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, 2004 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.)
64 Knightsbridge, London, United Kingdom SW1X
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 011-44-7979-057-708
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 June 28, 2004 was approximately $114,469,330 based on
104,063,027 shares of common stock outstanding on June 28, 2004.
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").
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 105 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 site in terms of location, soil composition and future development
potential.
Mount Rozier Estates (Pty) Limited and Mount Rozier Properties (Pty) Limited
produces top end quality wines on a boutique vineyard basis. We intend to become
a notable producer of quality wines from South Africa by further: (i) developing
and expanding our wine cellars through better crop management; (ii) enhancing
our strategic distribution channels with Atlantic Wine Agencies Limited; and
(iii) brand development efforts.
The launch of the wines under new patent branded labeling and marketing are
expected to be launched internationally in the second half of calendar year
2004.
Our wines will be initially issued in three tiers: Mount Rozier a top quality
premium brand; Rozier Reef a mid price range wine; and Rozier Bay a mass market
product.
1
On February 22, 2004 the Company formed Atlantic Wine Agencies Limited, a wholly
owned subsidiary in the United Kingdom for the purposes of exclusive
distribution rights of wines and products in the United Kingdom, the European
Community and the United States of America in perpetuity.
Also in February 2004, the Company's wholly-owned subsidiary, Atlantic Wine
Agencies Limited entered into a consulting agreement with Mr. Adam Mauerberger
as a consultant for general business purposes as well as with marketing and
distribution matters.
Atlantic Wine Agencies Ltd. has also contracted the services of Mr. Christopher
Burr a wine master internationally respected for his opinion and knowledge of
wines and a former managing director of Christies Auction House in London, as
well as hired a specialist wine maker, a professional viticulturalist and an
experienced estate manager. Turner Townsend Plc has been retained as the
construction supervision manager due to its international reputation for
experience in project property development and agricultural management.
Although not yet formalized, the Company is studying the feasibility of leisure
and residential development on our vineyard properties as an additional revenue
stream and asset enhancement project.
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
29.6 hectares, 50.9 hectares and 29.2 hectares making a total of 105.74
hectares. These properties are held in 3 separate title deeds.
The Estate also comprises of a winery, barrel holding area, a number of outer
houses which are being converted into Guest Lodges, 2 main residences one for
the use of the Estate 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 will be converted to a meet and greet area for the professional buyers.
The Estate also has its own water dam which supplies not only the farm on the
estate but also other neighbors on a limited basis. Around 20 hectares of land
are under wine currently which will increase to around 60 hectares. The property
is located next to a site owned by Anglo American, known as Vergelegen Estate.
Access to the farm is by way of a servitude road which is a common road , which
is served and serviced by all the farms in the vicinity, therefore can be
classed as a common access road.
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.
2
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
1) On December 16, 2003, the majority shareholders approved the sale of
9,234,520 shares of common stock to Rosehill Investments Limited. Also on
that date, the new shareholders appointed two interim directors.
2) On January 3, 2004, the majority shareholder elected to change to the
Company's name from New England Acquisitions, Inc. to its present name.
3) On February 9, 2004, the majority shareholder appointed one director and
accepted the resignation of the prior two directors.
4) On March 1, 2004, the majority shareholder approved a 1-for-200 reverse
stock split.
5) On May 4, 2004, the majority shareholder approved entering into an
exchange agreement with New Heights 560 Holdings, Inc., whereby New
Heights became the majority shareholder in exchange for all of its assets.
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, 2001 through June 28, 2004.
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
2003
Fourth Quarter 2.40 1.60
2004
First Quarter 1.90 1.60
Second Quarter 2.25 1.45
Third Quarter No activity No activity
Fourth Quarter 3.00 .60
(b) The approximate number of holders of the Common Stock of the Company as of
June 28, 2004 was 27.
(c) No cash dividends were declared by the Company during the fiscal year
ended March 31, 2004. 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, 2004.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
3
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.
RESULTS OF OPERATIONS
We are currently in the development stage and have generated no revenues to
date. Our activities from inception to date were related to our formation,
preparation of our business model, arranging and planning financing, developing
our business model and acquiring the rights to various properties.
We have financed our operations to date through a combination of the sale of our
securities and loans made to the Company by our director and affiliates of our
shareholders have provided administrative services for which we have not been
billed.
Operating costs for the period from inception to March 31, 2004 aggregated
$249,492 or $(0.02) per share.
As of March 31, 2004 the Company had completed a reverse takeover of New England
Acquisitions Inc., changed its name to Atlantic Wine Agencies Inc., changed its
OTC-BB symbol to AWNA and began a new business of wine production and
distribution.
