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, 2006 Commission File Number 333-63432
ATLANTIC WINE AGENCIES INC.
(Name of small business issuer in its charter)
Florida 65-1102237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Golden Cross House
8 Duncannon Street, London, United Kingdom WC2N 4JF
(Address of principal executive offices) (Zip Code)
Issuer's telephone number:
011-44-207-484-5005
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 such filing requirements for 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 the 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. |_|
The aggregate market value of the voting common stock held by non-affiliates of
the registrant as of July 14, 2006 was approximately $1,392,208 based on
34,805,203 shares of common stock outstanding on July 14, 2006.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Background
We are a Florida corporation formed on April 8, 2001. We were organized to be a
blank check company.
On December 16, 2003, Rosehill Investments Limited, a Seychelles corporation
("Rosehill"), acquired 11,937,200 shares of New England Acquisitions, Inc.'s
("Company") Common Stock ("Shares") pursuant to a Stock Purchase Agreement among
Rosehill, the Company, Mr. Jonathan B. Reisman and Mr. Gary Cella (the
"Agreement"). The Agreement provided for the Shares to be sold as follows:
9,234,520 shares from the Company; 1,379,600 shares from Mr. Reisman; and
1,323,100 shares from Mr. Cella. As a result of the stock sale, the Directors of
the Company resigned and ultimately Mr. Harry Chauhan was appointed as the sole
officer and director.
At that time there were 12,552,395 shares of common stock issued and
outstanding.
On January 13, 2004, the Company amended its Articles of Incorporation to change
its name from New England Acquisitions, Inc. to Atlantic Wine Agencies Inc.
On February 9, 2004, the Company's directors resigned and Mr. Harry Chauhan was
appointed as the Company's sole Director and its President.
On March 1, 2004 the Company completed a 1-for-200 reverse capitalization
without affecting the par value or authorized number of shares.
On May 4, 2004 the Company acquired all of the issued and outstanding shares of
New Heights 560 Holdings LLC, a Cayman Islands limited liability corporation
("New Heights"), in exchange for One Hundred Million shares of its restricted
common stock which is equal to 99.9% of the total outstanding shares of the
Company's common stock (this transaction shall be referred to as the "Share
Exchange"). New Heights owned the property in South Africa on which our vineyard
operations are located.
Prior to the Share Exchange, the Company was engaged in the business of
manufacturing and distributing various skin creams and generated minimal
revenues as a result.
Present
As a result of the Share Exchange, the Company now has two wholly owned
subsidiaries, Mount Rozier Estates (Pty) Limited and Mount Rozier Properties
(Pty) Limited. Such companies own a world class vineyard in the Stellenbosch
region of Western Cape, South Africa. The vineyard and surrounding properties
consist of 80.9 hectares of arable land for viticultural as well as residential
and commercial purposes. In the opinion of the management the site is a world
class in terms of location, soil composition and future development potential.
Mount Rozier Estates (Pty) Limited and Mount Rozier Properties (Pty) Limited
produces super premium quality wines on a boutique vineyard basis. We have
become a notable producer of quality wines from South Africa by further: (i)
developing and expanding our wine cellar tasting facilities and upgrading
vineyards through better crop management; (ii) enhancing our strategic
distribution channels with various international agents and direct route to
market channels; and (iii) brand development efforts.
The launch of the wines under new patent branded labeling and marketing occurred
in the fourth fiscal quarter of 2004 in South Africa and the United Kingdom.
1
Our wines were initially issued in three tiers: Mount Rozier a top quality super
premium single vineyard brand; Rozier Bay a mid price range wine; Rozier Reef
and a mainstream market product. Such wines have received several significant
awards recently and we have built a significant regional route to market for
sales which is on target with our early internal projections.
In September 2004, Mr. Adam Mauerberger became President of the Company and
Chairman of the Board. Also in September the Company hired Mr. Andy Bayley to be
the Senior Vice President of Sales and Marketing.
As an effort to reduce costs and centralize our operations due to securing an
exclusive agency agreement with HBJ wines within the UK AWA INC. have relocated
all operations to South Africa as the main profit centre. This move will result
in substantial cost savings, however, we are considering all available financing
options as well as the possibility of the sale of some or all of our assets. All
such decisions will be made with the goal of maximizing shareholder value both
in the near and long terms.
ITEM 2. DESCRIPTION OF PROPERTY
Mount Rosier Estate a World Class Vineyard located in previously known as Myrtle
Grove No 1380, Stellenbosch. The property is sub divided in parcels of land of
50.9 hectares and 29.2 hectares making a total of 80.10 hectares.
The Estate also comprises of a winery, barrel holding area, a number of outer
houses which plan to be converted into Guest Lodges on basis planning permission
is granted. Two main residences one for the use of the Viticultural Manager, and
the other to be converted into Wine tasting and picnic area.
The existing wine tasting area which is attached to the barrel storage area and
winery has been converted to modern cellar door facility to be utilised for
professional buyers and public. The Estate also has its own water dam and spring
which supplies not only the farm on the estate but also other neighbors on a
limited basis. Around 20 hectares of land are under vine currently with
potential to increase to around 40 hectares of planting. The property is located
next to Vergelegen Wine Estate placing it as one of the key premium sites within
Cape Town.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings or
government actions, including any bankruptcy, receivership, or similar
proceedings. Management of the Company does not believe that there are any
proceedings to which any director, officer, or affiliate of the Company, any
owner of record of the beneficially or more than five percent of the common
stock of the Company, or any associate of any such director, officer, affiliate
of the Company, or security holder is a party adverse to the Company or has a
material interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
2
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's Common Stock is traded on the OTC-Bulletin Board under the
symbol AWNA. The following sets forth the range of the closing bid prices
for the Company's Common Stock for the period January 1, 2004 through July
14, 2006. Such prices represent inter-dealer quotations, do not represent
actual transactions, and do not include retail mark-ups, mark-downs or
commissions. Such prices were determined from information provided by a
majority of the market makers for the Company's Common Stock.
