UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EtG Corporation
- --------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Nevada 87-0567854
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification
Code Number) No.)
1008 SW Mic-O-Say Circle, Blue Springs, Missouri 64015
- --------------------------------------------------------------------------------
(Address and telephone number of principal executive offices)
1008 SW Mic-O-Say Circle Blue Springs, Missouri 64015
- --------------------------------------------------------------------------------
(Address of principal place of business or
intended principal place of business)
William J. Stutz, 1008 SW Mic-O-Say Circle, Blue Springs, Missouri 64015
(816) 220-1119
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public October, 1999
Copies of communications to:
Allen G. Reeves, P.C.
900 Equitable Building, 730 17th Street
Denver, Colorado 80202
(303) 534-6278
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate offering Amount of
to be registered registered per unit price(1) registration fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.001 par value 200,000 $1.00 $200,000 $55.60
</TABLE>
(1) Calculated pursuant to Rule 457(o) under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
EtG CORPORATION
CROSS REFERENCE SHEET
Showing Location in the Prospectus of Information
Required by Items 1 through 23, Part 1, of Form SB-2
Item Number and Caption Caption in Prospectus
- ----------------------- ---------------------
1. Front of the Registration
Statement and Outside Front
Cover Page of Prospectus............. Outside Front Cover of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus............ Inside Front and Outside Back
Cover Pages of Prospectus
3. Summary Information and Risk
Factors.............................. Prospectus Summary; Risk Factors;
4. Use of Proceeds...................... Use of Proceeds
5. Determination of Offering Price...... Outside Front Cover page of
Prospectus; Risk Factors;
Terms of the Offering
6. Dilution............................. Dilution
7. Selling Security Holders............. Not Applicable
8. Plan of Distribution................. Outside Front Cover; Terms of
the Offering
9. Legal Proceedings.................... Business
10. Directors, Executive Officers,
Promoters and Control Persons....... Management
11. Security Ownership of Certain
Beneficial Owners and Management.... Security Ownership of Certain
Beneficial Owners and Management
12. Description of Securities........... Description of Capital Stock
13. Interests of Named Experts and
Counsel............................. Experts; Legal Matters
14. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities....... Indemnification
<PAGE>
15. Organization within Last Five
Years................................ Certain Transactions
16. Description of Business.............. Prospectus Summary; Business;
Risk Factors
17. Management's Discussion and
Analysis or Plan of Operation........ Business
18. Description of Property.............. Business
19. Certain Relationships and
Related Transactions................. Certain Transactions
20. Market for Common Equity and
Related Stockholder Matters.......... Outside Front Cover Page of
Prospectus; Risk Factors
21. Executive compensation............... Management; Executive
Compensation
22. Financial Statements................. Financial Statements
23. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure............. Not Applicable
<PAGE>
200,000 Shares
EtG Corporation
Common Stock
(par value $0.001 per share)
EtG Corporation (the "Company") is offering (the "Offering") hereby 200,000
shares of its common stock (the "Common Stock"). Prior to the Offering, there
has been no public market for the Common Stock. For factors that were considered
in determining the initial public offering price see "TERMS OF THE OFFERING."
The Offering is being made on a "direct participation" basis by the Company.
Upon completion of the Offering, the present directors, executive officers
and principal shareholders of the Company will beneficially own approximately
94% of the outstanding Common Stock. See "RISK FACTORS-Control by Existing
Shareholders."
THESE ARE SPECULATIVE SECURITIES. THIS OFFERING INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 4 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Initial Public Underwriting Proceeds to
Offering Price Discount(l) Company(2)
Per Share ................ $1.00 $0.00 $1.00
Total ..................... $200,000 $0.00 $200,000
(1) The Common Stock is being offered on a "direct participation" basis by the
Company. No sales commission will be paid for Common Stock sold by the Company.
The Company reserves the right to withdraw, cancel or reject an offer in whole
or in part. The Offering will terminate on or before __________, 1999. In the
Company's sole discretion, the Offering may be extended from time to time but in
no event later than one (1) year from the date of this Prospectus. There is no
minimum offering amount and no escrow account. Proceeds of this Offering are to
be deposited directly into the operating account of the Company. See "TERMS OF
THE OFFERING-Plan of Distribution and Offering Period."
(2) Before deducting estimated offering expenses of $40,500 payable by the
Company.
The date of this Prospectus is ________________, 1999.
<PAGE>
Available Information
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
SB-2 under the Securities Act of 1933 with respect to the Offering. This
prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Company will be subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), but is
currently not a reporting company. The reports and other information filed by
the Company may be inspected and copied at prescribed rates at the public
reference facilities of the Commission in Washington, D.C. Copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington, D.C., 20549, at the Commission's New York Regional Office located at
Seven World Trade Center, Suite 1300, New York, New York 10048, and at its
Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Descriptions contained in this prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement are
not necessarily complete and each such description is qualified by reference to
such contract or document. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission (including the Company).
The address of this Web site is http://www.sec.gov.
The Company intends to furnish to its shareholders, after the close of each
fiscal year, an annual report relating to the operations of the Company and
containing audited financial statements examined and reported upon by an
independent certified public accountants. In addition, the Company may furnish
to shareholders such other reports as may be authorized, from time to time, by
the Board of Directors. The Company's year end is December 31.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information appearing elsewhere in this Prospectus. Each prospective
investor is urged to read this Prospectus in its entirety. Unless otherwise
indicated, all references to the Company include Enjoy The Game, Inc., which is
a wholly-owned subsidiary of the Company.
The Company
The Company was incorporated in the State of Nevada on March 13, 1996,
under the name "B & R Ventures, Inc." The Company's name was subsequently
changed to "EtG Corporation." On March 28, 1999, the Company acquired all of the
issued and outstanding capital stock of Enjoy The Game, Inc., a company
incorporated in the State of Missouri as a result of which Enjoy The Game, Inc.
became its wholly-owned subsidiary. Prior to this acquisition, the Company was
not engaged in any business activities. As used herein, the term "Company"
refers to both the Company and its wholly owned subsidiary, Enjoy The Game, Inc.
The Company is a development stage company with a limited operating
history, having commenced operations in August of 1998. The Company is a sports
media and merchandising enterprise that promotes the positive aspects of
athletic competition. Its primary focus is on educating athletes, coaches,
parents and fans on the value of athletics and how to enjoy the art of playing
the game. While the Company believes its concepts are applicable to all levels
of athletics, it is anticipated that the age group that will benefit the most
are the youth sports groups (14 and under), interscholastic athletics and
collegiate programs. Educational tools that the Company uses to promote its
theme of enjoyable athletic competition include videos, apparel and specialized
merchandise. The Company's President, William J. Stutz, also makes live
appearances at which he stresses the Company's philosophy. The Company also
intends to branch out into the production of various publications to promote its
philosophy, including magazines, newsletters, brochures and a full educational
curriculum package that incorporates a multi-sport video, as well as
instructional materials. The sale and licensing of its products are expected to
provide a significant portion of the Company's revenues.
The Company's principal executive offices are located at 1008 S.W.
Mic-O-Say Circle, Blue Springs, Missouri 64015. Its telephone number is (816)
220-1119.
The Offering
Offering Price per share....................................... $1.00
Shares offered hereby ........................................200,000
Shares of Common Stock
Outstanding prior to the Offering................ 3,010,000
After the Offering.................................3,210,000
3
<PAGE>
Use of Proceeds
After deducting expenses associated with this Offering, estimated to be
$40,500, the net proceeds of this Offering in the approximate amount of $159,500
are expected to be used to produce videos, purchase merchandise, for general and
administrative expenses, marketing and promotion expenses and working capital.
See "Use of Proceeds" and "Business".
Risk Factors........................Investment in the securities offered by this
Prospectus involves a high degree of risk,
including the following risks:
* Unproven product line and lack of
commercial acceptance
* Development stage company with no
history of earnings
* Possible volatility of price of common
stock
See "Risk Factors"
Market for Common Stock.............There is no market for the Shares and there
can be no assurance that an active market
will develop in the Shares. See "Risk
Factors".
RISK FACTORS
In addition to other information contained in this Prospectus, the
following factors should be carefully considered in evaluating the Company and
its business before purchasing the Common Stock offered by this Prospectus. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results in the future could differ
significantly from the results discussed or implied in such forward-looking
statements. Factors that could cause or contribute to such a difference include,
but are not limited to, those discussed immediately below, in the section
captioned "Business, " as well as those discussed elsewhere in this Prospectus.
Absence of Operating History; Going Concern Qualifications
The Company is a newly formed venture without significant assets. The
Company's success will depend in part on its ability to deal with the problems,
expenses, and delays frequently associated with establishing a new business
venture. The Company has derived no significant revenue from operations to date.
As of June 30, 1999, the Company has an accumulated deficit of $37,497 and has
generated a loss from operations since inception in the amount of $33,641.
4
<PAGE>
Continuing losses are likely before the Company's operations might become
profitable and there is no assurance that the Company's operations will ever
become profitable. The financial statements accompanying this Prospectus have
been presented on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
However, because of a lack of an operating history, a lack of working capital
and an unproven business concept, there is substantial doubt about the Company's
ability to continue as a going concern. The Company has borrowed funds in the
aggregate principal amount of $57,500 from certain individuals, including
nonaffiliated shareholders (or affiliates thereof), payable on demand of each of
the lenders. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." If payment of
these loans is demanded prior to completion of the Offering or in the event the
Offering is terminated without having sold all of the shares of Common Stock
offered hereby, the Company's ability to continue as an ongoing concern could be
greatly affected. See "RISK FACTORS-Risks Associated with Selling Less than All
of the Offered Shares of Common Stock and with the Plan of Distribution."
Risks Associated with Unproven Product Line and Marketing Concept
The Company's proposed plan of operations seeks to exploit an unproven
product line and services that may have limited appeal. Further, while
management believes that a demand exists for its products and services, there
have been no marketing or similar studies done by the Company that would confirm
that such a demand exists. Even if such a demand exists, there can be no
assurance that the Company's proposed marketing concept will be effective in
identifying and fulfilling the demand in a manner which will ever lead to
profitable operations.
Risks Associated with Selling Less than All of the Offered Shares of Common
Stock and with the Plan of Distribution
The Company is offering hereby 200,000 shares of Common Stock at $1.00 per
share on a "direct participation" basis. There are no assurances that all of the
shares of Common Stock offered hereby will be sold. Further, because all of the
shares of Common Stock offered hereby may not be sold, there is the risk that
the Company may have proceeds which are insufficient to fully implement its
business strategy. See "Use of Proceeds". In such event, the Company may be
compelled to seek alternative sources of financing, including funding from
commercial lenders. There are no assurances that such alternative sources of
financing will be available under commercially reasonable terms. In the event
the Offering is terminated without having sold all of the shares of Common Stock
offered hereby, the Company's ability to continue as an ongoing concern could be
greatly affected.
There is no minimum number of shares of Common Stock that may be sold
hereunder and there is no escrow account into which the proceeds of this
Offering will be deposited. All proceeds of this Offering will be deposited
directly into the Company's operating account and will be immediately commingled
with other funds of the Company. See "TERMS OF THE OFFERING." If less than all
the shares of Common Stock offered hereby is sold, resulting in the Company's
inability to continue as an ongoing concern, an investor may sustain a loss of
his or her entire investment. An investment in the Company is therefore
immediately at risk.
5
<PAGE>
Dependence on Key Personnel
The Company is highly dependent on the abilities and continued service of
its management, William J. Stutz and Valerie M. Stutz, neither of whom have
employment contracts with the Company. The loss of the services of either of
these individuals could have a materially adverse effect on the Company. There
can be no assurance that the Company will be successful in attracting and
retaining the personnel necessary to develop the Company's services and to
continue to grow and operate profitably. The Company does not have in place "key
man" life insurance policies covering the lives of any of these individuals. See
"MANAGEMENT"
Control by Existing Shareholders
Upon completion of the Offering, the Company's directors, officers and
principal shareholders will, in the aggregate, beneficially own approximately
94% of the outstanding shares of Common Stock. As a result, these persons would
be able to elect a majority of the Board of Directors and to control the outcome
of virtually all other matters requiring shareholder approval. Such voting
concentration may have the effect of delaying or preventing a change in control
of the Company. See "DESCRIPTION OF CAPITAL STOCK", "MANAGEMENT" and "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT".
Arbitrary Offering Price
The Offering price of the Common Stock was arbitrarily determined by the
Company. In determining this price, the Company considered, among other things,
the amount of proceeds required to initiate the Company's business plan and
marketing strategy, the lack of revenues of the Company, estimates of future
revenues of the Company, the management of the Company, the Company's plans for
future growth, the general condition of the securities markets and the amount of
retained equity to the present shareholders. Prospective investors should not
consider the Offering Price of the Common Stock as necessarily indicative of the
actual value of the Common Stock.
No Prior Public Market and Possible Volatility of Price
Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurance that an active public market for the Common Stock
will develop or be sustained. The Company does not intend to list the Common
Stock on any national securities exchange or to apply for quotation on either
the Nasdaq Stock Market or the Nasdaq Small Cap Stock Market. Trading, if any,
in the Common Stock may be conducted in the over-the-counter (the "OTC") market
in the so-called "pink sheets" or the "OTC Bulletin Board" service. As a result,
an investor would likely find it difficult to dispose of or to obtain accurate
quotations as to the value of the Common Stock offered hereby.
6
<PAGE>
The Common Stock will be subject to Rule 15g-9 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which imposes additional
sales practice requirements upon brokers-dealers who sell "penny stocks" to
persons other than established customers and institutional accredited investors.
For transactions under this rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to the sale. The Securities and
Exchange Commission (the "Commission") defines a "penny stock" to be any
non-Nasdaq Stock Market equity security that has a market price of less than
$5.00 per share, subject to certain exceptions. For any transaction by
broker-dealers involving a penny stock, unless exempt, the rules of the
Commission require delivery, prior to a transaction in penny stock, of a risk
disclosure document relating to the penny stock market, together with other
requirements and restrictions. The market liquidity of the Company's securities
could be severely adversely affected.
