the
bothersome result of leaving behind razor bumps, technically known as
pseudofolliculitus barbae, caused by hair that grows back into the skin." The
article also states that "According to Nicholas Perricone, M.D., a dermatology
professor at the Yale University School of Medicine, using alpha hydroxy and
lipoic acid twice a day can minimize the bumps. Shaving less often or growing a
beard are alternatives for dealing with ingrown hairs."
Recent figures from sources that we believe are accurate reveal that there are
35 million black people in the United States comprising approximately 13% of the
total population. This population segment is expected to grow nearly twice as
fast as the rest of the population over the next fifty years. In 2000, black
Americans spent approximately $5.2 billion on personal care products and
services, an increase of 6% over the previous year. The foregoing data were
obtained from The New Reality of the African American Market and The Buying
Power of Black America - 2001 News.
5
Under the Asset and Rights Purchase Agreement, we have acquired worldwide rights
relating to ADM Tronics' ethnic shave cream which will be modified for us for
sale by us under our own label. We may not sell the ethnic shave cream under
any trademarks, trade names or designations used by ADM Tronics. We also
intend to acquire rights relating to any other shave creams developed by or to
be developed by ADM Tronics or any of its subsidiaries. ADM Tronics may continue
to market an ethnic shave cream without limitations to its existing customers.
The shave cream marketed to those customers has a different fragrance and less
lubricity than does the ethnic shave cream that we intend to purchase from ADM
Tronics
ADM Tronics began selling ethnic shave cream in 1988 under the brand name "No
More Bumps." Since that time it has realized net sales of approximately $45,000.
>From January 1, 2000 through April 30, 2002, ADM Tronics' existing customers
purchased ethnic shave cream from ADM Tronics for approximately $8,000. Because
ADM Tronics is primarily a product developer and manufacturer, it has not
actively promoted sales of ethnic shave cream since 1992. Because of the
limited sales that ADM Tronics has made to its existing customers, we do not
believe the continued sales by ADM Tronics to those customers will have any
material impact on our ability to market the ethnic shave cream. We will not be
permitted to use ADM Tronics' brand name. Or trademarks. The ethnic shave cream
is not patented.
Unless we pay ADM Tronics minimum royalties of (a) $10,000 within one year from
date of our acquisition of rights to the ethnic shave cream, (b) an additional
$14,000 within two years from that date and (c) additional amounts each
following year of not less than 110% of the minimum royalty for the immediately
preceding year, ADM Tronics may market ethnic shave creams to others without
limitation.
THE BURN LOTION
ADM Tronics developed a dermatological lotion in 1988. The lotion is intended
to relieve pain and itching associated with burns, sunburns, minor cuts,
scrapes, insect bites and skin irritation. The lotion accomplishes its soothing
effect by producing an immediate cooling sensation to the skin. The lotion is
also a film-former and is capable of covering affected areas with a thin
breathable layer of lotion. ADM Tronics believes that the lotion promotes
improved healing and moisture retention while, at the same time, allowing
permeation of oxygen to the affected area to promote more effective healing.
ADM Tronics further believes that the lotion is at least as, if not more
effective, than any other generally available non-prescription burn ointment or
first-aid cream.
6
Under the Asset and Rights Purchase Agreement, we intend to acquire rights
relating to ADM Tronics' burn lotion for sale by us under our own label. We may
not sell the lotion under any trademarks, trade names or designations used by
ADM Tronics.
We must pay $25,000 to ADM Tronics in advance of the initiation of production of
the burn lotion for ADM Tronics' expenses and establishment of regulatory
support and processes for the distribution of the burn lotion by us. If we do
not make the payment within one year from the consummation of the transaction
with ADM Tronics, we will lose the exclusive rights to the burn lotion.
AUREX-3
In 1997 Dr. Di Mino developed an electronic device known as the Aurex-3 for the
treatment of tinnitus. Tinnitus is a human medical condition which manifests
itself in a constant and annoying ringing in the ears. The Aurex-3 was
developed by Dr. Di Mino to treat his own tinnitus which was noise-induced type
tinnitus. Based upon ADM Tronics' limited experience, those with noise-induced
tinnitus that had symptoms that varied in intensity or frequency either day to
day or throughout the day reported the best response from the use of the
Aurex-3.
There are many possible causes for subjective Tinnitus, the noise only the
patient can hear. Most of the causes are not serious. Tinnitus can also be a
symptom of more serious middle ear problems such as infection, a hole in the
eardrum, an accumulation of fluid or stiffening (otosclerosis) of the middle ear
bones. Occasionally causes may be due to a head and neck aneurysm or acoustic
neuroma. Tinnitus may also be caused by allergy, high or low blood pressure, a
tumor, diabetes, thyroid problems, injury to the head or neck, and a variety of
prescribed drugs including: anti-inflammatory, antibiotics,
sedatives/antidepressants and painkillers.
Most tinnitus comes from damage to the microscopic endings of the hearing nerve
in the inner ear. The health of these nerve endings is important for acute
hearing, and injury to them brings on hearing loss and tinnitus. Advancing age
is generally accompanied by a certain amount of hearing nerve impairment and
often tinnitus. Exposure to loud noises is probably the leading cause of
tinnitus today.
7
The Aurex-3 is designed to treat tinnitus through the use of a probe that
transmits a vibratory and audio signal. Although significant testing of the
Aurex-3 has not been conducted, production prototypes were built by ADM Tronics
and testing and marketing strategies were developed. A production prototype is
a completely hand assembled unit which closely matches the finished product to
be manufactured in the production process.
There are numerous other generally available products for the treatment or
elimination of tinnitus. In addition, There are numerous methods used to treat
tinnitus. The methods include Tinnitus Retraining Therapy, oral manipulation,
mouth guards, neural surgery and wearable hearing aids.
To use the Aurex-3, a pencil like probe is placed in the small indent behind the
ear pressing backwards onto the mastoid bone. The device is difficult to use,
needing patience, practice and encouragement. Mechanical vibrations are
generated by a self-tuned control unit and transmitted through the applicator
probe into the mastoid bone. By positioning the probe correctly, the vibrations
develop as a deep feeling within the head. The user then alters the frequency
and amplitude settings to obtain a complementary sensation to the tinnitus. Fine
tuning is then introduced whereby complex harmonic frequencies are introduced to
create a comforting or soporific feeling. User patterns will vary, but typical
treatments consist of 3 to 5 minutes duration, 3 times a day for the first two
weeks. If benefits are realized, the number of treatments may be reduced and
the intervals increased.