LIQUIDITY AND CAPITAL RESOURCES
From inception through March 31, 2004, net cash used to fund operating
activities totaled approximately $249,492, net cash utilized by investing
activities totaled $(65,992) and net cash provided by financing activities
totaled $84,525.
Net cash used in operating activities for the period from inception to March 31,
2004 was $(65,992). The Company has not generated revenues and has financed its
operations to date through the sale of its securities and capital contributions
of its shareholders. As a result, cash on hand was $0 as of March 31, 2004.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial condition and results of
operations are based upon the 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.
4
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.
5
ITEM 7. FINANCIAL STATEMENTS
Item 7. Financial Statements
Table of Contents
Report of Independent Auditor F-1
Consolidated Balance Sheets F-2
Consolidated Statement of Stockholders' Equity F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Cash Flows F-5
Notes to Financial Statements F-6
6
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Auditor
Board of Directors
Atlantic Wine Agencies, Inc.
London, United Kingdom
We have audited the accompanying consolidated balance sheets of Atlantic Wine
Agencies, Inc., formerly New England Acquisitions, Inc., (a Florida corporation
in the development stage) as of March 31, 2004 and 2003 and the related
statements of operations, stockholders' equity (deficit) and its cash flows for
each of the years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Atlantic Wine Agencies, Inc. as
of March 31, 2004 and 2003 and the results of its operations and its cash flows
for each of the two years in the period ended March 31, 2004, in conformity with
U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As discussed in Note B of the financial
statements, the Company has incurred a net loss since inception of $65,992 and
has no assets. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those maters are more
fully described in Note B to the Financial Statements. The financial statements
do not include any adjustments that might result from the outcome of the
uncertainty.
/S/ Meyler & Company, LLC
Middletown, NJ
June 24 2004
F-1
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
March 31,
----------------------------
2004 2003
----------- -----------
(Restated)
CURRENT ASSETS
Cash $ 1,668
----------
Total Current Assets 1,668
OTHER ASSETS
Investment in CJC Enterprises, Inc. 26,888
License agreement 75,188
----------
102,076
$103,744
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 43,500
Due to principal stockholders $ 31,084
------------ ---------
Total Current Liabilities 43,500 31,084
STOCKHOLDERS' EQUITY
Common stock authorized 150,000,000
shares; $0.00001 par value; issued
and outstanding 4,063,027 and 16,289
shares at March 31, 2004 and 2003, respectively $ 103 33
Additional contributed capital 209,253 102,073
Deficit accumulated during Development Stage (252,856) (29,446)
----------- ----------
Total Stockholders' Equity (43,500) 72,660
----------- ----------
$103,744
See accompanying notes to financial statements.
F-2
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Period April 18, 2001 (Inception) to March 31, 2004
Common Stock Contributed Accumulated
Number Amount Capital Deficit Total
---------- ---------- ---------- ---------- ----------
Issuance of shares to
offices and directors
@$.001 per share 200,000 $ 200 $ 200
Effect of 15 to 1
stock split and
change of par
value to $.00001
per share 2,800,000 (170) $ 170
Sale of 7,500
shares @$2.00
per share 7,500 15,000 15,000
Cost of registration (15,170) $(3,364) (18,534)
Net loss for period (9,100) (9,100)
---------- ---------- ---------- ---------- ----------
Balance
March 31, 2002 3,007,500 30 (12,464) (12,434)
Issuance of 150,375
shares for license
agreement @$0.50
per share 150,375 2 75,186 75,188
Issuance of 100,000 shares for
acquisition of CJC Enterprises
of New York, Inc. @ $0.27 per share 100,000 1 26,887 26,888
Net loss for period (16,982) (16,982)
---------- ---------- ---------- ---------- ----------
Balance March 31, 2003 3,257,875 33 102,073 (29,446) 72,660
Issuance of 100,000
shares for consult-
ing fee for Ollie &
Partner's LLC @
$0.35 per share 100,000 1 34,999 35,000
Issuance of 13,100 shares
to principal stockholder
at $1.00 per share 13,100 2 13,098 13,100
Divestiture of subsidiaries (137,076) (137,076)
Sale of 9,234,520 shares
at $0.006 per share 9,234,520 92 56,134 56,226
Effect of 1 for 200
reverse stock split (12,542,468) (65) 65
Issuance of common
stock @ $0.055 for
consulting agreement 4,000,000 40 139,960 140,000
Net loss for period (223,410) (223,410)
---------- ---------- ---------- ---------- ----------
Balance March 31, 2004
4,063,027 $ 103 $209,253 $(252,856) (43,500)
========= ===== ======== ========= ========
See accompanying notes to financial statements.
