Manually Executed
As filed with the United States Securities and Exchange Commission
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OB
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996 Commission File Number
0-9071
E. T. CAPITAL, INC.
(Name and Address)
Colorado 74-2026624
(State of incorporation) (I.R.S. Employer Identification No.)
3525 South Tamarac Drive, Suite 120, Denver, CO 80237
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (303) 329-0345
Former name, former address and former fiscal year, if changed since last
report.
Caribou Energy, Inc.
9101 East Kenyon, Suite 2000, Denver, CO 80237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.10 par value.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to all
such filing requirements for the past 90 days.
Yes No X
The aggregate market value for the Voting Stock held by non-affiliates based
upon the closing price on September 30, 1996, was approximately $70,260,645.
As of September 30, 1996, there were 58,787,216 shares of Common Stock, $0.10
par value, outstanding.
Documents incorporated by reference: Not Applicable.
<PAGE>PART IPage
Item 1. Business1.
Item 2. Properties5.
Item 3. Legal Proceedings5.
Item 4. Submission of Matters to a Vote of
Security Holders5.
PART II
Item 5. Market for the Registrant's Common Equity
and Related Shareholder Matters6.
Item 6. Selected Financial Data6.
Item 7. Management's Discussion Analysis of Financial
Condition and Results of Operations8.
Item 8. Financial Statements and Supplementary Data9.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure9.
PART III
Item 10. Directors and Executive Officers of
the Registrant10.
Item 11. Executive Compensation10.
Item 12. Security Ownership of Certain Beneficial
Owners and Management11.
Item 13. Certain Relationships and Related Transactions12.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K13.
<PAGE>PART I
ITEM 1. BUSINESS
General
Origins of the Company. The Company began its corporate existence as
Caribou Energy, Inc. (the "Company"), and was incorporated under the laws of
the State of Colorado on October 3, 1978. The Company's initial corporate
purpose was to engage in the oil and gas business, but after a series of lean
years in the oil and gas business, beginning in June 1992, the Company entered
into the business of charitable fundraising, utilizing a unique computer
hardware, software and firmware system which enabled it to answer multiple
telephone calls per minute (see "Narrative Description of Business," below).
Initial oil and gas industry activities of the Company, commencing in
1978, consisted primarily of the acquisition of undeveloped acreage in the
Denver-Julesburg Basin in Colorado and Nebraska, drilling 16 wells through two
joint ventures and one limited partnership organized by the Company, and
participation in 14 wells drilled in joint ventures organized by other
industry operators. Three additional wells were drilled during fiscal year
1983. No further wells were drilled; no additional limited partnerships or
joint ventures were entered into by the Company in 1984 or thereafter.
On November 3, 1982, the Company successfully completed an offering of
22,092,203 shares of its $0.001 par value Common Stock receiving net proceeds
of $685,249. This capitalization enabled the Company to participate in oil
and gas joint ventures and partnerships.
Beginning in fiscal 1983, the core business of the Company began to
decline. At the end of fiscal 1985, the Company had eight gross (1.87 net)
productive wells on 680 gross (87.9 net) developed acres in Colorado,
Oklahoma, and Nebraska as a result of its drilling activities together with
9,955 gross (5,309 net) undeveloped acres in Colorado, North Dakota, and
Wyoming, with estimates of future net revenues from the Company's total proved
reserves of over $1.7 million (and a discounted value just under $940,000) --
yet, the Company showed losses from operations. As changes not in the
Company's interests took place in the U.S. domestic oil industry, and as the
Company's financial ability to invest in new drilling was sharply curtailed,
the Company first tried to sell or lease its oil and gas properties for
capital. These tactics produced neither capital nor profitable development of
any of the Company's properties.
When the value of the Company's properties were down to just over $10,000
on its books, it began to look seriously for a merger partner with additional
resources. It accepted an offer from North American Equity, which brought
about $7,000,000 in oil and gas properties into the Company. The oil and gas
industry continued its decline and after several years, the new properties
became uneconomic. The Company continued to search for a merger partner or
acquisition target.
On June 19, 1992, the Company signed an agreement (the "Agreement," which
was set forth as Exhibit A to the Company's 1992 10-K filing, and which is incor
porated herein by this reference) which changed the ownership and the
direction of the Company (see the Company's 10-K filing for 1992 for complete
details), and which agreement was duly ratified by shareholders.
