-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IfhE5qaNUEDaH0XRfwjX4UAze6urOrZvew1/Fkv/6hq3rSC8v23SbEgFiK/nJvMz jc8WTJt96FKBJ9XFwkKh4Q== 0000950168-02-002305.txt : 20020813 0000950168-02-002305.hdr.sgml : 20020813 20020813171758 ACCESSION NUMBER: 0000950168-02-002305 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDEAN DEVELOPMENT CORP CENTRAL INDEX KEY: 0000943184 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 650548697 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28806 FILM NUMBER: 02730712 BUSINESS ADDRESS: STREET 1: 801 BRICKELL SQUARE STREET 2: SUITE 900 CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 3053720056 MAIL ADDRESS: STREET 1: 600 BRICKELL AVE STREET 2: SUITE 301 B CITY: MIAMI STATE: FL ZIP: 33131 10QSB 1 d10qsb.txt PERIOD ENDING 06/30/2002 FORM 10-QSB SECURITY AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002. ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ___________________ to ______________________. Commission file number: 33-90696 ANDEAN DEVELOPMENT CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA 65-0648697 - -------------------------------------------------------------------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 1224 Washington Avenue, Miami Beach, Florida 33139 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 866-3360 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 preceding 12 months (or for such shorter period that the Registrant was required to file such report(s), and has been subject to such filing requirements for the past 90 days. Yes X No _____ ----- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. As of June 30, 2002, 2,820,100 shares of $.0001 par value common stock were outstanding. ANDEAN DEVELOPMENT CORPORATION INDEX Part I. Financial Information. 3 Item 1. Financial Statements (Unaudited). 3 Item 2. Management's Discussion and Analysis of Financial Condition and 12 Results of Operations. Part II. Other Information. 19 2 ANDEAN DEVELOPMENT CORPORATION PART I FINANCIAL INFORMATION Item 1. Financial Statements Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). Although the Company believes the disclosures made are adequate to make the information presented not misleading, and, in the opinion of management, all adjustments have been reflected which are necessary for a fair presentation of the information shown and the accompanying notes, these condensed unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2001. The results for the six months ended June 30, 2002 are not necessarily indicative of the results of operations for a full year or of future periods. 3 ANDEAN DEVELOPMENT CORPORATION Consolidated Balance Sheets June 30, 2002 and December 31, 2001
A S S E T S June 30, 2002 December 31, 2001 (Unaudited) (Audited) --------------- ----------------- Current Assets: Cash $ 2,227 $ 931 Accounts receivable 118,966 185,687 Notes receivable 251,441 327,911 Other current assets 207,728 168,279 ---------- ---------- Total Current Assets 580,362 682,808 ---------- ---------- Property, Plant and Equipment, net 339,170 379,842 ---------- ---------- Other Assets: Notes receivable from related party and others 1,346,730 1,415,273 Investment in unconsolidated subsidiaries 2,543 2,543 Advances under agreement 271,406 264,231 ---------- ---------- 1,620,679 1,682,047 ---------- ---------- $2,540,211 $2,744,697 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 ANDEAN DEVELOPMENT CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Continued) June 30, 2002 and December 31, 2001 LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, 2002 December 31, 2001 (Unaudited) (Audited) ------------- ----------------- Current Liabilities: Obligations with banks $ 14,842 $ 35,310 Accounts payable and accrued expenses 74,717 98,237 Due to related parties 12,044 49,203 Current portion of long-term debt 34,205 34,923 Income taxes payable 11,098 - ------------- -------------- Total Current Liabilities 146,906 217,673 ------------- -------------- Long-Term Liabilities: Long-term debt, excluding current portion 73,282 75,503 Staff severance indemnities 39,704 39,427 ------------- -------------- 112,986 114,930 ------------- -------------- Minority interest 192,505 196,019 ------------- -------------- Shareholders' Equity: Preferred stock, $.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding - - Common stock, $.0001 par value, 20,000,000 shares authorized, 2,820,100 shares issued and outstanding 282 282 Additional paid-in capital 5,660,187 5,660,187 Accumulated deficit (3,177,508) (3,105,509) Accumulated other comprehensive (loss) (395,147) (338,885) ------------- -------------- Total Shareholders' Equity 2,087,814 2,216,075 ------------- -------------- $ 2,540,211 $ 2,744,697 ============= ==============
The accompanying notes are an integral part of these consolidated financial statements. 5 ANDEAN DEVELOPMENT CORPORATION Consolidated Statements of Operations Three Months Ended June 30, 2002 and 2001
