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
September 30, 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) 220-1119
-------------------------
(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 October 31,
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
September 30, 2000
ASSETS
Current assets:
Cash ....................................................... $ 66,443
Accounts receivable ........................................ 8,598
Merchandise inventory, at lower of cost or market .......... 19,500
---------
Total current assets .................................. 94,541
Equipment, at cost, net of accumulated
depreciation of $1,918 ..................................... 1,220
Intangible assets:
Trademark, net of accumulated amortization
of $561.................................................... 904
---------
$ 96,665
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Trade payables ............................................. $ 21,205
Line of credit ............................................ 6,388
Notes payable, convertible into subsidiary
common stock ........ ..................................... 40,000
Accrued interest on notes payable .......................... 8,435
---------
Total current liabilities ............................. 76,028
---------
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 ........................................... (155,308)
---------
Total shareholders' equity............................. 20,637
---------
$ 96,665
=========
See accompanying notes to consolidated financial statements
<PAGE>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended
September 30,
----------------------------
2000 1999
---------- ----------
Net product sales ...................... $ 9,697 $ 4,293
Net service sales ...................... 9,320 --
---------- ----------
Total Revenue ...................... 19,017 4,293
Cost of net product sales .............. 5,322 1,233
---------- ----------
Gross profit ............... 13,695 3,060
---------- ----------
Costs and expenses:
General and administrative ............. 26,694 13,148
Contributed rent and services .......... -- 600
---------- ----------
26,694 13,748
---------- ----------
Loss from operations ....... (12,999) (10,688)
Interest income ........................ -- 4
Interest (expense) ..................... (1,200) (2,188)
---------- ----------
Net loss ................... $ (14,199) $ (12,872)
========== ==========
Net loss per basic common share .............. $ (0.00) $ (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
<PAGE>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine months Ended
September 30,
----------------------------
2000 1999
----------- -----------
Net product sales ...................... $ 16,903 $ 7,223
Net service sales ...................... 19,667 --
----------- -----------
Total Revenue ...................... 36,570 7,223
Cost of net product sales .............. 8,851 3,367
----------- -----------
Gross profit ............... 27,719 3,856
----------- -----------
Costs and expenses:
General and administrative ............. 107,133 27,126
Contributed rent and services .......... -- 6,800
----------- -----------
(107,133) (33,926)
----------- -----------
Loss from operations ....... (79,414) (30,070)
Interest income ........................ 71 36
Interest (expense) ..................... (5,124) (4,410)
----------- -----------
Net loss ................... $ (84,467) $ (34,444)
=========== ===========
Net loss per basic common share .............. $ (0.03) $ (0.01)
=========== ===========
Number of shares outstanding for purposes
of computing net loss per
basic and diluted share ................ 3,152,125 3,010,000
=========== ===========
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
EtG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine months Ended
September 30,
----------------------
2000 1999
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net loss ............................................. $ (84,467) $ (34,444)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization ................... 1,004 1,151
Contributed capital ............................. -- 6,800
--------- ---------
(83,463) (26,493)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ...................... (3,097) (10,844)
Accounts payable and accrued expenses ........... 9,283 7,595
--------- ---------
Net cash flow (used in) operating activities . (77,277) (29,742)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock ............... 200,000 --
Offering costs incurred .............................. (13,447) (15,571)
Borrowings on credit card ............................ 3,384 --
Proceeds of demand notes payable ..................... -- 61,500
Repayment of demand notes payable .................... (62,500) --
--------- ---------
Net cash flow provided by financing activities 127,437 45,929
--------- ---------
Net change in cash ......................................... 50,160 16,187
Cash at beginning of period ................................ 16,283 14,036
--------- ---------
Cash at end of period ........................ $ 66,443 $ 30,223
========= =========
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
SEPTEMBER 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 nine month period
ended September 30, 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 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 September 30, 2000 Compared to Quarter Ended September 30, 1999.
The Company had operating revenues of $19,017 for the quarter ended
September 30, 2000 compared to operating revenues of $4,293 for the quarter
ended September 30, 1999. Net operating expenses for the quarter ended September
30, 2000 were $26,694 compared to net operating expenses for the quarter ended
September 30, 1999 of $13,748. These net operating expenses resulted in a net
loss from operations in the quarter ended September 30, 2000 of $12,999 compared
to a net loss from operations for the quarter ended September 30, 1999 of
$10,688. The increase in operating expenses in the quarter ended September 30,
2000 can be attributable to the key categories of 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 has
resulted in increased revenue and is expected to continue.
Nine months Ended September 30, 2000 Compared to Nine months Ended September 30,
1999.
The Company had operating revenues of $36,570 for the nine months ended
September 30, 2000 compared to operating revenues of $7,223 for the nine months
ended September 30, 1999. Net operating expenses for the nine months ended
September 30, 2000 were $107,133 compared to net operating expenses for the nine
months ended September 30, 1999 of $33,926. These net operating expenses
resulted in a net loss from operations in the nine months ended September 30,
2000 of $79,414 compared to a net loss from operations for the nine months ended
September 30, 1999 of $30,070. The increase in operating expenses in the nine
months ended September 30, 2000 can be attributable to the key categories of
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 has resulted in increased revenue and is expected to
continue during the remainder of the fiscal year ending December 31, 2000. The
Company has been able to expand its operations with additional cash resources
available as a result of the Company's March 2000 public stock offering.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $77,277 for the nine months ended
September 30, 2000 compared to net cash used in operating activities of $29,742
for the nine months ended September 30, 1999. Net cash provided by financing
activities for the nine months ended September 30, 2000 was $127,437 compared to
$45,929 for the nine months ended September 30, 1999. This net cash increase is
attributable to the Company's March 2000 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 September 30, 2000 was $66,443. The Company had
working capital (current assets less current liabilities) of $18,513 at
September 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.
<PAGE>
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
<PAGE>
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: November 3, 2000 By: /s/ William J. Stutz
---------------------------------------
William J. Stutz
Chief Executive Officer
Principal Financial Officer
