UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the period ended November 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE Act of 1934 for the transition period from ___ to ___.
Commission File Number 0-30368
American International Ventures, Inc.
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(Name of Small Business Issuer in its charter)
Delaware 22-3489463
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(State or other jurisdiction of (I.R.S. Employer Identification no.)
incorporation or organization)
260 Garibaldi Avenue, Lodi, New Jersey 07644
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(Address of principal executive offices)
(973) 335-4400
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(Registrant's telephone number, including area code)
Securities registered under Section 12 (b) of the Act:
Title of each class Name of exchange on which
to be registered each class is to be registered
None None
Securities registered under Section 12(g) of the Act:
Common Stock
--------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the proceeding 12 months and (2) has been subject to such filing requirements for the past 90 days.
(1) Yes: [ ] No: [X]
(2) Yes: [X] No: [ ]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 30, 2002: 20,210,210 shares of Common Stock, $.00001 par value.
Transitional Small Business Issuer Format (Check One):
Yes: No: X
PART I -FINANCIAL INFORMATION
Page Number
Item 1. Financial Statements (Unaudited):
-Consolidated Balance Sheet at November 30, 2002
and May 31, 2002 3
-Consolidated Statements of Operations
for the six month periods ended November 30, 2002 and
November 30, 2001 4
-Consolidated Statements of Operations
for the six month periods ended November 30, 2002 and
November 30, 2001 5
-Consolidated Statements of Cash Flows for the six months
ended November 30, 2002 and the six months
ended November 30, 2001 6
-Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis. 7
Item 3. Effectiveness of the registrant’s disclosure controls
and procedures. 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 11
Item 2. Changes in Securities. 11
Item 3. Defaults upon Senior Securities. 11
Item 4. Submission of Matters to Vote of Securityholders. 11
Item 5. Other Information. 11
Item 6. Exhibits and Reports on Form 8-K. 11
Signatures 11
#
AMERICAN INTERNATIONAL VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
ASSETS
November 30, 2002
May 31, 2002
(Unaudited)
(Audited)
Current Assets
Cash
$ 72,345
$ 7,370
Accounts receivable, less allowance for
doubtful accounts
6,173
15,263
Inventory
1,304
1,346
Marketable securities
50,220
53,320
Prepaid expense
150
150
Total current assets
130,192
77,449
Fixed Assets
Office furniture and equipment
15,682
15,682
Less, accumulated depreciation
9,954
8,438
Net fixed assets
5,728
7,244
Other Assets
Deferred financing cost
5,417
6,417
Security deposits
550
550
Gold deposit
3,273
-
Total other assets
9,240
6,967
TOTAL ASSETS
$ 145,160
$ 91,660
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses
$ 435,808
$ 395,208
Payroll and sales taxes payable
100,099
93,428
Current portions of notes payable
94,849
97,949
Stockholder advance
45,691
21,594
Total current liabilities
676,447
608,179
Notes Payable
46,645
51,366
Total Liabilities
723,103
659,545
Stockholders’ Deficit
Common stock – authorized, 50,000,000
shares of $.00001par value; issued and
outstanding, 20,210,210 and 19,752,210
shares, respectively
202
197
Capital in excess of par value
855,985
741,490
Accumulated deficit
(1,484,350)
(1,362,892)
Accumulated other comprehensive income
50,220
53,320
Total stockholders’ deficit
(577,943)
(567,885)
TOTAL LIABILITIES AND
STOCKHOLDERS’ DEFICIT
$ 145,160
$ 91,660
The accompanying notes are an integral part of these financial statements.