The Aurex-3 is not intended to benefit all tinnitus sufferers. For example,
sufferers of non-noise induced tinnitus may generally not experience any
improvement in their symptoms In May 1998, a Premarket Notification, which is
also referred to as a 510K, was filed by ADM Tronics with the FDA and was
subsequently accepted. The acceptance permitted the marketing of the Aurex-3
in the United States for its intended indication, "The treatment and control of
tinnitus." A 510(k) is a premarketing submission made to the FDA to demonstrate
that the device to be marketed is as safe and effective, that is, substantially
equivalent, to a legally marketed device that is not subject to premarket
approval. Applicants must compare their 510(k) device to one or more similar
devices currently on the U.S. market and make and support their substantial
equivalency claims. A legally marketed device includes a device that was legally
marketed prior to May 28, 1976 or a device which has been found to be
substantially equivalent to such a device through the 510(k) process.
Applicants must submit descriptive data and, when necessary, performance data to
establish that their device is substantially equivalent to an eligible device On
August 4, 1998, the United States Patent and Trademark Office issued patent
number 5,788,656 with respect to the Aurex-3. The patent expires 17 years after
its issuance. The following claims were allowed:
8
1. An electronic stimulation system for treating a patient having a
tinnitus condition in which he hears ringing or other sounds in the
sonic frequency range, the sounds heard internally by the patient having
predetermined frequencies, said system comprising:
a. means to generate a complex electrical signal having frequency
components lying with said sonic range, said means being
adjustable by the patient to yield frequency components which
interfere with the frequencies of the tinnitus sounds heard by
the patient;
b. means to produce mechanical vibrations corresponding to said
complex signal; and
c. means to apply said mechanical vibrations to a site on said
patient in the proximity of the cochlea of his inner ear
whereby the vibrations are transmitted to the cochlea to
relieve the tinnitus condition.
2. A system as set forth in claim 1, in which the means to produce said
mechanical vibrations includes a diaphragm and means to
electromagnetically actuate the diaphragm in accordance with said
complex signal.
3. A system as set forth in claim 2, in which the means to apply said
vibrations to the patient includes a probe anchored on said diaphragm.
4. A system as set forth in claim 1, in which the means to generate the
complex signal are constituted by a low sonic frequency oscillator which
is adjustable in frequency and a high sonic frequency oscillator which
is adjustable in frequency, and means to combine the adjusted outputs of
said low and high-frequency oscillators to produce the complex signal
having the desired frequency components.
5. A system as set forth in claim 4, in which the low-frequency oscillator
is adjustable in a range whose upper limit is about 400 Hz.
6. A system as set forth in claim 4, in which the high-frequency oscillator
is adjustable in a range whose upper limit is about 1000 Hz.
9
From August 1998 to November 1999, ADM Tronics finalized manufacturing plans for
the Aurex-3. In November 1999, ADM Tronics began to deliver the units. Since
that time through April 30, 2002, ADM Tronics' net sales of the Aurex-3 have
been approximately $185,000 of which $95,000 represented sales in the United
States.
At the end of December 1999, 6 Aurex-3 devices were made available to the Dutch
Commission on Tinnitus & Hyperacusis. On December 24, 1999, six participants
were examined by the Dutch Commission for their tinnitus and trained in the use
of the Aurex-3 by an audiologist and adviser of the group. After a six-week
trial period with six participants, during which one participant reported a
worsening of tinnitus, the Dutch Commission concluded that no positive results
could be reported. Although the Dutch Commission tentatively concluded that the
Aurex-3 seldom or never has a positive effect on tinnitus, especially on high
frequency tinnitus, it did not exclude the possibility that application of the
Aurex-3 on patients with a low tone tinnitus might show better results. We have
been advised by ADM Tronics that it believes that the Dutch Commission's
conclusions are flawed primarily because of the small number of participants and
the probable selection of participants whose condition could not be improved
through the use of the Aurex-3. ADM Tronics has further advised us that, in its
limited experience, when potential users of the Aurex-3 were pre-screened to
eliminate those with non-noise induced or variable intensity tinnitus, more than
60% of the users of the Aurex-3 have experienced significant improvement. Other
than the Dutch Commission's study, we are not aware of any independent study to
determine the benefits, of any, of the Aurex-3. ADM Tronics Unlimited, Inc. has
verbally advised our president that it would grant us the right to market the
Aurex-3 in China. We provided a sample Aurex-3 to a Chinese distributor for its
evaluation. The distributor has advised us, on the basis of limited use, that
the sample has not been found to be effective.
Under the Asset and Rights Purchase Agreement, we acquired the use of all
permits, approvals, licenses and authorizations held by ADM Tronics relating to
the marketing of the Aurex-3. We will only be permitted to market the Aurex-3
in the United States where our marketing rights will be exclusive except for
sales by ADM Tronics to an existing customer. ADM Tronics' sales to that
customer have amounted to approximately $10,000. Because of the limited sales
that ADM Tronics has made to its existing customers, we do not believe the
continued sales by ADM Tronics to those customers will have any material impact
on our ability to market the Aurex-3.
In the event that we do not purchase a minimum of 90 Aurex-3 devices from ADM
Tronics within one year from the consummation of the transaction with ADM, with
the minimum to increase by 10% above the previous year's minimum for each
following year, ADM Tronics shall have the right to terminate our exclusivity
with respect to the Aurex-3.
10
MARKETING
In June 2003, we entered into a four year agreement with Ollie & Partners,
L.L.C. Ollie & Partners has agreed to use its "best efforts" in all
administrative, marketing and creative areas to bring the shave cream ad burn
lotion to market. Ollie & Partners will be responsible for staffing, to the
extent that that we obtain the necessary financial resources, developing
marketing strategies, product names, packaging and graphics and production of
necessary or desirable consumer advertisements, in-store displays, out-door or
other multi-media for local or national publication. Under the agreement, we
have issued to Ollie Johnson 100,000 shares of our common stock and have agreed
to pay Ollie & Partners $6,000 and, if sales of the products exceed $1,000,000
during the four year period, we will pay Ollie & Partners 6% of such excess
sales. Ollie Johnson is the chief executive officer of Ollie & Partners.
We cannot begin our marketing efforts unless we obtain additional capital. We
cannot assure you that we can obtain the capital on terms acceptable to us, if
at all, or that our marketing efforts will be successful.
ACQUISITION OF CJC ENTERPRISES OF NEW YORK, INC.
On February 27, 2003, pursuant a Stock Purchase Agreement of February 14, 2003
with Eugene Cella and CJC Enterprises of New York, Inc, we acquired CJC
Enterprises of New York, Inc. from Mr. Cella as a wholly owned subsidiary. The
purchase price consisted of 100,000 shares of our common stock. Eugene Cella is
the brother of Gary Cella, our President. All references to "Mr. Cella" under
the subcaption "Acquisition of CJC Enterprises of New York, Inc." refer to
Eugene Cella. The consideration paid by us was negotiated between Mr. Cella and
our President and was not necessarily related to any recognized criteria of
value.