High Close Low Close
2004
First Quarter 1.25 1.00
Second Quarter 3.00 1.15
Third Quarter 2.10 1.77
Fourth Quarter 2.15 1.77
2005
First Quarter 1.78 1.75
Second Quarter 1.78 1.00
Third Quarter 1.05 0.65
Fourth Quarter 0.65 0.45
2006
First Quarter 0.45 0.10
Second Quarter (through 7/13/06) 0.25 0.03
(b) The approximate number of holders of the Common Stock of the Company as of
July 14, 2006 was 960.
(c) No cash dividends were declared by the Company during the fiscal year
ended March 31, 2006. While the payment of dividends rests within the
discretion of the Board of Directors, it is not anticipated that cash
dividends will be paid in the foreseeable future, as the Company intends
to retain earnings, if any, for use in the development of its business.
The payment of dividends is contingent upon the Company's future earnings,
if any, the Company's financial condition and its capital requirements,
general business conditions and other factors.
(d) No shares were available for issuance under any equity compensation plan
at March 31, 2006.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
It should be noted that this Management's Discussion and Analysis of Financial
Condition and Results of Operations may contain "forward-looking statements."
The terms "believe," "anticipate," "intend," "goal," "expect," and similar
expressions may identify forward-looking statements. These forward-looking
statements represent the Company's current expectations or beliefs concerning
future events. The matters covered by these statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those set forth in the forward-looking statements, including the Company's
dependence on weather-related factors, introduction and customer acceptance of
new products, the impact of competition and price erosion, as well as supply and
manufacturing restraints and other risks and uncertainties. The foregoing list
should not be construed as exhaustive, and the Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statements, or to reflect the occurrence of
anticipated or unanticipated events. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of
such information should not be regarded as a representation that the strategy,
objectives or other plans of the Company will be achieved. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made.
3
RESULTS OF OPERATIONS
Our revenues showed strong growth from previous 2005 fiscal year from $120,913
to $1,132,060 in 2006. Case sales increased by gaining market share from 1,263
nine-liter cases in 2004 to 43,282 nine-liter cases in 2005.
New agents gained over the year ended March 31, 2006 include HBJ wines UK,
Ekford - Norway, Rubaiyat - Canada and Slowein - Slovakia.
Notable positive events during the year ended March 31, 2006 were various
industry awards to Mount Rozier Estate and its branded portfolio. Results
include 6 medals in the International Wine & Spirit Competition 2005. Of note,
our Mount Rozier Shiraz 2003 and Rozier Bay Chardonnay 2004 were each awarded
"Gold - Best in Class". Additionally, four of our wines were awarded Bronze
medals in the same competition. Recently, a double gold was achieved in the
prestigious South African Veritas competition including a further 4 medals.
Further, 4 star awards were awarded by John Platter the leading industry wine
guide from South Africa for Mount Rozier Cuvee Burr `03 and Mount Rozier Shiraz
`03.
Raising profile on the branded portfolio included positive articles in The
Herald, Drinks International, Harpers and Decanter respectively.
An additional notable event for the year was the unwind of our acquisition of
Dominion Estates. On August 20, 2005, Atlantic Wine Agencies, Inc. and its
subsidiary Mount Rozier Estates (collectively, "Company") entered into a
settlement agreement and related documents with Dominion Estates Pty Ltd
("Estates"), Global Realty Development Corp and Sapphire Developments Limited
("Settlement Transaction"). On August 24, 2005, Dominion Wines Ltd executed such
Settlement Agreement. Pursuant to the Settlement Transaction, the parties
thereto and their respective stockholders agreed that it would be in the best
interests of each to unwind the share exchange transaction that the parties had
previously consummated in accordance with the certain Share Exchange Agreement
effective as of September 4, 2004, by and among the parties thereto pursuant to
which the Company had acquired all of the issued and outstanding shares of
Estates and Wines in exchange for 20,000,000 shares of our common stock.
In exchange for the transfer of all ordinary shares of Estates held by the
Company to A1 Financial Planners, an unrelated party to the Company, and a
release of liabilities related to the Share Exchange Agreement dated September
14, 2004 ("Share Exchange Agreement"), the Settlement Transaction has resulted
in:
(i) The return of the 18,749,147 shares of the Company's common stock
originally issued to the shareholders of Estates thus decreasing the total
number of outstanding shares by almost 20%.
(ii) The extinguishment of a Company debt owed to one of its shareholders,
Sapphire Developments Limited, in the amount of $2,429,958 ("Sapphire
Debt");
(iii) The extinguishment of a Company debt owed to Estates in the amount of
$343,611 ("Estates Debt"); and
(iv) The release of the Company from all liabilities related to the Share
Exchange Agreement.
The Company's board of directors believes that the unwind transaction places the
Company in a significantly stronger position by extinguishing a total of
$2,773,569 of Company debt which was held in the form of a convertible note.
4
Atlantic reviewed operations strategy by implementing overhead costs initiatives
replacing the United Kingdom ("UK") with South Africa as main profit centre due
to securing Hayman Barwell Jones ("HBJ") as an exclusive agent. HBJ wines are an
independent fine wine shipper based in Ipswich and London. HBJ will service
current trade clients in the UK and will continue to develop new route to market
through their extensive sales team allowing UK overheads to be reduced in new
financial year. The business had to compromise with lower margin on mainstream
brands as the new world sector continues to be affected by aggressive global
trading conditions particularly from the oversupply of fruit from Australia. The
South African sector remains challenging for mainstream off trade brands due to
the strong South African Rand regarding exports in the mainstream sector below
(pound)5.00 price point. Focus will now remain on premium Estate range enhancing
margin.