2002 2001 ------------- ------------- (Unaudited) (Unaudited) ----------- ----------- Revenues from Operations: Revenues $ 40,434 $ 263,601 Cost of operations (25,842) (35,192) ----------- ----------- Gross Profit 14,592 228,409 Selling and Administrative Expenses (31,720) (64,052) ----------- ----------- Income (Loss) from Operations (17,128) 164,357 ----------- ----------- Other Expenses, net (63,159) (59,277) ----------- ----------- (Loss) Income Before Income Taxes and Minority Interest (80,287) 105,080 Income Taxes - (15,499) ----------- ----------- (Loss) Income Before Minority Interest (80,287) 89,581 Minority Interest - 1,525 ----------- ----------- Net (Loss) Income (80,287) 91,106 Other Comprehensive (Loss) Income: Foreign currency translation adjustment (1,825) 13,647 ----------- ----------- Comprehensive Income $ (82,112) $ 104,753 =========== =========== Net (Loss) Income per Common Share $ (.03) $ .04 =========== =========== Weighted Average Shares Outstanding 2,820,100 2,820,100 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 6 ANDEAN DEVELOPMENT CORPORATION Consolidated Statements of Operations Six Months Ended June 30, 2002 and 2001
2002 2001 ------------- ------------- (Unaudited) (Unaudited) --------- --------- Revenues from Operations: Revenues $ 142,508 $ 513,601 Cost of operations (56,259) (73,397) ------------- ------------- Gross Profit 86,249 440,204 Selling and Administrative Expenses (65,859) (251,771) ------------- ------------- Income from Operations 20,390 188,433 ------------- ------------- Other Expenses, net (92,389) (50,619) ------------- ------------- (Loss) Income Before Income Taxes and Minority Interest (71,999) 137,814 Income Taxes - (30,872) ------------- ------------- (Loss) Income Before Minority Interest (71,999) 106,942 Minority Interest - 12,379 ------------- ------------- Net (Loss) Income (71,999) 119,321 Other Comprehensive (Loss): Foreign currency translation adjustment (56,262) (82,263) ------------- ------------- Comprehensive Income $ (128,261) $ 37,058 ============= ============= Net (Loss) Income per Common Share $ (.05) $ .01 ============= ============= Weighted Average Shares Outstanding 2,820,100 2,820,100 ============= =============
7 ANDEAN DEVELOPMENT CORPORATION Consolidated Statements of Shareholders' Equity Six Months Ended June 30, 2002
Accumulated Other Total Common Additional Accumulated Comprehensive Shareholders' Stock Paid-In Capital Deficit Income (Loss) Equity ---------- ----------------- --------------- ------------------ --------------- Balance at December 31, 2001 $ 282 $ 5,660,187 $ (3,105,509) $ (338,885) $ 2,216,075 Net Loss (Unaudited) - - (71,999) - (71,999) Foreign currency translation adjustment (Unaudited) - - - (56,262) (56,262) -------- -------------- ------------ ------------- ----------- Balance at June 30, 2002 (Unaudited) $ 282 $ 5,660,187 $ (3,177,508) $ (395,147) $ 2,087,814 ======== ============== ============ ============= ===========
The accompanying notes are an integral part of these consolidated financial statements. 8 ANDEAN DEVELOPMENT CORPORATION Consolidated Statements of Cash Flows Six Months Ended June 30, 2002 and 2001
2002 2001 ----------- ----------- (Unaudited) (Unaudited) ----------- ----------- Cash Flows from Operating Activities: Net (loss) income $ (71,999) $ 119,321 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 40,672 40,673 Translation adjustment (56,262) (82,263) Minority interest (3,514) (380,585) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable 66,721 2,413,338 Inventory - 51,408 Other current assets (39,449) 15,931 Notes receivable 76,470 185,140 Advances under agreement (7,175) 126,805 Increase (decrease) in: Accounts payable and accrued expenses (23,520) (1,527,760) Income taxes payable 11,098 12,016 Staff severance 277 (1,619) ----------- ----------- Net Cash Provided by Operating Activities (6,681) 972,405 ----------- ----------- Cash Flows from Investing Activities: Purchase of fixed assets - (18,806) Investment in unconsolidated subsidiaries - 225,995 ----------- ----------- Net Cash Provided by Investing Activities - 207,189 ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 9 ANDEAN DEVELOPMENT CORPORATION Consolidated Statements of Cash Flows (Continued) Six Months Ended June 30, 2002 and 2001
2002 2001 ----------- ----------- (Unaudited) (Unaudited) ----------- ----------- Cash Flows from Financing Activities: Borrowings from (advances to) related parties 31,384 $ (314,366) Payments on notes payable to bank (20,468) (948,602) Principal payments on long-term debt (2,939) - Reduction of capital - (64,133) ----------- ----------- Net Cash (Used in) Financing Activities 7,977 (1,327,101) ----------- ----------- Net Increase (decrease) in Cash 1,296 (147,507) Cash at Beginning of Period 931 213,589 ----------- ----------- Cash at End of Period $ 2,227 $ 66,082 =========== =========== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ - $ 5,697 Cash paid during the period for taxes - 30,872 Supplemental Disclosure of Non-Cash Financing Activities: Rescinded Dividends - (423,018)