In addition, the National Association of Securities Dealers, Inc. (the
"NASD") has adopted a series of changes pertaining to the OTC Bulletin Board and
the OTC market. Generally stated, these changes:
(i) allow only those companies that report their current financial
information to the Commission, banking, or insurance regulators to be quoted on
the OTC Bulletin Board;
(ii) require brokers, before they recommend a transaction involving an
OTC security, to review current financial statements on the company they are
recommending; and,
(iii) prior to the initial purchase of an OTC security, require that
every investor receive a standard disclosure statement (prepared by the NASD)
emphasizing the differences between OTC securities and other market-listed
securities.
The NASD is also considering the adoption of additional changes, such as
seeking the authority for the NASD to halt trading of securities on the OTC
Bulletin Board under certain circumstances. The Company cannot predict the
likelihood of these proposed changes being approved by the Commission in their
current form or the adoption of any additional changes by the NASD.
Even if such a public market were to develop, the vagaries of the stock
market are such that there may be significant price and volume fluctuations that
may or may not be related to the operating performance of the Company.
Substantial Dilution
The initial public offering price of the Common Stock offered hereby is
substantially higher than the net book value of the currently outstanding Common
Stock. Therefore, purchasers of the Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of the Common
Stock in the amount of approximately $ .0965 per share. Existing shareholders
paid an average of $.005 per share of Common Stock. See "DILUTION."
7
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Dividend Policy
The Company has never declared or paid a cash dividend on its Common Stock
and does not expect to pay dividends in the foreseeable future. See "DESCRIPTION
OF CAPITAL STOCK-Dividend Policy."
Certain Anti-Takeover Considerations
Certain provisions of the Company's Articles of Incorporation and Bylaws
could have the effect of making it more difficult for a third party to acquire,
or of discouraging a third party from attempting to acquire, control of the
Company. Such provisions could limit the price that certain investors might be
willing to pay in the future for shares of the Common Stock. Certain of these
provisions allow the Company to issue Preferred Stock with rights senior to
those of the Common Stock without any further vote or action by the
shareholders, eliminate the right of shareholders to act by written consent and
impose various procedural and other requirements that could make it more
difficult for shareholders to undertake certain corporate actions. These
provisions could also have the effect of delaying or preventing a change in
control of the Company. The issuance of Preferred Stock could decrease the
amount of earnings and assets available for distribution to the holders of
Common Stock or could adversely affect the rights and powers, including voting
rights, of the holders of the Common Stock. In certain circumstances, such
issuance could have the effect of decreasing the market price of the Common
Stock. See "DESCRIPTION OF CAPITAL STOCK-Preferred Stock."
Risks of Limitation of Liability
The Company has included in its Articles of Incorporation provisions to
indemnify its directors and officers to the fullest extent permitted by Nevada
law. The Company's Articles of Incorporation also include provisions to
eliminate the personal liability of its directors and officers to the Company
and its shareholders to the fullest extent permitted by Nevada law. See
"DESCRIPTION OF CAPITAL STOCK"
Risk of Sales of Shares Eligible for Future Sale
The sale of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock. In addition, any such sale or perception could make
it more difficult for the Company to sell equity securities or equity related
securities in the future at a time and price that the Company deems appropriate.
Upon consummation of this Offering, the Company will have a total of 3,210,000
shares of Common Stock outstanding, of which 200,000 shares of Common Stock
offered hereby will be eligible for immediate sale in the public market without
restrictions, unless they are held by "affiliates" of the Company within the
meaning of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), and of which 3,010,000 shares will be "restricted" securities
8
<PAGE>
within the meaning of Rule 144. No prediction can be made as to the effect, if
any, that future sales of Common Stock, or the availability of shares for future
sales, will have on the market price of the Common Stock from time to time or
the Company's ability to raise capital through an offering of its equity
securities. See "SHARES ELIGIBLE FOR FUTURE SALE."
USE OF PROCEEDS
The following table sets forth the intended use of the proceeds of his
Offering, assuming the sale of all 200,000 shares of Common Stock offered hereby
at an initial offering price of $1.00 per share.
Percentage of
Description Amount Total Offering
----------- ------ --------------
Purchase of Merchandise $ 5,000 2.5%
Production of Videos (1) 20,000 10.0%
Marketing and Promotions (2) 20,000 10.0%
General and Administrative 60,000 30.0%
Working Capital 54,500 27.2%
Expenses of Offering (3) 40,500 20.3%
--------- -------
Total 200,000 100.00%
(1) Includes costs associated with the development and implementation of
the Company's marketing plan. See "Business-Strategy and Proposed Plan
of Operation.
(2) Includes officers' salaries, rent, other fixed overhead expenses and
other costs associated with office space the Company anticipates
leasing. Also includes travel expenses.
(3) The expenses of the offering are estimated to be $40,500 and include
filing fees, transfer agent fees and expenses, legal fees and expenses
and accounting fees and expenses
The projected expenditures above are estimates and approximations only and
do not represent firm commitments by the Company. Management may determine that
funds earmarked for one particular type of allocation may be more productively
spent in another allocated use, based upon the experience of management in
evaluating the needs of the Company over the next twelve months. All proceeds
will be deposited directly into the Company's operating account.
DIVIDEND POLICY
The Company currently intends to retain earnings to finance the growth and
development of its business and for working capital and general corporate
purposes, and does not anticipate paying cash dividends on the Common Stock for
9
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the foreseeable future. Any payment of dividends will be at the discretion of
the Board of Directors and will depend upon earnings, financial condition,
capital requirements, level of indebtedness, contractual restrictions with
respect to payment of dividends and other factors. See "Business-Marketing
Strategy and Proposed Plan of Operations".
DILUTION
The net tangible book value deficiency of the Company as of June 30, 1999
was approximately $46,184 or $.015 per share of Common Stock. Net tangible book
value per share is equal to the Company's total tangible assets less its total
liabilities, divided by the number of shares of Common Stock outstanding. After
giving effect to the sale of 200,000 shares offered hereby at an assumed initial
public offering price of 1.00 per share and the application of the net proceeds
therefrom, the pro forma net tangible book value of the Company at June 30, 1999
would have been $113,316 or $0.035 per share. This represents an immediate
increase in such net tangible book value of $0.05 per share to existing
shareholders and an immediate dilution of $.965 per share to new investors
purchasing shares at the initial public offering price, as illustrated in the
following table:
Assumed initial public offering price per share $ 1.00
Net tangible book value per share
as of June 30, 1999 $(.015)
Increase per share attributable to new investors $ .050
Pro forma net tangible book value per share
as of June 30, 1999, after this Offering $ .035
Dilution per share to new investors $ .965
The following table summarizes, on a pro forma basis as of June 30, 1999,
the number of shares purchased from the Company, the total cash consideration
paid and the average cash price per share paid by the existing shareholders and
the new investors (before deducting the estimated offering expenses to be paid
by the Company):
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders............3,010,000 93.8% $ 14,100 6.6% $0.005
New investors......................200,000 6.2% $200,000 93.4% $1.00
Total...................3,210,000 100.0% $214,100 100.00%
</TABLE>
10
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BUSINESS
Introduction
The Company is a development stage company with a limited operating
history, having commenced operations in the fall of 1998. The Company is a
sports media and merchandising enterprise that promotes the positive aspects of
athletic competition. Its primary focus is to educate athletes, coaches, parents
and fans on the value of athletics and how to enjoy the art of playing the game.
While the Company believes its concepts are applicable to all levels of
athletics, it is anticipated that the age group that will benefit the most are
the youth sports groups (14 and under), interscholastic athletics and collegiate
programs. The Company has developed a philosophy that explains why participants
and spectators may appear frustrated and act inappropriately at athletic
contests. The following issues are at the simple core of the Company's
philosophy
* Coaches must make tough decisions.
* Players are not perfect.
* Officials must deal with controversy.
Educational tools that the Company uses to promote its philosophy and advance
its theme of enjoyable athletic competition include videos, apparel and
specialized merchandise. The Company's President, William J. Stutz, also makes
live appearances at which he stresses the Company's philosophy. The Company also
intends to branch out into the production of various publications to promote its
philosophy, including magazines, newsletters, brochures and a full educational
curriculum package that incorporates a multi-sport video, as well as
instructional materials. The sale and licensing of its products are expected to
provide a significant portion of the Company's revenues.
While the Company has less than one year of operating history and has
experienced losses to date, management believes that it will have numerous
opportunities in the future to establish contractual relations with significant
customers of its products and services. Assuming all of the shares of Common
Stock offered hereby are sold, the Company's management anticipates that there
will be sufficient revenues to meet its current expenses. Management is seeking
to develop prospects located beyond its immediate geographic area.
The Company does not presently anticipate any change in the number of
employees required to maintain its operations. The Company does not conduct any
research and development activities at this time. The Company has no plant
and/or equipment requirements and anticipates no such expenditures. There are,
moreover, no plans, arrangements, commitments or understandings for the Company
to acquire, or be acquired by, any other company or business at this time.
11
<PAGE>
Marketing Strategy and Proposed Plan of Operation
The Company desires to teach youth the proper mindset for enjoyable and yet
competitive athletic competition. The overall approach to team sports, which the
Company believes should involve an attitude of cooperative enterprise that
strives towards a common goal, has, unfortunately, been replaced to a large
extent with a more selfish attitude and mindset that inhibits the enjoyment of
the team aspects of athletic competition and discourages participation in team
events to all but the most competitive athletes. The result is that a "what's in
it for me" attitude is becoming more prevalent. The Company believes that a
market exists among coaches, athletic administrators and parents to teach the
basics of an enjoyable team experience. Initially aimed at the sport of
basketball, the Company intends to expand its efforts into other teams sports,
such as football, baseball, softball, volleyball and soccer. In order to expand
its reach and operations, the Company intends to recruit local corporate
sponsors who already have in place marketing programs that attempt to reach
junior athletes. In addition, the Company will attempt to market all of its
products and services to sports organizations involved in the targeted sports.
Association Marketing Program. The Company initially intends to market its
products and services to sports organizations related to the sport of
basketball. The lead product is expected to be videos. The Company is still
analyzing which marketing concept will be most effective, but anticipates that
the video will be marketed either through endorsement, partnership (alliance),
outright purchase of bulk order or some combination thereof. The Company has
identified the following organizations which are connected with the sport of
basketball and which the Company believes would be receptive to the idea of
promoting better sportsmanship and teamwork:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Youth Interscholastic Collegiate Generic
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amateur Athletic Union National Federation of National Collegiate National Association
State High School Athletic of Basketball
Athletic Association Association Coaches
- ------------------------------------------------------------------------------------------------------
Biddy Basketball National Interscholastic National Association Women's Basketball
Athletic Administrators of Intercollegiate Coaches Association
Association Athletics
- ------------------------------------------------------------------------------------------------------
Upward Basketball Each State's High School National Junior Greater Kansas City
Activities Association College Athletic Basketball Coaches
Association Association
- ------------------------------------------------------------------------------------------------------
Great American Each State's Coaches National Christian Sports Connection
Association College Athletic (KC)
Association
- ------------------------------------------------------------------------------------------------------
Blue Valley National Association Fellowship of
Recreation Center (KC) of Collegiate Christian Athletes
Directors of
Athletics
- ------------------------------------------------------------------------------------------------------
Police Athletic CCA United States
Basketball League (KC) Olympic Committee
- ------------------------------------------------------------------------------------------------------
YMCA 50 Conferences USA Basketball
- ------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
The primary selling point to youth groups will be for the organization to
see the value of educating their players, coaches, parents and fans on the
positive aspects of team competition and how to avoid the negative, selfish
aspects that have taken over the game. It is anticipated that the cost of the
video would be passed along to the organization's participating teams as an
inclusion to their registration fees. The organization, if it so chooses, could
also use the video as a source of independent revenue.
The main selling point to interscholastic groups is that the Company's
products and services are expected to complement such group's ongoing
sportsmanship and citizenship programs. For example, The National Federation of
State High School Activities Association has a sportsmanship/citizenship program
in place, but it is not aimed at any specific sport (such as basketball) and is
general in nature. In order to successfully market its products and services,
the Company anticipates that it will eventually need to make presentations to
each state athletic administrators association or their functional equivalent.
These state associations are expected to have a significant impact on the
success of the Company's marketing efforts because of their influence on their
member schools.
Stand-alone Marketing Program. Ancillary to its sports association
marketing efforts, a stand-alone approach for the Company's apparel, merchandise
and publications may be developed, although there can be no assurance that such
a program will ever be implemented or, if implemented, become a successful
marketing program. Such a program, if implemented, would be expected to utilize
some form of a national marketing campaign, possibly with a national spokesman,
The Company's apparel and merchandise, if sold nationally, would most likely be
distributed through direct mail, the Internet and/or selected retail sites, such
as college book stores or specialty/resort shops. The Company has thusfar not
initiated any specific efforts in its stand-alone marketing program and may not
do so in the future if it determines that such a program would be too costly
given the Company's limited financial resources or for other reasons not
currently foreseen or anticipated by the Company.
Products and Services
In order to disseminate and promote the Company's philosophy of
sportsmanship and to achieve its objective of educating the target market of
athletes, coaches, parents, and fans, the Company intends to focus on producing
the following products and services:
* Videos - Quality video presentations that promoted the Enjoy The Game, Inc.
philosophy, was the original idea behind the establishment of the Company.
Typically, the videos are intended to be sport specific and will include a
"how-to" instructional guide that includes technical and strategic
considerations. The Company's first video on the sport of basketball was
completed in September of 1998. It was produced by High-Lites Video
Productions of Kansas City, Missouri. The final script took approximately
40 hours to develop. Each shot was planned and the corresponding dialog
13
<PAGE>
created. Because of this prior planning work, the basketball video footage
was completed in one 8-hour session. Actual players from Penn Valley
Community College were used in the video. The Company was careful to comply
with the all rules of the National Junior College Athletic Association
regarding the participation of student athletes in the video including the
completion and filing of appropriate paperwork in order not to jeopardize
the eligibility of the student athletes. The Company also applied for and
received prior clearance from the NCAA to use these players in order to
avoid jeopardizing their possible future eligibility at NCAA member
institutions.
The Company also plans future videos covering the following sports: Soccer
(Fall 1999); Baseball/Softball (Spring 2000), Football (Fall 2000). Each video
will involve the participation of high school players. Clearance from the
National Federation of State High School Association has been received. The next
step is to have the Missouri State High School Activities Association allow the
Company to use players from its member schools. Each planned video is expected
to be approximately 12 to 14 minutes in length. An optional One Way to Play Drug
Free message from the Fellowship of Christian Athletes which lasts approximately
2 to 3 minutes can also be included. Both girls and boys will be used in the
videos whenever possible.