F-3
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended Inception to
March 31, March 31,
---------------------- ----------
2004 2003 2004
---------- ---------- ----------
(Restated)
GENERAL and ADMINISTRATIVE EXPENSES
Stock based compensation $ 140,000 $ 140,000
Office and other 83,410 $ 16,982 109,492
---------- ---------- ----------
Total Expenses 223,410 16,982 249,492
---------- ---------- ----------
NET LOSS $ (223,410) $ (16,982) $ (249,492)
========== ========== ==========
NET LOSS PER SHARE, basic and diluted $ (0.01) $ (0.01) $ (0.02)
========== ========== ==========
Weighted average number
of common shares outstanding 545,465 15,493 194,531
========== ========== ==========
See accompanying notes to financial statements.
F-4
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended Inception to
March 31, March 31,
------------------------- ---------
2004 2003 2004
--------- --------- ---------
(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for period $(223,410) $(16,982) $(249,492)
Non-cash item included in net loss:
Stock based compensation 140,000 140,000
Changes in operating assets and liabilities:
Accrued expenses 43,500 43,500
Increase in due to principal stockholders 25,142 21,884
--------- --------- ---------
Net Cash (Used In) Provided by Operating Activities (14,768) 4,902 (65,992)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 13,100 15,200 84,525
Cost of registering securities (18,534) (18,534)
--------- --------- ---------
Net Cash Provided by (Used In) Financing Activities 13,100 (3,334) (65,992)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH (1,668) 1,568
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,668 100
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,668
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Non-cash investing and financing activities:
Assets acquired for issuance of common stock
License agreement. $75,188 $75,188
========= =========
Acquisition of CJC Enterprises of New York, Inc. $26,888 $26,888
========= =========
Issuance of common stock for consulting contract. $35,000 $35,000
========= =========
Issuance of common stock relating to the
change of control and settlement of
obligations to previous principal
stockholders. See Note C of Notes to
Financial Statements. $56,226 $56,226
========= =========
See accompanying notes to financial statements.
F-5
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004 and 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Atlantic Wine Agencies, Inc., formerly New England Acquisitions, Inc.,
(the Company), in the development stage, was organized under the laws of
the State of Florida on April 18, 2001. The Company, as of May 4, 2004,
owns two wholly owned subsidiaries which have a world class vineyard
producing high quality wines to be marketed principally in Europe.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The company considers all highly-liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Consolidated Financial Statements
The consolidated financial statements include the Company and its wholly
owned subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation.
Translation of Foreign Currencies
The functional currency of the company is the United States dollar. The
financial statements of the Company's operations whose functional currency
is other than the United States dollar are translated from such functional
currency to United States dollars using he current rate method. Under the
current rate method, assets and liabilities are translated at the exchange
rates in effect at the balance sheet date. Revenues and expenses,
including gains and losses on foreign exchange transactions, are
translated at average rates for the period. Where the current rate method
is used, the unrealized translation gains will be accumulated in other
comprehensive income under the shareholders' equity section.
Income Taxes
The Company accounts for income taxes using the liability method, which
requires the determination of deferred tax assets and liabilities based on
the differences between the financial and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which
differences are expected to reverse. Deferred tax assets are adjusted by a
valuation allowance, if , based on the weight of available evidence, it is
more likely than not that some portion or all of the deferred tax assets
will not be realized.
At March 31, 2004, the Company has net operating loss carry forwards of
approximately $249,500 which expire through 2023. Based on the fact that
the Company has generated
F-6
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004 and 2003
Income Taxes (continued)
operating losses since inception, a deferred tax asset of approximately
$62,375 has been offset by a valuation allowance of the same amount.
Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share".
SFAS per share ("EPS") requires presentation of basic and diluted EPS.
Basic EPS is computed by dividing the income (loss) available to Common
Stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS is based on the weighted-average number of
shares of Common Stock and Common Stock equivalents outstanding during the
periods.
Stock-Based Compenstaion
SFAS No. 123, "Accounting for Stock-Based Compenstaion" 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.
Business Combinations and Intangible Assets
The Financial Accounting Standards Board ("FSAB") issued SFAS NO. 141,
"Business Combinations" which requires the purchase method of accounting
for business combinations and eliminates the pooling-of-interests method.
The FASB has issued SFAS NO. 142, "Goodwill and Other Intangible Assets",
which requires the discontinuance of goodwill amortization. In addition,
the standard includes provisions for the reclassification of certain
existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill and the identification of
reporting units for purposes of assessing potential future impairment of
goodwill.