CJC opened a retail store under the name "Jazz Audio and Stereo" in Center
Moriches, New York on February 17, 2003 which sold and installed automotive
stereo systems, security devices and related products. The lease for the store
terminates in December 2004. Although Mr. Cella owns and operates two other
similar stores using the same name which are also located in Suffolk County, New
York, we have no ownership or other interest those two stores.
In connection with the acquisition, we obtained the limited right to open or
franchise additional Jazz Audio and Stereo stores provided that we bear all
costs and issue 50,000 shares of our common stock to Mr. Cella for each such
additional store. We do not have sufficient funds to bear any costs of opening
or franchising any additional store.
11
Mr. Cella has entered into a ten year employment agreement with CJC which may be
terminated by Mr. Cella at any time subsequent to the second year. Mr. Cella's
salary during the first and second years are $26,000 and $31,200, respectively.
His salary for each of the third through the tenth years will not be less than
$35,000 and will be determined by the Board of Directors of CJC. Beginning with
the third year, Mr. Cella may terminate the employment agreement on not less
than thirty days written notice to CJC. Mr. Cella is only required to devote a
portion of his time to CJC.
CJC has agreed to purchase inventory from Mr. Cella or a corporation designated
by him at prices equal to 105% of the actual cost of Mr. Cella or such
corporation.
Except as described in the following sentence, if the current value, as defined
in the Stock Purchase Agreement with Mr. Cella, of the 100,000 shares issued to
Mr. Cella is less than $250,000 on the first day that the New York Stock
Exchange is open for trading subsequent to February 27, 2004, Mr. Cella will
have the right to rescind the transaction. If Mr. Cella informs us that he
desires to rescind, we may, however, issue to Mr. Cella securities whose then
current value when added to the then current value of the 100,000 shares is not
less than $250,000. If we exercises the option to issue such additional
securities to Mr. Cella, Mr. Cella's right of rescission will terminate.
CJC has recently closed its retail store because it has not been profitable.
Mr. Cella believes that the failure of the store was primarily a result of its
location which was not on a heavily traveled thoroughfare. CJC intends to open
another store in a more favorable location during the fourth quarter of 2003.
CJC's ability to open another store is, however, in substantial part, dependant
upon its ability to acquire not less than $50,000 of capital. CJC does not now
have any meaningful capital or other assets and there can be no assurance that
CJC will be successful in obtaining sufficient capital.
COMPETITION
We expect to encounter intense competition in our effort to market the products
we obtained from ADM Tronics. In addition there is intense competition among
concerns that sell and install automotive stereo systems, security devices and
related products. Substantially all our competitors will have significantly
greater experience, resources and managerial capabilities than we do.
EMPLOYEES
We have no employees other than our executive officers. To the extent we have
sufficient capital, we expect to use consultants, attorneys and accountants as
necessary, and do not anticipate a need to engage any full time employees.
12
ITEM 2. DESCRIPTION OF PROPERTY
Other than the rights we acquired from ADM and those of CJC, we have no
significant property.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending or threatened legal proceedings to which we are a
party or of which any of our property is the subject or to our knowledge, any
proceedings contemplated by governmental authorities. We do not have any
subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
I. (a) The following table states the range of high and low bid
information for our common stock for each quarter for which
quotes have been published within the last two fiscal years.
The source of the high and low bid information is internet
quotes. The quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent
actual transactions.
Quarter Ended High Bid Low Bid
March 31, 2003 $2.40 $1.90
December 31, 2002 $2.40 $1.60
(b) On June 3, 2003, our common stock was held by 19 holders of
record.
(c) We have never paid any cash dividends on our common stock and
have no intention of paying cash dividends in the foreseeable
future. We intend to retain any earnings we may realize to
finance our future growth.
(d) As of March 31, 2003, we had no compensation plan (including
individual compensation arrangements) under which our equity
securities were authorized for issuance.
13
II. (a) In April 2001, we sold 1,500,000 shares of common stock, as
adjusted for a subsequent stock split, each to Gary Cella and
Jonathan B. Reisman. In November 2002, we sold 150,375 shares
to ADM Tronics Unlimited, Inc. In February 2003, we sold
100,000 shares to Eugene Cella. In May 2003, we sold 100,000
shares of our common stock each to Gary Cella and Jonathan
Reisman. In June 2003, we sold 100,000 shares of our common
stock to Ollie Johnson and 5,000 shares to Gary Cella.
(b) There were no principal underwriters.
(c) The aggregate consideration for the securities sold to Messrs.
Cella and Reisman in 2001 was $200. The consideration for the
securities sold to ADM Tronics, Eugene Cella and Mr. Johnson
is described in the response to Item 1 of this Annual Report.
The consideration for the shares sold to Gary Cella and Mr.
Reisman in May 2003 were their respective one year promissory
notes in the amount of $200,000 each which will be payable at
the option of the respective purchaser (a) in cash with
interest at the annual rate of 5% or (b) 120% of the shares
purchased by the purchaser, subject to customary adjustment in
the event of any stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash
dividends) of assets to stockholders. The consideration for
the shares sold to Gary Cella in June 2003 was $5,000.
(d) We claimed exemption from the registration provisions of the
Securities Act of 1933 with respect to the securities pursuant
to Section 4(2) thereof inasmuch as no public offering was
involved.
14
III. During the quarterly period ended March 31, 2003, we utilized
approximately $6,200 of the proceeds from our public sale of common stock.
Of the foregoing, $3,500 was paid to an affiliate of Mr. Reisman for legal
fees. The remainder was paid for website development, shipping, edgarizing
and accounting.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MANAGEMENT'S PLAN OF OPERATION
The following should be read in conjunction with our financial statements and
the related notes that appear elsewhere in this Annual Report. The discussion
contains forward looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Factors that could cause or contribute to these
differences include, but are not limited to, those discussed below and elsewhere
in this prospectus, particularly in "Risk Factors."
We have not had any significant revenues since inception. Our sole objective is
to become an operating business.
Our ability to become and continue as a going concern is dependent upon
obtaining additional substantial capital. In view of the limited amount of
funds available to us, we may exhaust our limited financial resources before
locating an acquisition candidate.
We have obtained limited rights to sell an ethnic shave cream, a burn lotion and
the Aurex-3 device from ADM Tronics Unlimited, Inc. Subject to the availability
of sufficient capital, we intend to initially aggressively market the shave
cream. We are reevaluating our plans to market the Aurex-3 and we have no plans
to market the burn lotion. We believe that we will require funding of
approximately $140,000 to aggressively market the shave cream and for working
capital during the next year.