The Company is currently in the process of identifying another production
company to assist it in the production of the planned videos since its prior
production company is no longer in the business of producing videos. Proposals
from three different production companies are currently being evaluated but no
contractual arrangements have been entered into. There can be no assurance that
the Company will be able to obtain the services of a production company on terms
it deems acceptable. The failure to obtain the services of such a production
company could have a material adverse impact on the ability of the Company to
produce videos. The video sleeves as well as all of the printed material for the
Company's basketball video were designed by Kevin Wahaus of Kevin and Company of
Overland Park, Kansas. It is expected that Kevin and Company will continue to
provide such design work in the future. The reproduction of the basketball video
and packaging in the sleeve, were supplied by UV Media of Denver, Colorado. The
minimal initial order of the basketball video was 1,000 units. The basketball
video is currently being marketed at a price of $20.00 and the Company's planned
videos are also expected to be sold at approximately the same price.
* Apparel - A specific Enjoy The Game line of apparel is available.
Currently, this line includes several designs of T-shirts and polo shirts,
and ball caps. The main focus will be to offer products that will fill a
narrow sports market niche that offers a positive message. The ETG line
consists of all positive, upbeat and encouraging messages. We will focus on
the positive aspects of sports, such as teamwork, respect for coaches,
players and officials, as well as the hard work... have fun slogan. The
Company approached Gear for Sports, Inc. Lenexa, KS, early in the planning
stages of its apparel developments. Working with artists and sales
representatives, the Company has initially developed a narrow apparel line
with the goal of establishing a significant volume base of sales in a few
specific items. While Gear for Sports, Inc. is currently the only supplier
of the Company's apparel, the Company believes that alternative or
additional sources of supply can be readily obtained on favorable terms if
Gear for Sports, Inc. ceases to be a supplier or if volume requirements
dictate the use of additional suppliers.
14
<PAGE>
The Company has produced 4 styles of T-shirts thus far. Two (one white and
the other gray), have the large Enjoy The Game mark placed on the center front.
The other two are a front and back design. Of these two, one is specifically
directed towards basketball, the other has the ETG slogan, "work hard...have
fun" in an oval design on the back of each shirt. The T-shirts are available in
medium, large, extra-large and double extra large sizes.
The ETG polo shirts have the Enjoy The Game mark embroidered on the left
chest. The shirts are available in red with white lettering, white with red
lettering, navy with gold lettering and black with red lettering. The designs
and colors were kept simple for broad appeal during the initial offering. The
polo shirts are available in medium, large, extra-large and double extra large
sizes.
The ball caps are white with a navy bill. They have the Enjoy The Game mark
on the front in red lettering. On the back in a semi-circle is our slogan "work
hard...have fun" in red lettering. Each ball cap has an adjustable back so one
size fits all.
The initial order in October 1998 for the T-shirts and ball caps was for 98
and 72 respectively, the minimum required by Gear for Sports, Inc. Since then,
the Company has reordered a shipment of both the white and gray styles. Full
allotments of the polo shirts were ordered initially in October, 1998, primarily
because the Company believes that polo shirts will never go out of style and
because the Company was able to obtain a better price as a result of a full
allotment order. Since then, the Company has reordered a half allotment of each
color.
As of the date of this Prospectus, the Company has paid for all of its
shipments on the date of delivery. However, it is anticipated that if the
Company increases its orders, of which there is no assurance, it will negotiate
terms of 30 or 60 days for payment.
* Merchandise - Specific Enjoy The Game merchandise is available. Currently
merchandise includes banners and water bottles. The banners are created by
House of Signs in Blue Spring, Missouri. Presently, a 4 by 6-foot white
vinyl banner with the red Enjoy The Game mark is offered in two styles. One
style has four grommets along the top and bottom; the other has a rope
stitched along the top and the bottom. The initial order for banners was a
quantity of four in October 1998. Since then 14 additional banners have
been ordered, seven of each style. The Company is currently selling the
banners at a price of $300.00. The water bottles are 32oz. white plastic
with a pull-up blue top. They have the red Enjoy The Game mark on one side
as well as the slogan, "work hard... have fun" in blue on the reverse side.
An initial order of 300 was placed in October 1998. The Company is
currently selling the water bottles at a price of $3.00. The Company is
also assessing the possibility of introducing additional items such as key
chains, game boards and posters, although no firm decisions have been made
with respect to any of these items.
15
<PAGE>
* Live Appearances - A live presentation has been developed and is delivered
by the Company's president and founder, William J. Stutz. Mr. Stutz's
presentation adds impact to the commitment of the Company's philosophy as
he shares his love for people and sports. In his presentation, Mr. Stutz
incorporates his years of playing sports at the youth, high school, junior
college and NCAA Division II levels, as well as the summer he spent playing
basketball in Panama and Brazil. The Company believes that Mr. Stutz
relates well to coaches because he spent two years as a high school and
junior college assistant coach. Additionally, over the past 13 years Mr.
Stutz has officiated high school and college basketball games, including
the 1998 National Junior College Division II Men's Basketball Championship.
Mr. Stutz includes in his presentation the fact that he has three sons and
a daughter and has sat in the stands and watched them play sports. Mr.
Stutz has also coached youth basketball since 1996.
Recently, the Company reached an agreement with Darrell Porter, a former
member of the Kansas City Royals baseball team and the 1982 World Series Most
Valuable Player, pursuant to which Mr. Porter agreed to make live appearances
and presentations on behalf of the Company. Under the terms of the agreement,
Mr. Porter Darrell will receive an honorarium and a commission based on sales of
the Company's merchandise made after the presentation. The Company anticipates
that it will also seek to increase the number of available speakers with the
ultimate goal of establishing a full-service speakers bureau. However, there can
be no assurance that such a speakers bureau will ever be established or, if
established, will be profitable to the Company.
* Publications - In addition to its videos, merchandise and live
presentations, the Company is currently evaluating whether it would be
feasible to produce various publications to promote its philosophy. The
types of publications currently under evaluation include magazines,
newsletters, brochures and a full educational curriculum package for
elementary schools that incorporates a multi-sport video, as well as
instructional materials. Factors being evaluated include the cost of
production and distribution of such publications, the potential market for
such materials, the profit margins, if any, the Company might be expected
to realize and the management capability of the Company to fully develop
and implement publications as an additional product line of the Company.
Competition
The Company believes that the industry within which it competes is highly
fragmented and comprised of numerous companies, many of whom are larger and have
greater resources than does the Company. On the other hand, the Company believes
it can overcome its competitive disadvantages which are based upon its lack of
size and financial resources by emphasizing its unique message and seeking to
align itself with corporate sponsors and other organizations which share its
philosophy.
16
<PAGE>
Substantially all of the Company's competitors have, and potential future
competitors could have, substantially greater financial, marketing and other
resources than the Company and have, or could have, greater name recognition and
market acceptance of their products and services. No assurance can be given that
the Company's competitors will not develop new products and services or
enhancements to existing products and services that will offer superior price or
performance features. In such case, the Company may experience significant price
competition, which could have a material adverse effect on gross margins.
Facilities
The Company's offices are presently located in the Kansas City metropolitan
area at the home of its president, William J. Stutz. Mr. Stutz does not charge
the Company rental for the use of such space and the rental arrangement between
the Company and Mr. Stutz is oral and based upon month to month lease
arrangements. The Company anticipates that it may eventually need to obtain
suitable office space in the Kansas City area after the Offering if its planned
activities expand to the point where its present space becomes inadequate or if
the number of employees involved in its operations increases because of
increased activity. If the Company determines that new office space is
desirable, it does not anticipate any difficulties in obtaining such space.
Employees
The Company presently has two employees, William J. Stutz and Valerie M.
Stutz. Other than the possibility of hiring a part time clerical assistant, the
Company has no present plans to hire additional personnel following completion
of the Offering.
Legal Proceedings
It is possible that the Company may be subject, from time to time, to
various legal proceedings relating to claims arising out of its operations in
the ordinary course of its business. The Company currently is not a party to any
pending or threatened legal proceedings, nor has it been made aware that any
such proceedings are contemplated.
MANAGEMENT
Officers and Directors
The following sets forth certain information with respect to the officers
and directors of the Company
Name Age Position
---- --- --------
William J. Stutz 38 President, Treasurer,
Director
Valerie M. Stutz 38 Secretary, Director
17
<PAGE>
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the company are elected by the Board of
Directors and hold office until their successors are elected and qualified.
The Company has no audit or compensation committee.
William J. Stutz. Mr. Stutz has been President, Treasurer and a Director of
the Company since 1998. Mr. Stutz was born and raised in Buffalo, NY. Mr. Stutz
lettered in three sports, golf, basketball and baseball as both a junior and a
senior at Baker-Victory High School in Lackawanna, NY. He received a basketball
scholarship to attend Villa Maria College of Buffalo, NY. While there he set new
basketball single season and career records for most field goals and points
scored. He received an Associates Degree in Graphic Communications. In 1980, he
continued his education, on another basketball scholarship, at Slippery Rock
State College of Pennsylvania. At Slippery Rock, he finished his last two years
of college basketball and played baseball during his senior year only. By the
conclusion of his college career in 1982, Mr. Stutz was a few credits short of
obtaining a Bachelor of Science Degree in Communication with an emphasis in
Public Relations.
The pursuit of playing professional basketball took him to Panama and
Brazil. After receiving a contract to play in Brazil, the contract fell through
and he began working for Household Finance in October 1982. From 1984 until 1992
he served in various junior management positions with the J C Penney Company in
its catalog division, serving the last two years as a Quality Circle
Facilitator. In 1990, the Kansas City Chapter for the Fellowship of Christian
Athletes ("FCA") recognized Mr. Stutz as its Volunteer of the Year. In September
1992, Mr. Stutz joined FCA as the Kansas City Area Director. He stayed in that
position until May of 1999. Under his direction the FCA saw significant growth.
School Huddles increased from 34 to 110; staff grew from 2 to 9 and the
financial balance went from $5,000 in 1992 to $600,000 when he resigned.
Valerie M. Stutz has been Secretary and a Director of the Company since
1998. She received her Bachelor of Science degree from Slippery Rock State
College in 1982. While attending Slippery Rock, Mrs. Stutz was a cheerleader and
she competed in judo. Her junior year she received a silver medal and her senior
year a bronze medal from the East Coast Judo Association for her achievements in
its National Tournament. For the past 12 years she has spent the bulk of her
time raising her 4 children. She also teaches preschool, at Small Wonders in
Independence, Missouri three mornings a week. In April of 1999, Mrs. Stutz
became a certified Court Appointed Special Advocate, (CASA) for Jackson County,
Missouri.
Willaim J. Stutz and Valerie M. Stutz are husband and wife.
18
<PAGE>
Executive Compensation
Summary Compensation Table
The following table provides certain summary information concerning
compensation of the Company's chief executive officer and the four other most
highly compensated executive officers of the Company (collectively, the Named
Executive Officers") since the Company's inception. There were no stock
appreciation rights outstanding during the fiscal year ended December 31, 1998,
nor are there any such rights outstanding as of the date of this prospectus.
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
------------------- ----------------------
Awards Payouts
Securities Long-Term
Underlying Incentive All Other
Name and Principal Fiscal Salary Bonus Other Annual Options Payouts Compensation
Position Year ($) ($) Compensation (#) ($) ($)
- ------------------ ------ ------ ----- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William J. Stutz............1998 0 0 0 0 0 0
President
Valerie M. Stutz............1998 0 0 0 0 0 0
Secretary
</TABLE>
- --------------------
* Not applicable
Employment Agreements
There are no employment agreements between the Company and any of its
officers or directors. Mr. Stutz and Mrs. Stutz intend to receive annual
salaries of $48,000 and $ 0 respectively upon completion of this offering.
19
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Prospectus, the
ownership of the Company's Common Stock by (a) each director of the Company, (b)
all executive officers and directors of the Company as a group, and (c) all
persons known by the Company to own more than 5% of the Company's Common Stock.
The percentage owned after the Offering assumes the sale of all Common Stock
offered hereby.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering (1) After Offering
--------------------- --------------
Name and Address (2) Shares Percentage Shares Percentage
- -------------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
William J. Stutz and
Valerie M. Stutz 2,010,000 66.8% 2,010,000 62.6%
1008 S.W. Mic-O-Say Circle
Blue Springs, Mo. 64015
David M. Nemelka 500,000 16.6% 500,000 15.6%
897 So. Artistic Circle
Springville, Utah 84663
Covest, Inc. 250,000 8.3% 250,000 7.8%
11011 King Street
Overland Park, Kansas 66210
Ivacind, Inc. 250,000 8.3% 250,000 7.8%
4001 W. 104th Terrace
Overland Park, Kansas 66207
All directors and executive officers
as a Group (2) persons 2,010,000 66.8% 2,010,000 62.6%
- -----------------------------
</TABLE>
(1) Under the rules of the Commission, shares are deemed to be "beneficially
owned" by a person if such person directly or indirectly has or shares (i)
the power to vote or dispose of such shares whether or not such person has
any pecuniary interest in such shares, or (ii) the right to acquire the
power to vote or dispose of such shares within 60 days, including any right
to acquire through the exercise of any option, warrant or right.
(2) The address of each executive officer and director of the Company is 1008
S.W. Mic-O-Say Circle, Blue Springs, Missouri 64015.
(3) Covest, Inc. is controlled by David C. Owen.
20
<PAGE>
(4) Ivacind, Inc. is controlled by Peterson & Sons Holding Company, which in
turn is controlled by Mark Peterson and Steve Peterson.
CERTAIN TRANSACTIONS
The Company's corporate offices are located at the personal residence of
William J. Stutz and Valerie M. Stutz. The Company pays no cash consideration
for the use of this office space.
On August 29, 1998 the Company issued 2,000,000 shares of its restricted
common stock to William J. Stutz for a total cash consideration of $2,000.
On March 28, 1999 the Company issued 5,000 shares of its restricted common
stock to William J. Stutz in exchange for 5,000 shares of the common stock of
Enjoy The Game, Inc., a Missouri corporation. At the same time, the Company also
issued 5,000 shares of its restricted common stock to Valerie M. Stutz in
exchange for 5,000 share of the common stock of Enjoy The Game, Inc. As a result
of these transactions, Enjoy The Game, Inc. became a wholly owned subsidiary of
the Company.
