SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K\A
Current Report Pursuant to Section 13 or 15(d) of the Securities
Act of 1934
Date of Report: August 10, 2000
ENG Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation of organization)
000-11225
(Commission File Number)
840899587
(IRS Employer Identification Number)
50 North Third Street, Fairfield, IA 52556
(Business address and zip code)
(515) 472-1500
(Registrant's telephone number, including area code)
5882 South 900 East, Suite 202, Salt Lake City, Utah 84121
(Former Address)
Item 4. Change in Registrant's Certifying Accountants
On August 7, 2000, ENG Enterprises, Inc. (the "Registrant")
replaced as independent accountants the firm Andersen, Andersen
and Strong, L.C., 941 East 3300 South, Suite 202, Salt Lake City,
Utah 84106.
To comply with the requirements of Regulation S-K, Item 304(a),
the Registrant asserts the following:
1. The former auditors were dismissed on August 7, 2000.
2. For the past two fiscal years, the auditors' reports have
not contained an adverse opinion, disclaimer of opinion or
modification as to audit scope or accounting principles.
However, the auditors' reports for the years ended December 31,
1999 and 1998 contained explanatory language describing
substantial doubt about the Registrant's ability to continue as a
going concern.
3. Not applicable.
4. The decision to dismiss the former auditors was recommended
and approved by the board of directors.
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5. During the two fiscal years and subsequent interim periods,
there have been no disagreements with the former auditors
regarding any matter of accounting principle or practice,
financial statement disclosure, or auditing scope or procedure.
Also on August 7, 2000, ENG Enterprises, Inc.'s board of
directors appointed the firm Pender Newkirk & Company, Certified
Public Accountants, 100 South Ashley Drive, Suite 1650, Tampa,
Florida 33602 as the independent accountants for the Company.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
a) The consolidated audited financial statements of GOL
India.com, Inc. for the period ending June 30, 2000; and
b) Pro forma ENG Enterprises, Inc. selected financial
information.
We have prepared the pro forma financial information using the
purchase method of accounting. We expect that we will have
reorganization and restructuring expenses related to the purchase
of GOL India. However, the pro forma information does not reflect
these expenses. The pro forma information, while helpful in
illustrating the financial characteristics of the combined
company under one set of assumptions, does not attempt to predict
or suggest future results.
The pro forma information also does not attempt to show how the
combined company would actually have performed had the companies
been combined throughout these periods. If the companies had
actually been combined in prior periods, these companies and
businesses might have performed differently. You should not rely
on pro forma financial information as an indication of the
results that would have been achieved if the acquisition of GOL
India by the Registrant had taken place earlier or the future
results that the companies will experience after completion of
this transaction. You should read these pro forma condensed
combined financial statements in conjunction with the historical
financial statements of the Registrant and GOL India.
c) Exhibits.
Exhibit 16: Letter from former accountants.
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
August 10, 2000
ENG Enterprises, Inc.
(Registrant)
By: Lee Fergusson, President
Fairfield, Iowa
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Consolidated Audited Financial Statements
GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Period April 20, 2000 (Date of Inception) to June 30, 2000
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Independent Auditors' Report
Board of Directors
GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Fairfield, Iowa
We have audited the accompanying consolidated balance sheet of
GOL India.com, Inc. and Subsidiary (a wholly owned subsidiary of
USA Global Link, Inc. and a development stage enterprise) as of
June 30, 2000 and the related consolidated statements of
operations, changes in stockholder's equity, and cash flows for
the period April 20, 2000 (date of inception) to June 30, 2000.
These consolidated financial statements are the responsibility of
the management of GOL India.com, Inc. and Subsidiary. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. These
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 consolidated financial statement presentation. We
believe that our audit provides 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 GOL India.com, Inc. and Subsidiary (a wholly owned
subsidiary of USA Global Link, Inc. and a development stage
enterprise) as of June 30, 2000 and the results of its operations
and its cash flows for the period April 20, 2000 (date of
inception) to June 30, 2000 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been
prepared assuming that GOL India.com, Inc. and Subsidiary will
continue as a going concern. As more fully described in Note 2,
the Company incurred an operating loss during the period of
approximately $188,000 and, as of June 30, 2000, has negative
working capital of approximately $23,300. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements do not
include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts
and classifications of liabilities that may result from the
outcome of this uncertainty.