We plan to obtain $150,000 through the private sale of our common stock. We
cannot assure you that we will be successful in obtaining any funds or that
$150,000 will be sufficient to fund our initial operations.
We have recently entered into a marketing and promotion agreement with a firm
specializing in ethnic products. We intend to formulate specific marketing
plans when that firm completes its recommendations to us.
If we do not make minimum royalty payments or purchase certain quantities of
products from ADM Tronics beginning in November 2003, and continuing in
subsequent years, we will lose certain rights of exclusivity. We intend to pay
the minimum royalties from revenues derived from sales. We do not know if we
will be able to purchase a sufficient number of the Aurex-3 from ADM Tronics to
maintain all of the rights we initially receive. We cannot assure you that we
will derive any meaningful revenues from the sale of any of the products.
We will reimburse ADM Tronics for an estimated amount of $4,500 for any tooling
or non-recurring engineering services that are required to be secured in support
of the manufacturing of our products. Tooling includes molds, plates, screens
and other items used to produce components in a manufacturing process. Non-
recurring engineering services are services such as drafting, preparation of
schematics, evaluations and measurements that are performed prior to
manufacturing but are not repeated during the manufacturing process.
We must pay $25,000 to ADM Tronics in advance of the initiation of production of
the burn lotion for ADM Tronics' expenses and establishment of regulatory
support and processes for the distribution of the burn lotion by us. If we do
not make the payment by November 2003, we will lose the exclusive rights to the
burn lotion. Because we do not have any plans to market the burn lotion, we do
not believe that the loss of the exclusive rights would be material to us.
We do not expect to purchase or sell any significant equipment, engage in
product research or development and do not expect any significant changes in the
number of our employees.
15
ITEM 7. FINANCIAL STATEMENTS
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended March 31, 2003 and 2002
Table of Contents Page
Report of Independent Auditor F-1
Consolidated Balance Sheets F-2
Consolidated Statement of Stockholders' Equity F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Cash Flows F-5
Notes to Financial Statements F-7
====================================================
16
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Auditor
Board of Directors
New England Acquisitions, Inc.
Cos Cob, CT
We have audited the accompanying consolidated balance sheets of New England
Acquisitions, Inc. (a Florida corporation in the development stage) as of March
31, 2003 and 2002 and the related statements of operations, stockholders'
equity and its cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects the financial position of New England Acquisitions, Inc.
as of March 31, 2003 and 2002 and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As discussed in Note B of the financial
statements, the Company has incurred net losses for the years ending March 31,
2003 and 2002 of $42,696 and $9,100, respectively. These conditions raise
substantial doubt about its ability to continue as a going concern.
Management's plans regarding those maters are more fully described in Note B to
the Financial Statements. The financial statements do not include any
adjustments that might result from the outcome of the uncertainty.
/s/ Meyler & Company, LLC
---------------------------
Middletown, NJ
June 18, 2003
F-1
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
March 31,
2003 2002
----------------------
CURRENT ASSETS
Cash $4,283 $ 100
Inventory 4,105 -
------ ------
Total Current Assets 8,388 100
OTHER ASSETS
Restricted cash - 15,000
License agreement 75,188 -
------ ------
75,188 15,000
$83,576 $15,100
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,274
Accrued expenses 2,272
Due to principal stockholders 31,084 $27,534
------ ------
Total Current Liabilities 36,630 27,534
STOCKHOLDERS' EQUITY
Common stock authorized 150,000,000
shares; $0.00001 par value; issued
and outstanding 3,257,875 and 3,007,500
shares at March 31, 2003 and 2002, respectively 33 30
Additional contributed capital 102,073 -
Deficit accumulated during Development Stage (55,160) (12,464)
------ ------
Total Stockholders' Equity 46,946 (12,434)
------ ------
$ 83,576 $15,100
====== ======
See accompanying notes to financial statements.
F-2
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Period April 18, 2001 (Inception) to March 31, 2003
Common Stock Contributed Accumulated
Number Amount Capital Deficit Total
-------------------------------------------------------------------------
Issuance of shares to
offices and directors
@$.001 per share 200,000 $200 - - $ 200
Effect of 15 to 1
stock split and
change of par
value to $.00001
per share 2,800,000 (170) $ 170 - -
Sale of 7,500
shares @$2.00
per share 7,500 - 15,000 - 15,000
Cost of registration - - (15,170) $(3,364) (18,534)
Net loss for period - - - (9,100) (9,100)
--------- ----- ------- ------- -------
Balance
March 31,
2002 3,007,500 30 - (12,464) (12,434)
Issuance of 150,375
shares for license
agreement @$0.50
per share 150,375 2 75,186 - 75,188
Issuance of 100,000
shares for acquisition
of CJC Enterprises
of New York @
$0.27 per share 100,000 1 26,887 - 26,888
Net loss per period - - - (42,696) (42,696)
--------- ----- ------- ------- -------
Balance March 31,
2003 3,257,875 $ 33 $102,073 $(55,160) $46,946
========= ===== ======= ======= =======
See accompanying notes to financial statements.
F-3
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended Inception to
March 31, March 31,
------------------- ------------
2003 2002 2003
---- ---- ----
NET SALES $ 13,246 $ 13,246
COSTS AND EXPENSES
Cost of good sold 6,774 6,774
Depreciation expense 4,855 4,855
Administrative expenses 26,168 $ 9,100 35,268
------ ------ -------
Total Costs and Expenses 37,797 9,100 46,897
------ ------ -------
NET LOSS BEFORE EXTRAORDINARY
LOSS (24,551) (9,100) (33,651)
EXTRAORDINARY LOSS - Discontinued
Operation (18,145) - (18,145)
------ ------ -------
NET LOSS $ (42,696) $ (9,100) $ (51,796)
====== ====== =======
NET LOSS PER SHARE, basic and diluted $ (0.01) $ (0.01) $ (0.02)
====== ====== =======
Weighted average number of common
shares outstanding 3,098,645 3,003,934 3,051,290
========= ========= =========
See accompanying notes to financial statements.