Although no revenues obtained as a result of or in direct consequence of
the new business of the Company since the change of ownership and change of
direction, the Company signed a charitable fundraising agreement with Broadway
Cares, Inc. (the "Broadway Cares Agreement"), a group formed by the New York
theatre community to fight A.I.D.S., in April 1993, and additional charitable
fundraising agreements were signed between the Company and the Action For
Peace Foundation (dedicated to helping the women and children of Bosnia in
association with United Nations' agencies) (the "Peace Agreement") and with
the National Coalition Against Domestic Violence (the "NCADV Agreement"), in
October 1993 and November 1993, respectively (see the Company's 1994 10-K
filing for complete details and copies of the Peace Agreement, which was set
forth as Exhibit A thereto, and the NCADV Agreement, which was set forth as
Exhibit B thereto). Both of these contracts are now being serviced by E.T.
Foundation, a Washington, D.C., not-for-profit corporation. The Company has
also made proposals to represent a number of other charitable organizations in
their fundraising activities as well. Additional agreements with other
charitable organizations are anticipated during the next fiscal year.
It would be necessary for the Company to raise a substantial amount of
money to obtain financial benefits from the various Agreements. Extensive
television advertising campaigns would cost millions of dollars, and it would
be the Company's obligation to come up with the funds necessary to get such
campaigns going.
To assist the Company in making additional marketing connections for its
"1-900" charitable fundraising program, the Company opened offices in Germany
during October 1993 and in Switzerland during February 1994. Although
fundraising efforts did not bear fruit during the year ending September 30,
1995, the Company intends to continue its efforts to raise enough money to
conduct its advertising campaign as soon as possible.
In early 1986, the Company's original core business of oil and gas
exploration and development appeared to be rebounding in the United States and
throughout the Western Hemisphere. Directors and officers of the Company were
approached by various people in the oil and gas business and encouraged to
take part in new oil exploration ventures. The Company viewed these overtures
seriously.
In April, 1996, the Company acquired a majority control of Spectrum Oil
Corporation ("Spectrum") and agreed to provide $18 million in financing for
Spectrum's hydrocarbon concessions in the Republic of Paraguay, which totaled
approximately 15 million acres, subject to the terms of an agreement between
Spectrum and the Company. Geologic and seismic data indicated that there
could be tens of millions of barrels of oil in the leased area. The Company's
Agreement to acquire Spectrum and finance its concessions was subject to
verification of the agreements by which Spectrum acquired development rights
to the concessions. The Company negotiated a private placement of 8 million
share purchase warrants at a price of $2.00 per share for a period of two
years. The financing would have guaranteed the funds necessary to complete
the acquisition of Spectrum and to fulfill the financial commitments of
Spectrum to the oil and gas concessions in Paraguay. However, by July, 1996,
Spectrum was in default of its agreements with the owners of the Paraguayan
concessions and the Company terminated all agreements between Spectrum and the
Company. Thereafter, the Company agreed to tender back to Spectrum the
majority control shares of Spectrum which it had given to the Company in
connection with its agreements with the Company in exchange for the 8 million
shares of the Company's common stock which had been given to Spectrum pursuant
to the said agreements.
The Company thereafter negotiated an Option Agreement directly with the
owners of the Paraguayan hydrocarbon concessions. The terms of this Agreement
require the Company to complete a ten-year exploration and development program
at a cost of approximately $300 million. The Company negotiated a $350
million financing agreement with Petek A.G., a Swiss investment firm, which
will require the Company to issue 1.5 billion shares of its common stock for
payment against delivery. As of the end of the Company's fiscal year, this
issuance of common stock has not taken place.
Financial Information About Industry Segments
Since inception, Company revenues, operating profit or loss and
identifiable assets have all been attributable to only one industry segment,
the oil and gas industry. There is no longer any purpose to filing financial
information regarding the amounts of revenue from sales to unaffiliated
customers, operating profit or loss and identifiable assets attributable to
this segment inasmuch as the Company no longer has active oil and gas assets.
The Company has no revenue, and no other relevant financial information,
associated with the telecommunications industry or with the charitable
fundraising industry to date.
Narrative Description of Business
Until June 1992, the Company was engaged in the oil and gas exploration
business and in the production and sale to wholesalers of crude oil and
natural gas. The Company acquired oil and gas property interests, mainly
leases through its contacts in the petroleum industry and then sold fractional
undivided interests in a portion of the acreage to individual investors and
industry firms in connection with exploratory drilling programs (limited
partnerships and joint ventures). The Company also participated in drilling
exploratory and development wells through joint ventures organized by other
industry operators.
