Item
2. Management’s Discussion and Analysis or Plan of
Operation
Forward-Looking
Statements
The
following discussion may contain certain forward-looking statements within
the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such statements are intended to be covered
by
the safe harbors created by such provisions. These statements include the plans
and objectives of management for future growth of the Company, including plans
and objectives related to the consummation of acquisitions and future private
and public issuances of the Company's equity and debt securities. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions,
all
of which are difficult or impossible to predict accurately and many of which
are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of
the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this Form 10-QSB will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
The
words
“we,” “us” and “our” refer to the Company. The words or phrases “would be,”
“will allow,” “intends to,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” or similar expressions are
intended to identify “forward-looking statements.” Actual results could differ
materially from those projected in the forward looking statements as a result
of
a number of risks and uncertainties, including but not limited to: (a) limited
amount of resources devoted to achieving our business plan; (b) our failure
to
implement our business plan within the time period we originally planned to
accomplish; (c) because we are seeking to merge with an operating business
which
has not yet been identified, you will be unable to determine whether we will
ever become profitable; and (d) other risks that are discussed in this Form
10-QSB or included in our previous filings with the Securities and Exchange
Commission.
General
Management's
discussion and analysis of results of operations and financial condition are
based upon our financial statements. These statements have been prepared in
accordance with accounting principles generally accepted in the United States
of
America. These principles require management to make certain estimates,
judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the 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.
As
disclosed previously in our Form 10-KSB for the year ended December 31, 2006,
we
have experienced a chronic working capital deficiency, which has severely
handicapped our ability to meet our business objectives. We recorded no revenues
during the nine months ended September 30, 2007. Americana Distribution
currently has two (2) subsidiaries: Americana Licensing Holding Inc. and
Americana Imports and Trading Inc.
Americana
Distribution, Inc.
While
previous management tried to transition from marketing through distributors
to
direct marketing to truck stops, these strategies did not result in a sufficient
increase in business prospects or revenues.
Americana
Licensing, Inc.
The
subsidiary of R&R Licensing was unable to achieve any of the goals set forth
in its business plan and as a result ceased operations in September of
2006.
We
have
expended efforts to secure additional capital from both our principal creditor
and other third parties, but such efforts have only been partially successful.
Currently, we have a severe working capital deficiency.
We
will
attempt to locate and negotiate with a business entity for the combination
of
that target company with us. The combination could take the form of a merger,
stock for stock exchange or stock for assets exchange. No assurances can be
given that we will be successful in locating or negotiating with any such target
company.
A
business combination with a target company may normally involve the transfer
to
the target company of the majority of our issued and outstanding common stock
and the substitution by the target company of its own management and board
of
directors.
No
assurances can be given that we will be able to enter into a business
combination, or the terms of the business combination, or as the nature of
the
target company.
Due
to
the overall decrease in our business operations, we have downsized our
management and employees to only one, and have minimized operating
expenses.
We
are
determined to take advantage of the prospects for this re-organization. We
will
continue to maintain the Company as a fully reporting company.
Financial
Performance
Results
of Operations For the Three Months Ended September 30, 2007, As Compared to
The
Three Months Ended September 30, 2006.
Revenues.
Our
revenues from operations for the quarter ended September 30, 2007 were $0 as
compared to revenues of $0 for the quarter ended September 30, 2006. The reason
for the lack of sales is due to the ceasing of operations.
Gross
Profit.
Our
gross
profit from operations for the quarter ended September 30, 2007 were $0 as
compared to $0 for the quarter ended September 30, 2006. The lack of gross
profit is due to the ceasing of operations.
Operating
Expense.
Selling
general and administrative costs were approximately $34,000 for the quarter
ended September 30, 2007 as compared to approximately $239,000 for the quarter
ended September 30, 2006, a decrease of approximately $205,000 or 86%. This
decrease is primarily attributable to the overall decrease in our business
operations and the reduction of the staff to only one employee.
Interest
Expense.
For
the
three months ended September 30, 2007 and 2006, we had interest expense of
approximately $62,000 and $56,000, respectively, an increase of $6,000 or
11%.
Net
Loss.
For
the
three months ended September 30, 2007, we had a net loss of approximately
$96,000 as compared to a net loss of approximately $295,000 for the three months
ended September 30, 2006, a decrease of approximately $199,000 or 67%. This
decrease is primarily attributable to the overall decrease in our business
operations and the reduction of the staff to only one employee.