The accompanying notes are an integral part of these consolidated financial statements. 10 ANDEAN DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The quarterly financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in opinion of management, necessary for a fair statement of results for the interim period. For further information, refer to the financial statements and notes thereto included in the Company's Form 10-KSB as of and for the year ended December 31, 2001. Functional Currency - The financial statements have been translated in accordance with the provisions set forth in Statement of Financial Accounting Standards No. 52, from Chilean pesos (the functional currency) into US dollars (the reporting currency). Earnings Per Common Share - Earnings per common share are based on the weighted average number of shares outstanding of 2,820,100 for the periods ended June 30, 2002 and 2001, respectively, after giving effect to common stock equivalents which consist of warrants issued with the initial public offering that would have a dilutive effect on earnings per share. Warrants issued with exercise prices greater than the existing market value of the company stock are deemed anti-dilutive and are not components of earnings per share. 11 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis contains various "forward looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-QSB, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to, "anticipates", "believes", "plans", "expects", "future" and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company's business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth herein. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the consolidated financial statements included herein. Further, this second quarterly report on Form 10-QSB should be read in conjunction with the Company's Consolidated Financial Statements and Notes to Consolidated Financial Statements included in its 2001 Annual Report on Form 10-KSB. In addition, you are urged to read this report in conjunction with the risk factors described herein. GENERAL Andean Development Corporation ("ADC" or the "Company") was incorporated in Florida on October 19, 1994 and is presently a holding company for Errazuriz y Asociados Ingenieros S.A. ("AE&A"), and E&A Ingesis S.A. ("INA"), both Chilean corporations located in Santiago, Chile. Except as otherwise specifically noted, ADC, AE&A and INA are collectively referred to herein as the "Company." AE&A provides engineering and project management services for water and energy related private and public works and provides technical assistance for both turnkey and non-turnkey major works, mainly related to the development and construction of energy, water and sewage treatment projects in Chile. INA acts as the agent in the sale of major electrical and mechanical equipment. 12 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) INA is also developing, in a joint venture with genteAndina S.A., a Chilean company specializing in education ("genteAndina S.A"), a communication network and related software for (i) rural area remote education, and (ii) post graduate professional education "at home" for Union leaders and key employees in Chile, which, if successful, could be adopted and developed in other countries in South America. On April 1, 2001, the Company executed an agreement with an unrelated company, genteAndina, S. A. in which the Company will invest approximately $500,000 in exchange for guaranteed interest income of 1/2% monthly and 35% of the profits of genteAndina, S. A. genteAndina, S. A. will continue developing the software and projects previously undertaken by the Company. As of December 31, 2001, approximately $425,000 was advanced to genteAndina, S. A. under this agreement and is included in deposits and other in the accompanying consolidated financial statements. The Company, supported by the government of Chile and by certain Chilean institutions, is developing at the Company's cost: . Software to be used to educate the school populations of indigenous rural communities located in isolated areas in the mountains of Chile or close to its coast line, and . Software to teach leadership, and other related matters, to union leaders in Chile, highly qualified employees of the government of Chile, and to certain private industries such as Corporacion del Cobre de Chile, Chilean Copper Corporation ("Codelco"). The Company has entered into an agreement with Codelco, through one of the Company's sponsoring institutions, Fundacion Tucapel Jimenez Alfaro, by which the Company will provide educational services to union leaders at Codelco's Andina Division. Codelco is the industry leader in the Chilean mining industry and the Company anticipates, but cannot guarantee, that once the Codelco project proves successful, other Chilean companies will execute similar agreements. Currently, the Company is well positioned in its core business segment to take advantage of an economic upturn in the large projects sector, since the Company is well established in its marketplace and has maintained customers who are established in their specialties. However, as of the date herein, the economic conditions in the South American market have delayed an anticipated economic upturn in the large projects sector. No assurances can be given as to when such economic upturn will transpire and how soon afterwards the Company will recognize significant revenues from the core business sector. In the interim, the Company is pursuing the development of the distant education business 13 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) and maintaining its strategic position in its core business sector to take advantage of any upswing in the economic conditions in South America. The Company is also the majority owner (83.6%) of a non-operating subsidiary, Consonni USA, Inc. ("Consonni"), the assets of which consist of cash and notes receivables. In 2000, the Company sold the operating subsidiary of Consonni. On August 31, 2001, the Company extended the expiration date of its Redeemable Common Stock Purchase Warrants (the "Warrants") from November 13, 2001 to November 13, 2003. The Company originally issued the Warrants in connection with a stock offering on Registration Statement Form SB-2 (SEC File No. 333-90696) which was declared effective by the Securities and Exchange Commission on November 13, 1996. 