The fractional undivided working interests and units in limited
partnerships which the Company sold in the past constitute securities. The
Company sold these interests in private offerings that it believed to be
exempt from federal and state registration. If an offering was made which was
believed to be exempt but which was in fact subject to a registration
requirement, or if a material fact was misstated or omitted in connection with
an offering, the Company might be subject to various penalties and liabilities
and might have to return purchasers' investments as a result of enforcement
action by the U.S. Securities and Exchange Commission and various state
securities commissions or private actions by purchasers. No claim has been
made against the Company with respect to its prior private offerings and none
is anticipated. However, it is possible that the Company might be subject to
such a claim in the future. Accordingly, there is no assurance that claims
will not be made against the Company for alleged violations of applicable
federal and state securities laws.
As of June 1992, the Company entered into an entirely different
business. It acquired a company with certain ownership rights (the "Rights")
to a telecommunications system capable of answering and/or otherwise handling
multiple telephone calls per minute (the "System"). The System was designed
for use with voice mail, and has unique and highly useful features. The
Company determined that such a system could most advantageously be used for
charitable fundraising in conjunction with 1-900 numbers. As reported above,
the Company entered into several Agreements for charitable fundraising during
the calendar year 1993 and, although additional agreements were not concluded
during the year ending September 30, 1995, the Company anticipates additional
agreements within the next twelve months.
<PAGE> The Rights pertain to the "E.T. TeleManagement," "1-900," "1-800"
and E.T. "TeleManagement" VoiceMail systems, as reported in the company's
1992 10-K filing.
The Company has no other patents, trademarks, licenses, franchises or
concessions. Telecommunications services and charitable fundraising are not
seasonal activities.
As of April, 1996, the Company has reentered the oil and gas industry by
entering into agreement with respect to Paraguayan oil and gas concessions, as
set forth above under "Origins of the Company."
Due to the nature of the Company's business, there are no significant
working capital items carried on its books (i.e., accounts receivable,
inventory, etc.), although a significant amount of equipment is carried on its
books.
Due to the nature of the Company's business, there is no backlog of
orders. There is no portion of the Company's business which may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of government.
The Company has substantially reduced its research and development with
respect to its telecommunications technology, partially accounting for the
accelerated four-year amortization schedule with respect to the Rights.
Financial Information About Foreign and Domestic Operations and Export Sales
The Company opened offices in Germany and Switzerland in 1993, and it
entered into an Option Agreement with respect to hydrocarbon concessions in
the Republic of Paraguay in 1996, but there are no foreign operations or
export sales at this time. This is changing rapidly and it is anticipated
that the Company will have operations as early as fiscal 1997 in Europe and
South America.
Employment
The Company has no full-time employees. The policy of the Company has
been to utilize consultants and other professionals on and ad hoc, when
needed, basis until the size of the Company warrants the employment of paid
employees. The Company anticipates the need for paid employees during fiscal
1997. The Company considers its employee relations to be satisfactory under
the circumstances.
Competition
The Company's activities in the oil exploration industry as well as in
the telecommunications and fundraising industries involve two extremely
competitive industries. The oil industry in America, after a decade-long
decline, with a price collapse in the mid-eighties with a corresponding
decline in demand, is making a significant comeback in the late 1990s, and the
fundraising industry and the telecommunications industry are among the most
rapidly growing industries in the world. In both industries, the Company is
one of thousands of firms which make money, or propose to make money, from its
operations. In the oil industry, the Company faces competition from hundreds
of wildcatters and a number of giant corporations like Exxon, Shell, and
others; in the telecommunications industry, competition comes from giant
corporations like AT&T and from thousands of small companies, offering an
ever-increasing array of telecommunications products and services; and in the
charitable fundraising industry, there are a number of organizations which
raise money, and a myriad of charitable organizations formed for a myriad of
purposes. Competition is both general and specific: there are a number of
approaches to making money in the oil exploration industry, and there are
many other ways to raise money for charities besides advertising 1-900
telephone numbers.
ITEM 2. PROPERTIES
The Company's executive offices are leased as follows:
Principal Use: Executive offices/corporate activities for
public corporation
Location Occupied: Denver, CO
Approximate Square Feet: 750
Lease Expiration: September, 1997
Current Monthly Rent: $1350
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are now pending by or against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended September 30, 1996, security holders of the Company
approved the Company's agreements with Spectrum Oil Corporation and the
Company's Option Agreement with Paraguayan hydrocarbon concessionaires, as
detailed under "Origins of the Company."