F-4
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended Inception to
March 31, March 31,
------------------------------------------
2003 2002 2003
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for period $(42,696) $ (9,100) $(51,796)
Adjustments to reconcile net loss to
net cash provided by
operating activities:
Depreciation expense 4,855 4,855
Loss on discontinued operations 18,145 18,145
Changes in operating assets and liabilities:
Increase in inventory (912) (912)
Increase in accounts payable 3,274 3,274
Increase in accrued expenses 1,861 1,861
Increase in due to principal stockholders 3,550 27,534 31,084
------ ------ ------
Net Cash (Used In) Provided by Operating
Activities (11,923) 18,434 6,511
CASH FLOWS FROM INVESTING ACTIVITIES
Restricted cash 15,000 (15,000) -
Net Cash Provided by (Used In) Investing
Activities 15,000 (15,000) -
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired in acquisition of CJC Enterprises
of New York, Inc. 1,106 - 1,106
Sale of common stock - 15,200 15,200
Cost of registering securities - (18,534) (18,534)
------ ------ ------
Net Cash Provided by (Used In) Financing
Activities 1,106 (3,334) (2,228)
------ ------ ------
NET INCREASE IN CASH 4,183 100 4,283
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 100 - -
------ ------ ------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,283 $ 100 $ 4,283
====== ====== ======
See accompanying notes to financial statements.
F-5
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the Years Ended Inception
March 31, March 3
---------------------------------------
2003 2002 2003
---- ---- ----
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Non-cash investing and financing activities:
Assets acquired for issuance of common stock:
License agreement $75,188 $75,188
------ ------
Acquisition of CJC Enterprises of New York, Inc.
and allocation of purchase price:
Cash 1,106 1,106
Inventory 3,193 3,193
Equipment and leasehold improvements 23,000 23,000
Accrued expenses (411) (411)
------ ------
Net Capitalization $26,888 $26,888
====== ======
See accompanying notes to financial statements.
F-6
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
New England Acquisitions, Inc. (the Company), a development stage enterprise,
was organized under the laws of the State of Florida on April 18, 2001. The
Company is seeking to acquire other companies or product lines. To date, it has
acquired an auto electronic company and acquired the right to market three
different cosmetic product lines.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Consolidated Financial Statements
The consolidated financial statements include the Company and its wholly owned
subsidiary. All significant intercompany transactions and balances have been
eliminated in consolidation.
Income Taxes
The Company accounts for income taxes using the liability method, which requires
the determination of deferred tax assets and liabilities based on the
differences between the financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse. Deferred tax assets are adjusted by a valuation allowance, if , based
on the weight of available evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
F-7
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
Income Taxes (Continued)
At March 31, 2003, the Company has net operating loss carryforwards of
approximately $30,000 which expire through 2022. Based on the fact that the
Company has generated operating losses since inception, a deferred tax asset of
approximately $4,500 has been offset by a valuation allowance of $4,500.
Property and Equipment and Depreciation
Property and equipment is stated at cost and is depreciated using the straight
line method over the estimated useful lives of the respective assets. Routine
maintenance, repairs and replacement costs are expensed as incurred and
improvements that extend the useful life of the assets are capitalized. When
property and equipment is sold or otherwise disposed of, the cost and related
accumulated depreciation are eliminated from the accounts and any resulting gain
or loss is recognized in operations.
Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share". SFAS per share
("EPS") requires presentation of basic and diluted EPS. Basic EPS is computed
by dividing the income (loss) available to Common Stockholders by the weighted-
average number of common shares outstanding for the period. Diluted EPS is
based on the weighted-average number of shares of Common Stock and Common Stock
equivalents outstanding during the periods.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes accounting
and reporting standards for all stock-based compensation plans, including
employee stock options, restricted stock, employee stock purchase plans and
stock appreciation rights. SFAS No. 123 requires employee compensation expense
to be recorded (1) using the fair value method or (2) using the intrinsic value
method as prescribed by accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB25") and
F-8
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2003 and 2002
Stock-Based Compensation (Continued)
related inTerpretations with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the fair value
method. The Company accounts for employee stock based compensation in
accordance with the provisions of APB 25. For non-employee options and
warrants, the company uses the fair value method as prescribed in SFAS 123.
New AccounTing pronouncements
In July 2001, The financial Accounting Standards Board ("FSAB") issued SFAS NO.
141, "Business Combinations". SFAS No. 141 requires the purchase method of
accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method.
In July 2001, The fasb issued SFAS NO. 142, "Goodwill and Other Intangible
Assets", which will become effective for the Company during the fiscal year
ending March 31, 2003. SFAS No. 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized intangibles
as goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of previously reported
goodwill and the identification of reporting units for purposes of assessing
potential future impairment of goodwill.
In August 2001, The fasb issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 changes the accounting for long-
lived assets to be held and used by eliminating the requirement to allocate
goodwill to long-lived assets to be tested for impairment, by providing a
probability weighted cash flow estimation approach to deal with situations in
which alternative courses of action to recover the carrying amount of possible
future cash flows and by establishing a primary-asset approach to determine the
cash flow estimation period for a group of assets and liabilities that
represents the unit of accounting for long-lived assets to be held and used.
SFAS No. 144 changes the accounting for long-lived assets to be disposed of
other than by sale by requiring that the
F-9
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2003 and 2002
New Accounting Pronouncements (Continued)
depreciable life of a long-lived asset to be abandoned be revised to reflect a
shortened useful life and by requiring the impairment loss to be recognized at
the date a long-lived asset is exchanged for a similar productive asset or
distributed to owners in a spin-off if the carrying amount of the asset exceeds
its fair value. SFAS No 144 changes the accounting for long-lived assets to be
disposed of by sale by requiring that discontinued operations no longer be
recognized in a net realizable value basis (but at the lower of carrying amount
or fair value less costs to sell), by eliminating the recognition of future
operating losses of discontinued components before they occur and by broadening
the presentation of discontinued operations in the income statement to include a
component of an entity rather than a segment of a business. A component of an
entity comprises operations and cash flows that can be clearly distinguished,
operationally, and for financial reporting purposes, from the rest of the
entity.
The Company has adopted SFAS No. 144 effective April 1, 2002. The adoption of
the new statement will not have a significant impact on the Company's financial
statements.
NOTE B GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred a
net loss of $42,696 and $9,100 for the years ended March 31, 2003 and 2002,
respectively, and had an accumulated deficit on that date of $55,160.
Additionally, on March 31, 2003, the Company had a negative working capital of
$28,242. The Company has acquired the right to market and sell an ethnic shave
cream, a burn lotion, and a medical device known as Aurex-3 to treat a
condition known as tinnitus. It is the Company's intent to market and sell the
shave cream. The Company is reevaluating its plans to market and sell the
Aurex-3 and has no plans to market the burn cream. The Company has recently
entered into a marketing and promotion agreement with a company to provide such
services to the Company. The Company plans to fund the marketing and sales
activities through a private placement of its equity securities. There is no
assurance, however, that the Company will be successful in its efforts to
complete a private placement and that, if successful, the net proceeds, coupled
with the net proceeds of any product sales, will be sufficient to fund the
operations of the Company.