The FASB has issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 which changes the accounting
for long-lived assets to be held and used by eliminating the requirement
to allocate goodwill to long-lived assets to be tested for impairment, by
providing a probability weighted cash flow estimation approach to deal
with situations in which alternative courses of action to recover the
carrying amount of possible future cash flows and by establishing a
primary-asset approach to determine the cash flow estimation period for a
group of assets and liabilities that represents the unit of accounting for
long-lived assets to be held and used. SFAS No. 144 changes the accounting
for long-lived assets to be disposed of other than by sale by requiring
that the depreciable life of a long-lived asset to be abandoned be revised
to reflect a shortened useful life and by requiring the impairment loss to
be recognized at the date a long-lived asset is exchanged for a similar
productive asset or distributed to owners in a spin-off if the carrying
amount of the asset exceeds its fair value. SFAS No 144 changes the
accounting for long-lived assets to be disposed of by sale by requiring
that discontinued operations no longer be recognized in a net realizable
value basis (but at the lower of carrying amount or fair value less costs
to sell), by eliminating the recognition of future operating losses of
discontinued components before they occur and by broadening the
presentation of discontinued operations in the income statement to include
a component of an entity rather than a segment of a business. A component
of an entity comprises operations and cash flows that can be clearly
distinguished, operationally, and for financial reporting purposes, from
the rest of the entity.
F-7
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2004 and 2003
NOTE B - GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred a net loss since inception of $249,492 and has negative working
capital at March 31, 2004. In December 2003, the Company had a change in
control of its principal stockholders. On May 4, 2004, the new
stockholders directed the Company to acquire all of the issued and
outstanding shares of New Heights 560 Holdings, LLC, a Cayman Islands
Limited Liability Corporation, in exchange for 100,000,000 shares of the
Company's common stock. As a result of the acquisition, the Company owns a
world class vineyard in South Africa and intends to produce high quality
wines. It is the Company's intent to market and sell these quality wines
in Europe which the Company feels is an excellent market. In this
connection, the Company is developing a marketing and sales strategy to
meet their objective and is seeking additional financing. However, there
is no assurance that the Company will be successful in its efforts to
raise additional working capital to carry on its marketing and sales
initiatives or to generate a profitable operation.
These matters raise substantial doubt about the Company's ability to
continue as a going concern. However, the accompanying financial
statements have been prepared on a going concern basis, which contemplates
the realization of assets and satisfaction of liabilities in the normal
course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
NOTE C - RELATED PARTY TRANSACTIONS
The former principal stockholders of the Company have paid, on behalf of
the Company, all of the costs related to the filing of a registration
statement under Form SB-2 with the Securities and Exchange Commission and
subsequent quarterly compliance filings as well as other miscellaneous
administrative expenses including professional fees for legal and
accounting. The total amount due the stockholders at March 31, 2003 was
$31,084. During the year ended March 31, 2004, the former principal
stockholders paid and/or incurred additional costs of $25,142, making
their aggregate total $56,226. On December 16, 2003, they sold their
majority control to Rosehill Investments, Limited. Part of the sales
proceeds was used to liquidate this indebtedness.
NOTE D- COMMON STOCK
In April 2001, the Company issued 200,000 shares to its two former
principal stockholders for $200 at its then par value of $0.01 per share.
In July 2001, the Company had a 15 to 1 stock split increasing the total
shares held by the two principal stockholders to 3,000,000 and changing
the par value to $0.00001.
On October 1, 2001, the Company sold 7,500 shares of its common stock at
$2.00 per share under its registration statement on Form SB2 filed with
the Securities and Exchange Commission. The registration statement was for
a minimum of 7,500 shares and a maximum of 15,000 shares.
F-8
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2004 and 2003
NOTE D- COMMON STOCK (CONTINUED)
On October 28, 2003, the Company issued 150,375 shares of its common stock
to ADM Tronics Unlimited, Inc. to acquire an assets and rights agreement
(license) to market three products: (1) an ethnic shave cream, (2) a burn
lotion, and (3) a medical device known as Aurex-3 which has been designed
to treat a condition known as Tinnitus. The shares were valued at $0.50.
On February 27, 2003, the Company issued 100,000 shares of its common
stock to acquire CJC Enterprises of New York, Inc., an auto electronics
store. The acquired company was owned by the brother of a former principal
stockholder of the Company. The shares were valued at $0.2688.
On November 1, 2003, the Company issued 100,000 shares of its common stock
at $0.35 per share to Ollie & Partners, LLC as a consulting fee to market
and sell its ethnic shave cream and medical products.
On December 1, 2003, the Company sold 13,100 shares to a former principal
stockholder for $13,100.
On December 15, 2003, the Company spun-off two wholly owned subsidiaries
for which common stock had been issued in the amount of $137,076. See Note
E of the Notes to Financial Statements.
On December 16, 2003, the former majority stockholders approved the sale
of 9,234,520 shares of common stock to Rosehill Investments Limited for
$56,226 or $0.006 per share.
On February 14, 2004, the Company entered into a consulting agreement with
Benjamin Mauerberger, whose brother Adam Mauerberger is deemed to be a
related party of the Company, 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.