<PAGE>
PART II
ITEM 5.MARKET PRICE FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock is traded on the over-the-counter market. The
following table sets forth the high and low sales price, in United States
Dollars, for each quarterly period during the three most recent fiscal years.
1995 - 1996 1994 - 1995 1993 - 1994
Quarter Ended High Low High Low High Low
December 31 1.25 1.25 1.25 1.25 2.50 1.25
March 31 1.25 1.25 1.25 1.25 1.75 .40
June 30 1.25 1.25 1.25 1.25 .40 .15
September 30 1.25 1.25 1.25 1.25 .03 .01
As of September 30, 1996, there approximately 9,111 holders of record of
the Company's Common Stock.
The Company has never declared or paid cash dividends to holders of its
Common Stock. It does not anticipate paying any dividends in the foreseeable
future.
ITEM 6.SELECTED FINANCIAL DATA
See attached page.
<PAGE>
ITEM 6.SELECTED FINANCIAL DATA
1996* 1995* 1994* 1993* 1992*
Cash Assets -0- $ -0- $ 9,659 $ 21,657 $ 12,047
Equipment 34,270 164,772 285,193 409,334 462,925
Other Assets-
Voice-Mail 1 1,662,500 3,325,000 4,987,500 6,650,000
Total Assets 339,073 2,193,033 4,046,571 5,418,491
7,124,972
Current
Liabilities 81,409 65,762 32,800 27,365 21,929
Notes Payable -0- -0- -0- -0- 902,136
Debentures
Payable 733,361 2,058,636 3,444,089 2,184,970 -0-
Total
Liabilities 339,073 2,193,033 4,046,571 2,212,335
1,181,883
Shareholders'
Equity (395,697) 68,635 569,682 3,206,156 5,943,089
Revenues -0- -0- -0- -0- -0-
Expenses (4,153,668) 2,790,795 2,566,377 2,688,123 1,560
Net Gain
(Loss) (4,153,668) (2,790,795) (2,566,377)
(2,688,123) (1,560)
Shares Out-
standing 58,787,216 25,787,216 39,360,791 39,360,791
39,360,791
Net Gain (Loss)
Per Share N/A N/A N/A N/A N/A
*Figures given are for fiscal year end, not calendar year end. The Company's
fiscal year ends on September 30th.
<PAGE>ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Fiscal 1996 v. Fiscal 1995
Overall
During this fiscal year, the Company reentered the oil and gas
exploration industry which was once its mainstay by entering into an option
agreement to develop oil and gas reserves in the Republic of Paraguay at an
estimated cost of $300 million. The Company also continued its attempted
entry into the area of charitable fundraising using 1-900 "pay-per-call"
telephone numbers during this fiscal year. Until the financing and marketing
plans of the Company begin to develop cash flow, the development stage of the
program will continue to draw from the Company's asset picture. Cash assets
at the close of fiscal 1996 were $0 as compared to $0 in 1995 and $9,657 in
1994; fixed assets were estimated to be worth $34,270 in 1996 as compared to
$164,772 in 1995 and $285,193 in 1994; the Rights and associated product
development expenditures (subject to the amortization schedule set forth in
the Financial Statements) dropped to $1 in 1996 from $1,662,500 in 1995 and
$3,751,721 in 1994; and total assets were $339,073 in 1996 as compared to
$2,193,033 in 1995 and $4,046,571 in 1994. The Company's fund raising efforts
in Europe, including a proposed $350 million financing which will make
possible both the Company's oil exploration activities in Paraguay and the
planned advertising campaign for its proposed charitable fund raising
operations, have been developing during this fiscal year and the Company
believes that it will be successful in following its present business plan.
Its European offices (in Germany and Switzerland) are expected to lead the way
in placing common shares of the Company, which will be necessary for the
Company's proposed expansion in South America and for the television campaign
in the United States, commercials for which have already been developed. The
Company believes that during fiscal 1997, it will both reestablish its
presence in the oil industry and commence its charitable fund raising
activities in earnest and raise such funds as are necessary to pay for both
oil exploration and television advertising.
Results of Operations
Fiscal 1995 v. Fiscal 1994
Overall
The Company's entry into the area of charitable fundraising using 1-900
"pay-per-call" telephone numbers has continued during this fiscal year. Until
the marketing plan of the Company begins to develop cash flow, the development
stage of the program will continue to draw from the Company's asset picture.