Margin loss was further affected by the administration of UNWINS - the largest
off trade retailer in the South-East of England, formally 382 stores. Despite
the administration process, which is similar to the bankruptcy process in the
United States, sales were insured but resulted in loss of margin to the
business.
In order to take the business forward in a profitable manner the board is
currently seeking various finance options including the possible disposal of
some or all of our assets. With reduced overheads and a JIT system implemented
to manage stock holding, our Board of Directors looks forward to building upon
the excellent profile and gains Mount Rozier has achieved within the last year
focusing on premium brands within the portfolio and gaining lost margin from
mainstream brands.
In furtherance of our goal of building world class wine brands from South
Africa, we intend to revisit some of our earlier business development strategies
of strengthening our business outside core wine model into potentially the
leisure & resource industry delivering value to all shareholders. We will
endeavour to keep the public promptly updated as our options clarify themselves.
We have financed our operations to date through loans made to us by our
shareholders and their affiliates.
Operating costs for the year ended March 31, 2006 aggregated $3,724,353 or
(0.04) per share as compared to $1,391,784 or (0.02) per share for the year
ended March 31, 2005.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended March 31, 2006 net cash used to fund operating activities
aggregated $1,308,317 net cash utilized by investing activities aggregated
$367,655 and net cash provided by financing activities aggregated $1,068,147.
From inception through March 31, 2006, net cash used to fund operating
activities aggregated approximately $3,600,000, net cash utilized by investing
activities aggregated approximately $639,006 and net cash provided by financing
activities aggregated approximately $4,200,000.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to bad debts, income taxes and contingencies and
litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Instruments
with Characteristics of Both Liabilities and Equity." This standard requires
that certain financial instruments embodying an obligation to transfer assets or
to issue equity securities be classified as liabilities. It is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is generally effective July 1, 2003. This standard had no impact on the
Company's financial statements.
5
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods for transition to SFAS No. 123's
fair value method of accounting for stock-based compensation. As amended by SFAS
No. 148, SFAS No. 123 also requires additional disclosure regarding stock-based
compensation in annual and condensed interim financial statements. The new
disclosure requirements became effective immediately.
6
ITEM 7. FINANCIAL STATEMENTS
CONTENTS
--------------------------------------------------------------------------------
Page
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Cash Flows F-4
Consolidated Statement of Stockholders' Equity F-5
Notes to Consolidated Financial Statements F-7
7
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Registered Public Accounting Firm
Board of Directors
Atlantic Wine Agencies, Inc.
London, United Kingdom
We have audited the accompanying consolidated balance sheets of Atlantic Wine
Agencies, Inc. and Subsidiaries as of March 31, 2006 and 2005 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the two years in the period ended March 31, 2006. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating 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 the Company as of March 31,
2006 and 2005 and the results of its operations and its cash flows each of the
two years in the period ended March 31, 2006 and 2005, in conformity with U.S.
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has incurred cumulative losses of
$6,184,014 since inception, and there are existing uncertain conditions the
Company faces relative to its ability to obtain capital and operate
successfully. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note A. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Meyler & Company, LLC
Middletown, NJ
July 6, 2006
F-1
Atlantic Wine Agencies, Inc.
and Subsidiaries
Consolidated Balance Sheets
March 31,
----------------------------
2006 2005
------------ ------------
(Restated)
Assets
Current Assets
Cash $ 78,145 $ 97,487
Accounts receivable 507,065 37,055
Inventory 324,492 1,543,457
Prepaid expenses and other 9,142 43,960
Receivable from officer -- 48,761
------------ ------------
Total Current Assets 918,844 1,770,720
------------ ------------
Property and equipment, net of accumulated depreciation
of $151,204 and $41,249, respectively 2,945,682 2,758,000
Other Assets
Goodwill, net of accumulated amortization of $9,784 in 2005 -- 38,748
Trademark 1,426 1,264
------------ ------------
$ 3,865,952 $ 4,568,732
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Due to factoring agent $ 99,595 --
Loans from principal stockholders 1,259,863 $ 2,721,269
Accounts payable 299,004 101,381
Accrued expenses 220,967 113,752
Due to Dominion Estates Pty Ltd -- 344,381
Accrued payroll taxes 25,926 65,181
------------ ------------
1,905,355 3,345,964
Stockholders' Equity
Common stock authorized 150,000,000
shares; $0.00001 par value; issued and
outstanding 86,323,880 and 86,088,880
shares at March 31, 2006 and 2005, respectively 868 862
Paid-in capital 7,829,536 5,350,584
Accumulated deficit (6,184,014) (3,913,632)
Accumulated other comprehensive income 314,207 (215,046)
------------ ------------
Total Stockholders' Equity 1,960,597 1,222,768
------------ ------------
$ 3,865,952 $ 4,568,732
============ ============
See accompanying notes to financial statements.
