UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
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(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ---------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
- ---------- 1934
For the transition period from ____________ to ___________
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Commission File Number: 33-27439FW
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Goung Hei Investment Co., Ltd.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2254391
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(State of incorporation) (IRS Employer ID Number)
16910 Dallas Parkway, Suite 100, Dallas TX 75248
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(Address of principal executive offices)
(972) 248-1922
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(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
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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 NO X
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: September 9, 1999: 1,693,163
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Transitional Small Business Disclosure Format (check one): YES NO X
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<PAGE>
Goung Hei Investment Co., Ltd.
Form 10-QSB for the Quarter ended June 30, 1999
Table of Contents
Page
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Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 8
Part II - Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 9
2
<PAGE>
Part 1 - Item 1 - Financial Statements
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Balance Sheets
June 30, 1999 and 1998
(Unaudited)
1999 1998
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ASSETS
------
Current Assets
Cash on hand and in bank $ -- $ --
Organizational costs, net -- --
------- -------
Total Assets $ -- $ --
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities $ -- $ --
------- -------
Commitments and Contingencies
Shareholders' Equity Preferred stock - $0.00001 par value
10,000,000 shares authorized; none
issued and outstanding -- --
Common stock - $0.00001 par value
50,000,000 shares authorized
1,693,163 issued and outstanding, respectively 17 17
Additional paid-in capital 5,270 5,270
Deficit accumulated during the development stage (5,287) (5,287)
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Total shareholders' equity -- --
------- -------
Total Liabilities and Shareholders' Equity $ -- $ --
======= =======
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
3
<PAGE>
<TABLE>
<CAPTION>
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Statements of Operations and Comprehensive Income
Six and Three months ended June 30, 1999 and 1998
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Expenses
General and administrative -- -- -- --
Depreciation and amortization -- -- -- --
------------ ------------ ------------ ------------
Total expenses -- -- -- --
------------ ------------ ------------ ------------
Net Loss -- -- -- --
Other comprehensive income -- -- -- --
------------ ------------ ------------ ------------
Comprehensive Income $ -- $ -- $ -- $ --
============ ============ ============ =============
Loss per weighted-average share of
common stock outstanding,
computed on Net Loss - basic
and fully diluted nil nil nil nil
============ ============ ============ =============
Weighted-average number of shares
of common stock outstanding 1,693,163 1,693,163 1,693,163 1,693,163
============ ============ ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
4
<PAGE>
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Statements of Cash Flows
Six months ended June 30, 1999 and 1998
(Unaudited)
Six months Six months
ended ended
June 30, June 30,
1999 1998
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Cash Flows from Operating Activities
Net Loss $ -- $ --
Adjustments to reconcile net income to net cash
provided by operating activities
Common stock issued for reorganization expenses -- --
Depreciation and amortization -- --
---------- ----------
Net cash provided by (used in) operating activities -- --
---------- ----------
Cash Flows from Investing Activities -- --
---------- ----------
Cash Flows from Financing Activities -- --
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents -- --
Cash and cash equivalents at beginning of period -- --
---------- ----------
Cash and cash equivalents at end of period $ -- $ --
========== ==========
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ -- $ --
========== ==========
Income taxes paid (refunded) $ -- $ --
========== ==========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
5
<PAGE>
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Notes to Financial Statements
Note A - Organization and Description of Business
Potentialistics, Inc. (Company) was incorporated on October 12, 1988, under the
laws of the State of Delaware, as a wholly-owned subsidiary of Texas American
Group, Inc., a publicly-owned corporation (TAG). TAG caused the Company to
register 1,585,733 shares of its initial 25,000,000 issued and outstanding
shares of common stock with the Securities and Exchange Commission on Form S-18.
TAG then distributed the registered shares to TAG shareholders. The Company has
had no substantial operations or substantial assets since inception. The
business purpose of the Company is to seek out and obtain a merger, acquisition
or outright sale transaction whereby the Company's shareholders will benefit.
In June 1996, the Company changed its corporate name to Goung Hei Investment
Co., Ltd. in anticipation of a acquisition of a construction company based in
Taiwan. This transaction was never consummated.