Cash assets at the close of fiscal 1995 were $0 as compared to $9,657 in 1994
and $21,657 in 1993; fixed assets were estimated to be worth $164,772 in 1995
as compared to $285,193 in 1994 and $409,334 in 1993; the Rights and
associated product development expenditures (subject to the amortization
schedule set forth in the Financial Statements) dropped to $1,662,500 in 1995
from $3,751,721 in 1994 and $4,987,500 in 1993; and total assets were
$2,193,033 in 1995 as compared to $4,046,571 in 1994 and $5,418,491 in 1993.
The Company's fundraising efforts in Europe have been developing during this
fiscal year and the Company believes that it will be successful in following
its present business plan. Its European offices (in Germany and Switzerland)
are expected to lead the way in raising the funds necessary for the Company's
proposed expansion into Europe and for the television campaign, commercials
for which have already been developed. The Company believes that during
fiscal 1996, it will commence its charitable fundraising activities in earnest
and raise such funds as are necessary to pay for television advertising.
Extraordinary Items
There were no extraordinary items reported in this fiscal year.
Liquidity and Capital Resources
At September 30, 1996, the Company had no cash assets, but total current
assets of $339,073, compared with no cash assets and total current assets of
$2,193,033 in 1995 and cash assets of $9,657 and total assets of $4,046,571 in
1994. The Company is not aware of any known trends, demands, commitments,
events or uncertainties that will result in or that are reasonably likely to
result in the Company's liquidity increasing or decreasing in any material
way.
Capital Resources and Expenditures
There were no significant capital expenditures made by the Company during
the fiscal year ended September 30, 1996. Further, the Company had no known
material commitments for additional capital expenditures as of September 30,
1996. Management of the Company knows of no material trends, favorable or
unfavorable, with respect to the Company's capital resources.
Inflation
The results of the Company's operations have not been significantly
affected by inflation during the last three fiscal years ended September 30,
1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Such financial statements and schedules as are available are attached
hereto.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.<PAGE>PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Identification of Executive Officers and Directors
Name Age Position with Company Director Since
Sidney B. Fowlds 57 Chairman of the Board October 31, 1986
John Johnston 69 Vice President October 31, 1986
Robert M. Miller 55 Secretary-Treasurer October 31, 1992
Mr. Fowlds and Mr. Johnston were elected to serve on October 31, 1986,
reelected at the annual meeting in 1988, reelected at the Special
Shareholders' Meeting held in mid-1992, reelected at the annual meeting in
1994, reelected at the annual meeting in 1996, and have served since. Mr.
Miller was elected to serve at the Special Shareholders' Meeting held in 1992,
reelected at the annual meeting in 1994, reelected at the annual meeting in
1996, and has served since. They were all elected to serve until the next
annual shareholders' meeting or until their respective successors are elected
and qualified. Officers of the Company hold office until the meeting of the
Board of Directors after the next annual shareholders' meeting or until
removal by the Board of Directors.
Business Experience
Sidney Fowlds: See the Company's 1987 Annual Report, Exhibit C.
John Johnston: See the Company's 1987 Annual Report, Exhibit D.
Robert M. Miller: See the Company's December 1993 Quarterly Report, Exhibit
A.
Involvement in Certain Legal Proceedings
None.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company
during the fiscal year ended September 30, 1996, to each executive officer who
received in excess of $60,000 (there were none) and to all executive officers
as a group.
Cash Compensation Table
Identity of Group Capacities in which served Cash Compensation
All executive Executive Officers $0 (includes
officers as a group all cash bonuses)
<PAGE>Employment Arrangements
Details of any Employment Contracts as exist between any officer of the
Company set forth above and the Company itself have already been disclosed in
previous 10-K filings for the Company. No additional contracts were entered
into between any Directors and/or officers of the Company and the Company
itself during the fiscal year ended September 30, 1996.
Compensation Pursuant to Plans
Once existent policies of the Company relating to compensation pursuant
to plan(s), stock options, and the like have long been repealed by action of
the Board of Directors until such time as the Company can produce a regular
profit.
Other Compensation
The Company did not provide any other compensation to any of its
executive officers which is not disclosed above.
Compensation of Directors
The Company has no standard or other arrangement pursuant to which
directors are compensated for services as a director, including for attendance
at meetings.
