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
June 30, 2000
Commission file number 333-86711
EtG Corporation
(Exact name of small business issuer as specified in its charter)
Nevada 87-0567854
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(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 July 31, 2000.
Transitional Small Business Disclosure Format
(Check one):
Yes No X
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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.
2
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EtG CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 2000
ASSETS
Current assets:
Cash ....................................................... $ 79,086
Accounts receivable ........................................ 296
Merchandise inventory, at lower of cost or market .......... 14,991
---------
Total current assets .................................. 94,373
Equipment, at cost, net of accumulated
depreciation of $1,656 ..................................... 1,482
Intangible assets:
Trademark, net of accumulated amortization
of $488 ................................................... 977
---------
$ 96,832
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Trade payables ............................................. $ 10,140
Line of credit ............................................. 4,621
Notes payable, convertible into subsidiary
common stock .............................................. 40,000
Accrued interest on notes payable .......................... 7,235
---------
Total current liabilities ............................. 61,996
---------
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 ........................................... (141,109)
---------
Total shareholders' equity ............................ 34,836
---------
$ 96,832
=========
See accompanying notes to consolidated financial statements
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EtG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended
June 30,
----------------------------
2000 1999
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Net product sales ...................... $ 4,885 $ 913
Net service sales ...................... 4,522 --
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Total Revenue ...................... 9,407 913
Cost of net product sales .............. 1,978 1,025
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Gross profit ............... 7,429 (112)
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Costs and expenses:
General and administrative ............. 32,407 5,930
Contributed rent and services .......... -- 2,600
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32,407 8,530
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Loss from operations ....... (24,978) (8,642)
Interest income ........................ -- 10
Interest (expense) ..................... (956) (1,239)
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Net loss ................... $ (25,934) $ (9,871)
=========== ===========
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 ................ 3,210,000 3,010,000
=========== ===========
See accompanying notes to consolidated financial statements
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EtG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended
June 30,
----------------------------
2000 1999
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Net product sales ...................... $ 7,206 $ 2,930
Net service sales ...................... 10,347 --
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Total Revenue ...................... 17,553 2,930
Cost of net product sales .............. 3,529 2,134
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Gross profit ............... 14,024 796
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Costs and expenses:
General and administrative ............. 80,439 13,978
Contributed rent and services .......... -- 6,200
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(80,439) (20,178)
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Loss from operations ....... (66,415) (19,382)
Interest income ........................ 71 32
Interest (expense) ..................... (3,924) (2,222)
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Net loss ................... $ (70,268) $ (21,572)
=========== ===========
Net loss per basic common share .............. $ (0.02) $ (0.01)
=========== ===========
Number of shares outstanding for purposes
of computing net loss per
basic and diluted share ................ 3,125,000 3,010,000
=========== ===========
See accompanying notes to consolidated financial statements
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<TABLE>
<CAPTION>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
----------------------
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................. $ (70,268) $ (21,572)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization ................... 670 409
Contributed capital ............................. -- 6,200
--------- ---------
(69,598) (14,963)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ...................... 9,712 (1,635)
Accounts payable and accrued expenses ........... (2,983) 2,187
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Net cash flow (used in) operating activities . (62,869) (14,411)
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Cash flows from financing activities:
Proceeds from issuance of common stock ............... 200,000 --
Offering costs incurred .............................. (13,447) (7,500)
Borrowings on credit card ............................ 1,619 --
Proceeds of demand notes payable ..................... -- 17,500
Repayment of demand notes payable .................... (62,500) --
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Net cash flow provided by financing activities 125,672 10,000
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Net change in cash ......................................... 62,803 (4,411)
Cash at beginning of period ................................ 16,283 14,036
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Cash at end of period ........................ $ 79,086 $ 9,625
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ........................................ $ 2,493 $ --
========= =========
Income taxes .................................... $ -- $ --
========= =========
See accompanying notes to consolidated financial statements
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</TABLE>
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ETG CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 December 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 six month period
ended June 30, 2000, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2000.
7
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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 June 30, 2000 Compared to Quarter Ended June 30, 1999.
The Company had operating revenues of $9,407 for the quarter ended June 30,
2000 compared to operating revenues of $913 for the quarter ended June 30, 1999.
Net operating expenses for the quarter ended June 30, 2000 were $32,407 compared
to net operating expenses for the quarter ended June 30, 1999 of $8,530. These
net operating expenses resulted in a net loss from operations in the quarter
ended June 30, 2000 of $24,978 compared to a net loss from operations for the
quarter ended June 30, 1999 of $8,642. The Company's net loss for the quarter
ended June 30, 2000 was $25,934 compared to a net loss for the quarter ended
June 30, 1999 of $9,871. The increase in operating expenses in the quarter ended
June 30, 2000 can be attributable to two key categories, professional
compensation and advertising. The increase reflects the Company's expanding
marketing efforts and 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.
Six months Ended June 30, 2000 Compared to Six months Ended June 30, 1999.
The Company had operating revenues of $17,553 for the six months ended June
30, 2000 compared to operating revenues of $2,930 for the six months ended June
30, 1999. Net operating expenses for the six months ended June 30, 2000 were
$80,439 compared to net operating expenses for the six months ended June 30,
1999 of $20,178. These net operating expenses resulted in a net loss from
operations in the six months ended June 30, 2000 of $66,415 compared to a net
loss from operations for the six months ended June 30, 1999 of $19,382. The
Company's net loss for the six months ended June 30, 2000 was $70,268 compared
to a net loss for the six months ended June 30, 1999 of $21,572. The increase in
operating expenses in the six months ended June 30, 2000 can be attributable to
the categories of professional compensation and advertising. The increase
reflects the Company's expanding marketing efforts and 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.
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.
8
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LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $62,869 for the six months ended
June 30, 2000 compared to net cash used in operating activities of $14,411 for
the six months ended June 30, 1999. Net cash provided by financing activities
for the six months ended June 30, 2000 was $125,672 compared to $10,000 for the
six months ended June 30, 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 and made a
$62,500 repayment on notes payable.
The Company's cash as of June 30, 2000 was $79,086. The Company had working
capital (current assets less current liabilities) of $72,377 at June 30, 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.
Forward Looking Statements
Certain statements contained in this Report on Form 10-QSB, including
statements of the Company's current expectations, intentions, plans and beliefs,
and statements containing the words "believes," "anticipates," "estimates,"
"expects," or "may," are forward-looking statements, as defined in Section 21D
of the Securities Exchange Act of 1934. Such forward-looking statements involve
known and unknown risk, uncertainties and other factors which may cause the
actual results, performance, timing or achievements of the Company to be
materially different from any results, performance, timing or achievements
expressed or implied by such forward-looking statements.
9
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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.
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
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EtG Corporation
Date: August 23, 2000 /s/ William J. Stutz
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William J. Stutz
Chief Executive Officer
Principal Financial Officer
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EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. FINANCIAL DATA SCHEDULE Filed herewith electronically