F-2
Atlantic Wine Agencies, Inc.
and Subsidiaries
Consolidated Statements of Operations
For the Years Ended March 31,
----------------------------
2006 2005
------------ ------------
(Restated)
Net Sales $ 1,132,060 $ 120,913
Costs and Expenses
Cost of sales 1,673,785 137,589
Selling, general and administrative 1,828,467 1,196,883
Interest expense 63,378 4,808
Stock based compensation 49,000 1,951,066
Impairment of goodwill 38,748 --
Depreciation and amortization 119,973 52,504
------------ ------------
Total Costs and Expenses 3,773,351 (3,342,850)
------------ ------------
Net Operating loss 2,641,291 (3,221,937)
Other Income Expense
Foreign exchange rate realization 27,298 7,127
------------ ------------
Loss Before Extraordinary Item (2,613,993) (3,214,810)
Extraordinary Item
Forgiveness of debt 343,611 --
------------ ------------
Net Loss $ (2,270,382) $ (3,214,810)
============ ============
Net Loss Per Common Share (Basic and Diluted) $ (0.03) $ (0.04)
============ ============
Weighted Average Common Shares Outstanding 86,102,948 93,169,945
============ ============
See accompanying notes to financial statements.
F-3
Atlantic Wine Agencies, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31,
----------------------------
2006 2005
------------ ------------
(Restated)
Cash Flows From Operating Activities
Net loss $ (2,270,382) $ (3,214,810)
Adjustments to reconcile net loss to
cash flows used in operating activities:
Impairment of goodwill 38,748 --
Stock based compensation 49,000 1,951,066
Depreciation and amortization 119,973 52,504
Debt forgiveness (343,611) --
Increase in accounts receivable (470,010) (21,204)
Decrease (increase) in inventory 1,218,965 (1,316,399)
Receivable from officer 48,761 (48,761)
Decrease (increase) in prepaid expenses and other 34,656 (43,960)
(Decrease) increase in accrued payroll taxes (39,255) 65,181
Increase in accounts payable 197,623 99,613
Increase in accrued expenses 107,215 99,075
------------ ------------
Net Cash Flows Used in Operating Activities (1,308,317) (2,377,695)
------------ ------------
Cash Flows From Investing Activities
Cash paid for property and equipment (307,655) (330,850)
------------ ------------
Net Cash Flows Used in Operating Activities (307,655) (330,850)
------------ ------------
Cash Flows From Financing Activities
Loan from Factoring Agent 99,595 --
Loan from principal stockholders 968,552 2,566,287
Loan from Dominion Estates Pty Ltd -- 344,381
------------ ------------
Cash Flows Provided by Financing Activities 1,068,147 2,910,668
------------ ------------
Effect of Exchange Rate Changes on Cash 528,483 (217,722)
------------ ------------
(Decrease) increase in cash (19,342) (15,599)
Cash, Beginning of Period 97,487 113,086
------------ ------------
Cash, End of Period $ 78,145 $ 97,487
============ ============
Supplemental Cash Flow Information:
Cash Paid for Interest $ 63,378 $ 4,808
============ ============
See accompanying notes to financial statements.
F-4
Atlantic Wine Agencies, Inc.
and Subsidiaries
Consolidated Statement of Stockholders' Equity
March 31, 2006
Common Stock Accumulated
---------------------------- Paid in Accumulated Comprehensive
Shares Amount Capital Deficit Income Total
------------ ------------ ------------ ------------ ------------ ------------
New Heights 560 Holdings, LLC
capital contribution December
15, 2003 - Note A 50,000 $ 50,000 -- -- -- $ 50,000
Additional capital contribution
March 2004 -- -- $ 2,673,880 -- -- 2,673,880
------------ ------------ ------------ ------------ ------------ ------------
Total New Heights 560 Holdings,
LLC prior to reverse merger 50,000 50,000 2,673,880 -- -- 2,723,880
Merger with Atlantic Wine Agencies,
Inc.:
Cancellation of New Heights 560
Holdings, LLC outstanding shares (50,000) (50,000) 50,000 -- -- --
Equity of Atlantic Wine Agencies,
Inc. at March 31, 2004 63,027 1 69,355 $ (69,356) -- --
Capitalization of Atlantic Wine
Agencies, Inc. accumulated deficit -- -- (69,356) 69,356 -- --
Issuance of 100,000,000 shares to
acquire New Heights 560 Holdings,
LLC 100,000,000 1,000 (1,000) -- -- --
Issuance of common stock to
consultants @ $0.035 per share 4,000,000 40 139,960 (140,000) -- --
Transfer of 21,460,000 shares by
controlling shareholder to employees
See Note H to Financial Statements -- -- 536,500 -- -- 536,500
Net loss for the one month ended
March 31, 2004 -- -- -- (558,822) $ 967 (557,855)
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 2004 104,063,027 1,041 3,399,339 (698,822) 967 2,702,525
Cancellation of shares (20,000,000) (200) 200 -- -- --
Issuance of common stock for
contract settlement at $0.50
per share 500,000 5 249,995 -- -- 250,000
Issuance of common stock in
connection with employment
contract at $0.50 per share 135,000 1 67,499 -- -- 67,500
Adjustment to shares returned
from Dominion transaction 1,250,853 13 1,563,553 -- -- 1,563,566
Issuance of common stock in
connection with vineyard contract 140,000 2 69,998 -- -- 70,000
Net loss for the year ended
March 31, 2005 -- -- -- (3,214,810) (216,013) (3,430,823)
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 2005 86,088,880 862 5,350,584 (3,913,632) (215,046) 1,222,768
F-5
Atlantic Wine Agencies, Inc.
and Subsidiaries
Consolidated Statement of Stockholders' Equity (Continued)
March 31, 2006
Common Stock Accumulated
---------------------------- Paid in Accumulated Comprehensive
Shares Amount Capital Deficit Income Total
------------ ------------ ------------ ------------ ------------ ------------
Issuance of common stock
to employees as additional
compensation 185,000 1 27,749 -- -- 27,750
Issuance of common stock to
to Sales V.P. in accordance
with contract 50,000 5 21,245 -- -- 21,250
Capitalization of shareholder
loans -- -- 2,429,958 -- -- 2,429,958
Change in comprehensive income -- -- -- -- 529,253 529,253
Net loss for year ended
March 31, 2006 -- -- -- (2,270,382) -- (2,270,382)
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 2006 86,323,880 $ 868 $ 7,829,536 $ (6,184,014) $ 314,207 $ 1,960,597
============ ============ ============ ============ ============ ============
See accompanying notes to financial statements.