On March 13, 1996 the Company issued 1,000,000 shares of its restricted
common stock to David N. Nemelka for a total cash consideration of $1,000.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred
Stock, par value $0.001 per share.
Common Stock
As of the date of this Prospectus, there were 3,010,000 shares of Common
Stock outstanding held by five (5) shareholders.
Holders of Common Stock are entitled to one vote per share in all matters
to be voted on by the shareholders. Subject to preferences that may be
applicable to any Preferred Stock outstanding at the time, holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. See "DIVIDEND POLICY." In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to share ratably
in all assets remaining after payment of the Company's liabilities and the
liquidation preference, if any, of any outstanding Preferred Stock. All of the
21
<PAGE>
outstanding shares of Common Stock are fully paid and non-assessable. The
rights, preferences and privileges of holders of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which the Company may designate and issue in the
future.
Preferred Stock
The Board of Directors has the authority, without any further vote or
action by the shareholders, to provide for the issuance of up to 5,000,000
shares of Preferred Stock from time to time in one or more series with such
designations, rights, preferences and limitations as the Board of Directors may
determine, including the consideration received therefor. The Board also has the
authority to determine the number of shares comprising each series, dividend
rates, redemption provisions, liquidation preferences, sinking fund provisions,
conversion rights and voting rights without approval by the holders of Common
Stock. Although it is not possible to state the effect that any issuance of
Preferred Stock might have on the rights of holders of Common Stock, the
issuance of Preferred Stock may have one or more of the following effects: (i)
to restrict Common Stock dividends if Preferred Stock dividends have not been
paid, (ii) to dilute the voting power and equity interest of holders of Common
Stock to the extent that any Preferred Stock series has voting rights or is
convertible into Common Stock, or (iii) to prevent current holders of Common
Stock from participating in the Company's assets upon liquidation until any
liquidation preferences granted to holders of Preferred Stock are satisfied. In
addition, the issuance of Preferred Stock may, under certain circumstances, have
the effect of discouraging a change in control of the Company by, for example,
granting voting rights to holders of Preferred Stock that require approval by
the separate vote of the holders of Preferred Stock for any amendment to the
Certificate of Incorporation or any reorganization, consolidation, merger or
other similar transaction involving the Company. As a result, the issuance of
such Preferred Stock may discourage bids for the Company's Common Stock at a
premium over the market price therefor, and could have a materially adverse
effect on the market value of the Common Stock. There are no shares of Preferred
Stock presently outstanding and the Board of Directors does not presently intend
to issue any shares of Preferred Stock.
No Preemptive Rights
No holder of any capital stock of the Company has any preemptive right to
subscribe for or purchase securities of any class or kind of the Company, nor
any redemption or conversion rights.
No Cumulative Voting
No holder of any capital stock of the Company has the right cumulate his or
her votes in an election of directors or for any other matter or matters to be
voted upon by the shareholders of the Company.
22
<PAGE>
Certain Provisions of the Nevada General Corporation Law
The Company is subject to the Nevada General Corporation Law (the "Nevada
Law"'). Under certain circumstances, the following described provisions of the
Nevada Law may delay or make more difficult acquisitions or changes of control
of the Company. Neither the Company's Amended Articles of Incorporation nor its
Bylaws exclude the Company from these provisions. Such provisions may make it
more difficult to accomplish transactions that shareholders believe are in their
best interests. Such provisions may also have the effect of preventing changes
in the Company's management.
Control Share Acquisitions.
Under Sections 78.378 to 78.3793 of Nevada Law, an "acquiring person," who
acquires a "controlling interest" in an "issuing corporation," may not exercise
voting rights on any "control shares" unless such voting rights are conferred by
a majority vote of the disinterested shareholders of the issuing corporation at
a special meeting of the such shareholders held upon the request and at the
expense of the acquiring person. If the control shares are accorded full voting
rights and the acquiring person acquires control shares with a majority or more
of all the voting power, any shareholder, other than the acquiring person, who
does not vote for authorizing voting rights for the control shares, is entitled
to demand payment for the fair value of their shares, and the corporation must
comply with the demand. For the above provisions, "acquiring person" means
(subject to certain exceptions) any person who, individually or in association
with others, acquires or offers to acquire, directly or indirectly, a
controlling interest in an issuing corporation. "Controlling interest" means the
ownership of outstanding voting shares of an issuing corporation sufficient to
enable the acquiring person, individually or in association with others,
directly or indirectly, to exercise (i) one-fifth or more but less than
one-third, (ii) one-third or more but less than a majority, and/or (iii) a
majority or more of the voting power of the issuing corporation in the election
of directors. Voting rights must be conferred by a majority of the disinterested
shareholders as each threshold is reached and/or exceeded. "Control Shares"
means those outstanding voting shares of an issuing corporation which an
acquiring person acquires or offers to acquire in an acquisition or within 90
days immediately preceding the date when the acquiring person becomes an
acquiring person. "Issuing corporation" means a corporation that is organized in
Nevada, has 200 or more shareholders (at least 100 of whom are shareholders of
record and residents of Nevada) and does business in Nevada directly or through
an affiliated corporation. The above does not apply if the articles of
incorporation or by-laws of the corporation in effect on the 10th day following
the acquisition of a controlling interest by an acquiring person provide that
said provisions do not apply. The Company's Amended Articles of Incorporation
and Bylaws do not exclude the Company from the restrictions imposed by these
provisions.
23
<PAGE>
Certain Business Combinations.
Sections 78.411 to 78.444 of the Nevada Law restrict the ability of a
"resident domestic corporation" to engage in any combination with an "interested
shareholder" for three years following the interested shareholder's date of
acquiring the shares that cause such shareholder to become an interested
shareholder, unless the combination or the purchase of shares by the interested
shareholder on the interested shareholder's date of acquiring the shares that
cause such shareholder to become an interested shareholder is approved by the
board of directors of the resident domestic corporation before that date. If the
combination was not previously approved, the interested shareholder may effect a
combination after the three-year period only if such shareholder receives
approval from a majority of the disinterested shares or the offer meets certain
fair price criteria. For the above provisions, "resident domestic corporation"
means a Nevada corporation that has 200 or more shareholders. "Interested
shareholder" means any person, other than the resident domestic corporation or
its subsidiaries, who is (i) the beneficial owner, directly or indirectly, of
10% or more of the voting power of the outstanding voting shares of the resident
domestic corporation or (ii) an affiliate or associate of the resident domestic
corporation and, at any time within three years immediately before the date in
question, was the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding shares of the resident domestic
corporation. The above does not apply to corporations that so elect in a charter
amendment approved by a majority of the disinterested shares. Such a charter
amendment, however, would not become effective for 18 months after its passage
and would apply only to stock acquisitions occurring after its effective date.
The Company's Amended Articles of Incorporation do not exclude the Company from
the restrictions imposed by such provisions.
Directors' Duties.
Section 78.138 of the Nevada Law allows directors and officers, in
exercising their respective powers to further the interests of the corporation,
to consider the interests of the corporation's employees, suppliers, creditors
and customers. They can also consider the economy of the state and the nation;
the interests of the community and of society and the long-term and short-term
interests of the corporation and its shareholders, including the possibility
that these interests may be best served by the continued independence of the
corporation. Directors may resist a change or potential change in control if the
directors, by a majority vote of a quorum, determine that the change or
potential change is opposed to or not in the best interest of the corporation.
In so determining, the board of directors may consider the interests described
above or have reasonable grounds to believe that, within a reasonable time, the
debt created as a result of the change in control would cause (i) the assets of
the corporation or any successor to be less than its liabilities, (ii) the
corporation or any successor to become insolvent or (iii) the commencement of
any voluntary or involuntary proceeding under the federal bankruptcy laws
concerning the corporation.
Certain Charter Provisions.
Certain provisions of the Company's Amended Articles of Incorporation and
Bylaws could make more difficult the acquisition of the Company by means of a
tender offer, a proxy contest or otherwise as well as the removal of incumbent
officers and directors. These provisions are expected to discourage certain
24
<PAGE>
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of the Company to first negotiate
with the Company. The Company believes that the benefits of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
Advance Notice for Raising Business or Making Nominations at Meetings.
The Amended Articles of Incorporation establish an advance notice procedure
for shareholder proposals to be brought before a meeting of shareholders of the
Company and for nominations by shareholders of candidates for election as
directors at an annual meeting or a special meeting at which directors are to be
elected. Subject to any other applicable requirements, including, without
limitation, Regulation 14A under the Exchange Act, such business may only be
conducted at a meeting of shareholders as has been brought before the meeting
by, or at the direction of, the Company's Board of Directors, or by a
shareholder who has given the Secretary of the Company timely notice, in proper
form, of the shareholder's intention to bring such business before the meeting.
The presiding officer at such meeting has the authority to make such
determinations. Only persons who are nominated by, or at the direction of, the
Company's Board of Directors, or who are nominated by a shareholder who has
given timely written notice, in proper form, to the Secretary prior to a meeting
at which directors are to be elected will be eligible for election as directors
of the Company.
To be timely, notice of nominations before an annual meeting must be
received by the Secretary of the Company not later than 90 days prior to the
date of such annual meeting. Notice of other business before an annual meeting
must be received by the Secretary of the Company not less than 20 days nor more
than 50 days prior to the meeting. Similarly, notice of nominations or other
business to be brought before a special meeting must be delivered to the
Secretary at the principal executive office of the Company no later than the
close of business on the 10th day following the day on which notice of the date
of a special meeting of shareholders was given.
The notice of any nomination for election as a director must set forth (i)
the name and address of the shareholder who intends to make the nomination and
of the person or persons to be nominated; (ii) a representation that the
shareholder is a holder of record stock of the Company entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (iii) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (iv) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Commission, had the nominee been nominated, or intended to be nominated,
by the Board of Directors; and (v) the consent of each nominee to serve as a
director of the Company if so elected.
25
<PAGE>
The notice with respect to other business to be brought before the annual
meeting must set forth (i) a brief description of the business proposed to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting; (ii) the name and address, as they appear on the
Company's books, of the shareholder proposing such business; (iii) the number of
shares of the Company which are beneficially owned by the shareholder; and (iv)
any material interest of the shareholder in such business.
Amendments to Bylaws.
The Amended Articles of Incorporation provide that the power to adopt,
alter, amend, or repeal the bylaws of the Company is vested exclusively with the
Board of Directors.
Limitation of Liability and Indemnification
The Amended Articles of Incorporation contain a provision permitted under
the Nevada Law relating to the liability of directors. This provision eliminates
a director's personal liability for monetary damages resulting from a breach of
fiduciary duty, except in certain circumstances involving certain wrongful acts,
such as a breach of a director's duty of loyalty or acts or omissions that
involve intentional misconduct or a knowing violation of law. This provision
does not limit or eliminate the rights of the Company or any shareholder to,
seek non-monetary relief, such as an injunction or rescission, in the event of a
breach of a director's fiduciary duty. This provision will not alter a
director's liability under federal securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Transfer Agent and Registrar
Prior to the effective date of this offering, the Company intends to engage
Interwest Transfer Company, Inc. of Salt Lake City, Utah, as the transfer agent
and registrar of the Common Stock.
26
<PAGE>
TERMS OF THE OFFERING
Plan of Distribution
The Company hereby offers up to 200,000 shares of Common Stock at the
purchase price of $1.00 per share. The Common Stock is being offered on a
"direct participation" basis by the Company (employees, officers and directors).
The employees, officers and directors who will sell the offering on behalf of
the Company are William J. Stutz and Valerie M. Stutz. These individuals will be
relying on the safe harbor in Rule 3a4-1 under the Securities Exchange Act of
1934 to sell the Company's securities. The principal shareholders will supply
names of prospective investors to the Company's management, none of whom shall
have been offered shares of Common Stock prior to the date of this Prospectus.
The Company does not intend to offer the shares of Common Stock by means of
general advertising or solicitation. No sales commission, finder's fee or other
compensation (other than salaries payable to the Company's management) will be
paid for Common Stock sold by the Company. The Company reserves the right to
withdraw, cancel or reject an offer in whole or in part. The Common Stock
offered hereby will not be sold to insiders, control persons, or affiliates of
the Company. There are no plans, proposals, arrangements or understandings with
any potential sales agent with respect to participating in the distribution of
the Company's securities. When, in the future, assuming such participation
develops, the registration statement will be amended to identify such persons.
Determination of Offering Price.
The offering price and other terms of the Common Stock were arbitrarily
determined by the Company after considering the total offering amount needed and
the possible dilution to existing and new shareholders.
Offering Procedure.
This Offering will terminate on or before__________, 2000. In the Company's
sole discretion, the offering of Common Stock may be extended from time to time
but in no event later than one (1) year from the date of this Prospectus.
Subscription Procedure.
Each investor must complete a subscription agreement in the form supplied
by the Company. The full amount of each subscription will be required to be paid
with a check payable to the Company in the amount of the subscription. Such
payments are to be remitted directly to the Company by the purchaser before
12:00 noon, on the following business day, together with a list showing the
names and addresses of the person subscribing for the offered Common Stock or
copies of subscribers confirmations.
No Escrow Account.
There is no minimum offering amount and no escrow account. As a result, any
and all offering proceeds will be deposited directly into the operating account
of the Company.
27
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
3,210,000 shares of Common Stock. Of such outstanding shares, the shares sold in
connection with this Offering will be freely tradeable in the United States
without restriction under the Securities Act, except that shares purchased by an
affiliate" of the Company, within the meaning of the rules and regulations
adopted under the Securities Act, may be subject to resale restrictions. The
remaining outstanding shares are "restricted securities," as that term is
defined under such rules and regulations, and may not be sold unless they are
registered under the Securities Act or they are sold in accordance with Rule 144
under the Securities Act or some other exemption from such registration
requirement. As those restrictions under the Securities Act lapse, such shares
may be sold to the public pursuant to Rule 144.