The compensation for the consulting agreement was the issuance of
4,000,000 shares of the company's common stock valued at $0.035 per share.
On May 27, 2004, the Company filed a registration statement with the
Securities and Exchange Commission to register such shares on Form S-8.
The Company has considered these shares to be post-split shares. The
shares were issued on May 27, 2004. However, for financial statement
purposes, they have been considered issued as of February 14, 2004. See
Note G of Notes to Financial Statements.
On March 1, 2004, the Company approved a 1-for-200 reverse stock split.
Accordingly, all per share figures in these financial statements have been
adjusted for the reverse stock split.
NOTE E - RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
On December 16, 2003, the former controlling stockholders agreed to sell
their controlling interest to Rosehill Investments, Limited. Included in
the agreement was a spin-off of two wholly owned subsidiaries of the
Company to shareholders of record on December 15, 2003.
F-9
ATLANTIC WINE AGENCIES, INC. and SUBSIDIARIES
(Formerly New England Acquisitions, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2004 and 2003
NOTE E - RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS (CONTINUED)
The value of such divestiture was $137,076 which was associated with (1) a
license agreement, (2) the acquisition of CJC Enterprises of New York,
Inc., an auto electronics store and (3) a consulting agreement to Ollie &
Partners, LLC. Accordingly, for comparability, the financial statements
for the year ended March 31, 2003 have been restated to exclude the one
month's operations of the auto electronic store.
NOTE F - EMPLOYMENT CONTRACTS
In March 2003, 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 24,960,000 shares (25% of the company) from their holdings to one
employee and 1,500,000 to another.
NOTE G - SUBSEQUENT EVENTS
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 which controls the Mount Rozier Estate (pty) Limited
and the Mount Rozier Properties (pty) Limited for 100,000,000 shares of
its common stock. The companies own a world class vineyard in the
Stellenbosch region of Western Cape, South Africa and produces high
quality premium wines. The acquisition is being accounted for as a
purchase under SFAS No. 141, Business Combinations. The acquisition has
not been included in the Company's financial statements at March 31, 2004.
The allocation of the purchase price was as follows:
Value of 100,000,000 shares of
common stock at $0.035 per share $3,500,000
==========
Fair value of net assets acquired is as follows:
Land $2,596,154
Processing equipment 40,866
Intangibles 51,385
Inventories 242,429
Accounts receivable 16,834
Cash 120,742
Liabilities assumed (3,091,134)
Goodwill 3,522,724
----------
$3,500,000
Condensed results of operations for the two months ended
April 30, 2004 for the companies acquired are as follows:
Gross revenues $ 28,334
Cost of sales 7,443
----------
Gross profit 20,891
Operating costs 42,056
----------
Net loss $ (21,165)
==========
On May 27, 2004, the Company registered 4,000,000 shares of its common
stock on Form S-8 for a consulting agreement dated February 14, 2004. See
Note D of the Notes to Financial Statements.
F-10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
For the fiscal year ended March 31, 2004, 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
Mr. Harry Chauhan is the sole director of the Company. Mr. Alistair Mcrae is the
Company's Secretary. The Company's directors are elected at each Annual Meeting
of Shareholders. The directors currently serving on the Company's Board of
Directors are set forth in the table below:
Name Age Positions and Offices With The Company
------- ----- ----------------------------------------------
Harry Chauhan 45 Chairman; Chief Executive Officer;
President; Chief Financial Officer; and
Alistair Mcrae 26 Secretary
Adam Mauerberger 35 Chief Executive Officer to Atlantic Wine Agencies Ltd
Christopher Burr 55 Executive Consultant to Atlantic Wine Agencies Ltd
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 one director and the Company one employee, 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.
On February 9, 2004, the Company's directors resigned and Mr. Harry Chauhan was
appointed as the Company's sole Director and its President.
The following is a biographical summary of the directors and officers of the
Company:
HARRY CHAUHAN
From January 2002 to the present, Mr. Chauhan has been involved in with
Australian Power and Energy Limited, Salem Hotels and Resorts Limited and
International Healing Company Limited as a consult. His responsibilities have
included: (i) development and implementation of business plans; (ii) structuring
of mergers and acquisitions; (iii) management of organizational and operational
strategies; and (iv) financial modeling, budgets and fund raising activities.
II-1
From November 1999 through December 2001, Mr. Chauhan was the Commercial and
Finance Manager for the United Kingdom and German territories for Habitat UK and
Germany.
In addition to the above experiences, Mr. Chauhan has been instrumental in many
start up operations, and has held Directorships and senior positions in
organizations such as Wimpey Leisure the largest leisure and home builder in the
world where he was Finance and Commercial Director, Renault UK as a management
controller, Atlantis Energy Switzerland as a consultant, Caterpillar in France,
Spain and Germany, and the Burton Group in UK and mainland Europe where he was
involved in cross border trading development and reorganization of the
international business.