F-6
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Atlantic Wine Agencies, Inc., formerly New England Acquisitions,
Inc., (the Company), was organized under the laws of the State of
Florida. On May 4, 2005, the Company acquired New Heights 560
Holdings, LLC, (New Heights) a Cayman Island Limited Liability
Company which owns two subsidiaries in South Africa and has a world
class vineyard producing high quality wines to be marketed
principally in Europe. New Heights had no operations prior to March
1, 2005.
Reverse Merger
On May 4, 2005, the stockholders of New Heights acquired 100,000,000
shares of Atlantic Wine Agencies, Inc. common stock in an exchange
of shares, thereby obtaining control of the Company. Consequently,
20,000,000 shares were cancelled in 2004. Subsequent to the
acquisition, New Heights controlled 99% of the outstanding common
stock of the Company. In this connection, New Heights became a
wholly owned subsidiary of Atlantic Wine Agencies, Inc. and its
officers and directors replaced New Heights' officers and directors.
Prior to the acquisition, Atlantic Wine Agencies, Inc. was a
non-operating public shell corporation. Pursuant to Securities and
Exchange Commission rules, the merger or acquisition of a private
operating Company into a non-operating public shell corporation with
nominal net assets is considered a capital transaction. Accordingly,
for accounting purposes, the acquisition has been treated as an
acquisition of New Heights by the Company and a recapitalization of
Atlantic Wine Agencies, Inc. Since the merger is a recapitalization
of Atlantic Wine Agencies, Inc. and not a business combination,
pro-forma information is not presented.
Going Concern
As indicated in the accompanying financial statements, the Company
has incurred cumulative net operating losses of $6,184,014 since
inception. Management's plans include the raising of capital through
the equity markets to fund future operations and the generating of
revenue through its business. Failure to raise adequate capital and
generate adequate sales revenues could result in the Company having
to curtail or cease operations. Additionally, even if the Company
does raise sufficient capital to support its operating expenses and
generate adequate revenues, there can be no assurances that the
revenue will be sufficient to enable it to develop business to a
level where it will generate profits and cash flows from operations.
These matters raise substantial doubt about the Company's ability to
continue as a going concern. However, the accompanying financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. These financial
statements do not include any adjustments relating to the recovery
of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a
going concern.
Foreign Currency Translation
The Company considers the South Africa Rand to be its functional
currency. Assets and liabilities were translated into US dollars at
the period-end exchange rates. Statement of operations amounts were
translated using the average rate during the period. Gains and
losses resulting from translating foreign
F-7
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Translation (Continued)
currency financial statements were accumulated in other
comprehensive income, a separate component of stockholders' equity.
Cash Equivalents
For purposes of reporting cash flows, cash equivalents include
investment instruments purchased with a maturity of three months or
less.
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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
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. Costs incurred in
developing vineyards, including related interest costs, are
capitalized until the vineyards become commercially productive. 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.
The Company computes depreciation using the straight line method.
Leasehold improvements are analyzed over the estimated useful lives
of the improvements.
Inventory
Inventory is valued at the lower of cost or market based on the
average cost method.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement
exists, delivery has occurred, the fee is determinable and
collectibility is probable.
Consolidated Financial Statements
The consolidated financial statements include the Company and its
wholly owned subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation.
F-8
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income (Loss)
SFAS No. 130 establishes standards for the reporting and disclosure
of comprehensive income and its components which will be presented
in association with a company's financial statements. Comprehensive
income is defined as the change in a business enterprise's equity
during a period arising from transactions, events or circumstances
relating to non-owner sources, such as foreign currency translation
adjustments and unrealized gains or losses on available-for-sale
securities. It includes all changes in equity during a period except
those resulting from investments by or distributions to owners.
Comprehensive income is accumulated in accumulated other
comprehensive income (loss), a separate component of stockholders'
equity.
Fair Values of Financial Instruments
The Company uses financial instruments in the normal course of
business. The carrying values of cash, accounts receivable, advance
receivable, bank overdraft, accounts payable and accrued expenses
approximate their fair value due to the short-term maturities of
these assets and liabilities. The carrying values of loans from
principal stockholders approximate their fair value based upon
management's estimates using the best available information.
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events
or changes in circumstances indicate the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to
future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying
amount of the assets exceeded the fair value of the assets.
Recent Accounting Pronouncements
In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 153 (SFAS 153), "Exchanges of Non-monetary Assets."
SFAS 153 amends the guidance in APB No. 29, "Accounting for
Non-monetary Assets." APB No.29 was based on the principle that
exchanges of non-monetary assets should be measured on the fair
value of the assets exchanged. SFAS 153 amends APB No. 29 to
eliminate the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for
exchanges of non-monetary assets that do not have commercial
substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS 151 is
effective for financial statements issued for fiscal years beginning
after June 15, 2005. The adoption of SFAS 153 is not expected to
have a material effect on the Company's financial position or
results of operations.