-1-
AMERICAN INTERNATIONAL VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Month Periods Ended November 30,
(Unaudited)
2002
2001
Net Sales
$ 143,724
$ 185,877
Cost of Goods Sold
91,766
119,807
Gross Profit
51,958
66,070
Selling and Administrative Expenses
155,511
236,396
Operating loss
(103,553)
(170,326)
Other Income and Expense
Rental income
-
6,750
Interest expense
(19,944)
(14,713)
Net loss on sale of furniture
-
(3,259)
Gain on sale of securities
2,029
-
Net Loss
(121,458)
(181,548)
Other Comprehensive Loss:
Holding loss arising during the period
(1,061)
-
Reclassification adjustment for gain
included in net loss
(2,039)
-
Total Comprehensive Loss
$(124,558)
$(181,548)
Loss Per Share:
Basic and Diluted
$(.01)
$(.01)
Weighted Average Number of Shares Outstanding
19,933,210
14,445,544
The accompanying notes are an integral part of these financial statements.
-2-
#
AMERICAN INTERNATIONAL VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Month Periods Ended November 30,
(Unaudited)
2002
2001
Net Sales
$ 72,765
$ 95,519
Cost of Goods Sold
47,991
96,406
Gross Profit
24,774
(877)
Selling and Administrative Expenses
64,344
119,198
Operating loss
(39,570)
(120,085)
Other Income and Expense
Rental income
-
-
Interest expense
(9,388)
(11,431)
Net loss on sale of furniture
-
(3,259)
Gain on sale of securities
2,039
-
Net Loss
$ (46,919)
$(134,775)
Other Comprehensive Loss:
Holding loss arising during the period
(1,061)
-
Reclassification adjustment for gain
included in net loss
(2,039)
-
Total other comprehensive loss
(3,100)
-
Total Comprehensive Loss
$( 65,319)
$(134,775)
Loss Per Share:
Basic and Diluted
$ -
$(.01)
Weighted average number of shares outstanding
20,283,543
14,445,544
The accompanying notes are an integral part of these financial statements.
-3-
AMERICAN INTERNATIONAL VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended November 30,
(Unaudited)
2002
2001
Cash Flows From Operations:
Net loss
$(121,458)
$(181,548)
Adjustments to reconcile net loss to net cash
consumed by operating activities:
Depreciation
1,516
2,142
Decrease in deferred financing cost
1,000
1,000
Loss on sale of furniture
-
3,259
Changes in current assets and liabilities:
Increase in payroll and sales taxes payable
6,671
22,177
Decrease in accounts receivable
9,090
8,515
Decrease in security deposits
-
4,994
Increase in accounts payable and
accrued liabilities
40,600
138,479
Decrease in liability for security deposit
-
(1,800)
Decrease in inventory
42
1,461
Net cash consumed by operating activities
(62,539)
(1,321)
Cash Flows From Investing Activities:
Investment in gold deposit
(3,273)
-
Proceeds from sale of furniture
-
1,200
Fees paid to arrange debt financing
-
-
Net cash provided (consumed) by
investing activities
(3,273)
1,200
Cash Flows From Financing Activities:
Proceeds of sales of common stock
114,500
-
Proceeds of borrowing
-
14,153
Repayments of debt
(7,810)
(21,053)
Increase in stockholder advances
24,097
4,600
Net cash provided (consumed) by
financing activities
130,787
(2,300)
Net increase (decrease) in cash
64,975
(2,421)
Cash balance, beginning of period
7,370
3,811
Cash balance, end of period
$ 72,345
$ 1,390
The accompanying notes are an integral part of these financial statements.
-4-
AMERICAN INTERNATIONAL VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2002
(Unaudited)
1.
BASIS OF PRESENTATION
The unaudited interim consolidated financial statements of American International Ventures, Inc. and its subsidiary ("the Company") as of November 30, 2002 and for the three and six month periods ended November 30, 2002 and 2001, have been prepared in accordance accounting principles generally accepted in the United States of America. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results of operations for the six months ended November 30, 2002 are not necessarily indicative of the results to be expected for the full fiscal year ending May 31, 2003.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended May 31, 2002.
2.
SUPPLEMENTARY CASH FLOWS INFORMATION
There was no cash paid for income taxes during either of the periods presented. Payments for interest were $11,109 in the 2002 period and $10,299 in the 2001 period.
-5-
Item 2. Management's Discussion and Analysis.