Termination of Employment and Change of Control Arrangement
None.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information, as of September 30, 1996,
with respect to beneficial ownership of the Company's common stock, $0.001 par
value, of the Company's officers and directors, both individually and as a
group, and the record and/or beneficial owners of more than five percent of
the Company's common stock:
Security Ownership of Certain Beneficial Owners
(Name of Holder; Number of Shares; Percentage of
Outstanding Common Shares Held)
North American Oil and Gas; 2,578,700; 4.39%
Officers and directors and beneficial owners of more than 5% of the Company's
common stock as a group; 2,578,700; 4.39%
<PAGE>Changes in Control
The Company knows of no other arrangements the operations of which may at
a subsequent date result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
Not applicable.
Certain Business Relationships
None.
Indebtedness of Management
None.<PAGE>
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Auditors Report F-1
Balance Sheets F-2
Statements Of Operations F-4
Statements of Shareholders Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
(2) Financial Statement Schedules for the fiscal year ended
September 30, 1996
All other schedules called for under Regulation S-X are not submitted because
they are not applicable or not required or because the required information is
not material or is included in the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports were made on Form 8-K during the fiscal year ended September 30,
1995
<PAGE>
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
AUDIT REPORTS
AS OF
September 30, 1996 and 1995
Janet Loss, C.P.A., P.C.
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
<PAGE>INDEX TO FINANCIAL STATEMENTS
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant.................... 1
Balance Sheets,
September 30, 1996 and 1995.............................. 2-3
Statements of Operations,
For Years Ended September 30, 1996 and 1995.............. 4
Statements of Stockholders' Equity,
For Years Ended September 30, 1996 and 1995.............. 5
Statements of Cash Flows,
For Years Ended September 30, 1996 and 1995.............. 6
Notes to Financial Statements............................ 7-9
<PAGE>
Janet Loss, C.P.A., P.C.
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
Board of Directors
E.T. Capital, Inc.
Suite 315 - 650 West Georgia Street
Vancouver, B.C., Canada V6BN7
I have audited the Balance Sheets of E.T. Capital, Inc. as of September 30,
1996 and 1995, and the Statements of Operations, Stockholders' Equity and Cash
Flows for the years ended September 30, 1996 and 1995.
I conducted my audit in accordance with generally accepted auditing
standards. These standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit also includes assessing the accounting
principles used and significant estimate made by management, as well as
evaluating the overall financial statement presentation.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of E.T. Capital, Inc. (a
development stage company) as of September 30, 1996 and 1995, and the results
of its operations and its cash flow for the years ended September 30, 1996 and
1995.
Janet Loss, C.P.A., P.C.
October 10, 1997
<PAGE>
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
September 30, September 30,
1996 1995
CURRENT ASSETS:
Cash on Hand 0 0
FIXED ASSETS:
Equipment (Note 2) 534,886 534,886
Less accumulated
depreciation $ (500,616) $ (370,114)
Net Fixed Assets 34,270 164,772
OTHER ASSETS:
Rights' Title, net of
amortization (Note 2) $ 1 $ 1,662,500
Product Development
Expenditures, net of
amortization (Note 2) 304,801 365,761
Option (Note 8) 1 0
Total Other Assets 304,803 2,028,261
TOTAL ASSETS $ 339,073 $ 2,193,033
The accompanying notes are an integral part of the financial statements.
<PAGE>
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
September 30, September 30,
1996 1995
CURRENT LIABILITIES:
Accounts Payable 81,409 65,762
LONG-TERM LIABILITIES: (Note 4)
Debenture Payable, Xanthos
Management Corporation 733,361 2,058,636
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.10 par value,
10,000,000,000 and
100,000,000 shares authorized,
58,787,216 and 25,787,216
shares issued and outstanding 4,516,079 4,186,079
Paid-In-Capital in excess
of par value 18,429,869 14,929,869
(Deficit) Accumulated during
the Development Stage (23,341,645) (19,047,313)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ( 395,697) 68,635
Less treasury stock,
8,000,000 shares, at cost ( 80,000) 0
SUB-TOTAL: ( 475,697) 68,635
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT): $ 339,073 $ 2,193,033
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Year For the Year
Ended Ended
September 30, September 30,
1996 1995
REVENUES $ -- $ --
GENERAL AND ADMINISTRATIVE EXPENSES:
Accounting $ 2,250 $ 9,936
Ad Agency Fees 0 12,840
Amortization (Note 3) 1,723,459 1,723,460
Auto Expenses, gas and repairs 12,000 12,000
Consulting Fees 655,660 91,215
Depreciation Expenses (Note 3) 130,502 129,422
Filing and Transfer Fees 15,647 32,961
Finders Fees 1,350,000 0
Management 0 235,020
Personnel and Clerical 0 171,663
Printing Expense 0 12,711
Rent Expense 48,150 94,000
Telephone Expense 36,000 84,910
Travel and Promotions 180,000 180,657
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 4,153,668 2,790,795
NET (LOSS) BEFORE
OTHER INCOME (EXPENSES) (4,153,668) (2,790,795)
OTHER INCOME AND (EXPENSES):
Interest Expense (140,664) (210,252)
TOTAL OTHER INCOME AND
(EXPENSES) (140,664) (210,252)
NET (LOSS) $(4,294,332) $(3,001,047)
NET (LOSS) PER SHARE $ (.11216) $ (.23275)
The accompanying notes are an integral part of the financial statements.