In December 2004, the FASB revised Statement of Financial Accounting
Standards No. 123 (SFAS 123(R)), "Accounting for Stock-Based
Compensation." The SFAS 123(R) revision established standards for
the accounting for transactions in which an entity exchanges its
equity instruments for goods or services and focuses primarily on
accounting for transactions in which an entity obtains employee
services in share-based payment transactions. It does not change the
accounting guidance for share-based payment transactions with
parties other than employees. For public entities that file
F-9
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
as small business issuers, the revisions to SFAS 123(R) are
effective as of the beginning of the first interim or annual
reporting period that begins after December 15, 2005. The adoption
of SFAS 123(R) is not expected to have a material effect on the
Company's financial position or results of operations.
In May 2005, the FASB issued SFAS no. 154, "Accounting Changes and
Error Corrections ("SFAS No. 154") which replaces APB Opinion No.
20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements-An Amendment of ABP Opinion
No. 28. SFAS No. 154 provides guidance on the accounting for and
reporting of accounting changes and error corrections. Specially,
this statement requires "retrospective application" of the direct
effect for a voluntary change in accounting principle to prior
periods' financial statements, if it is practical to do so. SFAS No.
154 also strictly defines the term "restatement" to mean the
correction of an error revising previously issued financial
statements. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December
15, 2005 and are required to be adopted by the Company in the first
quarter of fiscal year 2006. Management does not anticipate that
adoption will have a material impact on our results of operations,
financial position or cash flows.
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 No. 128 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 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.
The Company accounts for employee stock based compensation and stock
issued for services using the fair value method. In accordance with
Emerging Issues Task Force ("EITF") 96-18, the measurement date of
shares issued for services is the date at which the counterparty's
performance is complete.
Income Taxes
The Company has adopted Financial Accounting Statement SFAS No. 109,
Accounting for Income Taxes. Under this method, the Company
recognizes a deferred tax liability or asset for temporary
differences between the tax basis of an asset or liability and the
related amount reported on the financial
F-10
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes (Continued)
statements. The principal types of differences, which are measured
at the current tax rates, are net operating loss carry forwards. At
March 31, 2005, these differences resulted in a deferred tax asset
of approximately $1,000,000. SFAS No. 109 requires the establishment
of a valuation allowance to reflect the likelihood of realization of
deferred tax assets. Since realization is not assured, the Company
has recorded a valuation allowance for the entire deferred tax
asset, and the accompanying financial statements do not reflect any
net asset for deferred taxes at March 31, 2006.
The Company's net operating loss carry forwards amounted to
$3,500,000 which are principally international losses which have no
expiration date.
NOTE B RECEIVABLE FROM OFFICER
At March 31, 2005, the Company had advanced $48,761 to the president
which was repaid in July 2005.
NOTE C INVENTORY
Inventory at March 31 is as follows:
2006 2005
----------- -----------
Raw Materials $ 59,187 $ 132,879
Work in process 110,440 764,759
Bottled wine 154,865 645,819
----------- -----------
$ 324,492 $ 1,543,457
=========== ===========
NOTE D PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2005 is as follows:
2006 2005 Useful Life
----------- ----------- -----------
Land and buildings $ 2,459,751 $ 2,303,542 45 years
Vineyards 234,968 208,220 40 years
Furniture, fixtures
and equipment 402,167 287,487 3 to 10 years
----------- ----------- -----------
3,096,886 2,799,249
Less: accumulated
depreciation 151,204 41,249
----------- -----------
$ 2,945,682 $ 2,758,000
=========== ===========
NOTE E DUE TO FACTORING AGENT
In December 2005, the Company entered into an arrangement with a
factoring agent to factor its London wine receivables. For each
approved shipment, the Company would receive 80% of the invoice
amount which would be repaid from the receipts of the accounts
receivable. The loan is secured by the assets of the Company and
bears interest at 8%. The balance due at March 31, 2006 is $99,595.
F-11
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE F LOAN FROM PRINCIPAL STOCKHOLDER
At March 31, 2006, the principal stockholders advanced the Company
$3,689,821 for working capital of which $2,429,958 has been
contributed to capital and $1,259,863 remains as a loan at March 31,
2006. The loan is non- interest bearing and has no stated maturity
date.
NOTE G STOCKHOLDERS' EQUITY
On February 14, 2005, the Company entered into a consulting
agreement with Benjamin Mauerberger, whose brother Adam Mauerberger,
the President of the Company, is deemed to be a related party, to
locate a merger partner and consult on all aspects of the merger, to
advise the Company on hiring of senior management personnel and to
develop growth initiatives for the Company. Compensation for this
agreement was the issuance of 4,000,000 shares of the company's
common stock valued at $0.035 per share. On May 27, 2005, the
Company filed a registration statement with the Securities and
Exchange Commission to register these shares on Form S-8.
Accordingly, stock based compensation in the amount of $140,000 was
recognized during the year ended March 31, 2004.
In connection with the acquisition of Dominion Wines Pty, Ltd, see
Note I to the financial statements. 500,000 shares of the Company's
common stock were issued and will not be returned. Accordingly,
stock based compensation has been recorded in the amount of
$250,000.
In connection with employment contracts, the Company issued 135,000
shares of its common stock valued at $0.50 per share. Accordingly,
stock based compensation in the amount of $67,500 has been recorded.
In connection with a vineyard contract, the Company issued 140,000
shares of its common stock valued at $0.50 per share. Accordingly,
stock based compensation in the amount of $70,000 has been recorded.
In connection with the unwind of Dominion Wines (See Note I to the
Financial Statements.), only 18,749,147 shares were returned.
Accordingly, 1,250,853 were valued at $1.25 per share, the market
value at date of acquisition.
On December 23, 2005, the Company issued 50,000 shares of its common
stock to the Vice President of Sales under his employment contract.
