10Q :Form 10QSB for ATNG INC
14-May-2004
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
FORWARD-LOOKING INFORMATION
Much of the discussion in this Item is "forward looking" as that term isused in Section 27A of the Securities Act and Section 21E of the SecuritiesExchange Act of 1934. Actual operations and results may materially differ frompresent plans and projections due to changes in economic conditions, newbusiness opportunities, changed business conditions, and other developments.Other factors that could cause results to differ materially are described in ourfilings with the Securities and Exchange Commission.
The following are factors that could cause actual results or events todiffer materially from those anticipated, and include, but are not limited to,general economic, financial and business conditions, changes in and compliancewith governmental laws and regulations, including various state and federalenvironmental regulations, our ability to obtain additional financing fromoutside investors and/or bank and mezzanine lenders, and our ability to generatesufficient revenues to cover operating losses and position us to achievepositive cash flow.
Readers are cautioned not to place undue reliance on the forward-lookingstatements contained herein, which speak only as of the date hereof. We believethe information contained in this Form 10-QSB to be accurate as of the datehereof. Changes may occur after that date. We will not update that informationexcept as required by law in the normal course of our public disclosurepractices.
Additionally, the following discussion regarding our financial conditionand results of operations should be read in conjunction with the financialstatements and related notes contained in Item 1 of Part I of this Form 10-QSB,as well as the financial statements in Item 7 of Part II of our Form 10-KSB forthe fiscal year ended December 31, 2003.
MANAGEMENT'S PLAN OF OPERATION
During 2001, we commenced operations and earned our initial revenue fromtelecommunication services. During the latter part of 2002 we were not able toraise sufficient capital to continue our business objectives. Therefore, all ouroperations ceased, all employees were terminated, all assets were written offand all liabilities provided for in the financial statements at December 31,2002. Since then, Dr. Robert Simpson has either provided working capital orfacilitated the acquisition of working capital to revitalize the business.
Our current purpose is to seek, investigate and, if such investigationwarrants, acquire an interest in business opportunities presented to us bypersons or firms who or which desire to seek the perceived advantages of acorporation which is registered under the Securities Exchange Act of 1934 (the"Exchange Act"). We do not restrict our search to any specific business;industry or geographical location and we may participate in a business ventureof virtually any kind or nature. This discussion of the proposed business ispurposefully general and is not meant to be restrictive of our virtuallyunlimited discretion to search for and enter into potential businessopportunities.
We may seek a business opportunity with entities which have recentlycommenced operations, or which wish to utilize the public marketplace in orderto raise additional capital in order to expand into new products or markets, todevelop a new product or service or for other corporate purposes. We mayacquire assets and establish wholly owned subsidiaries in various businesses oracquire existing businesses as subsidiaries.
As part of our investigation of potential merger candidates, our officersand directors will meet personally with management and key personnel, may visitand inspect material facilities, obtain independent analysis or verification ofcertain information provided, check references of management and key personneland take other reasonable investigative measures, to the extent of our financialresources and management expertise. The manner in which we participate in anopportunity will depend on the nature of the opportunity, the respective needsand desires of us and other parties, the management of the opportunity, ourrelative negotiation strength and that of the other management.
Management intends to concentrate on identifying preliminary prospectivebusiness opportunities that may be brought to its attention through presentassociations of our officers and directors, or by our shareholders. Inanalyzing prospective business opportunities, management will consider suchmatters as the available technical, financial and managerial resources; workingcapital and other financial requirements; history of operations, if any;prospects for the future; nature of present and expected competition; thequality and experience of management services which may be available and thedepth of that management; the potential for further research, development orexploration; specific risk factors not now foreseeable but which then may beanticipated to impact our proposed activities; the potential for growth orexpansion; the potential for profit; the perceived public recognition oracceptance of products, services or trades; name identification; and otherrelevant factors. Our officers and directors will meet personally withmanagement and key personnel of the business opportunity as part of theirinvestigation. To the extent possible, we intend to utilize written reports andpersonal investigation to evaluate the above factors. We will not acquire ormerge with any company for which audited financial statements cannot be obtainedwithin a reasonable period of time after closing of the proposed transaction.