Mr. Chauhan has extensive knowledge of finance, accounting, tax and business
development and restructuring in many countries including Russia where he was
Commercial Director for Radisson Hotels and Americom Business Centres JV.
ALISTAIR MCRAE
Mr. Alistair Mcrae is the Company's Secretary. Prior to this, Mr. Mcrae held
various positions as a consultant for a number of years in the UK, South Africa
and Australia. Mr. Mcrae has been a Secretary for a variety of companies ranging
from start up to established companies in the United Kingdom, United States of
American, South Africa and Australia.
Prior to pursuing a professional career Mr. Mcrae studied at Damelin College in
Cape Town, South Africa studying various business related subjects including
accounting.
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.
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.
CHRISTOPHER BURR
On February 15, 2004, the Company's wholly owned subsidiary, Atlantic Wine
Agencies Limited, contracted with Mr. Christopher Burr, a leading international
figure in the industry. Mr. Burr has worked in a number of senior positions as
European Director of Bass Brewers, then Managing Director of two fine wine
shipping businesses. Christopher reached the pinnacle of the industry, when he
was appointed as International Head of Wine at Christies, the traditional
auction house, overseeing sales in London, New York, Los Angeles, Tokyo and
other worldwide sales centres.
Whilst rising to the top of his profession, Christopher became a Master of Wine,
won the Villa Maria prize for his papers on viticulture had his opinions on wine
and the industry published regularly around the world and has hosted some of the
world's most prestigious tastings.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Not applicable.
II-2
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, 2004. As the operating company (Atlantic Wine Agencies, Inc. prior to
its merger with New England Acquisitions, Inc) was formed in 2003, only one year
of compensation is available.
The following table sets forth information concerning all remuneration paid by
the Company as of March 31, 2004 to the Company's sole Director and Executive
Officer. All of the following dollar denominations are adjusted from United
Kingdom Pounds at a rate of 1.84 USD per Pound.
Summary Compensation Table
LONG-TERM
COMPENSATION
AWARDS
---------------
SECURITIES
UNDERLYING
OPTIONS (#) ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS /SARS COMPENSATION
--------------------------- ---- ------ ----- ----- ------------
Harry Chauhan -
Chairman, Chief Executive Officer,
President, and Chief Financial Officer 2004 $ 26,000* 0 0 0
Alistair Mcrae - Secretary 2004 15,000** 0 0 0
Adam Mauerberger - CEO of subsidiary 2004 99,360*** 0 0 0
Christopher Burr - Consultant to
subsidiary 2004 25,0004**** 0 0 0
*Mr. Chauhan's is employed by the Company pursuant to an oral agreement which
both parties intend to formalize with a written agreement within the next 30
days. The terms of Mr. Chauhan's employment are: (i) a 5 year term with an
annual salary in year one of $78,000; and (ii) reimbursement for expenses
estimated to be a total of $48,000 on an annualized basis. As Mr. Chauhan began
his employment with the Company on March 1, 2004, his salary in the above table
is for the 4 months ending June 2004. Mr. Chauhan's employment terms are to be
reviewed at such time that the various development projects by the Company are
in place.
**Mr. Mcrae is employed by the Company pursuant to an oral agreement for a term
of 3 years to which both parties intend to formalize with a written agreement
within the next 30 days. Mr. Mcrae receives a salary of $15,000 per year and any
Company related expenses.
***Mr. Mauerberger's contract is for a period of 5 years with an annual salary
of $98,280 in year one and escalating to $174,720 in year five. 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 consulting agreement may be terminated for "cause".
II-3
****Mr. Burr's contract is for a renewable one year term with an annual salary
of approximately $50,000. He also has been granted an option to purchase the
Company's products at terms to be mutually agreed upon at the time Mr. Burr
exercises such right.
DIRECTORS' COMPENSATION
During the fiscal year ended March 31, 2004 no fees were paid to our Director.
EMPLOYMENT CONTRACTS
See footnote to the compensation table immediately above for the material terms
of our officers employment/consulting agreements with the Company.
II-4
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 June 28, 2004, 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 New Heights 560 Holdings LLC 68,450,000 65.78%
c/o Hyperion Holdings Ltd
64 Knightsbridge
London, UK SW1X
Common Adam Mauerberger1 24,960,000 23.99%
Common Harry Chauhan 1,500,000 1.44%
Common Alistair Mcrae 0 0%
Directors and Officers
as a group 26,460,000 25.43%
1Mr. Mauerberger is the sole shareholder of Fairhurst Properties S A. Akara Bldg
24 De Castro Street Wickhams Cay 1Road Town, Tortola BVI
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
Atlantic Wine Agencies Ltd.'s CEO Adam Mauerberger is brother to Benjamin
Mauerberger, a consultant to Atlantic Wine Agencies, Inc. However, they do not
reside at the same address and do not have any agreement between them regarding
the respective shares controlled by them.
