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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File number: 0-11225
ENG ENTERPRISES, INC.
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(Exact name of registrant as specified in charter)
Delaware 84-0899587
- ------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5882 South 900 East, #202, Salt Lake City, UT 84121
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
801-269-9500
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Registrant's telephone number, including area code
6337 South Highland Dr. #130 Salt Lake City, Utah 84121
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(Former name, former address, and former fiscal year, if changed since last
report.)
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), Yes [X ] No [ ] and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Class Outstanding as of March 31, 2000
------------------------- --------------------------------
Common Stock, $0.01 par value 473,847
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ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheets of the Company as of March 31, 2000 and
December 31, 1999, and the related unaudited statements of operations and cash
flows for the three month periods ended March 31, 2000 and 1999, and the
period from January 1, 1995 (inception of development stage) to March 31,
2000, the unaudited statement of stockholders' equity for the period from
January 1,1995 (inception of development stage) through March 31, 2000, are
attached hereto and incorporated herein by this reference.
Operating results for the three months ended March 31, 2000, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2000.
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ENG ENTERPRISES, INC.
(Development Stage Company)
BALANCE SHEETS
March 31, 2000, and December 31, 1999
March 31, December 31,
2000 1999
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ - $ -
------------- ------------
Total Current Assets $ - $ -
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ -
------------- ------------
Total Current Liabilities - -
------------- ------------
STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized, at
$1.00 par value; 2,619 shares and
2,791 shares issued and outstanding
at March 31, 2000 and December 31,
1999, respectively 2,619 2,791
Common stock
100,000,000 shares authorized, at
$0.01 par value; 473,847 shares
and 348,456 shares issued and
outstanding at March 31, 2000 and
December 31, 1999, respectively 4,738 3,485
Capital in excess of par value 6,742,246 6,683,457
Stock subscription received - 59,870
Accumulated deficit (Note 1) (6,749,603) (6,749,603)
------------ ------------
Total Stockholders' Equity - -
------------ ------------
$ - $ -
============ ============
The accompanying notes are an integral part of these financial statements.
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ENG ENTERPRISES, INC.
(Development Stage Company)
Statement of Operations
For the Three Months Ended March 31, 2000 and 1999
and the Period from January 1, 1995 to March 31, 2000
(Unaudited)
Three Months Three Months January 1, 1995
March 31, March 31, (Note 1)through
2000 1999 March 31, 2000
------------ ------------ ------------
REVENUES $ - $ - $ 62,793
EXPENSES - - 194,601
------------ ------------ ------------
NET LOSS - before other income
and expense - - (131,808)
------------ ------------ ------------
OTHER INCOME AND EXPENSE
Gain on settlement of debt - - 2,725,467
Loss of assets - - (1,592,626)
------------ ------------ ------------
$ - $ - $ 1,001,033
============ ============ ============
GAIN (LOSS) PER COMMON SHARE
Basic $ - $ -
============ ============
AVERAGE OUTSTANDING SHARES
Basic 348,456 282,894
============ ============
The accompanying notes are an integral part of these financial statements.
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ENG ENTERPRISES, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2000, and 1999
and the Period from January 1, 1995 to March 31, 2000
(Unaudited)
Three Months Three Months January 1, 1995
March 31, March 31, (note 1)through
2000 1999 March 31, 2000
------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $ - $ - $ 1,001,033
Adjustments to reconcile net
loss to net cash provided by
operating activities
Loss of assets - - 1,592,626
Gain on settlement of debt - - (2,725,467)
Changes in accounts payable - - 67,400
------------ ------------ ------------
Net Cash Used by Operations - - (64,408)
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceeds from issuance
of common stock - - 64,408
------------ ------------ ------------
Net Increase (Decrease) in Cash - - -
Cash at Beginning of Period - - -
------------ ------------ ------------
Cash at End of Period $ - $ - $ -
============ ============ ============
The accompanying notes are an integral part of these financial statements.
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ENG ENTERPRISES, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the state of Delaware on August
2, 1982 with authorized common stock of 10,000,000 shares at a par value of
$.01 and 10,000,000 preferred stock at a par value of $1.00. Since inception
the Company has been engaged in the business of the exploration, development,
and production of oil and natural gas through three wholly owned subsidiaries.
During 1995 the Company ceased operations and has since remained inactive.
The company is considered to have been in the development stage since January
1, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On March 31, 2000, the Company had a net operating loss carry forward of
$6,749,603. The tax benefit from the loss carry forward has been fully
offset by a valuation reserve because the use of the future tax benefit is
doubtful since the Company has no operations. The loss carryover will expire
beginning in years 1998 though 2019.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Financial instruments
- ---------------------
The carrying amounts of financial instruments, including accounts payable, are
considered by management to be their estimated fair values. These values are
not necessarily indicative of the amounts that the Company could realize in a
current market exchange.