Overview
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In March 2001, the Company acquired all the issued and outstanding capital stock of TLM Industries, Inc. (“TLM”). TLM thereafter merged with its wholly owned subsidiary, GetToner.com, Inc. ("GetToner"), pursuant to which GetToner was the surviving entity. For the period represented by this filing, GetToner is a wholly owned subsidiary of the Company, and is engaged in the business of selling office supply products, principally disposable imaging products such as laser toner, inkjet, and fax ribbon cartridges for computer printers, fax machines and copiers.
Prior to the transaction with TLM and GetToner, the Company’s operations consisted of providing limited consulting services to mining companies. These services included the review of existing, and introduction of new, assay processes, and the introduction of technical personnel and sources of investment capital. During 1999, the Company provided consulting services to Birch Mountain Resources Ltd., a company trading on the Canadian Venture Exchange (symbol: BMD.V) under an arms’ length agreement. The Company introduced technical consultants to Birch Mountain that advanced certain mining assay procedures employed by Birch Mountain. In exchange for providing services to Birch Mountain, the Company may be entitled to receive a total of 500,000 shares of common stock of Birch Mountain, of which 350,000 shares have been received to date by the Company. The remaining 150,000 shares will be issued to the Company contingent upon Birch Mountain developing a proprietary assay procedure that meets certain established standards. At this time, the Company is uncertain as to whether it will receive the remaining 150,000 shares of Birch Mountain common stock. The Company may explore the possibility of providing similar consulting services to other mining companies in the future, although it has no present arrangement with any other mining company.
Six Month Period ended November 30, 2002 compared with Six Month Period ended November 30, 2001.
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Revenues for six month period ended November 30, 2002 were $143,724 which represents a decrease of $42,153 or 22.7% from revenues of $185,877 for the comparable period in 2001. The revenues for both periods reflect sales from the Company’s subsidiary, GetToner.com. The revenue decrease was due to a shift in product mix and market emphasis. Prior to 2001, a significant portion of sales was directed to wholesalers purchasing register tapes, which produced higher revenues per sale but carried lower profit margins. During 2001, GetToner shifted its sales emphasis to retail customers purchasing inkjet and laser toner cartridges through the Internet and other sales channels, which produced smaller revenues per sale but carry higher profit margins. During later part of this fiscal year end 2001, the Company began to experience lower selling prices resulting from increased competition and higher product costs due to supplier changes, both of which reduced the projected higher margins of its cartridge sales for the 2002 period.
Cost of goods sold for the 2002 period totaled $91,766 or 63.8% of total revenue contrasted with $119,807 or 64.5% of total revenue for the 2001 period. The slight decrease in cost of sales on a percentage basis for the 2002 period reflects a change in the mix of products sold. Gross profit for the 2002 period was $51,958 compared with $66,070 for the 2001 period. The decrease of $14,112 or 21.4% reflects the impact of lower sales in the 2002 period matched against relatively flat cost of goods sold for the comparable periods.
Selling and administrative expenses which consists of marketing expenses, salaries, rent, and other general and administrative expenses were $155,511 for the 2002 period contrasted with $236,396 for the 2001 period. The decrease of $80,885 or 34.2% from the prior period is due principally to lower salaries and related costs attributable to a reduction in salary paid to a Get Toner officer, and lower rent for GetToner’s new offices.
Operating loss for the 2002 period was $103,553 compared with an operating loss of $170,326 for the prior period. The decrease in operating loss of $66,773 or 39.2% from the prior period is due principally to the reduction in selling and administrative expenses offset by the reduction in total sales. No research and development costs were incurred during the 2002 or 2001 periods, and there is no seasonal impact on the Company's sales.
During 2001, the Company subleased to a third party part of GetToner’s office space that it previously occupied and received $6,750 in rental income during the 2001 period. No sublease arrangement exists for GetToner’s current offices. Interest expense on long and short term debt totaled $19,944 contrasted with $14,713 for the prior 2001 period. The increase of $5,231 or 35.6% is due to an increase in credit card and bank debt which was incurred during the period to support the operations of GetToner.