II-5
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit Number Exhibit Description
10.1 Adam Mauerberger Employment Agreement
21.1 Subsidiaries of the Company
23.1 Consent of Independent Certified Public Accountant
31.1 Section 302 Certification
32.1 Section 906 Certification
(b) Reports on Form 8-K.
On February 12, 2004, the Company filed an 8-K (Item 6) with the Securities and
Exchange Commission with respect to Mr. Harry Chauhan's appointment as a
director and officer with the Company and the resignation of the Company's prior
officers and directors.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the Company's fiscal year ended March 31, 2004, the estimated cost for
professional services rendered for the audit of our financial statements and the
review of the Form 10-KSB is approximately $12,000 to $15,000. We were billed
approximately $5,000 for professional services rendered for the audit as of
March 31, 2004 and 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. We were also billed in February 2004 $3,000 for
preparation and review of our quarterly financial statements.
Tax Fees
For the Company's fiscal year ended March 31, 2004, the estimated cost for
professional services rendered for tax compliance, tax advice, and tax planning
is de minimis.
All Other Fees
The Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended March 31, 2004.
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/ Harry Chauhan
---------------------------
Name: Harry Chauhan
Title: Chairman of the Board, Chief Executive Officer,
President, Chief Financial Officer and Secretary
Date: June 28, 2004
II-6
INDEPENDENT CONTRACTOR AGREEMENT
This Independent Contractor Agreement ("Agreement") is made and
effective this 1st day of March 2004, by and between Adam Mauerberger
("Consultant") and Atlantic Wine Agencies Limited ("Company").
WHEREAS, Company desires to engage Consultant to perform certain
services for the Company, pursuant to the terms and conditions stated in this
Agreement, and
WHEREAS, Consultant desires to perform certain services for Company,
pursuant to the terms and conditions stated herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties agree as follows:
1. Services to be Performed. Company desires that Consultant perform, and
Consultant agrees to perform the following services for the Company in the
indicated capacities:
EXECUTIVE CONSULTANT
o Develop Mount Rozier brands through the Company into one of the top
15 South African brands within the UK market in 5 years.
o Based on the success of Mount Rozier create a platform for the
business to grow through acquisition focusing on new world brands.
o Develop and manage strategy of the Company's Marketing, Sales and
Viticulture.
MARKETING / SALES
o Develop medium to long-term agreement partnerships with On and Off
trade agents within the UK to achieve volume targets.
o Compile and provide latest Nielson stats by category management to
build agency presentations and profile within market place
o Compile SA trade market review on an annual basis
o Develop new packaging and marketing promotions in line with current
global brand competition.
o Provide all training and educational aspects of the business for the
team on wine and agency business
o Manage promotional marketing spend to grow the business via part
time commissionable retro contracts.
VITICULTURE/ VINIFICATION
o Manage the Wine making team to develop brands that would be
appropriate for International markets.
o Develop vineyards and area not under vine into production that
follows trend of largest consumer variety consumption
o Identify investment required through Viti consultants Johan Wiese
and Cadus Coopers in Beaune Burgundy.
2. Consultant's Performance. All work done by Consultant shall be of the highest
professional standard and shall be performed to Company's reasonable
satisfaction.
3. Status. Consultant's status under this Agreement shall be that of an
independent consultant, and not that of an agent or employee. Consultant
warrants and represents that he has complied with all federal, state and local
laws regarding business permits and licenses that may be required for him to
perform the work as set forth in this Agreement.
4. Terms of Compensation. In addition to Section 8 of this Agreement, Company
shall pay to Consultant a salary as follows:
YEAR COMPENSATION (POUND)
---- ----------------------
1 54,000
2 54,000
3 72,000
4 72,000
5 96,000
5. Reimbursement of Expenses. Company shall reimburse Consultant for aggregate
monthly expenses of (pound)8,000 incurred by Consultant providing the expenses
are documented in writing by Consultant to the satisfaction of the Company.
6. Termination. This Agreement may be terminated at anytime by Consultant during
the term hereof with 90 days written notice. Further, this Agreement may be
terminated by the Company for Cause (as that term is defined below) with 90 days
written notice. In the event Company dismisses Consultant for Cause then
Company's obligations to Consultant shall be limited to the compensation earned
up to the date of Consultant's termination for Cause.