Results
of Operations For the Nine Months Ended September 30, 2007, As Compared to
The
Nine Months Ended September 30, 2006.
Revenues.
Our
revenues from operations for the nine month period ended September 30, 2007
were
$0 as compared to revenues of $0 for the nine month period September 30, 2006.
The reason for the lack of sales is due to the ceasing of
operations.
Gross
Profit.
Our
gross
profit from operations for the nine month period ended September 30, 2007 were
$0 as compared to $0 for the nine month period ended September 30, 2006. The
lack of gross profit from operations is attributable to the ceasing of
operations.
Operating
Expense.
Selling,
general and administrative costs decreased by approximately $593,000 to
approximately $122,000 for the nine month period ended September 30, 2007 as
compared to approximately $715,000 for the nine month period ended September
30,
2006, a 82% decrease. This decrease is primarily attributable to the overall
decrease in our business operations and the reduction of staff to only one
employee.
Interest
Expense.
Our
interest expense for the nine month period ended September 30, 2007 was
approximately $179,000 as compared with approximately $16,000 for the nine
month
period ended September 30, 2006. This increase was due to increased borrowings
to maintain the Company’s public reporting status.
Net
Loss.
For
the
nine month period months ended September 30, 2007, we had a net loss of
approximately $301,000 as compared to a net loss of approximately $699,000
for
the nine month period ended September 30, 2006, a decrease of approximately
$398,000 or 57%. This decrease is primarily attributable to the overall decrease
in our business operations, the minimization of expenses and the reduction
of
staff to only one employee.
LIQUIDITY
AND CAPITAL RESOURCES
At
September 30, 2007 and December 31, 2006, we had cash or cash equivalents of
$1,034 on hand. Our primary source of cash during the three month period ended
September 30, 2007 consisted of a loan from a shareholder and related
party.
Net
cash
used in operating activities was approximately $122,000 for the nine month
period ended September 30, 2007 as compared to approximately $715,000 for the
nine month period ended September 30, 2006.
Net
cash
used by investing activities was $0 during the nine month period ended September
30, 2007 and 2006.
Net
cash
provided by financing activities during the nine month period ended September
30, 2007 was approximately $106,000 as compared to approximately $28,000 for
the
nine month period ended September 30, 2006. We received the proceeds from
several promissory notes.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
In
December of 2004 the Financial Accounting Standards Board ("FASB") issued SFAS
No. 153, an amendment of APB Opinion No. 29.
The
guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that opinion,
however, included certain exceptions to that principle. This statement amends
Opinion 29 to eliminate the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
non-
monetary assets that do not have commercial substance. A non-monetary exchange
has commercial substance if the future cash flows of the entity are expected
to
change significantly as a result of the exchange.
SFAS
NO.
123(R) — In December 2004, the FASB issued Statement of Financial Accounting
Standard (“SFAS”) No. 123 (Revised 2004) (SFAS 123 (R)) "Share-based payment".
SFAS 123 (R) will require compensation costs related to share-based payment
transactions to be recognized in the financial statements. With limited
exceptions, the amount of compensation cost will be measured based on the
grant-date fair value of the equity or liability instruments issued. In
addition, liability awards will be re-measured each reporting period.
Compensation cost will be recognized over the period that an employee provides
service in exchange for the award. FASB 123 (R) replaces FASB 123, Accounting
for Stock-Based Compensation and supersedes APB option No. 25, Accounting for
Stock Issued to Employees. This guidance is effective as of the first interim
or
annual reporting period after December 15, 2005 for Small Business
filers.
Emerging
Issues Task Force (“EITF”) 00-19.2—In December 2006, the FASB issued Staff
Position No. EITF 00-19-2. This FSP addresses an issuer's accounting for
registration payment arrangements and specifies that the contingent obligation
to make future payments or otherwise transfer consideration under a registration
payment arrangement should be separately recognized and measured in accordance
with FASB No. 5. The guidance in this FASB Staff Position (“FSP”) amends FASB
Statements 133 and 150 and FASB Interpretation No. 45 to include scope
exceptions for registration payments arrangements. This FSP further clarifies
that a financial instrument subject to a registration payment arrangement should
be accounted for without regard to the contingent obligation to transfer
consideration pursuant to the registration payment arrangement. This guidance
is
effective for financial statements issued for fiscal years, beginning after
December 15, 2006. The Company is currently assessing the impact this
pronouncement will have on its financial statements if any.