The Company's majority shareholder has continued to maintain the corporate
status of the Company and provides all nominal working capital support on the
Company's behalf. Because of the Company's lack of operating assets, its
continuance is fully dependent upon the majority shareholder's continuing
support. The majority shareholder intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.
The Company is considered in the development stage and, as such, has generated
no significant operating revenues and has incurred cumulative operating losses
of approximately $2,900.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Organization costs
------------------
Organization costs were amortized using the straight-line basis over a
five year period.
3. Income taxes
------------
The Company files its own separate federal income tax return. The Company
has no net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods.
6
<PAGE>
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Notes to Financial Statements - Continued
Note B - Summary of Significant Accounting Policies - Continued
4. Loss per share
--------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of June 30, 1999 and 1998, the Company
has no outstanding warrants and options issued and outstanding.
Note C - Related Party Transactions
For the period October 12, 1988 (date of inception) through December 31, 1989,
TAG provided office space and management services to the Company for a monthly
fee. Total expenses under this arrangement aggregated $1,100 for the cumulative
period.
Note D - Common Stock Transactions
On June 7, 1996, the Company's Board of Directors approved a one (1) for fifteen
(15) reverse stock split in anticipation of a merger transaction which did not
consummate. The effect of this action is reflected in the accompanying financial
statements as of the first day of the first period presented.
In September 1989, the Company issued 221 reverse split shares of the Company's
restricted, unregistered common stock to its majority shareholder for cash of
approximately $2,082. The proceeds were used to support general corporate
expenses.
In June 1996, the Company issued 23,429 reverse split shares of the Company's
restricted, unregistered common stock to it's majority shareholder for payments
made on the Company's behalf, valued at approximately $2,300, for various
charges and fees related to the then proposed merger transaction which was not
consummated.
(Remainder of this page left blank intentionally)
7
<PAGE>
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) General comments
In June 1996, the Company, concurrent with a change in control, attempted to
acquire Qualyserve Construction Co., Ltd., a privately owned company
incorporated and domiciled in Taiwan, Republic of China. As the Company was then
delinquent in filing periodic reports with the U. S. Securities and Exchange
Commission, the Company filed a Form 10, and subsequent amendments, with the U.
S. Securities and Exchange Commission. This acquisition was never consummated
and, accordingly, the information reported in the 1996 Form 10 was premature and
erroneously filed.
(3) Results of Operations, Liquidity and Capital Resources
As of the date of this filing, the Company has no operations, assets or
liabilities. Accordingly, the Company is dependent upon management and/or
significant shareholders to provide sufficient working capital to preserve the
integrity of the corporate entity at this time. It is the intent of management
and significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
The Company is currently seeking a suitable merger or acquisition candidate.
(3) Year 2000 Considerations
The Year 2000 (Y2K) date change is believed to affect virtually all computers
and organizations. The Company has undertaken a comprehensive review of its
information systems, including personal computers, software and peripheral
devices, and its general communications systems. The Company has no direct
electronic links with any customer or supplier. In addition, the Company has
held discussions with certain of its software suppliers with respect to the Y2K
date change. The Company has completed its detailed review, as a preliminary
assessment and the Company believes, as of the date of this filing, that it will
not be required to modify or replace significant portions of its computer
hardware or software and any such modifications or replacements are, or will be,
readily available. The Company has no known direct Y2K exposures and anticipates
that any costs associated with the Y2K date change compliance to have a material
effect on its financial position or its results of operations. There can be no
assurance until January 1, 2000, however, that all of the Company's systems, and
the systems of its suppliers, shippers, customers or other external business
partners will function adequately.
(Remainder of this page left blank intentionally)
8
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings
of shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
Reports on Form 8-K - None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Goung Hei Investment Co., Ltd.
September 10, 1999 /s/ Kevin B. Halter, Jr.
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Kevin B. Halter, Jr.
President and Director
9
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<LEGEND>
</LEGEND>
<CIK> 0001023877
<NAME> Goung Hei Investment Co., Ltd.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 0
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0
0
<COMMON> 17
<OTHER-SE> (17)
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