Total comprehensive loss for the six month period in 2002 decreased $56,990 or 31.4% to $124,558 from $181,548 for the comparable period in 2001 for the reasons discussed above.
Liquidity And Capital Resources.
As of November 30, 2002, the Company's working capital deficit was $546,255 compared with a working capital deficit of $530,730 for the May 31, 2002 year end. The increase in deficit for the current period reflects the operational losses sustained by GetToner during this period, partially offset by the private placement of the Company’s securities which occurred during the current period.
During fiscal year 1999 and continuing through February 2001, prior to the acquisition of TLM and GetToner, the Company's capital requirements have been insignificant due to its relatively limited operations. During this period its capital requirements have been funded principally through the private placement of its common stock and from loans from the Company's President and Chairman. During fiscal 2001 and in connection with the acquisition of TLM, the Company raised $153,500 from the private placement of 1,800,000 shares of common stock at prices ranging from $0.06 to $0.10 per unit. Of the shares sold, 650,000 were sold as units, each of which included a warrant entitling the holder to purchase an additional share at anytime during the ensuing year at a price of $1 per share. The proceeds were used to fund the operation of GetToner. In February 2001, the Company and its Chairman and President each agreed to certain compensation arrangements for the one-year period ending May 31, 2001. In consideration for acting as chairman and president of the Company for such period, the Company issued 300,000 shares of common stock of each such officer. In addition, during February 2001, the Company issued 191,000 shares of common stock in exchange for cancellation of a loan in the amount of $19,035 in favor of the Company’s Chairman and issued 181,000 shares of common stock in exchange for cancellation of a loan in the amount of $18,129 in favor of the Company's President. During fiscal 2002, the Company raised $35,000 in gross proceeds in connection with the private placement of 140,000 units. Each consists of one share of common stock and one half of a stock purchase warrant exercisable one year from the issue date at a price of $0.50. The warrants have expired unexercised. During the six month period ended November 30, 2002, the Company raised $114,500 in connection with the sale of units of the Company at a price per unit of $0.25. Each unit consists of one share of common stock and one half of common stock warrant which expires one year from issue date. Each full warrant enables the holder to acquire one share of common stock at an exercise price of $1.00 per share.
The Company has experienced significant losses in connection with the operations of GetToner. The Company is uncertain as to when it will achieve profitable operations. Until it achieves profitable operations, the Company intends to finance its ongoing operations through the private placement of its capital stock, through debt financing, or though the sale of its assets in the form of common stock of Birch Mountain Resources Ltd. As of May 31, 2002, the value of the Birch Mountain common stock (based upon the closing price of May 31, 2002) was $53,320 USD. At this time, the Company has no commitments for any such financing. No assurances can be given that the Company will be successful in these endeavors. If the Company is unsuccessful in these endeavors, it will have a material adverse impact on Company and its ability to conduct its business in the future. Accordingly, the Company’s financial statements contain note disclosures describing the circumstances that lead to doubt over the ability of the Company to continue as a going concern. In his report on the consolidated financial statements for the year ended May 31, 2002, the Company’s independent auditor included an explanatory paragraph regarding its ability to continue as going concern.
On April 29, 2003, the Company entered into an agreement with the former principals of GetToner which effectively rescinded the GetToner transaction. Under the agreement, the Company returned the capital stock of GetToner to its former principals in exchange for receiving 1,751,666 shares of the Company’s common stock from the GetToner principals which was previously issued to such principals in connection with GetToner acquisition (See “Item 12 Certain Relationships and Related Transactions”). As a result of this transaction, the Company believes that it significantly reduced its operating cash requirements and improved its balance sheet by eliminating the GetToner liabilities.
