SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
March 31, 2000
Commission file number 333-86711
EtG Corporation
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 87-0567854
- ----------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
1008 Mic-O-Say Circle, Blue Springs, MO 64015
- --------------------------------------- -------
(Address of principal executive offices) (Zip Code)
(816) 220-1110
-------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has be
subject to such filing requirements for the past 90 days. Yes X No ___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
There were 3,210,000 shares of common stock outstanding on May 13, 2000.
Transitional Small Business Disclosure Format
(Check one):
Yes No X
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required to be filed
with this 10-QSB Quarterly Report were prepared by management and commence on
the following page, together with related Notes. In the opinion of management,
the Consolidated Financial Statements fairly present the financial condition of
the Company.
<PAGE>
EtG CORPORATION
CONSOLIDATED BALANCE SHEET
March 31, 2000
ASSETS
Current assets:
Cash ....................................................... $ 104,672
Accounts receivable ........................................ 4,029
Merchandise inventory, at lower of cost or market .......... 14,960
---------
Total current assets .................................. 123,661
Equipment, at cost, net of accumulated
depreciation of $1,395 ..................................... 1,743
Intangible assets:
Trademark, net of accumulated amortization
of $415 ................................................... 1,051
---------
$ 126,455
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Trade payables ............................................. $ 13,652
Line of credit ........ .................................... 4,168
Notes payable, convertible into subsidiary
common stock ........ ..................................... 40,000
Accrued interest on notes payable .......................... 7,865
---------
Total current liabilities ............................. 65,685
---------
Shareholders' deficit:
Preferred stock, $0.001 par value;
5,000,000 shares authorized, -0-
issued and outstanding .................................... --
Common stock, $0.001 par value,
50,000,000 shares authorized, 3,210,000
issued and outstanding .................................... 3,210
Additional paid-in capital ................................. 172,735
Retained deficit ........................................... (115,175)
---------
Total shareholders' equity............................. 60,770
---------
$ 126,455
=========
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended
March 31,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net product sales ................................ $ 2,321 $ 2,017
Net service sales ................................ 5,825 --
Cost of net product sales ........................ 1,551 1,109
----------- -----------
Gross profit ......................... 6,595 908
----------- -----------
Costs and expenses:
General and administrative ....................... 48,032 8,048
Contributed rent and services .................... -- 3,600
----------- -----------
(48,032) (11,648)
----------- -----------
Loss from operations ................. (41,437) (10,740)
Interest income .................................. 71 22
Interest (expense) ............................... (2,968) (983)
----------- -----------
Net loss ............................. $ (44,334) $ (11,701)
=========== ===========
Net loss per basic common share ........................ $ (0.01) $ (0.00)
=========== ===========
Number of shares outstanding for purposes
of computing net loss per
basic and diluted share .......................... 3,110,000 3,010,000
=========== ===========
See accompanying notes to consolidated financial statements
<PAGE>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended
March 31,
------------------------------
2000 1999
-------- --------
Cash flows from operating activities:
Net loss .................................................... $(44,334) $(11,701)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization .......................... 335 230
Contributed capital .................................... -- 3,600
-------- --------
(43,999) (7,871)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ............................. 6,011 493
Accounts payable and accrued expenses .................. 1,158 948
-------- --------
Net cash flow (used in) operating activities ........ (36,830) (6,430)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock ...................... 200,000 --
Offering costs incurred ..................................... (13,447) --
Borrowings on credit card ................................... 1,166 --
Repayment of demand notes payable ........................... (62,500) --
-------- --------
Net cash flow provided by financing activities ...... 125,219 --
-------- --------
Net change in cash ................................................ 88,389 (6,430)
Cash at beginning of period........................................ 16,283 14,036
-------- --------
Cash at end of period................................ $104,672 $ 7,606
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ............................................... $ 2,493 $ --
======== ========
Income taxes ........................................... $ -- $ --
======== ========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
ETG CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
1. Interim Reporting - BASIS OF PRESENTATION
Summary of issuer's significant accounting policies are incorporated by
reference to the Company's annual report on Form 10KSB at March 31, 1999.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles and with Form 10-QSB requirements.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 2000, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2000.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
General
EtG is a small media and merchandising company that promotes the positive
aspects of athletic competition. Its main focus is to educate athletes, coaches,
parents and fans on the value of athletics and how to enjoy the art of playing
the game. It anticipates that the groups that will benefit the most from its
concepts will be the youth sports groups as well as junior high/middle schools
and high school and collegiate athletic programs. The Company uses videos,
apparel and specialized merchandise to promote its theme of enjoyable athletic
competition. Its President, William J. Stutz, also makes live appearances at
which he stresses the Company's philosophy. The Company would also eventually
like to branch out into the production of different kinds of publications to
promote its philosophy. These publications might include magazines, newsletters,
brochures and a full educational curriculum package that includes instructional
materials and a multi-sport video. It expects that a large portion of its
revenues will come from the sale and licensing of its products.