<PAGE>E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
Total Common
Class A Stock Additional Development Stockholders'
$.0001 Par Value Paid-In Stage Equity
Shares Amount Capital (Deficit)
(Deficit)
Balance
October 1, 1994 39,360,791 $3,936,079 $12,679,869
$(16,046,266) $ 569,682
Reverse split of
common stock @
50 to 1(38,573,575) 0 0
0 0
Issue 25,000,000
shares at $0.10 25,000,000 250,000 2,250,000
0 2,500,000
Net (Loss) for
the Year Ended
September 30, 1995 0 0 0
(3,001,047) ($3,001,047)
Balance,
September 30, 1995 25,787,216 $4,186,079 $14,929,869
$(19,047,313) $ 68,635
Issue 25,000,000
shares at $.15
April 17, 1996 25,000,000 250,000 3,500,000
0 3,750,000
Issue 8,000,000
shares at $1.25
July 1996 8,000,000 80,000 9,920,000 0
10,000,000
Reversal of
8,000,000 shares
issued July 1996 0 0 (9,920,000)
0 (9,920,000)
Net (Loss) for the
Year Ended
September 30, 1996 (4,294,332) (4,294,332)
Balance
September 30, 1996 $58,787,216 $4,516,079 $18,429,869
$(23,341,645) $( 395,697)
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Year For the Year
Ended Ended
September 30, September 30,
1996 1995
Net Cash Flows From Operating Activities:
Net (loss) $ (4,294,332) $ (3,001,047)
Adjustments to Reconcile
Net (Loss) to Cash (Loss)
From Operating Activities:
Amortization 1,723.459 1,723,460
Depreciation 130,502 129,422
Sub-total (2,440,371) (1,148,165)
Net Increase in Equipment 0 (9,000)
Increase in Accounts Payable 15,647 32,961
(Decrease) Increase in
Debenture Payable, Xanthos
Management Corp. (1,325,275) (1,385,453)
Issuance of shares of
common stock 3,830,000 2,500,000
Decrease due to purchase of
treasury stock, at cost (80,000) 0
Option (1) 0
INCREASE (DECREASE) IN CASH 0 (9,657)
CASH, BEGINNING OF PERIOD 0 9,657
CASH, END OF THE PERIOD $ 0 $ 0
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 1 - HISTORY
E.T. Capital, Inc. (formerly Caribou Energy Inc.)was incorporated in Colorado
in 1978. The Company was originally engaged in oil and gas exploration from
its inception until 1988. In 1988, the Company abandoned all of its oil and
gas properties and all accounts associated with oil and gas have been written
off.
In 1992, E.T. Capital, Inc. (the Colorado Corporation) secured all the rights,
title and interest to the E.T. "TeleManagement" VoiceMail System and 1-900 and
1-800 pay-per-call telephone numbers and information center from a Nevada
corporation, E.T. Network, Inc., for $6,650,000.00. This purchase was
financed by the sale of 20,000,000 Regulation "S" restricted shares of the
Company.
As of October 1, 1994, the Colorado Corporation changed its name to E.T.
Capital, Inc.
E.T. Network, Inc. was a Nevada corporation which owned the world-wide rights
to the E.T. "TeleManagement" VoiceMail System and the 1-900 and 1-800 pay
- -per-call telephone numbers and information center. Its wholly-owned
subsidiary was Encryption Technology Canada, Inc. (E.T.). This subsidiary
owned the rights for the VoiceMail system in Canada.