During the quarter ended May 31, 2002, the Company’s board of directors determined to re-direct its efforts towards the mining industry. The decision to re-direct its efforts towards the mining industry was based in part upon the belief by management that precious metal prices would rise in the future. To that end, the Company effected management changes in April and May 2002. The management change was intended to strengthen the Company’s management experience in the mining industry. Although the Company appointed Robert G. Carrington and Samuel G. Nunnemaker, as the Company’s new directors and new Chairman and President in April 2002, it removed both parties as officers of the Company on May 6, 2003 and as directors of the Company on December 15, 2003. It appointed Myron Goldstein, an experienced mining executive, as a director on March 25, 2003 and as Chairman on May 6, 2003. The Company’s plan of operations for the foreseeable future is to continue to seek, identify and, if successful, acquire a portfolio of mineral, principally gold properties, in the United States, which based upon existing data, is undervalued or sub-economic but prospective. These properties likely have had prior mineral exploration work or actual mining activities conducted on site, but these operations were abandoned due to gold prices prevailing at the time. Once a sub-economic property is identified and /or acquired, the Company intends to re-evaluate the property based on the experience of its Chairman and consultants, and will seek to enhance its value by performing a limited amount of exploratory work. The exploratory work may consist of on site geological mapping, field testing and drilling additional exploratory holes in order to improve the economic viability of the property. At this time, the Company does not intend to engage in actual mineral extraction operations. However, if the Company is successful in enhancing the property value through its additional exploratory work, it may consider a number of options, including selling the property to interested mining company.
In this regard, on July 16, 2002, the Company acquired certain patented and unpatented mining claims known as the Bruner property located in Nye County, Nevada from Orcana Resources, Inc. and Miramar Gold Corporation (collectively “Orcana”). Under the terms of acquisition, the Company is required to maintain the property in good standing under state mining regulations for at least one full assessment year and pay Orcana a two percent net smelter royalty on all metals and materials mined or produced from the property. The Company maintains the right to purchase the net smelter royalty from Orcana for the sum of $250,000 payable in cash and/or marketable securities of the Company. In addition, upon achieving commercial production on the Bruner property, the Company is obligated to pay Orcana $250,000 within 120 day of achieving such commercial production. The payment may be in the form of cash and/or marketable securities of the Company. Since its acquisition, the Company has reviewed existing geological data, staked additional claims in the area, and conducted limited geochemical studies on the property. The Company intends to conduct additional exploratory work on the property consisting mainly of drilling a series of shallow and deeper drill holes in an attempt to establish a commercially viable mineral property. The Company will be required to raise additional funds in order to complete the additional exploration work, the amount of which has not been determined by the Company.
Risk Factors.
See the Company's Annual Report on Form 10-KSB for the period ending May 31, 2002 (“Form 10-KSB”) for additional statements concerning operations and future capital requirements. Certain risks exist with respect to the Company and its business, which risks include: its limited assets, absence of significant operating revenue, and the need for additional capital; lack of established marketing strategy; sale of compatible and remanufactured products; and competition; among other factors. Readers are urged to refer to the section entitled “Cautionary Statements” in the Company’s Form 10-KSB for a broader discussion of such risks and uncertainties.
Item 3. Effectiveness of the registrant’s disclosure controls and procedures
At November 30, 2002, the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined by Rule 13a-14(c) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company’s chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company’s disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether:
(i) this quarterly report on Form 10 QSB contains any untrue statement of a material fact or omits 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 quarterly report on Form 10-QSB, and (ii) the financial statements, and other financial information included in this quarterly report on Form 10-QSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report on Form 10-QSB.
There have been no significant changes in the Company's internal controls or in other factors since the date of the President’s and Principal Financial Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.
PART II
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
During the six month period ended November 30, 2002, the Company raised $114,500 in connection with the sale of its securities in the form of units. Each unit consists of one share of common stock and one half of common stock warrant which expires one year from issue date. Each full warrant enables the holder to acquire one share of common stock at an exercise price of $1.00 per share.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K
(a). Furnish the Exhibits required by Item 601 of Regulation S-B.
Exhibit 31 – Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002.
Exhibit 32 – Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.
(b) Reports on Form 8-K.
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: January 8, 2004
AMERICAN INTERNATIONAL VENTURES, INC.
/s/ Jack Wagenti
Jack Wagenti
Principal Accounting Officer and
Principal Executive Officer