14 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED JUNE 30, 2002 TO THREE MONTHS ENDED JUNE 30, 2001 Gross Revenues and Costs of Operations Gross Revenues decreased from $263,601 for the three months ended June 30, 2001 to $40,434 for the three months ended June 30, 2002, a decrease of $233,167. The decrease in gross revenues is a result of the sale of certain subsidiaries during 2001, reduced revenues in the core business as a consequence of the financial instability of the markets in South America, and the loss in revenues from Consonni as a consequence of the sale of the Company's interest in Consonni. Cost of Operations decreased from $35,192 for the three months ended June 30, 2001 to $25,842 for the three months ended June 30, 2002, a decrease of $9,350. This decrease comes primarily from a decrease in operational costs following the sale of certain subsidiaries during 2001, reduced costs of operations as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America, and the decrease in revenues resulting from the sale of the Company's interest in Consonni. Selling and Administrative Expenses, Incomes from Operations and Other Income Expenses Selling and Administrative Expenses decreased from $64,052 for the three months ended June 30, 2001 to $31,720 for the three months ended June 30, 2002. This decrease comes primarily from a decrease in operational costs following the sale of certain subsidiaries during 2001 and reduced expenses as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America Income (Loss) from Operations decreased from $164,357 for the three months ended June 30, 2001 to a loss of ($17,128) for the three months ended June 30, 2002. This decrease comes primarily from a decrease in income following the sale of certain subsidiaries during 2001 and reduced income from operations as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America Other Expenses increased from $59,277 for the three months ended June 30, 2001 to $63,159, an increase of $3,882. This comes primarily from a decrease in depreciation of Consonni's equipment and in the reductions of some costs due to the sale of the Company's interest in Consonni. 15 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Net Income and Income Tax Net Income decreased from income of $91,106 for the three months ended June 30, 2001 to a loss of ($80,287) for the three months ended June 30, 2002. Income Tax decreased from $15,499 for the three months ended June 30, 2001 to $-0- for the three months ended June 30, 2002. FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 TO SIX MONTHS ENDED JUNE 30, 2001 Gross Revenues and Cost of Operations Gross revenues decreased from $513,601 for the six months ended June 30, 2001 to $142,508 for the six months ended June 30, 2002, a decrease of $371,093. The decrease in gross revenues is a result of the sale of certain subsidiaries during 2001, reduced revenues in the core business as a consequence of the financial instability of the markets in South America, and the loss in revenues from Consonni as a consequence of the sale of the Company's interest in Consonni. Cost of Operations decreased from $73,397 for the six months ended June 30, 2001 to $56,259 for the six months ended June 30, 2002, a decrease of $17,138. This decrease comes primarily from a decrease in operational costs following the sale of certain subsidiaries during 2001, reduced costs of operations as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America, and the decrease in revenues resulting from the sale of the Company's interest in Consonni. Selling and Administrative Expenses, Income from Operations and Other Income/Expenses Selling and Administrative Expenses decreased from $251,771 for the six months ended June 30, 2001 to $65,859 for the six months ended June 30, 2002 a decrease of $185,912. This decrease comes primarily from a decrease in operational costs following the sale of certain subsidiaries during 2001 and reduced expenses as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America Income from Operations decreased from $188,433 for the six months ended June 30, 2001 to $20,390 for the six months ended June 30, 2002, a decrease of $168,043. This decrease comes primarily from a decrease in income following the sale of certain subsidiaries during 16 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 2001 and reduced income from operations as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America. Other expenses increased from net expenses of $50,619 for the six months ended June 30, 2001 to net expenses of $92,389 for the six months ended June 30, 2002, an increase of $41,770. This comes primarily from a decrease in depreciation of Consonni's equipment and in the reductions of some costs due to the sale of the Company's interest in Consonni. Net Income and Income Tax Income before income taxes decreased from $137,814 for the six months ended June 30, 2001 to a loss of $(71,999) for the