In general, under Rule 144, beginning 90 days after the date of this
Prospectus, subject to certain conditions with respect to the manner of sale,
the availability of current public information concerning the Company and other
matters, each of the existing shareholders who has beneficially owned shares of
Common Stock for at least one year will be entitled to sell within any three
month period that number of such shares which does not exceed the greater of the
total number of then outstanding shares of Common Stock or the average weekly
trading volume of shares of Common Stock during the four calendar weeks
preceding the date on which notice of the proposed sale is sent to the
Commission. Moreover, each of the existing shareholders who is not deemed to be
an affiliate of the Company at the time of the proposed sale and who has
beneficially owned his or her shares of Common Stock for at least two years will
be entitled to sell such shares under Rule 144 without regard to such volume
limitations.
Prior to the Offering, there has been no public market for the Common
Stock. No assurance can be given that such a market will develop or, if it
develops, will be sustained after the Offering or that the purchasers of the
shares of Common Stock will be able to resell such shares of Common Stock at a
price higher than the initial public offering or otherwise. If such a market
develops, no prediction can be made as to the effect, if any, that future sales
of shares of Common Stock, or the availability of shares of Common Stock for
future sale, to the public will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of presently
outstanding or subsequently issued stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for the Common
Stock and could impair the Company's ability to raise capital in the future
through an offering of its additional shares of Common Stock that may be offered
for sale or sold to the public in the future.
LITIGATION
The Company is not a party to any pending or threatened legal proceedings.
LEGAL MATTERS
The validity of the Shares of common Stock offered hereby will be passed
upon for the Company by Allen G. Reeves, P.C., Denver, Colorado.
28
<PAGE>
EXPERTS
The financial statements of EtG Corporation as of December 31, 1998, and
for each of the years in the two year period ended December, 31, 1998, have been
included herein and elsewhere in the registration statement in reliance upon the
report of Cordovano and Harvey, P.C., independent certified public accounts,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The report of Cordovano and Harvey, P.C. covering the December 31, 1998
financial statements contains an explanatory paragraph that states the Company
has suffered recurring losses from operations and has limited capital resources
which raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of that uncertainly.
29
<PAGE>
EtG CORPORATION
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent auditors' report ........................................ F-2
Consolidated balance sheets, June 30, 1999 (unaudited) and
December 31, 1998 ................................................ F-3
Consolidated statements of operations, for the six months
ended June 30, 1999 and 1998 (unaudited), for the years
ended December 31, 1998 and 1997, and for the period
from March 13, 1996 (inception) through June 30, 1999
(unaudited) ...................................................... F-4
Consolidated statement of shareholders' deficit, from March 13,
1996 (inception) through June 30, 1999 (unaudited) ............... F-5
Consolidated statements of cash flows, for the six months ended
June 30, 1999 and 1998 (unaudited), for the years ended
December 31, 1998 and 1997, and for the period from
March 13, 1996 (inception) through June 30, 1999 (unaudited) ..... F-6
Notes to consolidated financial statements .......................... F-7
F-1
<PAGE>
To the Board of Directors and Shareholders
EtG Corporation and subsidiary
Independent Auditors' Report
We have audited the accompanying consolidated balance sheet of EtG Corporation
and subsidiary (the "Company) as of December 31, 1998, and the related
consolidated statements of operations, shareholders' deficit, and cash flows for
each of the years in the two year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of EtG Corporation and
subsidiary as of December 31, 1998, and the results of their operations and
their cash flows for each of the years in the two year period ended December 31,
1998, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has a lack of operating history,
limited capital and working capital, and an unproven business concept at
December 31, 1998. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note A. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
We express no opinion on the consolidated interim financial information,
presented herein, as of June 30, 1999 and for the six months ended June 30, 1999
and 1998.
Cordovano and Harvey, P.C.
Denver, Colorado
August 17, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
EtG CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1999 1998
-------- -----------
(unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash .............................................. $ 9,625 $ 14,036
Accounts receivable ............................... 280 --
Merchandise inventory, at lower of cost or market . 16,582 15,227
-------- --------
TOTAL CURRENT ASSETS ......... 26,487 29,263
EQUIPMENT, AT COST, net of accumulated
depreciation of $350 and $88, respectively ........ 2,788 3,050
INTANGIBLE ASSETS
Trademark, net of accumulated amortization
of $195 and $49, respectively (Note C) .......... 1,270 1,417
OTHER ASSETS
Deferred offering costs (Note F) .................. 18,750 --
-------- --------
$ 49,295 $ 33,730
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses ............. $ 11,265 $ 50
Notes payable, convertible into subsidiary
common stock (Note D) ........................... 40,000 30,000
Other notes payable (Note D) ...................... 17,500 10,000
Accrued interest on notes payable ................. 3,927 1,705
-------- --------
TOTAL CURRENT LIABILITIES .... 72,692 41,755
-------- --------
SHAREHOLDERS' DEFICIT (NOTE F)
Preferred stock, $0.001 par value, 5,000,000 shares
authorized, -0- and -0- shares issued and
outstanding, respectively ....................... -- --
Common stock, $0.001 par value, 50,000,000 shares
authorized, 3,010,000 and 3,000,000 shares
issued and outstanding, respectively ............ 3,010 3,000
Additional paid-in capital ........................ 11,090 4,900
Deficit accumulated during the development stage .. (37,497) (15,925)
------- -------
TOTAL SHAREHOLDERS' DEFICIT .. (23,397) (8,025)
------- ------
$ 49,295 $ 33,730
======== ========
See accompanying notes to consolidated financial statements
F-3
<PAGE>
EtG CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
March 13, 1996
For the Six Months Ended For the Years Ended (inception)
June 30, December 31, Through
------------------------- -------------------------- June 30,
1999 1998 1998 1997 1999
----------- ----------- ----------- ----------- ----------
(unaudited) (unaudited) (unaudited)
REVENUES .............................................. $ 2,930 $ -- $ 917 $ -- $ 3,847
COST OF REVENUES ...................................... 2,134 -- 257 -- 2,391
----------- ----------- ----------- -----------
GROSS PROFIT ............... 796 -- 660 -- 1,456
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
General and administrative ...................... 13,978 1,976 9,478 641 24,097
Contributed rent and services (Note B) .......... 6,200 -- 4,800 -- 11,000
----------- ----------- ----------- ----------- -----------
LOSS FROM OPERATIONS ....... (19,382) (1,976) (13,618) (641) (33,641)
Interest income ................................. 32 12 39 -- 71
Interest (expense) .............................. (2,222) (111) (1,705) -- (3,927)
LOSS BEFORE PROVISION FOR INCOME TAXES .. (21,572) (2,075) (15,284) (641) (37,497)
INCOME TAXES (NOTE E)
Current ......................................... 4,378 421 3,105 130 7,613
Deferred ........................................ (4,378) (421) (3,105) (130) (7,613)
NET LOSS ................... $ (21,572) $ (2,075) $ (15,284) $ (641) $ (37,497)
=========== =========== =========== =========== ===========
Net loss per basic common share ................. $ (0.01) -- $ (0.01) -- $ (0.01)
=========== =========== =========== =========== ===========
Number of shares outstanding for purposes
of computing net loss per basic share ........... 3,010,000 3,010,000 3,010,000 3,010,000 3,010,000
=========== =========== =========== =========== ===========
* Less than $.01
See accompanying notes to consolidated financial statements
F-4
<PAGE>
EtG CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
Deficit
Accumulated
Preferred Stock Common Stock Additional During
---------------------- -------------------------- Paid-In Development
Shares Amount Shares Amount Capital Stage Total
-------- ----------- ----------- ----------- ----------- ------------ ---------
March 13, 1996,
sale of common stock -- $ -- 1,000,000 $ 1,000 $ -- $ -- $ 1,000
-------- ----------- ----------- ----------- ----------- ----------- ---------
BALANCE, DECEMBER 31, 1996 -- -- 1,000,000 1,000 -- -- 1,000
Net loss for the year -- -- -- -- -- (641) (641)
-------- ----------- ----------- ----------- ----------- ----------- ---------
BALANCE, DECEMBER 31, 1997 -- -- 1,000,000 1,000 -- (641) 359
August 29, 1998,
sale of common stock -- -- 2,000,000 2,000 -- -- 2,000
August 1 through December 31,
1998, office space and time
effort contributed by officer
(Note B) -- -- -- -- 4,900 -- 4,900
Net loss for the year -- -- -- -- -- (15,284) (15,284)
-------- ----------- ----------- ----------- ----------- ----------- ---------
BALANCE, DECEMBER 31, 1998 -- -- 3,000,000 3,000 4,900 (15,925) (8,025)
March 3, 1999, acquisition of
subsidiary under common
control (Note B) (unaudited) -- -- 10,000 10 (10) -- --
January 1 through June 30, 1999,
office space and time and
effort contributed by officer
(Note B) (unaudited) -- -- -- -- 6,200 -- 6,200
Net loss for the period
(unaudited) -- -- -- -- -- (21,572) (21,572)
-------- ----------- ----------- ----------- ----------- ----------- ---------
BALANCE, JUNE 30, 1999
(UNAUDITED) -- $ -- 3,010,000 $ 3,010 $ 11,090 $ (37,497) $ (23,397)
======== =========== =========== =========== =========== =========== =========
See accompanying notes to consolidated financial statements
F-5
<PAGE>
EtG CORPORATION
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
March 13, 1996
For the Six Months Ended For the Years Ended (inception)
June 30, December 31, Through
----------------------- ---------------------- June 30,
1999 1998 1998 1997 1999
--------- --------- -------- -------- ----------
(unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $(21,572) $ (2,075) $(15,284) $ (641) $(37,497)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 409 -- 136 -- 545
Contributed capital (Note B) 6,200 -- 4,900 -- 11,100
-------- -------- -------- -------- --------
(14,963) (2,075) (10,248) (641) (26,852)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets (1,635) (5,690) (15,227) -- (16,862)
Accounts payable and accrued expenses 13,437 -- 1,605 150 15,192
-------- -------- -------- -------- --------
NET CASH (USED IN)
OPERATING ACTIVITIES (3,161) (7,765) (23,870) (491) (27,522)
-------- -------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of equipment -- -- (3,138) -- (3,138)
Payments for trademark (Note C) -- -- (1,465) -- (1,465)
NET CASH (USED IN)
INVESTING ACTIVITIES -- -- (4,603) -- (4,603)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- -- 2,000 -- 3,000
Offering costs incurred (Note F) (18,750) -- -- -- (18,750)
Proceeds from demand notes payable (Note D) 17,500 16,500 40,000 -- 57,500
-------- -------- -------- -------- --------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES (1,250) 16,500 42,000 -- 41,750
-------- -------- -------- -------- --------
Net change in cash (4,411) 8,735 13,527 (491) 9,625
Cash at beginning of period 14,036 509 509 1,000 --
-------- -------- -------- --------
CASH AT END OF PERIOD $ 9,625 $ 9,244 $ 14,036 $ 509 $ 9,625
======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Income taxes $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements
F-6
</TABLE>
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note A: Organization and summary of significant accounting policies
Description of operations and liquidity
- ---------------------------------------
EtG Corporation (including subsidiary, the "Company") was incorporated in the
state of Nevada on March 13, 1996. On November 16, 1998, the Company changed its
name from B&R Ventures, Inc. The Company plans to become a sports media and
merchandising business that promotes the positive aspects of athletic
competition.
The Company has devoted substantially all of its efforts since inception to
organization matters, the acquisition of Enjoy the Game, Inc., development of
its business plan, and raising capital. The Company plans to finance its
activities through an initial public offering of 200,000 shares of its common
stock at a price of $1.00 per share.
To date, the Company's sales revenue has been insignificant. The Company has not
gained market acceptance for any of its merchandise and promotions and there can
be no assurance that the Company will be able to gain such acceptance in the
future, that future sales and revenues will be significant, that any sales will
be profitable, or that the Company will have sufficient funds available to
develop its proposed merchandise sales and services.
The Company's consolidated financial statements are prepared in accordance with
Statement of financial Accounting Standards No. 7 "Accounting for Development
Stage Enterprises".
The Company is in the early period of its development embarking on a new
venture. The Company has limited capital, is dependent upon the proceeds of its
proposed initial public offering (See Note F), and achieving profitable
operations. The Company's business plan was prepared based upon the limited
experience of management. The Company's business model is unproven and will take
additional resources to perfect, if at all. The success of the Company's
marketing plan is dependent on attracting new customers. The likelihood of the
success of the Company will depend upon its ability to raise sufficient capital
to overcome the problems, expenses and delays frequently encountered in the
operation of a new business and the competitive environment in which it will be
operating. These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern.
Management of the Company has budgeted the proceeds of its proposed initial
public offering of common stock for a period of approximately six months.
However, there is no assurance that the Company's revenues will increase such
that a public offering would be unnecessary. In order for the Company to
complete implementation of its business plan and fund anticipated growth, the
Company may require additional financing from outside sources. Management
believes that the Company is not a viable candidate for commercial bank debt
financing due to its lack of operating history and lack of tangible assets. In
the event that the Company's initial public offering is unsuccessful, management
would rely on additional private debt or equity financing. There is no assurance
that the Company's proposed initial public offering will be successful, that the
Company will meet the objectives of its business plan or that it will be
successful in obtaining additional financing.
F-7
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note A: Organization and summary of significant accounting policies, continued
Principles of consolidation
The accompanying consolidated financial statements include the accounts of EtG
Corporation and its wholly owned subsidiary, Enjoy the Game, Inc. All material
intercompany transactions have been eliminated in consolidation.
Financial instruments and cash equivalents
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, demand notes payable, and accrued liabilities. The carrying
value of these financial instruments approximates fair value because of their
short-term nature or because they bear interest at rates which approximate
market rates. For financial accounting purposes and the statement of cash flows,
cash equivalents include all highly liquid debt instruments purchased with an
original maturity of three months or less.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect certain reported amounts of assets and liabilities; disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements; and the reported amounts of revenues and expenses during the
reporting period. Accordingly, actual results could differ from those estimates.
Income Taxes
The Company reports income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes", which requires the liability method in accounting for income
taxes. Deferred tax assets and liabilities arise from the difference between the
tax basis of an asset or liability and its reported amount on the consolidated
financial statements. Deferred tax amounts are determined by using the tax rates
expected to be in effect when the taxes will actually be paid or refunds
received, as provided under currently enacted law. Valuation allowances are
established when necessary to reduce the deferred tax assets to the amounts
expected to be realized. Income tax expense or benefit is the tax payable or
refundable, respectively, for the period plus or minus the change during the
period in the deferred tax assets and liabilities.