F-10
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2003 and 2002
NOTE B GOING CONCERN (CONTINUED)
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 ACQUISITION OF CJC ENTERPRISES OF NEW YORK, INC.
On February 27, 2003, the Company acquired 100% of the issued and outstanding
stock of CJC Enterprises of New York, Inc. for an aggregate purchase price of
100,000 shares of the Company's common stock. The seller is a brother of a
principal stockholder of the Company.
The allocation of the purchase price was as follows:
Value of 100,000 shares issued using discounted price of $0.2688 per share
$26,888
Fair value of net assets allocated as follows:
Cash $ 1,106
Inventory 3,193
Equipment and leasehold improvements 23,000
Liabilities assumed (411)
======
$26,888
Additionally, if the value of the 100,000 shares issued to the seller is less
than $250,000, as defined in the purchase agreement, on the first day that the
New York Stock Exchange is open for trading subsequent to February 27, 2004, the
seller has the right to rescind the transaction unless the Company issues
additional securities to the seller whose then current value when added to the
F-11
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2003 and 2002
NOTE C ACQUISITION OF CJC ENTERPRISES OF NEW YORK, INC. (CONTINUED)
value of 100,000 shares will not be less than $250,000. As part of the
agreement, CJC Enterprises of New York, Inc. agreed to purchase inventory from
corporations controlled by the seller at prices equal to 105% of their actual
cost.
NOTE D - RELATED PARTY TRANSACTIONS
The principal stockholders of the Company have paid, on behalf of the Company,
all of the costs related to the filing of a registration statement under Form
SB-2 with the Securities and Exchange Commission and certain subsequent periodic
reports. The total amount due the stockholders is $31,084 and $27,534, at March
31, 2003 and 2002, respectively. The principal stockholders have agreed to defer
the reimbursement of the amounts due them until the Company becomes a going
concern.
NOTE E - COMMON STOCK
In April 2001, the Company issued 200,000 shares to its two principal
stockholders for $200 at its then par value of $0.01 per share.
In July 2001, the Company had a 15 to 1 stock split increasing the total shares
held by the two principal stockholders to 3,000,000 and changing the par value
to $0.00001.
On October 1, 2001, the Company sold 7,500 shares of its common stock at $2.00
per share under its registration statement on Form SB-2 filed with the
Securities and Exchange Commission.
On October 28, 2002, the Company issued 150,375 shares of its common stock to
ADM Tronics Unlimited, Inc. to acquire an assets and rights agreement (license)
to market three products: (1) an ethnic shave cream, (2) a burn lotion, and (3)
a medical device known as Aurex-3 which has been designed to treat a condition
known as Tinnitus. The shares were valued at
F-12
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2003 and 2002
NOTE E - COMMON STOCK (CONTINUED)
$0.50 per share using block discount factor.
On February 27, 2003, the Company issued 100,000 shares of its common stock to
acquire CJC Enterprises of New York, Inc., an auto electronics store. The
acquired company was owned by the brother of a principal stockholder of the
Company. The shares were valued at $0.2688 per share using a block discount
factor.
NOTE F LEASED PREMISES
CJC Enterprises of New York, Inc. entered into a lease for a store under a non-
cancelable agreement expiring in December 2004. Future minimum payments
required under the operating lease are as follows:
Year ending March 31, 2004 $14,400
April 2004 to December 2004 10,800
NOTE G EMPLOYMENT CONTRACTS
On February 27, 2003, CJC Enterprises of New York, Inc. entered into a ten year
employment agreement with its Chief Executive Officer who is a brother of one of
the Company's principal stockholders. The agreement may be terminated by the
Chief Executive Officer of CJC Enterprises of New York, Inc. at any time
subsequent to the second year. Pursuant to the agreement, the Chief Executive
Officer is only required to denote a portion of his time to CJC Enterprises of
New York, Inc. The compensation is $26,000 for the first year, $31,200 for the
second year, and a negotiated salary for subsequent years which will not be less
than $35,000.
NOTE H SUBSEQUENT EVENTS
Discontinued Operations
On February 27, 2003, the Company acquired 100% of the outstanding common stock
of CJC Enterprises of New York, Inc., a retail store specializing in auto
electronics. In June 2003, CJC Enterprises of New York, Inc. closed the retail
store because it was not profitable. The Company believes that the
F-13
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)
March 31, 2003 and 2002
Discontinued Operations (Continued)
failure of the store is primarily the result of its location, which is not a
heavily traveled thoroughfare.
In connection with the closing, the Company incurred an extraordinary loss of
$18,145 for the write off of the remaining leasehold improvements and store
equipment.
CJC Enterprises of New York, Inc. is contingently liable for the balance of the
rent until lease expiration of approximately $21,600 and is liable under an
employment contract executed with its Chief Executive Officer. See note G of
Notes to Consolidated Financial Statements.
Marketing and Promotion Agreement
In June 2003, the Company entered into a four year agreement with Ollie &
Partners, L.L.C. Ollie & Partners, L.L.C. has agreed to use its "best efforts"
in all administration, marketing, and creative areas to bring the shave cream
and burn lotion to market, although the Company has no plans to market the burn
lotion. Ollie & Partners, L.L.C. will be responsible for staffing, to the extent
that the Company can obtain the necessary financial resources, developing
marketing strategies, product names, and other marketing techniques. Under the
agreement, the Company issued 100,000 shares of its common stock and will
further pay Ollie & Partners, L.L.C. $6,000 and, to the extent sales exceed
$1,000,000, 6% of such excess.
Executive Compensation
On May 19, 2003, the Board of Directors approved the New England Acquisition,
Inc. 2003 Incentive Equity Plan. The purpose of the Plan is to promote the
long-term profitability and enhance value for the stockholders by offering
incentives and rewards to key employees, officers and directors. The A maximum
of 500,000 shares of common stock may be issued under the Plan. The Plan will
terminate on May 19, 2008. On May 19, 2003, the Company issued options under
the Plan for the purchase of 220,000 shares of common stock at $2.00 per share.
Of the foregoing, options for the purchase of 200,00 shares were issued to the
Company's principal stockholders and an option for the purchase of 20,000 shares
was issued to a brother of one of the principal stockholders. The principal
stockholders exercised their options.
F-14
NEW ENGLAND ACQUISITIONS, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2003 and 2002
Executive Compensation(Continued)
The purchase price consisted of the issuance of one year promissory notes by the
principal stockholders which will be payable at their option (a) in cash with
interest at an annual rate of 5%, or (b) 120% of the shares purchased by the
respective purchaser, subject to adjustment as defined in the Plan. The Company
intends to register the 200,000 shares under the Securities Act of 1933 for
public offer and sale.