Results of Operations
Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999.
- ----------------------------------------------------------------------
The Company had operating revenues of $8,146 for the quarter ended March
31, 2000 compared to operating revenues of $2,017 for the quarter ended March
31, 2000. Net operating expenses for the quarter ended March 31, 2000 were
$48,032 compared to net operating expenses for the quarter ended March 31, 1999
of $11,648. These net operating expenses resulted in a net loss from operations
in the quarter ended March 31, 2000 of $41,437 compared to a net loss from
operations for the quarter ended March 31, 1999 of $10,740. The Company's net
loss for the quarter ended March 31, 2000 was $44,334 compared to a net loss for
the quarter ended March 31, 1999 of $11,701. The increase in operating expenses
in the quarter ended March 31, 2000 can be attributable to two key categories.
First, advertising expenses increased to $10,584 in the quarter ended March 31,
2000 compared to $3,885 in the quarter ended March 31, 1999, an increase of
367%. This increase reflects the Company's expanding marketing efforts. The most
significant increase in operating expenses was in the category of compensation.
Such expenses were $31,325 for the quarter ended March 31, 2000 compared to
$3,000 for the quarter ended March 31, 1999. This reflects the expansion of the
Company's activities both to promote the Company's product line and to provide
revenue producing services. This higher level of activity is expected to
continue since the completion of the Company's public stock offering in March
2000.
<PAGE>
Management believes that both revenues and expenses of the Company are
likely to continue to increase during the remainder of the fiscal year ending
December 31, 2000 if the Company is able to expand its operations as a result
of having additional cash resources available as a result of the Company's
recently completed public stock offering.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $36,830 in the three months ended
March 31, 2000 compared to net cash used in operating activities of $6,430 for
the three months ended March 31, 1999. Net cash provided by financing activities
for the three months ended March 31, 2000 was $125,219 compared to $ 0 for the
quarter ended March 31, 1999. This net cash increase is attributable to the
Company's recently completed public stock offering whereby the Company sold
200,000 shares of its common stock at a price of $1.00 per share, reduced by
$62,500 repayment of notes payable.
The Company's cash as of March 31, 2000 was $104,672. The Company had
working capital (current assets less current liabilities) of $57,976 at March
31, 2000 and no material long-term commitments or material commitments for
capital or operational expenditures.
The Company believes that its current capital resources and liquidity are
adequate for at least the next twelve months. Other than advertising and
promotional expenses, the Company does not have any plans for significant
capital or operating expenditures above its current level.
YEAR 2000 COMPLIANCE
The Company did not experience any so called "Year 2000" computer problems
and does not expect to encounter any Year 2000 computer problems in the future.
PART II OTHER INFORMATION
Item 1. Legal proceedings.
The Company is not a party to any pending or threatened legal proceedings.
Item 2. Changes in Securities and use of Proceeds.
None.
<PAGE>
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports of Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EtG Corporation
Date: May 19, 2000 /s/ William J. Stutz
-----------------------------------------
William J. Stutz
Chief Executive Officer
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 3 and 4 of the Company's Form 10-QSB for the year to date, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 104,672
<SECURITIES> 0
<RECEIVABLES> 4,029
<ALLOWANCES> 0
<INVENTORY> 14,959
<CURRENT-ASSETS> 123,661
<PP&E> 3,138
<DEPRECIATION> 1,395
<TOTAL-ASSETS> 126,455
<CURRENT-LIABILITIES> 65,685
<BONDS> 0
0
0
<COMMON> 3,210
<OTHER-SE> 57,560
<TOTAL-LIABILITY-AND-EQUITY> 126,455
<SALES> 8,146
<TOTAL-REVENUES> 8,146
<CGS> 1,551
<TOTAL-COSTS> 1,551
<OTHER-EXPENSES> 48,032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,968
<INCOME-PRETAX> (44,334)
<INCOME-TAX> 0
<INCOME-CONTINUING> (44,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44,334)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