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ENG ENTERPRISES, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Net Income (Loss) Per Share
- ---------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes
antidilutive and then only the basic share amounts are shown in the report.
Comprehensive Income
- --------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholders' equity on
February 29, 1999.
Recent Accounting Pronouncements
- --------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. PREFERRED STOCK
The preferred stock is convertible into common stock at a ratio determined
according to a formula in the Designation of Rights and Privileges at the
option of the stockholder. The preferred shares carry a cumulative dividend
rate of 8%. No dividends can be declared on the common stock until the
cumulative dividends are paid on the preferred.
4. RELATED PARTY TRANSACTIONS
Related parties own 82% of the outstanding common stock.
5. GOING CONCERN
The Company does not have the necessary working capital to service its
liabilities for the coming year and may be forced into bankruptcy.
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company but
it does not have the working capital to be successful in this effort.
Continuation of the Company as a going concern is dependent upon obtaining the
working capital to service its debt and to provide working capital for its
planned activity and the management of the Company has developed a strategy,
which they believe can obtain the needed working capital through additional
equity funding and long term debt which will enable the Company to continue
operations for the coming year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
This report may contain "forward-looking" statements. The Company is
including this cautionary statement for the express purpose of availing itself
of the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include, but are not
limited to: (a) projections of revenues, capital expenditures, growth,
prospects, dividends, capital structure and other financial matters; (b)
statements of plans and objectives of the Company or its management or Board
of Directors; (c) statements of future economic performance; (d) statements of
assumptions underlying other statements and statements about the Company and
its business relating to the future; and (e) any statements using the words
"anticipate," "expect," "may," "project," "intend" or similar expressions.
The Company was incorporated under the laws of the state of Delaware on August
2, 1982 with authorized common stock of 100,000,000 shares at a par value of
$.01 and 10,000,000 preferred stock at a par value of $1.00. Since inception
the Company has been engaged in the business of the exportation, development
and production of oil and natural gas through three wholly owned subsidiaries.
During 1995 the Company ceased operations by the loss of its remaining assets
leaving the Company with the debt shown in the balance sheet, and has since
remained inactive. The company is considered to have been in the development
stage since January 1, 1995.
Since discontinuing operations the Company has had no operations and is now
seeking a potential business acquisition in an effort to commence business
operations. Management has not restricted its search for a business
opportunity to any particular industry or geographical area and may,
therefore, seek an opportunity in any business or industry. Management has
unrestricted discretion in seeking and participating in a business
opportunity, subject to the availability of such opportunities, economic
conditions, and other factors.
The selection of a business opportunity in which to participate is complex and
risky. Additionally, as the Company has only limited resources, it may be
difficult to find good opportunities. There can be no assurance that the
Company will be able to identify and acquire any business opportunity which
will ultimately prove to be beneficial to its shareholders. The Company will
select any potential business opportunity based on management's due diligence
and business judgment.
The activities of the Company are subject to several significant risks which
arise primarily as a result of the fact that the Company has no specific
business and may acquire or participate in a business opportunity
based on the decision of management which potentially could act without the
consent, vote, or approval of the Company's shareholders. Because of the
Company has no assets and no recent operating history, in the event the
Company does successfully acquire or merge with an operating business
opportunity, it is likely that the Company's present shareholders will
experience substantial dilution and there will be a probable change in control
of the Company.
The Company is required to file with the Commission certain interim and
periodic reports including an annual report containing audited financial
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statements. Any target acquisition or merger candidate of the Company will
become subject to the same reporting requirements as the Company upon
consummation of any such business combination. Thus, in the event that the
Company successfully completes an acquisition or merger with another operating
business, the resulting combined business must provide audited financial
statements for at least the two most recent fiscal years or, in the event that
the combined operating business has been in business less than two years,
audited financial statements will be required from the period of inception of
the target acquisition or merger candidate.
The Company has used various sources in its search for potential business
opportunities including its officers and directors, consultants, venture
capitalists and others who have presented management with unsolicited
proposals, which are currently being reviewed and evaluated by management.
Management is investigating such proposals, but Management cannot predict at
this time the status or nature of any venture in which the Company may
participate. The Company will provide its shareholders with information
regarding the definitive terms of any proposed acquisition or merger as may be
required for approval of the transactions.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and
other instruments will require management time and attention and will require
the Company to incur costs for payment of accountants, attorneys, and others.