Unaudited financial information
Interim financial information presented herein contain all adjustments (all
which are normal and recurring in nature) necessary to present fairly the
financial position of the Company as of June 30, 1999 and the results their
operations for the six months ended June 30, 1999 and 1998.
Accounts receivable
Management considers all accounts receivable collectible. Therefore, no
allowance for doubtful accounts receivable is reflected in the accompanying
financial statements.
Inventories
Inventories are stated at the lower of cost or market; cost being determined
principally by the use of the average-cost method, which approximates the
first-in, first-out method.
F-8
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note A: Organization and summary of significant accounting policies, concluded
Equipment and depreciation
Equipment is stated at cost. Depreciation is computed over the estimated useful
life of the assets using the straight-line method. During the six months ended
June 30, 1999 and 1998, the years ended December 31, 1998 and 1997, and for the
period from March 16, 1996 (inception) through June 30, 1999, the Company
recorded depreciation expense of $263 (unaudited), $-0- (unaudited), $87, $-0-,
and $350 (unaudited), respectively.
Earnings/(loss) per share
Basic earnings per share have been computed on the basis of the weighted average
of number of common shares outstanding. However, the Company has treated as
outstanding for the entirety of all reporting periods, shares issued at
substantially less than the public offering price of $1.00 per share pursuant to
Securities and Exchange Commission policy.
Diluted earnings per share is not presented in the accompanying consolidated
financial statements as there are no common stock equivalents outstanding that
would result in dilution.
Advertising costs
The Company expenses advertising costs as incurred. During the six months ended
June 30, 1999 and 1998, the years ended December 31, 1998 and 1997, and for the
period from March 16, 1996 (inception) through June 30, 1999, the Company
expensed $3,419 (unaudited), $-0- (unaudited), $2,706, $-0-, and $6,125
(unaudited), respectively.
Recently issued accounting pronouncements
The Company has adopted the following new accounting pronouncements for the year
ended December 31, 1998. There was no effect on the consolidated financial
statements presented from the adoption of the new pronouncements. SFAS No. 130,
"Reporting Comprehensive Income," requires the reporting and display of total
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," is based on the "management" approach for reporting
segments. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosure about the Company's products, the geographic areas in which it earns
revenue and holds long-lived assets, and its major customers. SFAS No. 132,
"Employers' Disclosures about Pensions and Other Post-retirement Benefits,"
which requires additional disclosures about pension and other post-retirement
benefit plans, but does not change the measurement or recognition of those
plans.
F-9
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note B: Related party transactions
For all periods presented, the Company was a home-based business, with no
employees. An officer of the Company contributed office and warehouse space at
no charge. In addition, the officer contributed his time and effort in the
initial operations of the Company. The accompanying consolidated financial
statements reflect the estimated cost of the use of such space and the estimated
cost of such services with an offsetting credit to contributed capital. During
the six months ended June 30, 1999 and 1998, the years ended December 31, 1998
and 1997, and for the period from March 16, 1996 (inception) through June 30,
1999, the Company recorded contributed capital totaling $6,200 (unaudited), $-0-
(unaudited), $4,900, $-0-, and $11,100 (unaudited), respectively related to the
rent and services.
Pursuant to the terms of a certain stock subscription agreement dated March 3,
1999, the two 50 percent shareholders of Enjoy the Game, Inc. ("EGI") exchanged
all of their shares in EGI for 10,000 shares (unaudited) of EtG Corporation
("ETG") common stock. Upon the exchange of shares, EGI became a wholly owned
subsidiary of ETG. The former EGI shareholders held approximately 67 percent of
the issued and outstanding shares of ETG prior to the date of the Agreement.
Accordingly, the transaction has been accounted for as an exchange of shares of
companies under common control. This accounting treatment is similar to a
"pooling-of-interests". Common control was established on August 29, 1998. EGI
was incorporated in Missouri on May 28, 1998. The accompanying financial
statements have been presented on a consolidated basis as if common control was
established on May 28, 1998. For the period from May 28 through August 29, 1998,
EGI's transactions consisted only of organizational matters. The separate
financial statements of EGI for the period from May 28, 1998 (inception) through
August 28, 1998 have not been presented.
Note C: Trademark
Costs incurred to register the Company's trademark are capitalized in the
accompanying consolidated financial statements and are being amortized on the
straight-line basis over a period of 60 months. These costs include filing fees
and legal costs incurred in connection with the application and registration of
the trademark "Enjoy the Game" for videos and certain merchandise.
Amortization expense totaled $147 (unaudited), $-0- (unaudited), $49, $-0-, and
$196 (unaudited) for the six months ended June 30, 1999 and 1998, the years
ended December 31, 1998 and 1997, and for the period from March 16, 1996
(inception) through June 30, 1999.
Note D: Notes payable
The Company issued promissory notes, due on demand, to certain investors in
order to provide the Company with working capital during its development stage.
However, certain of these promissory notes are convertible into a total of 2,496
shares of non-voting common stock of the subsidiary, EGI, at the rate of .0624
shares to the dollar. The notes are convertible beginning two years from the
date of issuance, at the option of the holder.
F-10
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note D: Notes payable, concluded
In the event all of the notes are converted into non-voting common stock of EGI,
the holders would own an aggregate of less than 20 percent of the common stock
outstanding. Management has classified, as current, all interest accrued on the
notes. Notes payable at June 30, 1999 and December 31, 1998 follow:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
(unaudited)
Convertible into shares of EGI non-voting common stock
- --------------------------------------------------------------------------------
<S> <C> <C>
Note payable to individual, with interest due on June 1, 1999
and June 1, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... $ 5,000 $ 5,000
Note payable to individual, with interest due on June 2, 1999
and June 2, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 5,000
Note payable to individual, with interest due on June 9, 1999
and June 9, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 5,000
Note payable to individual, with interest due on July 23, 1999
and July 23, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 5,000
Note payable to individual, with interest due on August 18, 1999
and August 18, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 5,000
Note payable to individual, with interest due on August 28, 1999
and August 28, 2000 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 5,000
Note payable to corporation, with interest due on May 2, 2000
and May 2, 2001 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 -
Note payable to individual, with interest due on June 2, 2000
and June 2, 2001 at 10 percent, unsecured, convertible into
312 shares of Class "B" common stock of EGI................................... 5,000 -
---------------- ----------------
Total convertible notes payable $ 40,000 $ 30,000
================ ================
Other notes payable
- --------------------------------------------------------------------------------
Note payable to corporation, with interest due on demand
at 10 percent, unsecured...................................................... 5,000 5,000
Note payable to corporation, with interest due on demand
at 10 percent, unsecured...................................................... 5,000 5,000
Note payable to an LLC, with interest due on demand
at 10 percent, unsecured...................................................... 6,000 -
Note payable to an LLC, with interest due on demand
at 10 percent, unsecured...................................................... 1,500 -
---------------- ----------------
Total other notes payable $ 17,500 $ 10,000
================ ================
F-11
</TABLE>
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note E: Income taxes
A reconcilliation of U.S. statutory federal income tax rate to the effective
rate follows for the six months ended June 30, 1999 and 1998, the years ended
December 31, 1996 and 1997, and the period from March 13, 1996 (inception)
through June 30, 1999, follows:
<TABLE>
<CAPTION>
March 13, 1996
Six Months Ended For the Years Ended (inception)
June 30, December 31, through
-------------------------- --------------------- June 30,
1999 1998 1998 1997 1999
--------- --------- ------- ------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
U.S. statutory federal rate...... 15.00% 15.00% 15.00% 15.00% 15.00%
State income tax rate, net....... 5.31% 5.31% 5.31% 5.31% 5.31%
NOL for which no tax
benefit is currently available... -20.31% -20.31% -20.31% -20.31% -20.31%
------ ------ ------ ------ ------
0.00% 0.00% 0.00% 0.00% 0.00%
====== ====== ====== ====== ======
</TABLE>
The benefit for income taxes from operations consisted of the following
components at December 31, 1998: current tax benefit of $3,105 resulting from a
net loss before income taxes, and deferred tax expense of $3,105 resulting from
the valuation allowance recorded against the deferred tax asset resulting from
net operating losses. The change in the valuation allowance for the December 31,
1998 and 1997, were $3,105 and $130, respectively. Net operating loss
carryforwards at December 31, 1998 will begin to expire in 2018. The valuation
allowance will be evaluated at the end of each year, considering positive and
negative evidence about whether the asset will be realized. At that time, the
allowance will either be increased or reduced; reduction could result in the
complete elimination of the allowance if positive evidence indicates that the
value of the deferred tax asset is no longer impaired and the allowance is no
longer required.
Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.
Note F: Shareholders' deficit
Preferred Stock
The preferred stock may be issued in series as determined by the Board of
Directors. As required by law, each series must designate the number of shares
in the series and each share of a series must have identical rights of (1)
dividend, (2) redemption, (3) rights in liquidation, (4) sinking fund provisions
for the redemption of the shares, (5) terms of conversion and (6) voting rights.
F-12
<PAGE>
EtG CORPORATION
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note F: Shareholders' deficit
Proposed Initial Public Offering
The Company is planning to offer 200,000 shares of its $.001 par value common
stock to the public at $1.00 per share. The offering will be made on a "direct
participation" basis and no sales commissions are expected to be paid. The
Company is currently in the process of filing on Form SB-2 a registration
statement with the Securities and Exchange Commission. This statement is to
register 200,000 shares of common stock.
Legal, accounting, and printing costs incurred in connection with the above
proposed initial public offering, have been deferred until such time as the
proposed offering is closed. Upon closing, the deferred offering costs will be
offset against the gross offering proceeds. However, if and when the offering is
declared unsuccessful, the costs will be expensed.
Note G: The Year 2000 Issue
The Y2K issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any of the Company's computer
programs that have date sensitive software may recognize a date using "00" as
the year 1900 instead of 2000. This could result in system failure or
miscalculations causing disruptions or operations, including, among other things
an inability to process transactions, send invoices, or engage in similar normal
business activities. The Company's equipment, consisting of a computer and
related components, has been certified as Y2K compliant as of December 31, 1998.
The Company cannot determine the extent to which the Company is vulnerable to
third parties' failure to remediate their own Y2K problems. As a result, there
can be no guarantee that the systems of other companies on which the Company's
business relies will be timely converted, or that a failure to convert by
another company, or a conversion that is incompatible with the Company's
systems, would have a material adverse effect on the Company. In view of the
foregoing, there can be no assurance that the Y2K issue will not have a material
adverse effect on the Company's business.
F-13
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Section 78.037 of the Nevada Revised Statutes ("NRS") provides that a
corporation, in its Articles of Incorporation, may provide for the limitation of
personal liability of directors or officers to the corporation or its
stockholders for breach of fiduciary duty except for acts or omissions involving
intentional misconduct, fraud or knowing violation of law or unlawful payment of
distributions. The Company's Articles of Incorporation contains such a
provision.
The Company's Articles of Incorporation, pursuant to the authority granted
by Section 78.037 NRS, state that no director or officer shall be personally
liable to the Corporation for monetary damages for any breach of fiduciary duty
by such person as a director or officer. Notwithstanding the foregoing sentence,
a director or officer shall be liable to the extent provided by applicable law,
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of dividends in violation of
NRS 78.300.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities offered hereby.
SEC Registration Fee........................................ $ 55.60
Printing.................................................... 500.00
Blue Sky Fees and Expenses.................................. 1,000.00
Transfer Agent Fees......................................... 500.00
Accounting Fees and Expenses................................ 8,000.00
Legal Fees and Expenses..................................... 30,000.00
Miscellaneous Fees and Expenses............................. 450.00
----------
Total $40,505.60
Item 26. Recent Sales of Unregistered Securities.
Since inception in 1996, sales of unregistered common stock (the only
issued and outstanding securities of the Company) were made by the small
business issuer as follows:
<PAGE>
Name Date Sold Number of Shares Cash Consideration
- ---- --------- ---------------- ------------------
David N. Nemelka March 7, 1999 1,000,000 $1,000
William J. Stutz August 29, 1998 2,000,000 $2,000
In addition, 5,000 shares of the small business issuer's restricted common
stock were issued to William J. Stutz on March 28, 1999 in exchange for 5,000
shares of restricted common stock of Enjoy The Game, Inc., a Missouri
corporation. At the same time 5,000 shares of restricted common stock of the
small business issuer were also issued to Valerie M. Stutz in exchange for 5,000
shares of Enjoy The Game, Inc.
With respect to the sale of all unregistered securities as described above,
this small business issuer relied upon the exemptions afforded by Sections 4 (2)
or 4 (6) of the Securities Act of 1933 or Rule 506 promulgated under such Act.
All recipients were either officers or directors of the Company or were
independent, non-affiliated, accredited investors. Each of the certificates
evidencing the respective securities contained a restrictive Rule 144 legend. No
transfer will be permitted without opinion of counsel that such transfer is in
compliance with the rules and regulations of the SEC.
Item 27. Exhibits.
See Index to Exhibits.
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities
under Rule 415 of the Securities Act, a post-effect amendment to
this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
<PAGE>
(3) File a post effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the registrant pursuant to the provisions
described in Item 24, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding), is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance on Rule
430A and contained in the form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under
the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Blue Springs, Missouri on September 7, 1999.
EtG Corporation
By: /s/ William J. Stutz
----------------------------------
William J. Stutz
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on September 7, 1999.
Signature Title Date
/s/ William J. Stutz President, Treasurer, September 7, 1999
- ------------------------ Director, Principal
William J. Stutz Financial Officer
/s/ Valerie M. Stutz Secretary, Director, September 7, 1999
- ------------------------ Principal Accounting
Valerie M. Stutz Officer
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM SB-2
EtG CORPORATION
3.1 Articles of Incorporation of Registrant
3.12 Articles of Amendment to the Articles of Incorporation
3.2 By-laws of Registrant
5.1 Proposed Form of Opinion of Counsel Regarding Legality
24.1 Consent of Counsel
24.2 Consent of Cordovano and Harvey, P.C., certified public accountants
27 Financial Data Schedule
Exhibit 3.1
Articles of Incorporation
Of
B & R VENTURES, INC.
WE, THE UNDERSIGNED natural persons of the age of eighteen (18) years or
more, acting as incorporators of a corporation under the Nevada Business
Corporation Act, adopt the following Articles of Incorporation.
Article I
NAME
The Name of the corporation is B&RVENTURES, INC.