F-15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
I. (a) Identification of Executive Officers and Directors
Name Age Positions
Gary Cella 45 President, Treasurer and Director.
Jonathan B. Reisman 60 Secretary and Director
Any of our directors may be removed with or without cause at any time by
the vote of the holders of not less than a majority of our then outstanding
common stock. Officers are elected annually by the Board of Directors. Any
of our officers may be removed with or without cause at any time by our
Board of Directors.
Messrs Cella and Reisman, who are our founders, have held their positions
with us since our inception.
Mr. Cella has been a self-employed marketing and sales consultant for more
than five years. Mr. Cella's consulting services to his clients have
included advice on marketing, advertising, product and market expansion and
sources of capital. Mr. Cella has been a Vice President, Secretary,
Treasurer and a member of the Board of Directors of Accelerated
Globalization, Inc., a development stage company, since November 2000.
Accelerated seeks to provide strategic business solutions to small and
middle sized companies that are seeking to expand their markets to other
portions of the world.
Mr. Reisman practices law with and has been the President of Reisman &
Associates, P.A. for more than five years.
Both Messrs. Cella and Reisman will only devote a small portion of their
time to us. They intend to communicate periodically, primarily by
telephone, to discuss our affairs and to review our operations. Any
conflicts of interest that arise affecting Messrs. Cella and Reisman and us
will be resolved by them in a manner which they deem will be fair. You may
not agree with their determination. If you have any doubt about the
abilities or integrity of Messrs. Cella and Reisman, you should not confirm
your investment.
16
(b) Identify Significant Employees
Not applicable
(c) Family Relationships
There are no family relationships between any of New England
Acquisition, Inc.'s directors or executive officers.
(d) Involvement in Certain Legal Proceedings
During the last five years, none of the following events occurred with
respect to any executive officer or director of the Company as of the date
hereof.
(i) Any bankruptcy petition was filed by or against any
business of which such person was a general partner or an
executive officer at or within two years before the time
of such filing;
(ii) Any conviction in a criminal proceeding or being subject
of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(iii) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or
banking activities; and
(iv) Being found by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or
the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
(e) Audit committee financial expert
We do not have an audit committee.
17
II. Section 16(a) Beneficial Ownership Reporting Compliance
Not applicable.
III. Code of Ethics.
We have not adopted a code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. We have not done so
because we believe that it not necessary because of our size and lack of
tangible assets.
ITEM 10. EXECUTIVE COMPENSATION
As of March 31, 2003, we had not paid any salary, bonus or other compensation to
either of our executive officers and had not made any individual grants of stock
options. We have no standard or other arrangements pursuant to which any of our
directors is or was compensated during the our last fiscal year for services as
a director, for committee participation or special assignments.
The New England Acquisitions, Inc. 2003 Incentive Equity Plan was adopted and
approved by our Board of Directors and our stockholders in May 2003. The
following summary of the Plan is qualified in its entirety by the terms and
conditions of the Plan which has been filed as an exhibit to our Current report
on Form 8-K dated May 19, 2003.
The purpose of the Plan is to promote long-term profitability and to enhance
value for our stockholders by offering incentives and rewards to our key
employees, directors and officers, including those of its subsidiaries, to
retain their services and to encourage them to acquire stock ownership in us.
The Plan will terminate at the close of business on May 19, 2008 unless
terminated earlier by our Board of Directors or a Committee composed of two or
more of members of our Board of Directors to administer the Plan. All
references below to the "Board" in connection with the Plan refer to our Board
of Directors and any such Committee. After termination of the Plan, no future
awards may be granted, but previously granted awards shall remain outstanding in
accordance with their applicable terms and conditions and the terms and
conditions of the Plan.
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The Plan may be amended only by the Board as it deems necessary or appropriate
to better achieve the purposes of the Plan, except that no such amendment shall
be made without the approval of our stockholders which would increase the number
of shares available for issuance in accordance with the Plan.
The Board has the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change in control of us, as
defined by the Board, to provide for the acceleration of vesting and for
settlement, including cash payment, of an award granted under the Plan upon or
immediately before such event is effective. However, the granting of awards
under the Plan shall in no way affect our right to adjust, reclassify,
reorganize, or otherwise change our capital or business structure, or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any portion of our
businesses or assets.
The Board is responsible for administering the Plan. The Board has full and
exclusive power to interpret the Plan and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or proper. This
power includes but is not limited to selecting award recipients, establishing
all award terms and conditions and adopting modifications, amendments and
procedures, as well as rules and regulations governing awards under the Plan,
and to make all other determinations necessary or advisable for the
administration of the Plan. The interpretation and construction of any provision
of the Plan or any option or right granted under the Plan and all determinations
by the Board in each case shall be final, binding and conclusive with respect to
all interested parties.
Subject to adjustment as provided in the Plan, 500,000 shares of our common
stock, $.00001 par value, may be issued to participants under the Plan.
All of our key employees, directors and officers are eligible to receive awards
under the Plan as well as those of any entity that is directly or indirectly
controlled by us, as determined by the Board.
The period of time within which employees may elect to participate in the plan
shall be determined by the Board at the time an award is granted. The purchase
price per share shall be not less than 100% of "Current Value" on the date of
grant (except if a stock option is granted retroactively in tandem with or as a
substitution for an SAR, the exercise price may be no lower than the exercise
price per share for such tandem or replaced SAR).
19
For purposes of the Plan, Current Value of a security shall be determined as
follows:
(a) If the security is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on NASDAQ or the NASD Bulletin Board, the Current Value of a
share or other unit shall be the last reported sale price of such
security on such exchange; or
(b) If the security is not so listed or admitted to unlisted trading
privileges but bid and asked prices are reported by the National
Quotation Bureau, Inc. or any successor thereto, the Current Value
shall be the average of last reported high bid and low asked prices
reported by the National Quotation Bureau, Inc.; or
(c) If the security is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the Current
Value shall be the book value of a share or other unit as at the end
of our immediately prior fiscal quarter determined in accordance with
generally accepted accounting principles consistently applied.
The exercise price for a stock option shall be paid in full by the optionee at
the time of the exercise in cash or such other method permitted by the Board,
including (i) tendering (either actually or by attestation) shares, (ii)
authorizing a third party to sell the shares (or a sufficient portion thereof)
acquired upon exercise of a stock option and assigning the delivery to us of a
sufficient amount of the sale proceeds to pay for all the shares acquired
through such exercise, or (iii) any combination of the above.
If approved by the Board, the purchase price for shares purchased under the
Plan may be paid in cash or a finite number of shares at the option of the
Employee. Payment must be made at such time as determined by the Board.