/S/
Certified Public Accountants
Tampa, Florida
July 17, 2000
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GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Consolidated Balance Sheet
June 30, 2000
Assets
Current assets:
Cash $10,034
Property and equipment, net of accumulated depreciation 111,813
Other assets:
Software development costs 90,887
Internet domain names 7,135
Investments 5
98,027
$219,874
Liabilities and Stockholder's Equity
Current liabilities:
Obligations under capital lease $33,399
Long-term liabilities:
Obligations under capital lease 50,172
Stockholder's equity:
Common stock; $.001 par value; 2,000,000
shares authorized; 1,000,000 shares outstanding 1,000
Additional paid-in capital 323,253
Deficit accumulated during development stage (187,950)
Total stockholder's equity 136,303
$219,874
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GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Consolidated Statement of Operations
Period April 20, 2000 (Date of Inception) to June 30, 2000
Development stage expense:
General and administrative $(187,986)
Other income:
Interest income 36
Net loss $(187,950)
Net loss per common share $(.19)
Weighted average common shares outstanding 1,000,000
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GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Consolidated Statement of Changes in Stockholder's Equity
Period April 20, 2000 (Date of Inception) to June 30, 2000
Deficit
Common Stock Accumulated
Shares Additional During
Issued and Par Paid-In Development
Outstanding Value Capital Stage Total
Balance, April 20, 2000
Stock issued for cash,
fixed assets, leased
equipment, software
development costs, and
expenses paid on
behalf of the Company
(May 2000) 1,000,000 $ 1,000 $ 323,253 $324,253
Net loss for the period $ (187,950) (187,950)
Balance, June 30, 2000 1,000,000 $ 1,000 $ 323,253 $ (187,950) $136,303
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GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Consolidated Statement of Cash Flows
Period April 20, 2000 (Date of Inception) to June 30, 2000
Operating activities
Net loss $ (187,950)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation 4,833
Expenses paid by Parent in exchange for common stock 183,153
Total adjustments 187,986
Net cash from operating activities 36
Financing activities
Issuance of common stock for cash 9,998
Net increase in cash and cash equivalents 10,034
Cash and cash equivalents at beginning of period 0
Cash and cash equivalents at end of period $ 10,034
Supplemental disclosures of cash flow information:
Common stock was issued for the following noncash
considerations during May 2000:
Fixed asset $15,178
Assets under capital lease, net of obligations 17,897
Software development costs 90,887
Internet domain names 7,135
Common stock of Parent 5
$131,102
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GOL India.com, Inc. and Subsidiary
(A Wholly Owned Subsidiary of USA Global Link, Inc.
and A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Period April 20, 2000 (Date of Inception) to June 30, 2000
1. Background Information and Subsequent Events
GOL India.com, Inc. and Subsidiary (the "Company"), a Delaware
corporation, was incorporated on April 20, 2000. The Company is
100 percent owned by USA Global Link, Inc. (the "Parent") and was
established to provide e-commerce and e-business services to
consumers and businesses around the world through its 100 percent
owned subsidiary GOL India Portal Private Limited. No revenue
has been earned to date. Consequently, the consolidated
financial statements have been presented as those of a
development stage enterprise. The Company's headquarters is
located in Fairfield, Iowa.
At June 30, 2000, GOL India Portal Private Limited, an India
corporation, has not commenced operations. The Company has
developed the Indian web-portal, "www.GOLIndia.com," a full
service e-commerce hub providing services to the 20 million
Indian expatriate population around the world. The Company's web-
portal, which is specifically designed to be "Indian-centric,"
will provide a complete e-commerce solution with a globally
branded "trading floor" hosting a collection of products selected
both internationally and regionally. These products will be
introduced through the Parent's global online stores and global
online exchange hubs at "www.GlobalOnline.com."
The Company owns, subject to governmental approval, a 49 percent
interest in an India corporation, GOL India Internet Service
Provider Private Limited (GOL India ISP). GOL India ISP is the
holder of a Category "A" national Internet service provider
license allowing it to provide Internet services to every city,
state, and region in India. The Company has been issued 98,000
shares of common stock in GOL India ISP, which has a par value of
$.023 per share and a net book value of zero, as part of the
Company's common stock transaction with its Parent that occurred
in May 2000. This transfer is not complete because it is subject
to approval by the government of India and, accordingly, the
investment is not recorded as of June 30, 2000.
On July 14, 2000, ENG Enterprises, Inc. ("ENG"), a Delaware
corporation, which is a full reporting public company on the OTC
Bulletin Board (Symbol: ENEI), acquired all of the shares of the
Company. The consideration given by ENG consisted of the
issuance by ENG of 15,750,000 shares of its common stock to USA
Global Link, Inc., representing 94.5 percent of the total
outstanding common stock of ENG. This transaction will be
accounted for as a reverse acquisition, which is similar to a
purchase by the Company of ENG. As part of this transaction, ENG
has applied to change its name to GOL India.com, Inc.