Article 11
DURATION
The duration of the corporation is perpetual.
Article III
PURPOSES
The purpose or purposes for which this corporation is
engaged are:
(a) To pursue the business of consulting. Also, to acquire, develop,
explore, and otherwise deal in and with all kinds of real and personal property
and all related activities, and for any and all other lawful purposes.
(b) To acquire by purchase, exchange, gift, bequest, subscription, or
otherwise; and to hold, own, mortgage, pledge, hypothecate, sell, assign,
transfer, exchange, or otherwise dispose of or deal in or with its own corporate
securities or stock or other securities including, without limitations, any
shares of stock, bonds, debentures, notes mortgages, or other obligations, and
any certificates, receipts or other instruments representing rights or interests
therein on property or assets created or issued by any person, firm, associate,
or corporation, or instrumentalities thereof, to make payment therefor in any
lawful manner or to issue in exchange therefor in any lawful manner or to issue
in exchange therefor its unreserved earned surplus for the purchase of its own
shares, and to exercise as owner or holder of any securities, any and all
rights, powers, and privileges in respect thereof.
<PAGE>
(c) To do each and everything necessary, suitable, or proper for the
accomplishment of any of the purposes or the attainment of any one or
more of the subjects herein enumerated, or which may, at any time,
appear conducive to or expedient for the protection or benefit of this
corporation, and to do said acts as fully and to the same extent as
natural persons might, or could do in any part of the world as
principals, agents, partners, trustees, or otherwise, either alone or
in conjunction with any other person, association, or corporation.
(d) The foregoing clauses shall be construed both as purposes and
powers and shall not be held or limit or restrict in any manner the
general powers of the corporation, and the enjoyment and exercise
thereof, as conferred by the laws of the State of Nevada; and it is
the intention that the purposes and powers specified in each of the
paragraphs of this Article III shall be regarded as independent
purposes and powers.
Article IV
STOCK
(a) Common Stock. The aggregate number of shares of Common Stock which the
Corporation shall have authority to issue is 50,000,000 shares at a par value of
$.001 per share. All stock when issued shall be fully paid and non-assessable,
shall be of the same class and have the same rights and preferences.
No holder of shares of Common Stock of the Corporation shall be entitled,
as such, to any pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the Corporation may now or thereafter be
authorized to issue.
Each share of Common Stock shall be entitled to one vote at a stockholders
meetings, either in person or by proxy. Cumulative voting in elections of
Directors and all other matters brought before stockholders meeting, whether
they be annual or special, shall not be permitted.
(b) Preferred Stock. The aggregate number of share of Preferred Stock which
the Corporation shall have authority to issue is 5,000,000 shares, par value
$.001, which may be issued in series, with such designations, preferences,
stated values, rights, qualifications or limitations as determined solely by the
Board of Directors of the Corporation.
<PAGE>
Article V
AMENDMENT
These Articles of Incorporation may be amended by the affirmative Vote of
"a majority" of the shares entitled to vote on each such amendment.
Article VI
SHAREHOLDERS RIGHTS
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration as the Board of
Directors shall determine. Shareholders shall not have pre-emptive rights to
acquire unissued shares of the stock of this corporation.
Article VII
INITIAL OFFICE AND AGENT
The registered office of the Corporation in the State of Nevada is 3230 E.
Flamingo Road, Suite 156, Las Vegas, NV 89121. The registered agent in charge
thereof at such address is Gateway Enterprises, Inc..
Article VIII
DIRECTORS
The directors are hereby given the authority to do any act on behalf of the
corporation by law and in each instance where the Business corporation act
provides that the directors may act in certain instances where the Articles of
Incorporation authorize such action by the directors 'the directors are hereby
given authority to act in such instances without specifically numerating such
potential action or instance herein.
<PAGE>
The directors are specifically given the authority to mortgage or pledge
any or all assets of the business with stockholders' approval.
The number of directors constituting the initial Board of Directors of this
corporation is one (1). The names and addresses of persons who are to serve as
Directors until the first annual meeting of stockholders or until their
successors are elected and qualify are:
NAME ADDRESS
---- -------
DAVID N. NEMELKA 899 SOUTH ARTISTIC CIRCLE
SPRINGVILLE, UT 84663
Article IX
INCORPORATORS
The name and address of each incorporator is:
DAVID N. NEMELKA 899 SOUTH ARTISTIC CIRCLE
SPRINGVILLE, UT 84663
ARTICLE X
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
No contract or other transaction between this corporation and any on or
more of its directors or any other corporation, firm, association, or entity in
which one or more of its directors or officers are financially interested, shall
be either void or voidable because of such relationship or interest, or because
such director or directors are present at the meeting of the Board of Directors,
or a committee thereof, which authorizes, approves, or ratifies such contract or
transaction, or because his or their votes are counted for such purpose if (a)
the fact of such relationship or interest is disclosed or known to the Board of
Directors or committee which authorizes, approves, or ratifies the contract or
transaction by vote or consent sufficient for the purpose without counting the
<PAGE>
votes or consents of such interested director; or (b) the fact of such
relationship or interest is disclosed or known to the stockholders entitled to
vote and they authorize, approve, or ratify such contract or transaction by vote
or written consent, or (c) the contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or committee thereof which
authorizes, approves or ratifies such contract or transaction.
Article XI
LIABILITY OF DIRECTORS AND OFFICERS
No director or officer shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director or officer. Notwithstanding the foregoing sentence, a
director or officer shall be liable to the extent provided by applicable law,
(1) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of dividends in violation of
NRS 78.300.
The provisions hereof shall not apply to or have any effect on the
liability or alleged liability of any officer or director of the Corporation for
or with respect to any acts or omissions of such person occurring prior to such
amendment.
Under penalties of perjury, I declare that these Articles of Incorporation
have been examined by me and are, to the best of my knowledge and belief, true,
correct and complete.
Dated this 7th day of MARCH, 1996
/s/ David N. Nemelka
DAVID N. NEMELKA
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF )
On the 7th day of MARCH, 1996, personally appeared before me, David N.
Nemelka, who being by me first duly sworn, declared that he was the person who
signed the foregoing document as incorporator and that the statements therein
contained are true.
IN WITNESS THEREOF, I have hereunto set my hand and seal this 7th day of
March, 1996.
/s/ BRENDA M. HALL
-------------------------------------
NOTARY PUBLIC
Residing at 1415 Spring Creek Place
Springville, UT 84663
My commission expires:
5/5/97
Exhibit 3.12
CERTIFICATE OF AMENDMENT OF
THE ARTICLES OF INCORPORATION
OF B & R VENTURES, INC.
1, William Stutz, sole Director and Executive Officer of B & R Ventures,
Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 29th day of August, 1998, adopted a resolution to amend the original
articles as follows:
Article 1 is hereby amended to read as follows:
The name of the Corporation is EtG Corporation.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 3,000,000; that the said change
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
Dated: 10/16/98 By: /s/ William Stutz
------------------------------------------
William Stutz, President
Dated: 10/16/98 By: /s/ William Stutz
------------------------------------------
William Stutz, Secretary & Treasurer
<PAGE>
State of Kansas )
) ss
County of Johnson )
0n October 16, 1998, personally appeared before me, a Notary Public,
William J. Stutz, who acknowledged that they executed the above instrument.
/s/ KAREN E. TAYLOR
----------------------------------
Signature of Notary
My Appt. Exp. 3-21-02
(Notary Stamp or Seal)
Exhibit 3.2
BY-LAWS
-------
of
B & R VENTURES, INC.
--------------------
A NEVADA CORPORATION
ARTICLE I
OFFICES
-------
Section 1. The principal office of the Corporation shall be at 899 South
Artistic Circle located in Springville, Utah 84663. The Corporation may have
such other offices, either within or without the State of Utah as the Board of
Directors may designate or as the business of the Corporation may require from
time to time.
The registered office of the Corporation required by the Nevada Business
Corporation Act to be maintained in the State of Nevada may be, but need not be,
identical with the principal offices in the State of Nevada, and the address of
the re 'stered office may be changed, from time to time, by the Board of
Directors.
ARTICLE 11
STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of stockholders shall be held
at the principal office of the Corporation at 899 South Artistic Circle,
Springville, Utah 84663 or at such other places on the third Friday of April, or
at such other times as the Board of Directors may, from time to time, determine.
If the day so designated falls upon a legal holiday then the meeting shall be
held upon the first business day thereafter. The Secretary shall serve
personally or by mail a written notice thereof, not less than ten (10) nor more
than fifty (50) days previous to such meeting, addressed to each stockholder at
his address as it appears on the stock book; but at any meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above required may be
dispensed with.
Section 2. SPECIAL MEETINGS. Special meetings of stockholders other than
those regulated by statute may be called at any time by a majority of the
Directors. Notice of such meeting stating the place, day and hour and the
purpose for which it is called shall be served personally or by mail, not less
<PAGE>
than ten (10) days before the date set for such meeting. If mailed, it shall be
directed to a stockholder at his address as it appears on the stock book; but at
any meeting at which all stockholders shall be present, or of which stockholders
not present have waived notice in writing, the giving of notice as above
described may be dispensed with. The Board of Directors shall also, in like
manner, call a special meeting of stockholders whenever so requested in writing
by stockholders representing not less than ten percent (10%) of the capital
stock of the Corporation entitled to vote at the meeting. The President may in
his discretion call a special meeting of stockholders upon ten (10) days notice.
No business other than that specified in the call for the meeting shall be
transacted at any special meeting of the stockholders, except upon the unanimous
consent of all the stockholders entitled to notice thereof
Section 3. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to receive notice of or to vote at
any meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period not to exceed, in any case, fifty (50) days. If the stock transfer
books shall be closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of stockholders, such books shall be closed
for a least ten (1 0) days immediately preceding such meeting. In lieu of
closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of stockholders, such date
'in any case to be not more than fifty (50) days, and in case of a meeting of
stockholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of stockholders, is to be taken.
If the stock transfer books are not closed, and no record date is fixed for the
determination of stockholders entitled to receive notice of or to vote at a
meeting of stockholders, or stockholders entitled to r6ceive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination as to
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 4. VOTING. At all meetings of the stockholders of record having the
right to vote, subject to the provisions of Section 3, each stockholder of the
Corporation is entitled to one (1) vote for each share of stock having voting
power and standing in the name of such stockholder on the books of the
Corporation. Votes may be cast in person or by written authorized proxy.
<PAGE>
Section 5. PROXY. Each proxy must be executed in writing by the stockholder
of the Corporation or his duly authorized attorney. No proxy shall be valid
after the expiration of eleven (11) months from the date of its execution unless
it shall have specified therein its duration.
Every proxy shall be revocable at the discretion of the person executing it
or of his personal representatives or assigns.
Section 6. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
by-laws of such corporation may prescribe or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
noted by him either in person or by proxy without a transfer of such shares into
his name. Shares standing in the name of a trustee may be voted by him either
'in person or by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate Order of the Court by which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledge, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
<PAGE>
Section 7. ELECTION OF DIRECTORS. At each election for Directors every
stockholder entitled to vote at such election shall have the night to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are Directors to be elected and for whose election he has a right to vote.
There shall be no cumulative voting.
Section 8. QUORUM. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the stockholders.
If a quorum shall not be present or represented, the stockholders entitled
to vote thereat, present in person or by proxy, shall have the power to adjourn
the meeting, from time to time, until a quorum shall be present or represented.
At such rescheduled meeting at which a quorum shall be present or represented
any business or any specified item of business may be transacted which might
have been transacted at the meeting as originally notified.
The number of votes or consents of the holders of stock having voting power
which shall be necessary for the transaction of any business or any specified
item of business at any meeting of stockholders, or the giving of any consent,
shall be a majority of the outstanding shares of the Corporation entitled to
vote.
Section 9. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be taken
at a meeting of the stockholders, or any other action which may be taken at a
meeting of the stockholders, may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
Section 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of Directors. The present Board of Directors shall consist of
one (1) member. Thereafter the number of Directors may be increased to not more
than nine (9) by resolution of the Board of Directors. Directors need not be
residents of the State of Nevada and need not be stockholders of the
Corporation.
<PAGE>
Section 2. ELECTION. The Directors shall be elected at each annual meeting
of the stockholders, but if any such annual meeting is not held, or the
Directors are not elected thereat, the Directors may be elected at any special
meeting of the stockholders held for that purpose.
Section 3. TERM OF OFFICE. The term of office of each of the Directors
shall be one (1) year, which shall continue until his successor has been elected
and qualified.
Section 4. DUTIES. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, regularly convened, and may adopt
such rules and regulations for the conduct of meetings and the management of the
Corporation, as may be deemed proper, so long as it is not inconsistent with
these By-laws and the laws of the State of Nevada. -
Section 5. DIRECRORS' MIEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the stockholders, and
at such other time and places as the Board of Directors may determine. Special
meetings of the Board of Directors may be called by the President or the
Secretary upon the written request of one (1) Director.
Section 6. NOTICE OF MEETINGS. Notice of meetings other than the regular
annual meeting shall be given by service upon each Director in person, or by
mailing to him at his last known address, at least three (3) days before the
date therein designated for such meeting, of a written notice thereof specifying
the time and place of such meeting, and the business to be brought before the
meeting, and no business other than that specified in such notice shall be
transacted at any special meeting. At any Directors' meeting at which a quorum
of the Board of Directors shall be present (although held without notice), any
and all business may be transacted which rm'ght have been transacted if the
meeting had been dulv called if a quorum of the Directors waive or are willing
to waive the notice requirements of such meeting.
Any Directors may waive notice of any meeting under the provisions of
Article XII. The attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully convened or called.
<PAGE>
Section 7. VOTING. At all meetings of the Board of Directors, each Director
is to have one (1) vote. The act of a majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
Section 8. VACANCIES. Vacancies in the Board occurring between annual
meetings shall be filled for the unexpired portion of the term by a majority of
the remaining Directors.
Section 9. REMOVAL OF DIRECTORS. Any one or more of the Directors may be
removed, with or without cause, at any time, by a vote of the stockholders
holding a majority of the stock, at any special meeting called for that purpose.
Section 10. QUORUM. The number of Directors who shall be present at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be a
majority.
The number of votes of Directors that shall be necessary for the
transaction of any business of any specified item of business at any meeting of
the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the Board of Directors,
those present may adjourn the meeting, from time to time, until a quorum shall
be present.