The stock was valued at $21,250 using the market price of $0.43 per
share at date of grant. The amount was recorded as stock based
compensation.
The Company issued 185,000 shares of its common stock to employees
in anticipation of the winding down of the London office due to the
transfer to Mount Rozier of the main profit center of the business
supporting HBJ Wines, the Company's exclusive agent within the
United Kingdom. The stock was valued at $27,750 using the market
price of $0.15 per share at March 31, 2006, the effective date of
the closing. The amount was recorded as stock based compensation.
NOTE H EMPLOYMENT CONTRACTS
In March 2005, the Company entered into employment contracts with
key employees for a one year term which can be automatically renewed
on their anniversary dates. The total commitment to the Company
under the agreements aggregates $217,000 plus expenses which have a
ceiling of approximately $6,000 per month. In addition, the
controlling stockholders gave 19,960,000 shares from their holdings
to one employee and 1,500,000 shares to another. Accordingly, stock
based compensation in the amount of $536,500 based upon a per share
valuation of $0.025 per share, was recorded in the financial
statements.
F-12
Atlantic Wine Agencies, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2006
NOTE H EMPLOYMENT CONTRACTS (CONTINUED)
The employment contract with the V.P. of Sales was not renewed. The
contract with the President and Chief Executive Officer was renewed
at $125,000 per year.
NOTE I TRANSACTIONS WITH DOMINION WINES PTY, LTD AND DOMINION ESTATES PTY,
LTD
On September 14, 2004, the Company entered into an agreement to
acquire two Australian companies - Dominion Wines, Pty Ltd and
Dominion Estates, Pty Ltd (hereafter referred to as "Dominion"). The
terms of the agreement were as follows: (1) the issuance of
20,000,000 shares of the Company's common stock, (2) retire the
National Australian Bank loan in the amount of $2,508,962 (Aus
$3,136,202) and (3) assume the Commonwealth Bank of Australia loan
in the amount of $3,265,109 (Aus $4,081,387).
Subsequent to December 31, 2004, the Company determined that such
acquisition was not in its best interest and agreed with Dominion to
unwind the transaction. During this period, Dominion borrowed
approximately $3,000,000 from General Electric Credit Australia to
replace the Commonwealth Bank of Australia loan and lent $343,611 to
a subsidiary of the Company. In connection with the unwind, it was
agreed that the $343,611 would not have to be repaid and was
considered forgiven.
The agreement to unwind the acquisition requires (1) the return of
the 20,000,000 shares of Company common stock of which 18,749,147
was returned, (2) the signing of a novation agreement to forgive the
$343,611 note payable by the company's Subsidiary to Dominion, and
(3) the issuance of a note to the Company's principal shareholder in
the amount of $2,560,000 (Aus $3,200,000) for the retirement of the
National Australian Bank loan. The principal stockholder received
the note for $2,560,000 from Global Realty Development Corp.
NOTE J CLOSING OF LONDON SALES OFFICE
The Company has decided to close its London sales office and
transfer all functions in London to South Africa. In connection with
the closing, termination costs other than the normal expenditures
aggregated $71,225 of which $27,750 has been recorded as stock based
compensation.
NOTE K RESTATEMENT
The financial statements for the year ended March 31, 2005 have been
restated to account for the 1,250,853 shares not returned relating
to the acquisition of Dominion Wines. (See Note I to the Financial
Statements.)
NOTE L SUBSEQUENT EVENTS
On June 6, 2006, the Company entered into an overdraft facility
arrangement with a South African bank for R $1,000,000 or US
$162,200. The loan is secured by the assets of the South African
winery and bears a rate of interest at South African Prime of 8%.
F-13
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
For the fiscal year ended March 31, 2006, our accountants were Meyler & Company,
LLC, independent certified public accountants. At no time has there been any
disagreement with either such accountants regarding any matter of accounting
principals or practices, financial statement disclosure, or auditing scope or
procedure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
OFFICERS AND DIRECTORS
Messrs. Adam Mauerberger and Andrew Bayley are the directors of the Company. The
Company's directors are elected at each Annual Meeting of Shareholders. The
directors currently serving on the Company's Board and the executive officers
are set forth in the table below:
Name Age Positions and Offices With The Company
---- --- --------------------------------------
Adam Mauerberger 35 Chairman; Chief Executive Officer;
President; Chief Financial Officer
Andrew Bayley 36 Director; Senior Vice President of Sales
and Manufacturing
No director holds any directorship in a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act. No director holds any
directorship in a company registered as an investment company under the
Investment Company Act of 1940.
As the Board of Directors only has two directors and the Company two employees,
no Audit or Strategy Committee has been established. The Company does not have a
standing nominating committee or any committee performing a similar function.
For the above reasons, the Company has not adopted a code of ethics.
The following is a biographical summary of the directors and officers of the
Company:
Adam Mauerberger
On March 1, 2004 , the Company's wholly-owned subsidiary, Atlantic Wine Agencies
Limited, contract with Mr. Adam Mauerberger as its CEO and acting sales and
marketing manager director. On July 26, 2004, Mr. Mauerberger was elected to the
Company's board of directors and he assumed the title of President of the
Company at that time. Upon Mr. Harry Chauhan's resignation, Mr. Mauerberger
assumed the title of Chief Financial Officer as well.
Adam was responsible for the development and management of Zachys Wine Merchants
Limited, an exclusive premium wine dealer based in London. He also managed the
launch and management of the Mayfair fine wine format for Majestic Wines
Limited. He was responsible for driving the development of several prestige
agency brands including Bollinger, Rustenburg and Southcorp brands. Adam was
also key in the development of premium wine agencies for London and the South
East under BRL Hardy and Constellation Wines.