We will not restrict its search to any specific kind of firms, but mayacquire a venture which is in its preliminary or development stage, which isalready in operation or which is in essentially any stage of its corporate life.It is impossible to predict at this time the status of any business in which wemay become engaged, in that such business may need to seek additional capital,may desire to have its shares publicly traded or may seek other perceivedadvantages which we may offer.
We are over a year into a turnaround period with the negotiation forstrategic alliances acquisitions of several entities that can provide steadysignificant growth to us. The first acquisition is planned for May 12, 2004.
In this Form 10-QSB Quarterly Report, references to "us" refer to ATNG Incand our subsidiaries, unless the context indicates otherwise.
FIRST QUARTER COSTS AND CHANGES IN FINANCIAL CONDITIONS
SALES
We have generated no sales revenues during the period covered by this Form
10-QSB.
LOSSES
Net loss for the three months ended March 31, 2004, was $638,187. The lossis primarily attributable to the costs associated with our of several lawsuitsand expenses relating to administration.
We expect to become profitable in fiscal year 2004 through acquisitions ofat least two of our strategic partners. There can be no assurance that we willachieve or maintain profitability, generate revenue or sustain future growth.
RESULTS OF OPERATIONS
During the quarter ended March 31, 2004, we incurred an operating loss of$638,187 and had no revenues. The loss featured, advertising, general andadministrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
As discussed by our accountants in the audited financial statementsincluded in Item 7 of our Annual Report on Form 10-KSB for the year endedDecember 31, 2003, our revenue is currently insufficient to cover our costs andexpenses. Dr. Robert Simpson, our director and chief executive officer,continues to provide us the funds needed to continue its development andoperations. To the extent our revenue shortfall exceeds this stockholder'swillingness and ability to continue providing us the funds needed, managementanticipates raising any necessary capital from outside investors coupled withbank or mezzanine lenders. As of the date of this report, we have not enteredinto any negotiations with any third parties to provide such capital.
Our management anticipates that our current financing strategy of privatedebt and equity offerings will meet its anticipated objectives and businessoperations for the next 12 months. Management continues to evaluateopportunities for corporate development. Subject to its ability to obtainadequate financing at the applicable time, we may enter into definitiveagreements on one or more of those opportunities.
RECENT DEVELOPMENTS
On January 27, 2004, we received a request from DK Holdings, L.L.C.pursuant to Rule 14d-5 under the Securities Exchange Act of 1934, as amended.On January 27, 2004, we responded to DK Holdings, L.L.C. that as soon as itsrequest was made in proper form, we would comply with the request as required bylaw. We have no previous knowledge of DK Holdings, L.L.C. or what itsintentions might be.
Rule 14d-5 of the Exchange Act typically is used in connection with tenderoffers. As of the date of this Report, we have no information with respect toany tender offer for our securities. As soon as we possess such information,appropriate disclosures will be made as required by law.
At a status conference held by the Bankruptcy Court and attended by ourcounsel and counsel for the petitioning creditors on April 7, 2004, it wasannounced to the Court that we have reached a settlement agreement with allpetitioning creditors to dismiss the involuntary bankruptcy petition which thePetitioning Creditors had filed against us on July 15, 2003, in Case No. LA03-28687-BB, pending in the U.S. Bankruptcy Court for the Central District ofCalifornia in Los Angeles. The settlement agreement is subject to BankruptcyCourt approval. A final court hearing to obtain such approval is scheduled forMay 12, 2004. Our counsel is optimistic that the Bankruptcy Court will approvethe proposed settlement at the time of the final hearing.
When such settlement is approved, the involuntary bankruptcy case will bedismissed in its entirety, and such settlement will also enable all othermaterial litigation pending against us to be finally resolved and dismissed,that being the cases of James M. Crunk v. ATNG, Case No. 01-CV-2573 pending inthe U.S. District Court for the Western District of Tennessee, and CNM Network,Inc. v. ATNG, Case No. SC070673 pending in the Superior
Court of Los Angeles County, California. Both Crunk and CNM Network, Inc. havesigned settlement agreements with us.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
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