Section 11. COMPENSATION. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or each may be paid a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefore.
Section 12. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
<PAGE>
his dissent is entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered or certified mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who vote in favor of such action.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Corporation shall be: President,
Vice-President, Secretary, and Treasurer, and such assistant Secretaries as the
President shall determine.
Any officer may hold more than one (1) office.
Section 2. ELECTION. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately following the
meeting of stockholders, and shall hold office for the term of one (1) year or
until their successors are duly elected. Officers need not be members of the
Board of Directors.
The Board may appoint such other officers, agents and employees as it shall
deem necessary who shall have such authority and shall perform such duties as,
from time to time, shall be prescribed by the Board.
Section 3. DUTIES OF OFFICERS. The duties and powers of the officers of the
Corporation shall be as follows:
PRESIDENT
The President shall preside at all meetings of the stockholders. He shall
present at each annual meeting of the stockholders and Directors a report of the
condition of the business of the Corporation. He shall cause to be called
regular and special meetings of these stockholders and Directors in accordance
with these By-laws. He shall appoint and remove, employ and discharge, and fix
the compensation of all agents, employees, and clerks of the Corporation other
<PAGE>
than the duly appointed officers, subject to the approval of the Board of
Directors. He shall sign and make all contracts and agreements in the name of
the Corporation, subject to the approval of the Board of Directors. He shall see
that the books, reports, statements and certificates required by the statutes
are properly kept, made and filed according to law. He shall sign all
certificates of stock, notes, drafts, or bills of exchange, warrants or other
orders for the payment of money duly drawn by the - Treasurer; and he shall
enforce these By-laws and perform all the duties incident to the position and
office., and which are required by law.
VICE-PRESIDENT
During the absence or inability of the President to render and perform his
duties or exercise his powers, as set forth in these By-laws or in the statutes
under which the Corporation is organized, the same shall be performed and
exercised by the Vice-President; and when so acting, he shall have all the
powers and be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the stockholders 'in appropriate books. He shall give and serve
all notices of the Corporation. He shall be custodian of the records and of the
corporate seal and affix the latter when required. He shall keep the stock and
transfer books in the manner prescribed by law, so as to show at all times the
amount of capital stock issued and outstanding, the manner and the time
compensation for the same was paid, the names of the owners thereof,
alphabetically arranged-, the number of shares owned by each; the time at which
each person became such owner, and the amount paid thereon; and keep such stock
and transfer books open daily during the business hours of the office of the
Corporation, subject to the inspection of any stockholder of the Corporation,
and permit such stockholder to make extracts from said books to the extent
prescribed by law. He shall sign all certificates of stock. He shall present to
the Board of Directors at their meetings all communications addressed to him
officially by the President or any officer or stockholder of the Corporation;
and he shall attend to all correspondence and perform all the duties incident to
the office of Secretary.
<PAGE>
TREASURER
The Treasurer shall have the care and custody of and be responsible for all
the funds and securities of the Corporation, and deposit all such funds in the
name of the Corporation in such bank or banks, trust company or trust companies
or safe deposit vaults as the Board of Directors may designate. He shall exhibit
at all reasonable times his books and accounts to any Director or stockholder of
the Corporation upon application at the office of the Corporation during
business hours. He shall render a statement of the conditions of the finances of
the Corporation at each regular meeting of the Board of Directors, and at such
other times as shall be required of him, and a full financial report at the
5nnual meeting of the stockholders. He shall keep, at the office of the
Corporation, correct books of account of all its business and transactions and
such other books of account as the Board of Directors may require. He shall do
and perform all duties appertaining to the office of Treasurer. The Treasurer
shall, if required by the Board of Directors, give to the Corporation such
security for the faithful discharge of his duties as the Board may direct.
Section 4. BOND. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the Board may direct.
Section 5. VACANCIES, HOW FILLED. All vacancies in any office shall be
filled by the Board of Directors without undue delay, either at its regular
meeting or at a meeting specifically called for that purpose. hi the case of the
absence of any officer of the Corporation or for any reason that the Board of
Directors may deem sufficient, the Board may, except as specifically otherwise
provided in these By-laws, delegate the power or duties of such officers to any
other officer or Director for the time being; provided, a majority of the entire
Board concur therein.
Section 6. COMPENSATION OF OFFICERS. The officers shall receive such salary
or compensation as may be determined by the Board of Directors.
Section 7. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
<PAGE>
ARTICLE V
CERTIFICATES OF STOCK
Section 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock
shall be numbered and registered in the order in which they are issued. They
shall be bound in a book and shall be issued in consecutive order therefrom, and
in the margin thereof shall be entered the name of the person owning the shares
therein represented, with the number of shares and the date thereof. Such
certificates shall exhibit the holder's name and number of shares. They shall be
signed by the President or Vice President, and countersigned by the Secretary or
Treasurer and scaled with the Seal of the Corporation.
Section 2. TRANSFER OF STOCK. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
'in whose name it appears on said books, his legal representatives or by his
duly authorized agent. In case of transfer by attorney, the power of attorney,
duly executed and acknowledged, shall be deposited with the Secretary. In all
cases of transfer the former certificate must be surrendered up and cancelled
before a new certificate may be issued. No transfer shall be made upon the books
of the Corporation within ten (10) days next preceding the annual meeting of the
stockholders.
Section 3. LOST CERTIFICATES. If a stockholder shall claim to have lost or
destroyed a certificate or certificates of stock issued by the Corporation, the
Board of Directors may, at its discretion, direct a new certificate or
certificates to be issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with such sureties if any
that the Board may require.
<PAGE>
ARTICLE VI
SEAL
Section 1. SEAL. The seal of the Corporation shall be as follows:
NO SEAL IN USE AT THIS TIME
ARTICLE VII
DIVIDENDS
Section 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient for
such dividends to be declared.
Section 2. RESERVE. The Board of Directors may set aside, out of the net
profits of the Corporation available for dividends, such sum or sums (before
payment of any dividends) as the Board, in their absolute discretion, think
proper as a reserve fund, to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and they may abolish or modify any such reserve in the manner in
which it was created.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved 'in any civil, criminal
or administrative action, suit or proceeding by reason of the fact that he or
his testator or intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal thereon, except
with respect to matters as to which it is adjudged in such action, suit or
proceeding that such officer, Director, or employee was liable to the
Corporation, or to such other corporation, for negligence or misconduct in the
performance of his duty. As used herein the term "expense" shall include all
obligations incurred by such person for the payment of money, including without
limitation attorney's fees, judgments, awards, fines, penalties, and amounts
paid in satisfaction of judgment or in settlement of any such action, suit, or
proceedings, except amounts paid to the Corporation or such other corporation by
him.
<PAGE>
A judgment of conviction whether based on plea of guilty or nolo contenders
or its equivalent, or after trial, shall not of itself be deemed an adjudication
that such Director, officer or employee is liable to the Corporation, or such
other corporation, for negligence or misconduct in the performance of his
duties. Determination of the rights of such indemnification and the amount
thereof may be made at the option of the person to be indemnified pursuant to
procedure set forth, from time to time, in the By-laws, or by any of the
following procedures: (a) order of the Court or administrative body or agency
having jurisdiction of the action, suit, or proceeding; (b) resolution adopted
by a majority of the quorum of the Board of Directors of the Corporation without
counting in such majority any Directors who have 'incurred expenses in
connection with such action, suit or proceeding; (c) if there is no quorum of
Directors who have not incurred expense in connection with such action, suit, or
proceeding, then by resolution adopted by a majority of the committee of
stockholders and Directors who have not incurred such expenses appointed by the
Board of Directors; (d) resolution adopted by a majority of the quorum of the
Directors entitled to vote at any meeting; or (e) Order of any Court having
jurisdiction over the Corporation. Any such determination that a payment by way
of indemnity should be made will be binding upon the Corporation. Such right of
indemnification shall not be exclusive of any other right which such Directors,
officers, and employees of the Corporation and the other persons above mentioned
may have or hereafter acquire, and without limiting the generality of such
statement, they shall be entitled to their respective rights of indemnification
under any By-law, Agreement, vote of stockholders, provision of law, or
otherwise in addition to their rights under this Article. The provision of this
Article shall apply to any member of any committee appointed by the Board of
Directors as fully as though each person and been a Director, officer or
employee of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. HOW AMENDED. These By-laws may be altered, amended, repealed or
added to by the vote of the Board of Directors of the Corporation at any regular
meeting of said Board, or at a special meeting of Directors called for that
purpose provided a quonan of the Directors as provided by law and by the
Articles of Incorporation, are present at such regular meeting or special
meeting. These By-laws and any amendments thereto and new By-laws added by the
Directors may be amended, altered or replaced by the stockholders at any annual
or special meeting of the stockholders.
<PAGE>
ARTICLE X
FISCAL YEAR
Section 1. FISCAL YEAR. The fiscal year shall end on the 31st day of
DECEMBER.
ARTICLE XI
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any shareholders
or directors of the Corporation under the provisions of these By-laws, under the
Articles of Incorporation or under the provisions of the Nevada Business
Corporation Act, a waiver thereof 'in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated [herein, shall
be deemed equivalent to the giving of such notice.
ADOPTED this 25th day of March, 1996.
B & R VENTUPES, INC.
A Nevada Corporation
/s/ David N. Nemelka
-----------------------------
DAVID N. NEMELKA
President
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary\Treasurer of B & R
VENTURES, INC., A NEVADA CORPORATION: and
<PAGE>
2. That the foregoing By-laws, comprising Thirteen (13) pages, constitute
the By-laws of said Corporation as duly adopted at a meeting of the Board of
Directors thereof duly held on the 25th day of May, 1996.
/s/ David N. Nemelka
--------------------------
DAVID N. NEMELKA
Secretary\Treasurer
(SEAL)
Exhibit 5.1
Allen G. Reeves, P.C.
Attorney and Counselor at Law
900 Equitable Building
730 Seventeenth Street
Denver, Colorado 80202
(303)534-6278 FAX (303) 825-9147
August 30, 1999
EtG Corporation
1008 Mic-O-Say Circle
Blue Springs, MO 64015
Ladies and Gentlemen:
I have acted as counsel for Profile Technologies, Inc. (the "Company") in
connection with the preparation and filing of the Registration Statement and
Prospectus with the Securities and Exchange Commission relating to the issuance
of up to 200,000 shares of Common Stock (the "Common Stock").
I have examined copies of the Company's Articles of Incorporation, Bylaws
and certain other corporate documents, including copies of resolutions adopted
by the Board of Directors of the Company and certificates of officers of the
Company, and I have reviewed such other documents and made such investigations
as I have deemed necessary or appropriate in order to express my opinion on the
matters set forth below.
The opinions hereinafter expressed are subject to the qualification that I
am an attorney admitted to practice in Colorado, and am not an expert in the
laws of any other jurisdiction, and have not obtained opinions of local counsel
in any other jurisdiction.
Based upon and subject to the foregoing, I am of the opinion that:
The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Nevada, with full
corporate power and authority to own and operate its properties and to carry on
its business as set forth in the Registration Statement and Prospectus.
The Company is duly qualified and registered to transact the business in
which the Company is engaged and is qualified and in good standing in each and
every jurisdiction in which its ownership of property or its conduct of business
requires such qualification or registration.
<PAGE>
EtG Corporation
Page 2
August 30, 1999
The Company has an authorized and outstanding capitalization as set forth
in the Registration Statement and Prospectus; the Common Stock offered thereby
of the Company conforms to the statements concerning it in the Registration
Statement and Prospectus; the outstanding Common Stock of the company has been
duly and validly issued and is fully paid and non-assessable and no Common Stock
is subject to any pre-emptive rights.
The holders of the issued and outstanding shares of Common Stock are, and
the holders of the securities to be sold under the Registration Statement,
namely, the Common Stock offered pursuant to the Prospectus will be entitled to
the rights, and preferences set forth in the certificates representing the same.
No consents, approvals, authorizations or orders of agencies or other
regulatory authorities are necessary for the valid authorization, issuance or
sale of the Common Stock except as required under the Securities Act of 1933 or
state Blue Sky or other securities laws.
The issuance and sale of the Common Stock will not conflict with or result
in a breach of any of the terms, conditions or provisions of, or constitute a
default under, the Articles of Incorporation or Bylaws of the Company or any
note, indenture, mortgage, Deed of Trust or other Agreement or instrument
(however characterized or described) known to me as to which the Company is a
party or any of its property is bound or any existing laws, order, rule,
regulation, writ, injunction or decree known to me of any government,
governmental instrumentality, agency, body, arbitration tribunal or court,
domestic or foreign, having jurisdiction over the Company or its property.
The undersigned hereby consents to the use of his name under the heading
"Legal Matters" in the Company's registration statement on Form SB-2 and to all
references thereto as contained in said registration statement.
Very truly yours,
Allen G. Reeves, P.C.
By: /s/ Allen G. Reeves
--------------------------------
Allen G. Reeves
AGR/rga
Exhibit 24.1
Consent of Counsel
The consent of Allen G. Reeves, P.C. of all references made to it in the
Prospectus included as a part of this Registration Statement on Form SB-2 of EtG
Corporation, and in all amendments thereto are included in its opinion filed as
Exhibit 5.1 to the Registration Statement.
Allen G. Reeves, P.C.
By: /S/ Allen G. Reeves
-----------------------------
Allen G. Reeves
Denver, Colorado
August 31, 1999
Exhibit 24.2
TO: The Securities and Eschange Commission
Washington, D.C. 20549
RE: EtG Corporation
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of EtG Corporation and
subsidiary on Form SB-2 of our report dated August 17, 1999, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
Cordovano and Harvey, P.C.
Denver, Colorado
September 2, 1999
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<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 14,036 9,625
<SECURITIES> 0 0
<RECEIVABLES> 0 280
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<INVENTORY> 15,227 16,582
<CURRENT-ASSETS> 29,263 26,487
<PP&E> 3,138 3,138
<DEPRECIATION> (88) (350)
<TOTAL-ASSETS> 33,730 49,295
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0 0
0 0
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<TOTAL-LIABILITY-AND-EQUITY> 33,730 49,295
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<OTHER-EXPENSES> 14,278 20,178
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<INTEREST-EXPENSE> 1,705 2,222
<INCOME-PRETAX> (15,284) (21,572)
<INCOME-TAX> 0 0
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