(a) Definition of Cause. "Cause" shall mean:
(i) any action by Consultant which constitutes dishonesty relating
to Company, a willful violation of law (other than traffic offenses
and similar minor offenses) or a fraud against Company;
(ii) Consultant is charged by indictment for, is convicted of or
pleads guilty to a felony or other crime;
(iii) misappropriation of Company's funds or assets by Consultant
for his personal gain;
(iv) willful misconduct by Consultant relating to Company,
including, without limitation, willful failure to perform stated
duties or to follow legitimate directions of his superiors;
(v) the continual or frequent possession by Consultant of an illegal
substance or abuse by Consultant of a controlled substance or
alcohol resulting in a pattern of behavior disruptive to the
business operations of Company;
(vi) failure by Consultant to perform Consultant's duties and
responsibilities to Company in a competent manner;
(vii) any material violation by Consultant of any covenant contained
in this Agreement, including covenants related to confidentiality;
and
(viii) any other willful misconduct which materially injures
Company.
Subject to this Section 6, in the event that the Company terminates
this Agreement for any reason other than "For Cause", Consultant
shall receive all benefits pursuant to Sections 4 and 8 of this
Agreement as if Consultant satisfactorily performed all required
duties during the Term of this Agreement. Consultant may not be
terminated pursuant to Section 6(a)(vi) or (vii) as a result of the
Company's inability to be sufficiently capitalized for Consultant to
reasonably perform his duties under this Agreement.
7. Federal, State and Local Payroll Taxes. Company will not withhold or pay on
behalf of Consultant or any of its employees: (a) U.S. federal, state or local
income taxes; or (b) any other payroll tax of any kind. In accordance with the
terms of this Agreement and the understanding of the parties herein, Consultant
shall not be treated as an employee with respect to the services performed
hereunder for U.S. federal, state or local tax purposes.
8. Fringe Benefits. Because Consultant is engaged in its own independent
consulting business, it is not eligible for, nor entitled to, and shall not
participate in, any of Company's pension, health or other fringe benefit plans,
if any such plans exist. Such participation in these fringe benefits plans is
limited solely to Company's employees. However, Company shall pay to Consultant
(pound)100 per month to be applied to Consultant's health expenses.
9. Notice to Consultant Regarding Tax Liability. Consultant understands that he
is responsible to pay his income tax in accordance with federal, state and local
law. Consultant further understands that he is liable for Social Security,
("FICA") tax, to be paid in accordance with all applicable laws.
10. Term. This Agreement's term shall begin on the date hereof and shall remain
in force until February __, 2007. Unless either the Consultant or the Company
provides 90 days written notice to the other party to this Agreement of its
intention to terminate this Agreement, this Agreement shall be renewed for an
additional two years without any action required on either the Consultant or the
Company on the terms and conditions found herein.
11. Confidentiality.During the term of this Agreement, and thereafter in
perpetuity, Consultant shall not, without the prior written consent of Company,
disclose to anyone any Confidential Information. "Confidential Information" for
the purposes of this Agreement shall include Company's proprietary and
confidential information such as, but not limited to, customer lists, business
plans, marketing plans, financial information, designs, drawing, specifications,
models, software, source codes and object codes. Confidential Information shall
not include any information that: (a) is disclosed by Company without
restriction; (b) becomes publicly available through no act of Consultant; or (c)
is rightfully received by Consultant.
12. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the United Kingdom.
13. Headings. The headings in this Agreement are inserted for convenience only
and shall not be used to define, limit or describe the scope of this Agreement
or any of the obligations herein.
14. Final Agreement. This Agreement constitutes the final understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements between the
parties, whether written or oral. This Agreement may be amended, supplemented or
changed only by an agreement in writing signed by both of the parties.
15. Notice. Any notice required to be given or otherwise given pursuant to this
Agreement shall be in writing and shall be hand delivered, mailed by certified
mail, return receipt requested or sent by recognized overnight courier service
as follows:
If to Consultant:
Fax:
It to Company:
Fax:
Attn:
With a copy to:
William S. Rosenstadt, Esq.
Rubin, Bailin, Ortoli, Mayer & Baker LLP
405 Park Avenue - 15th Floor
New York, NY 10022
Such Notice shall be deemed given when actually delivered.
16. Severability. If any term of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, then this Agreement, including all
of the remaining terms, will remain in full force and effect as if such invalid
or unenforceable term had never been included.
17. Restrictions on Assignment.Consultant may not assign or otherwise transfer
his rights or delegate its obligations created hereunder to any third party
without the prior written consent of the Company. Notwithstanding the foregoing,
this Agreement shall bind and inure to the benefit of the successors and assigns
of the parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of this the 1st day of March 2004.
Atlantic Wine Agencies Limited
Atlantic Wine Agencies, Inc. -
Sole Shareholder of Atlantic Wine Agencies Limited
By: /s/ Harry Chauhan
--------------------
Name: Harry Chauhan
Title: President
Adam Mauerberger
/s/ Adam Mauerberger
---------------------