The assets of E.T. network, Inc. (the Nevada Corporation) and Encryption
Technology Canada, Inc. were then transferred to the Colorado Corporation.
Encryption Technology Canada, Inc. has been de-registered and is no longer in
existence.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
The company is on the accrual basis of accounting for financial statements and
income tax purposes.
Fixed Assets and Depreciation
Fixed assets are made up of computer equipment, cellular phones and
furniture. The furniture was put into use October, 1991, and equipment was
put into use October 1, 1992. Both furniture and equipment are being
depreciated over their estimated life.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 2 - CONTINUED
Amortization
The purchased rights for the TeleManagement VoiceMail system and the 1-900 and
1-800 pay-per-call telephone numbers are being amortized over the estimated
useful life of four (4) years.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Note 3 - RELATED PARTIES
As the corporation was unable to meet its financial obligations as they became
due, one of the major shareholders of the Company, Xanthos Management
Corporation, offered to pay the obligations on behalf of the Company and
agreed to make payments as required, such payments secured by and subject to
the terms of a debenture duly filed and registered with the Secretary of State
for the State of Colorado.
The Board of Directors of E.T. Capital, Inc. authorized management fees of
$25,000.00 per month for office, telephone, automobile and travel, and
promotion be paid to Xanthos Management Corporation.
Note 4 - DEBENTURE PAYABLE, BEARER
This debenture is dated October 31, 1992 and is secured by the company assets
of E.T. "TeleManagement" System, 1-900 services, 1-800 services, VoiceMail
services and Computer Centers. The total aggregate principal amount of the
debenture shall be $5,000,000.00 may be outstanding at any time and interest
shall be payable at ten (10) percent per annum.
Note 5 - FISCAL YEAR
The Company adopted a fiscal year end of September 30th.
Note 6 - CURRENCY EXCHANGE
The financial statements are presented in dollar amounts based on the United
States Currency Exchange.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 7 - ACQUISITIONS AND FINANCING
In April, 1996 the Company acquired a majority control of Spectrum Oil
Corporation and agreed to finance Spectrum's hydrocarbon concessions in
Paraguay totaling approximately 15 million acres subject to the terms of an
agreement between Spectrum and the Company. Geologic and seismic data
indicate that there could be tens of millions of barrels of oil in the leased
area. The Company agreed to acquire majority control of Spectrum and to
finance Spectrum Oil's hydrocarbon concessions in the Republic of Paraguay
subject to verification of the Spectrum's agreements under which they held the
development rights to the concessions. Financing to make this acquisition and
to proceed with the work program of approximately US$18 million was subject to
the terms of an agreement between Spectrum and the Company. The Company
negotiated a Private Placement of 8 million common shares of the Company at a
price of US$1.25 carrying 8 million share purchase warrants at a price of
US$2.00 per share for a period of two years. This financing would guarantee
the funds necessary to complete the acquisition of Spectrum and fulfill the
financial commitments of Spectrum to the oil and gas concessions in Paraguay.
In July of 1996, Spectrum was in default of its agreements with the owners of
the Paraguayan concessions and the Company terminated all Agreements between
Spectrum and the Company. The 8 million share financing was reversed, the
shares of the Company were returned to the Company and the majority control
shares of Spectrum were returned.
Note 8 - OPTION & SUBSEQUENT EVENTS
The Company negotiated an Option Agreement directly with the owners of the
Hydrocarbon concessions in the Republic of Paraguay. The terms of the
Agreement require the Company to complete a ten year exploration and
development program of approximately US$300 million. The Company negotiated a
US$350 million financing with Petek AG. a Swiss Investment firm which require
the Company to issue 1.5 billion shares for payment against delivery. In
November 1996, the shares were electronically delivered to Barclay's Bank in
London, England against payment of US$350 million. In February 1997, the
shares were returned by Barclay's to the Company Barclay's withdrew from the
financing. The Company's lawyers are investigating the Company's remedies as
a result of this transaction and are confident that the Company will succeed
in seeking remedies.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, duly authorized.
Dated: October 10, 1997
E.T. CAPITAL, INC. (the "Company")
By: /s/ Sidney B. Fowlds
Chairman of Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Dated: October 10, 1997/s/ Sidney B. Fowlds
Director: Sidney B. Fowlds
Dated: October 10, 1997/s/ John Johnston
Director: John Johnston
Dated: October 10, 1997/s/ Robert M. Miller
Director: Robert M. Miller