six months ended June 30, 2002, and taxes were reduced in the same period from $30,872 to $-0-. In the same period the corresponding portion of the Minority Interest decreased from $12,379 to $-0-. As a consequence of the previous figures, the net income of the Company decreased in the period from $119,321 to $(71,999). Liquidity and Capital Resources The Company has financed its operations and other working capital requirements principally from operating cash flow. Current Assets Cash and short-term investments increased from $931 as of December 31, 2001 to $2,227 for the six month period ended June 30, 2002, an increase of $1,296. As of December 31, 2001 and for the six month period ended June 30, 2002, the Company had no short-term investments Accounts receivable decreased from $185,687 at December 31, 2001 to $118,966 for the six month period ended June 30, 2002, a decrease of $66,721. This decrease comes primarily from a decrease in accounts receivable following the sale of certain subsidiaries during 2000, the sale of most of the Company's interest in Consonni and reduced accounts receivables as a consequence of the reduced revenues in the core business as a consequence of the financial instability of the markets in South America Notes receivable decreased from $327,911 as of December 31, 2001 to $251,441 for the six month period ended June 30, 2002, a decrease of $76,470. Other current assets increased from $168,279 as of December 31, 2001 to $207,728 for the six month period ended June 30, 2002, an increase of $39,449. 17 ANDEAN DEVELOPMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Total current assets decreased from $682,808 at December 31, 2001 to $580,362 for the six month period ended June 30, 2002, a decrease of $102,446. This decrease was primarily due to the sale of certain subsidiaries during 2000. Property, plant and equipment decreased from $379,842 at December 31, 2001 to $339,170 for the six month period ended June 30, 2002, a decrease of $40,672. Other assets decreased from $1,682,047 at December 31, 2001 to $1,620,679 for the six month period ended June 30, 2002, a decrease of $61,368. This decrease is primarily the result of a write off of goodwill and the sale of some subsidiaries during 2000. Liabilities Current liabilities decreased from $217,673 at December 31, 2001, to $146,906 for the six month period ended June 30, 2002. This decrease comes primarily from a decrease in liabilities following the sale of certain subsidiaries during fiscal 2000 and the sale of the Company's interest in Consonni. Long-term liabilities decreased from $114,930 at December 31, 2001 to $112,986 at the six month period ended June 30, 2002, due to the Company's decision to rescind a declared dividend. The Company anticipates that its cash requirements will continue to increase as it continues to expend substantial resources to build its infrastructure, develop its business plan and establish its sales and marketing network operations, customer support and administrative organizations. The Company currently anticipates that its available cash resources and cash generated from operations will be sufficient to meet its presently anticipated working capital and capital expenditure requirements for the next twelve months. As of June 30, 2002, there were no commitments for long-term capital expenditures. If the Company is unable to maintain profitability, or seeks further expansion, additional funding will become necessary. No assurances can be given that either equity or debt financing will be available. 18 ANDEAN DEVELOPMENT CORPORATION PART II OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. 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) The following exhibits are included in this Form 10-QSB: 99.1 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K None 19 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANDEAN DEVELOPMENT CORPORATION Dated: August 13, 2002 /s/ Pedro Pablo Errazuriz ---------------------------------------------- Pedro Pablo Errazuriz, President and Chief Executive Officer Dated: August 13, 2002 /s/ Jose Luis Yrarrazaval ---------------------------------------------- Jose Luis Yrarrazaval, Chief Financial Officer 20 Exhibit Index Exhibit Description Exhibit Number 99.1 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EX-99.1 3 dex991.txt CEO CERTIFICATION Exhibit 99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In connection with the Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-QSB of Andean Development Company (the "Company") for the period ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Pedro Pablo Errazuriz, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 13, 2002 /s/ Pedro Pablo Errazuriz ------------------------------------- Pedro Pablo Errazuriz, President and Chief Executive Officer EX-99.2 4 dex992.txt CFO CERTIFICATION Exhibit 99.2 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In connection with the Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-QSB of Andean Development Corporation (the "Company") for the period ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jose Luis Yrarrazaval, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 13, 2002 /s/ Jose Luis Yrarrazaval ---------------------------------------------- Jose Luis Yrarrazaval, Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----