2. Going Concern
The Company is in the development stage with its principal
activity being the development of
e-commerce, Internet connectivity, and web-hosting services to
residential and business customers. Its current activities
consist principally of establishing its web-site, customers, and
suppliers. The Company has a loss since inception of
approximately $188,000.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
The Company has sustained losses since inception and has negative
working capital of approximately $22,300 as of June 30, 2000.
These factors raise substantial doubt about the Company's ability
to continue as a going concern. The consolidated financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
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The Company's continued existence is dependent upon its ability
to commence profitable operations and to obtain additional equity
capital to meet operating cash flow requirements.
3. Significant Accounting Policies
The significant accounting policies followed are:
The consolidated financial statements include the
accounts of GOL India.com, Inc. and its wholly owned
subsidiary, GOL India Portal Private Limited. All
significant intercompany accounts and transactions have
been eliminated in consolidation.
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities and 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. Actual results
could differ from those estimates.
Property and equipment are stated at cost. Additions and
improvements to property and equipment are capitalized.
Maintenance and repairs are expensed as incurred. When
property is retired or otherwise disposed of, the cost
and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in
operations. Depreciation is computed on the straight-
line method over the estimated useful lives of the
assets, ranging from three to seven years.
Advertising costs (except for costs associated with
direct-response advertising) are charged to operations
when incurred. Advertising expense for the period
April 20, 2000 (date of inception) to June 30, 2000 was
$174,736. The Company has no direct-response advertising
as of June 30, 2000.
The Company has adopted early Emerging Issues Task Force
Bulletin No. 00-2, "Accounting for Web Site Development
Costs." This bulletin offers guidance on accounting for
the various costs associated with Internet web site
development. Generally, the bulletin segregates software
development costs into various stages of planning,
application and infrastructure development, graphics and
content development, and operations. Capitalization of
costs begin in the application and infrastructure stage
and ends when the web-site is operational. Since the
software is currently in the application and
infrastructure development stage, no amortization thereof
has taken place as of June 30, 2000.
The Company follows Statement of Financial Accounting
Standards No. 121 (SFAS No. 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." SFAS No. 121 requires that long-
lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of these assets may not be
recoverable. In performing the review for
recoverability, the Company estimates that future cash
flows are expected to result from the use of the assets
and their eventual disposition.
Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to
differences between the consolidated financial statements
carrying amounts of existing assets and liabilities and
their respective income tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized as
income in the period that included the enactment date.
Basic loss per share (EPS) is computed by dividing loss
available to common stockholders by the weighted average
number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution from the
exercise or conversion of securities into common stock.
Diluted EPS is not presented because the Company has no
dilutive securities.
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Assets transferred by the Parent in exchange for common
stock have been valued at the Parent's net book value as
of the date of exchange.
4. Property and Equipment
Property and equipment consist of:
Office furniture, fixtures, and computer
hardware/software $ 15,178
Equipment held under capital leases 101,468
116,646
Less accumulated depreciation and amortization 4,833
$ 111,813
Amortization for equipment held under capital leases amounts to
$4,412 at June 30, 2000.
5. Investments
The Company has a 49 percent investment in a foreign company, GOL
India ISP, subject to governmental approval. This investment was
transferred from the Parent in exchange for common stock of the
Company. At that time, it had a net book value of zero on the
Parent's books. The transfer is subject to approval by the
government of India and, accordingly, the investment is not
recorded at June 30, 2000.
The Company also has an investment of 5,000 shares of common
stock of its Parent, which was contributed to the Company by its
Parent. As of June 30, 2000, this investment is recorded at
$5.00, which approximates its net book value.
6. Obligations Under Capital Leases
The Company has capitalized rental obligations under leases of
equipment, which were transferred to the Company by its Parent.
The obligations, which mature in 2002, represent the total
present value of future rental payments discounted at the
interest rates implicit in the leases. Future minimum lease
payments under capital leases are as follows:
2000 $29,355
2001 32,024
2002 38,020
Total lease payments 99,399
Less amount representing interest 15,828
Present value of net minimum lease payment 83,571
Less current portion 33,399
$50,172
7. Income Taxes
The Company has incurred an operating loss since its inception
that is able to be carried forward, and therefore, no tax
liabilities have been incurred for the period presented. This
operating loss gives rise to a deferred tax asset as follows as
of June 30, 2000:
Deferred tax asset $63,915
Allowance (63,915)
$ 0
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The Company has available an unused operating loss carryforward
that may be applied against future taxable income, which would
reduce taxes payable by approximately $64,000 in the future.
