UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended: DECEMBER 31, 2010

£

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

AND EXCHANGE ACT OF 1934  

THE ANDINA GROUP, INC.

(Name of Small Business Issuer in its Charter)

179 South 1950 East, Layton UT 84040

 (Address number principal executive offices)

((801) 558-2110

(Issuer’s telephone number)

Check 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 reports); and (2) has been subject to such filing requirements for the past 90 days.   Yes  R     No £  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  £  No   £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:

THE ANDINA GROUP, INC.

(A Development Stage Company)

BALANCE SHEETS

The accompanying notes are an integral part of these financial statements

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THE ANDINA GROUP, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

For the Three and Six Months Ended December 31, 2010 and 2009

and the Period June 17, 2004 (Inception) to December 31, 2010

(Unaudited)

The accompanying notes are an integral part of these financial statements

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THE ANDINA GROUP, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

For the Six Months Ended December 31, 2010 and 2009

and the Period June 17, 2004 (Inception) to December 31, 2010

(Unaudited)

The accompanying notes are an integral part of these financial statements

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THE ANDINA GROUP, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2010

(UNAUDITED)

1.

ORGANIZATION AND BASIS OF PRESENTATION

The Company was incorporated under the laws of the state of Nevada on June 17, 2004 with authorized common stock of 50,000,000 shares with a par value of $.001 and 10,000,000 preferred shares with a par value of $.001. None of the preferred shares have been issued and the terms have not been established.

The Company is in the business of offering integrated multi-media promotional services to small network marketing organizations and other small businesses to promote sales of their products or services. The Company assists them in using marketing tools such as public relations as well as developing and utilizing such services as advertising, direct mail, electronic communication, and promotions to increase product and service awareness.  The Company offers quality marketing strategies and services for their business along with marketing support services, such as ad design, ad placement strategies, advertising sales, website development, marketing plans, focus groups, and media buying

The company has not reached full operations and is in the development stage.

The results of operations for the interim periods are not necessarily indicative of the results for the full year. In management’s opinion all adjustments necessary for a fair presentation of the Company’s financial statements are reflected in the interim periods included, and are of a normal recurring nature.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Income Taxes

The Company utilizes the liability method of accounting for income taxes.  Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse.  An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

On December 31, 2010, the Company had a net operating loss available for carry forward of $123,207. The income tax benefit of approximately $42,000 from the carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has been unable to project a reliable estimated net income for the future.  The net operating loss will expire starting in 2024 through 2030.

Financial and Concentrations Risk

The Company does not have any concentration or related financial credit risk.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

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Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Revenue Recognition

Revenue is recognized on the sale and delivery of a product or the completion of a service provided

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were assumed in preparing these financial statements.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities.

Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

3.  CAPITAL STOCK

From its inception the Company has issued 6,010,000 private placement common shares for services valued at $2,000 and 136,600 private placement common shares for cash of $99,600.

4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

Officer/directors own 81% of the outstanding common capital stock and have made contributions to capital of $12,657.

A portion of the Company’s revenues have been derived from a related party, KAATN of Wyoming, a company controlled by the Company’s sole officer/director, Burke Green. The Company is paid for each service it provides to KAATN at a rate that is usual in the industry and the same as what the Company charges its other clients

5.  GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activity, and to service its debt, which raises substantial doubt about its ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective, through short term related party loans, long term financing, and additional equity funding, which will enable the Company to operate for the coming year. In addition, Mr. Burke Green, the Company’s sole officer/director has indicated his willingness to contribute funds, if necessary to support operations, if not available from another source.

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Revenues

Revenues are generated by marketing services provided to our clients and are recognized as earned at the time the services are provided.   Services are provided, and fees negotiated on an individualized per job basis usually at prices normal and usual in the industry. We do not have service contracts with clients but perform services in accordance with the clients’ needs and budget. We achieve revenues from both network marketers and other small businesses.

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Revenues three-months ended DEC2010 and DEC2009: We had revenues of $7,150 during our second quarter of our current fiscal year, significantly less than the $62,267 in revenues we generated in our second quarter last year. Revenues in the three months ended DEC 2010 were received from two non-related clients. During our second quarter last year, revenues were derived from 6 clients: 5 non-related party clients and 1 related party client. The related party client, KAATN of Wyoming, provided approximately 10% of the revenue stream during the period

Revenues six-months ended DEC2010 and DEC2009: Revenues in the our six months ended DEC2010 were $19,850, significantly less than the revenues received during our six months ended DEC2009 which were $77,317. The largest portion of the six month ended DEC2009 revenues were achieved during the second quarter.  This year’s revenues during the 6 month period were derived from two non-related party clients; during the first 6 months of our last fiscal year, revenues were derived from 10 clients one of which was a related party. The related party client, KAATN of Wyoming, is a network marketing company controlled by our sole officer/director, Burke Green. KAATN markets a health juice product called MonaVie. Our revenues from KAATN, which accounted for 8% of our revenues during the six month period ended DEC2009, and our other clients, are based on individual services performed.