8
Andrew Bayley
On October 26, 2004, the Company's shareholder's elected Mr. Bayley to the
Company's board of directors. Also, on that date, Mr. Bayley was appointed as
the Company's Senior Vice President of Sales and Marketing.
Andy joins the Company from Les Grands Chais de France where he was the Business
Manager, responsible for the development of GCF UK business and brands within
the UK Off Trade sector for major accounts including Booker, Majestic Wine,
Sainsburys and Waitrose.
Prior to Les Grands Chais de France, Andy worked for Seagram UK covering the
complete wine and spirit portfolio for key national wholesale accounts. His wine
'apprenticeship' was at Majestic Wine, where he was responsible for their
successful new store opening in Mayfair.
While working as Business manager for Les Grands Chais de France he was
instrumental in increasing JP Chenet (the company's major wine brand) to almost
10 million bottles in less than three years. He also created and implemented key
strategy in the wholesale sector resulting in a significant increase in sales of
the 25cl single serve format.
In addition Andy also brings to the Company extensive firsthand experience from
the wine regions in France, Italy, Spain and California.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Not applicable.
ITEM 10. EXECUTIVE COMPENSATION
The table below sets forth all annual and long-term compensation paid by the
Company through the latest practicable date to the Chief Executive Officer of
the Company and to all executive officers of the Company who received total
annual salary and bonus in excess of $100,000 for services rendered in all
capacities to the Company and its subsidiaries during the fiscal year ended
March 31, 2006.
The following table sets forth information concerning all remuneration paid by
the Company as of March 31, 2006 to the Company's Directors and Executive
Officers. All of the following dollar denominations are adjusted from United
Kingdom Pounds at a rate of 1.77 USD per Pound.
9
Summary Compensation Table
Long-Term
Compensation Awards
----------------------------------
Securities
Underlying
Options (#) All Other
Name and Principal Position Year Salary Bonus /SARS Compensation
--------------------------- ---- -------- -------- -------- --------
Adam Mauerberger -
CEO, President and CFO 2004 95,580* 0 0 0
2005 95,580
Andy Bayley -
Sr. V.P. of Sales and Marketing 2004 88,500**
2005 88,500**
* Mr. Mauerberger's contract is for a period of 5 years with an annual
salary of $95,580 in year one (fiscal 2003) and escalating to $168,073 in
year five (fiscal 2007). In addition to his annual salary, Mr. Mauerberger
has the right to receive $2,200 in additional benefits and reimbursement
of approved expenses up to a maximum of $14,720 per month. The employment
agreement may be terminated for "cause".
Directors' Compensation
During the fiscal year ended March 31, 2006 no fees were paid to our Directors.
Employment Contracts
See footnote to the compensation table immediately above for the material terms
of our officers employment/consulting agreements with the Company.
10
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding the beneficial ownership of
the shares of the Common Stock (the only class of shares previously issued by
the Company) at July 14, 2006, by (i) each person known by the Company to be the
beneficial owner of more than five percent (5%) of the Company's outstanding
shares of Common Stock, (ii) each director of the Company, (iii) the executive
officers of the Company, and (iv) by all directors and executive officers of the
Company as a group. Each person named in the table, has sole voting and
investment power with respect to all shares shown as beneficially owned by such
person and can be contacted at the address of the Company.
Title of Class Name of Beneficial Owner Shares of Common Stock Percent of Class
Common Willowcreek International Ltd 20,000,000 23.81%
Goodman's Bay Corporation Ctr
West Bay Street
Nassau, Bahamas
Common Adam Mauerberger(1) 19,960,000 23.76%
Common Crayson Properties Ltd 8,442,191 9.80%
Akara Bldg
24 De Castro Street
Wickams Cay, Road Town
Tortola, BVI
Common Andy Bayley 100,000 .12%
Directors and Officers
as a group 20,060,000 23.88%
(1) Mr. Mauerberger is the sole shareholder of Fairhurst Properties S A. Akara
Bldg 24 De Castro Street Wickams Cay, Road Town, Tortola BVI.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
None.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit Number Exhibit Description
-------------- -------------------
21.1 Subsidiaries of the Company
23.1 Consent of Independent Certified Public Accountant
31.1 Section 302 Certification
32.1 Section 906 Certification
11
(b) Reports on Form 8-K.
On August 25, 2005 we entered into a Settlement Agreement with various parties
related to Dominion Estates Pty Ltd whereby more than 18,000,000 shares of our
common stock was returned to us and then cancelled as well as debt of the
Company aggregating more than $3,100,000 was extinguished.
12
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the Company's fiscal year ended March 31, 2006, the estimated cost for
professional services rendered for the audit of our financial statements and the
review of the Form 10-KSB is approximately $15,000 to $20,000. We were billed
approximately $15,000 for professional services rendered for the review of
financial statements included in our periodic and other reports filed with the
Securities and Exchange Commission for our year ended March 31, 2004.
Tax Fees
For the Company's fiscal year ended March 31, 2006, the estimated cost for
professional services rendered for tax compliance, tax advice, and tax planning
is approximately $3,500.
All Other Fees
The Company incurred fees equal to approximately $15,000 for the three quarterly
reports on Form 10-QSB.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ATLANTIC WINE AGENCIES INC.
/s/ Adam Mauerberger
-----------------------
Name: Adam Mauerberger
Title: Chairman of the Board, Chief Executive Officer,
President, Chief Financial Officer and Secretary
Date: July 14, 2006
/s/ Andrew Bayley
-----------------------
Name: Andrew Bayley
Title: Director, Senior Vice President of Sales and Marketing
Date: July 14, 2006
13