This operating loss carryforward will expire in 2015. Income tax
benefits resulting from the utilization of this carryforward will
be recognized in the year that it is realized for federal and
state tax purposes.
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On July 14, 2000, the Registrant, a Delaware corporation,
acquired 100% of the issued and outstanding capital stock of GOL
India.com, Inc. ("GOL India"), a Delaware corporation, in
exchange for voting stock of the Registrant, in a transaction
qualifying as a tax-free stock-for-stock exchange under Internal
Revenue Code Section 368(a)(1)(B). Under this agreement,
1,000,000 issued and outstanding shares of capital stock of GOL
India, equal to one hundred percent (100%) of the outstanding
shares, was exchanged with the Registrant for 15,750,000 shares
of restricted voting common stock, $.01 par value. This
transaction will be accounted for as a reverse acquisition using
the purchase method of accounting, whereby the Registrant is
acquired by GOL India. Effectively, this transaction is
accounted for as a recapitalization of GOL India. The effects of
this transaction are summarized in the accompanying pro forma
consolidated financial information provided below. The pro forma
consolidated balance sheet is presented at June 30, 2000 and the
pro forma consolidated statement of operations is presented as of
April 20, 2000, as though the transaction had taken place at the
beginning of each period.
Also included in the pro forma financial information, are several
miscellaneous capital stock transactions of the Registrant. The
effects of these transactions are summarized in the accompanying
pro forma consolidated financial information provided below.
PRO FORMA ENG ENTERPRISES, INC. SELECTED FINANCIAL INFORMATION
Pro Forma Consolidated Statement of Operations
Period April 20, 2000 Through June 30, 2000
PRO FORMA
ADJUSTMENTS
GOL ENG & PRO FORMA
INDIA.COM ENTERPRISES ELIMINATION CONSOLIDATED
Revenue $0 $0 $0 $0
Operating Expenses:
General and
administrative 187,986 951,206 (3) $1,139,192
187,986 0 951,206 1,139,192
Operating income 187,986 0 951,206 1,139,192
Other income
(expenses):
Interest (36) (36)
(36) 0 0 (36)
Net Loss $187,950 $0 $951,206 $1,139,156
Loss per share $0.07
Weighted average 16,668,092
common stock
outstanding
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Pro Forma Consolidated Balance Sheet
June 30, 2000
PRO FORMA
ADJUSTMENTS
GOL ENG & PRO FORMA
INDIA.COM ENTERPRISES ELIMINATION CONSOLIDATED
Assets
Current assets:
Cash $10,034 $10,034
Total current assets 10,034 0 10,034
Property and
equipment, net of
accumulated
depreciation and
amortization 111,813 111,813
Other assets:
Software
development costs,
net of accumlated
amortization 90,887 90,887
Other assets 7,140 7,140
Total Assets $219,874 $0 $0 $219,874
Liabilities and
Stockholders' Equity
Current liabilities:
Obligations under
capital lease 33,399 33,399
Total current
liabilities 33,399 0 0 33,399
Obligations under
capital lease 50,172 50,172
Stockholders' Equity:
Preferred stock:
Class A 2,562 (2,562) (2) 0
Class B 57 (57) (2) 0
Common stock 1,000 4,138 (4) (1) 166,680
818 (2)
4,228 (3)
157,500 (4)
(1,000) (5)
Capital in excess 323,253 6,742,846 4 (1) 157,573
1,801 (2)
946,978 (3)
(157,500) (4)
1,000 (5)
(7,700,809) (6)
Retained earnings (187,950) (6,749,603) (951,206) (3) (187,950)
7,700,809 (6)
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Total Stockholders' 136,303 0 0 136,303
Equity
Total Liabilities and $219,874 $0 $0 $219,874
Stockholders' Equity
1) To cancel 356 previously issued shares of common stock.
2) To convert ENG Enterprises, Inc. convertible preferred stock to
81,832 shares of common stock.
3) To record the issuance of 422,758 shares of common stock by ENG
Enterprises, Inc. to consultants.
4) To record acquisition of GOL India.com, Inc.
5) To eliminate GOL India.com, Inc.'s common stock.
6) To eliminate ENG Enterprises, Inc.'s retained earnings.
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