Expenses/Loss from Operations

Three months ended DEC2010 and DEC2009: Our sales and administrative expenses during our three months ended DEC 2010 were $8,445 compared to sales and administrative expenses of $74,329 during the three months ended DEC2009.  This resulted in a $1,295 loss from operations in the second fiscal quarter of this year compared to a $12,062 loss from operations in the three months ended DEC2009. Expenses during the three month period this year included marketing costs of $500 compared to marketing costs of $32,442 in that same period in DEC2009.  Legal and accounting and other fees cost us approximately $1,300 this year in the second quarter compared to $1,200 during the second quarter last year. We also spent much less on consulting fees this year, $5,900, compared to $21,209 last year. We did not incur any telemarketing expenses during the second quarter ended DEC2010 compared to that same quarter last year when we spent $9,000 on telemarketing. In addition advertising cost us $2,800 in the second quarter ended DEC2009 with no comparative expense the second quarter of this year. We incurred travel expenses of $4,513 last year during the second quarter; during our second quarter this year we spent only $75 in this category.  Overall we spent significantly less during the second quarter this year than last especially in marketing and consulting when management took advantage of increased revenues last year to make a more concerted effort to penetrate our market niche

Six months ended DEC2010 and DEC2009: During our six-months ended DEC2010 our sales and administrative expenses were $21,788 compared to the six months ended DEC2009 when sales and administrative expenses were $82,923. This resulted in a $1,938 loss from operations in the six months ended DEC2010 compared to $5,606 a loss from operations in the six months ended DEC2010; revenues in both years’ six-month periods were not sufficient to offset spending. We had $4,800 in advertising expenses in the six months ended DEC2009 with no advertising costs in that period ended DEC2010. Advertising costs consist mainly of direct costs paid out for signs, print or radio advertising, brochures and material distributed to the public. We spent significantly less on marketing during the six-month period ended DEC2010 at only $500, compared to $32,585 in the six months ended DEC2009, with nearly all of that occurring in the second three month period. We also incurred no telemarketing costs during this year’s DEC2010 six month period ended; during the six months ended DEC2009, we spent $9,600 on telemarketing. Legal, accounting and other associated fees were approximately $6,600 during the first half of 2010 compared to $4,639 during the six months DEC2009. We expect our legal and accounting fees to remain the same or higher in the next year as we continue to comply with various SEC rules and reporting requirements and begin initiating procedures to comply with the upcoming XBRL compliance.  During the six months ended DEC2010, we had consulting fees of $5,900; consulting cost us $22,000 in the same period least year. These fees reflect professional development expenses and consulting fees associated with efforts to increase our business in both six-month periods. During the six months ended DEC2010 we had professional expenses of $8,394 with only $479 in that category last year.  Professional fees this year were associated with our DTC applications.  However, we had only $75 in travel expenses this year compared to $5,592 spent in the six month period ended DEC2009. Nearly all of the higher spending that occurred in the six month ended DEC2009 period occurred in the second quarter when increased revenues allowed management to market our services more aggressively. In addition, we spent nothing on marketing in the first six months of this fiscal year; during the first six months of last year marketing was a relatively large component of our expenditures. Overall revenues were down this year as were expenses although our DTC application did impact our spending.

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Balance Sheet Information

The chart below presents a summary of our balance sheet at December 31, 2010 and June 30, 2010:

We had only $19 cash as of our fiscal year ended June 30, 2010. Our cash increased to $50 at December 31, 2010.  Liabilities of $9,031 at our June 30, 2010 fiscal year end increased to $11,000 during our second fiscal quarter and consist of accounts payable due to professional services for legal and accounting.  

Commitment and Contingencies

We have no leases in place.

Off-Balance Sheet Arrangements

None.

Liquidity and Capital Resources/ Plan of Operation for the Next Twelve Months

Cash Flows and Capital Resources

Overall, our revenues have not reached a level to support our operations nor provide for additional business development and expansion.  Operations used $960 in cash during the six months ended December 31, 2009 and provided only $31 during our six months ended December 31, 2010. Our primary sources of capital during our last two years are as follows:

§

During our six months ended December 31, 2010, revenues and available cash funded our operations.

§

During our fiscal year ended June 30, 2010, we had no financing or investing activities; increased revenues along with available cash were sufficient to fund operations;

§

During our fiscal year ended June 30, 2009, we had no financing or investing activities and our expenses exceeded our revenues. Revenues of $31,580 however, along with available cash provided sufficient cash to operate the business during the year.

Our Plan of Operation for the Next Year

We had losses from operations during our first quarter of this fiscal year and have incurred losses since inception.  We have an accumulated deficit at December 31, 2010 of $123,207 and we have only $50 in cash.  Although we have increased our overall number of clients, we continue to rely on a small number of clients, and, in this first six months of our fiscal year we had only two clients. In addition, although our revenues have increased, they are inconsistent and we do not have sufficient cash to fund our operations and pursue business development and expansion.

We have an immediate need for cash to fund operations. During the next twelve months we must find ways to reduce our operating expenses and while continuing to increase cash flows.  Outside accounting services are responsible for reviewing and analyzing the completeness of the accounting information provided by our CFO and then compiling it into a financial statement prior to submission to our independent public accountant for review. We anticipate professional fees will continue to cost us approximately $5,000 - $7,000 per quarter. In addition, these increased fees have not been relieved now that we are public because we continue to require assistance to comply

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