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 September 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
Goung Hei Investment Co., Ltd.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2254391
(State of incorporation) (IRS Employer ID Number)
16910 Dallas Parkway, Suite 100, Dallas TX 75248
(Address of principal executive offices)
(972) 248-1922
(Issuer's telephone number)
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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 X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: October 15, 1999: 2,286,649
Transitional Small Business Disclosure Format (check one): YES NO X
<PAGE>
Goung Hei Investment Co., Ltd.
Form 10-QSB for the Quarter ended September 30, 1999
Table of Contents
Page
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
September 30, 1999 and 1998
(Unaudited)
1999 1998
-------- --------
ASSETS
Current Assets
Cash on hand and in bank $ -- $ --
Organizational costs, net -- --
-------- --------
Total Assets $ -- $ --
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Due to controlling shareholder $ 2,720 $ --
-------- --------
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
2,286,649 and 1,693,163 issued
and outstanding, respectively 23 17
Additional paid-in capital 56,076 5,270
Deficit accumulated during the development stage (58,819) (5,287)
-------- --------
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
Nine and Three months ended September 30, 1999 and 1998
(Unaudited)
Nine months Nine months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
----------- ---------- ----------- -----------
Expenses
Reorganization and settlement expenses 53,532 -- 53,532 --
General and administrative expenses -- -- -- --
Depreciation and amortization -- -- -- --
----------- ---------- ----------- -----------
Total expenses 53,532 -- 53,532 --
----------- ---------- ----------- -----------
Net Loss (53,532) -- (53,532) --
Other comprehensive income -- -- -- --
----------- ---------- ----------- -----------
Comprehensive Income $ (53,532) $ -- $ (53,532) $ --
=========== ========== =========== ===========
Loss per weighted-average share of
common stock outstanding,
computed on Net Loss - basic
and fully diluted $ (0.03) nil $ (0.03) nil
=========== ========== =========== ===========
Weighted-average number of shares
of common stock outstanding 1,727,946 1,693,163 1,796,378 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>
<TABLE>
<CAPTION>
Goung Hei Investment Co., Ltd.
(formerly Potentialistics, Inc.)
(a development stage enterprise)
Statements of Cash Flows
Nine months ended September 30, 1999 and 1998
(Unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Loss $(53,532) $ --
Adjustments to reconcile net income to net cash
provided by operating activities
Common stock issued for reorganization
and settlement expenses 50,812 --
Increase in due to majority shareholder 2,720 --
-------- ----------
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) $ -- $ --
======== ==========
</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.
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
Goung Hei Investment Co., Ltd. (Company) was incorporated on October 12, 1988,
as Potentialistics, Inc., 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 $59,000.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the Securities and Exchange Commission. The
accompanying financial statements do not include all disclosures required by
generally accepted accounting principles. Users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 1999.
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.
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
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.
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 September 30, 1999 and 1998, the
Company has no outstanding warrants and options issued and outstanding.
Note C - Common Stock Transactions
On September 30, 1999, the Company issued an aggregate 593,486 shares of
unregistered, restricted common stock in connection with the settlement of
certain previously unknown oral obligations incurred during the negotiations
held in anticipation of a acquisition of a construction company based in Taiwan.
This acquisition transaction was never consummated. Approximately 175,200 of
these shares were concurrently transferred between unrelated third parties for
approximately $15,000 cash. Accordingly, this settlement transaction was valued
at approximately $50,872 (or $0.085616 per share).
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.
8
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
On September 30, 1999, the Company issued 175,200 shares of unregistered,
restricted common stock to Mr. Jin G. Yeng Wu and 418,286 shares of
unregistered, restricted common stock to Mr. Mao-Tse Yang in connection
with the settlement of certain previously unknown oral obligations
incurred during the negotiations held in anticipation of a acquisition of
a construction company based in Taiwan. This acquisition transaction was
never consummated. Approximately 175,200 of these shares were
concurrently transferred between unrelated third parties for
approximately $15,000 cash. Accordingly, this settlement transaction was
valued at approximately $50,872 (or $0.085616 per share).
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.
October 15 , 1999 /s/ Kevin B. Halter, Jr.
-------- ------------------------------
Kevin B. Halter, Jr.
President and Director
9
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<NAME> Goung Hei Investment Co., Ltd.
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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<CASH> 0
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0
0
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