The purchase price of securities purchased under the Plan will be received by us
and may be used to pay compensation to our affiliates and to reimburse them for
amounts advanced by them to us or on our behalf.
20
Awards have been made under the Plan to Gary Cella, Jonathan Reisman and Eugene
Cella which permit them to purchase 100,000 shares, 100,000 shares and 20,000
shares of the Corporation's common stock, $.00001 par value, respectively at
$2.00 per share. Gary Cella and Mr. Reisman exercised their option and
purchased their shares by issuing their respective one year promissory notes
which will be payable at their option (a) in cash with interest at the annual
rate of 5% or (b) 120% of the shares purchased by the purchaser, subject to
customary adjustment as described above. We have agreed and intend to shortly
register the shares purchased under the Securities Act of 1933 for public offer
and sale.
We do not have any compensatory plan or arrangement, including payments to be
received from us with respect to any person, which plan or arrangement results
or will result from the resignation, retirement or any other termination of such
person's employment with us and our subsidiaries or from a change in control of
us or a change in such person's responsibilities following a change in control
and the amount involved, including all periodic payments or installments,
exceeds $100,000.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
(a), (b)
The following table sets forth certain information as of June 20, 2003 with
respect to any person who is known to us to be the beneficial owner of more than
5% of our common stock, which is the only class of our outstanding voting
securities, and as to our common stock beneficially owned by our directors and
officers and directors as a group:
Name and address of Amount of Shares Approximate Percent
Beneficial Owner Beneficially Owned of Class
-------------------- ------------------ -------------------
Gary Cella
5 Ridge Road
Cos Cob, CT 06807 1,530,000 43 %
Jonathan B. Reisman
6975 NW 62nd Terrace
Parkland, FL 33067 1,599,600 45%
Officers and directors
as a Group (2 persons) 3,129,600 88%
(c) Changes in Control
We are not aware of any arrangement that may result in a change in control of
us.
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as otherwise set forth in this Annual Report, during the last
two years there was no transaction or proposed transaction to which we were or
is to be a party, in which any of the following persons had or is to have a
direct or indirect material interest and the amount involved in the transaction
or a series of similar transactions exceeded $60,000:
(1) Any of our directors or executive officers;
(2) Any nominee for election as a director;
(3) Any security holder named in response to Item 11 hereof; and
(4) Any member of the immediate family (including spouse, parents,
children, siblings and in-laws) of any person named in
paragraphs (1), (2) or (3) of this Item 12(a).
ITEM 13. EXHIBITS, LISTS AND REPORTS OF FORM 8-K
(a) Exhibits
Exhibit Index Description
------------- -------------
3.01(a) Articles of Incorporation. (1)
3.01(b) Form of Articles of Amendment to Articles of Incorporation.(2)
3.03 Bylaws.(1)
4.01 Form of Specimen Stock Certificate for the Registrant's Common
Stock.(2)
4.02 The New England Acquisitions, Inc. 2003 Incentive Equity Plan(5)
10.01 Escrow Agreement of August 3, 2001 between the Registrant and
Patriot National Bank.(2)
10.02 Asset and Rights Purchase Agreement of March 21, 2002, by and
between ADM Tronics Unlimited, Inc. and the Registrant.(3)
10.03 Stock Purchase Agreement of February 14, 2003, by and between
CJC Enterprises of New York, Inc., Eugene Cella and the
registrant.(4)
10.04 Employment Agreement of February 14, 2003 between CJC
Enterprises of New York, Inc., and Eugene Cella.(6)
10.05 Agreement of June 11, 2003, by and between International
Products, Inc., Ollie & Partners, L.L.C. and Ollie Johnson.(6)
22.01 Subsidiaries of the Registrant.(6)
99.01 Certification Of Chief Executive Officer and Chief Financial
Officer.(6)
__________________________________
(1) Filed as part of registration statement on Form SB-2, File No.
333-63432 and hereby incorporated by reference.
(2) Filed as part of Amendment No. 1 to registration statement on
Form SB-2 and hereby incorporated by reference.
(3) Filed as part of Post-Effective Amendment No. 2 to
registration statement on Form SB-2 and hereby incorporated by
reference.
(4) Filed as Exhibit 2.1 to our Current report on Form 8-K dated
February 27, 2003 and hereby incorporated by reference.
(5) Filed as Exhibit 99.1 to our Current report on Form 8-K dated
May 19, 2003 and hereby incorporated by reference.
(6) Filed herewith.
(b) Reports on Form 8-K
We filed a report on Form 8-K dated February 27, 2003 which reported Item 2 and
7. Amendment No. 1 to such report included financial statements of CJC
Enterprises of New York, Inc. as well as certain pro-form financial information.
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ITEM 14. CONTROLS AND PROCEDURES.
I.
(a) Our principal executive officer and principal financial officer
has concluded that our disclosure controls and procedures are
effective based on his evaluation of these controls and
procedures as of a date within 90 days of the filing date of this
Annual Report.
(b) 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. There were no
corrective actions with regard to significant deficiencies and
material weaknesses.
II.
(1) Audit fees the aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal
accountant for the audit of our annual financial statements and
review of financial statements included in our form 10-qsb or
services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements
for those fiscal years were $5,000 and $4,900, respectively.
(2) Audit-related fees no fees were billed in either of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the
audit or review of our financial statements and are not reported
under item 9(e)(1) of schedule 14a.
(3) Tax fees no fees were billed in either of the last two fiscal
years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning.
(4) All other fees no fees were billed in either of the last two
fiscal years for products and services provided by the principal
accountant, other than the services reported in items 9(e)(1)
through 9(e)(3) of schedule 14a.
(5) We do not have an audit committee.
(6) Less than 50 percent, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
New England Acquisitions, Inc.
/s/ Gary Cella
---------------------
By: Gary Cella, President
Dated: June 25, 2003
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
SIGNATURES TITLE DATE
s/ Gary Cella Chief Executive Officer, June 25, 2003
---------------- Principal Financial Officer
Gary Cella and Director
/s/ Jonathan B. Reisman
-------------------- Director June 25, 2003
Jonathan B. Reisman
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF EXCHANGE ACT BY NON-REPORTING ISSUERS
The issuer did not send an annual report, proxy statement, form of proxy or
other proxy soliciting material to its security holders.
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CERTIFICATION
I, Gary Cella, certify that:
1. I have reviewed this annual report on Form 10-KSB of New England
Acquisitions, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4. I am the registrant's only certifying officer and am responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within
those entities, particularly during the period in which this
annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c. presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: June 25, 2003
/s/ Gary Cella
-------------------------
Gary Cella
Principal Executive Officer and
Principal Financial Officer of the Registrant
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