Currently, management is not able to determine the time or resources that
will be necessary to complete the participation in or acquisition of any
future business prospect. There is no assurance that the Company will be able
to acquire an interest in any such prospects or opportunities that may exist
or that any activity of the Company, regardless of the completion of any
participation in or the acquisition of any business prospect, will be
profitable.
Year 2000 Computer Problem
- --------------------------
The Year 2000, or Y2K problem concerns potential failure of certain computer
software to correctly process information because of the software's inability
to calculate dates. The Company had no operations or current equipment which
might have been affected by the Year 2000 computer glitch, and experienced no
Y2K problems.
Results of Operations
- ---------------------
The Company is considered a development stage company with no assets
or capital and with no operations or income since approximately 1995.
It is anticipated that the Company will require only nominal capital to
maintain the corporate viability and necessary funds will most likely be
provided by the Company's existing shareholders or its officers and directors
in the immediate future until the completion of the a acquisition or merger.
However, unless the Company is able to complete a acquisition or merger or
obtain outside financing, there is substantial doubt about its ability to
continue as a going concern.
In the opinion of management, inflation has not and will not have a
material effect on the operations of the Company until such time as the
Company successfully completes an acquisition or merger. At that time,
management will evaluate the possible effects of inflation on the Company as
it relates to its business and operations following a successful acquisition
or merger.
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Plan of Operation
- -----------------
Because the Company lacks funds, it may be necessary for the officers and
directors to either advance funds to the Company or to accrue expenses until
such time as a successful business consolidation can be made. Management
intends to hold expenses to a minimum and to obtain services on a contingency
basis when possible. The Company's directors may receive compensation for
services provided to the Company until such time as an acquisition or merger
can be accomplished. However, if the Company engages outside advisors or
consultants, it may be necessary for the Company to attempt to raise
additional funds. As of the date hereof, the Company has not made any
arrangements or definitive agreements to use outside advisors or consultants
or to raise any capital.
In the event the Company does need to raise capital most likely the
only method available to the Company would be the private sale of its
securities. It is unlikely that it could make a public sale of securities or
be able to borrow any significant sum from either a commercial or private
lender. There can be no assurance that the Company will be able to obtain
additional funding when and if needed, or that such funding, if available, can
be obtained on terms acceptable to the Company.
The Company does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal
cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
In January 2000, the Company issued 5,389 shares of its common stock for the
conversion of 172.42 shares of its preferred Class A stock to one shareholder.
In January 2000, the Company issued a total of 120,000 shares of its common
stock to Milagro Holdings, Inc., for the conversion of outstanding
indebtedness totaling approximately $60,000, pursuant to the terms of an
Interim Funding Agreement entered into in September 1999.
During the period, the Company's shareholders approved a 200 for 1 reverse
split of its common stock, and recorded an adjustment of 2 additional issued
and outstanding shares for fractional shares resulting from the reverse split.
The number of shares referenced herein and the financial statements included
in this report give effect to the 200 for 1 reverse split, unless otherwise
indicated.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the shareholders of the Company was held on February 24,
2000. The meeting was called for the election of directors, and to approve the
1-for 200 reverse split of the Company's issued and outstanding stock. The
purpose of the Meeting was for the shareholders to consider and vote on the
proposals included in the Information Statement mailed to the shareholders on
or about February 4, 2000. Accordingly, the following items proposals were
presented:
(A) that the Company implement a 1-for-200 reverse split of all of the
Company's issued and outstanding shares of common stock;
(B) that the Company's name change to ENG Enterprises, Inc., which was
required for its reinstatement in Delaware, be hereby approved; and
(C) that John Chymboryk and Shauna Chymboryk be elected as directors of
the Company, to serve until the next annual meeting of shareholders and until
their successors are duly elected and qualified.
The number of votes in person and by proxy for all of the proposals was
59,343,314 (pre-split) voted in favor, with none against and none withholding
authority. The Chairman declared that the proposals were adopted.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)EXHIBITS. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- ------------
27 27 Financial Data Schedule This Filing
Information Statement Prior Filing
(b) Reports on Form 8-K. The Company filed a report on Form 8-K on January
28, 2000, reporting its name change from Energetics, Inc. to ENG Enterprises,
Inc.
SIGNATURES
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 thereunto duly authorized.
ENG ENTERPRISES, INC.
Dated: May 11, 2000
By /S/ John Chymboryk, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
2,619
<COMMON> 6,746,984
<OTHER-SE> (6,749,603)
<TOTAL-LIABILITY-AND-EQUITY> 0
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