U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number: 000-13846
EUTRO GROUP HOLDING, INC.
(Exact name of small business issuer as specified in its charter)
Florida 75 14 33 000
(State of incorporation) (IRS Employer Identification No.)
1070 East Indiantown Road, Suite 208
Jupiter, Florida 33477
(Address of principal executive offices)
(561) 575-3520
(Issuers 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 been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS
Check whither the registrant filed all documents and reports required to
be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes.... No....
APPLICABLE ONLY TO CORPORATE ISSUERS.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of February 9, 2000,
Common capital stock - 356, 249, 977 shares
Series A. Preferred Stock - 428, 250 shares
Transitional Small Business Disclosure Format (Check One)
Yes [ ] No [X]
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements.
FINANCIAL STATEMENTS
EUTRO GROUP HOLDING, INC
FOR THE YEAR ENDED
SEPTEMBER 30 1999
TABLE OF CONTENTS Page Number
Accountants Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Shareholders' Deficit 4
Statement of Cash Flow 5
Notes to Financial Statements 6-8
To the Board of Directors and Shareholders'
of Eutro Group Holding, Inc.
I have audited the accompanying balance sheet of Eutro Group Holding,
Inc (a Florida corporation) as of September 30, 1999 and the related
statement of operations, changes in shareholders' deficit and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those 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 estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eutro Group Holding, Inc. at
September 30, 1999 and the results of its operations and its cash flows for
the year ended, in conformity with generally accepted accounting
principles. The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company, has a very limited
operating history, has a shareholder and working capital deficiency of
$76,723 and $102,723 respectively, and has suffered recurring losses since
inception. The Company's lack of financial resources and liquidity as of
September 30, 1999 raises substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters also are
described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Aaron Stein
Cedarhurst, New York
November 10, 1999
EUTRO GROUP HOLDING, INC.
BALANCE SHEET
SEPTEMBER 30 1999
ASSET
Current assets:
Cash $219
Other assets 26,000
Escrow
TOTAL ASSETS $26,219
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Preferred dividends $102,942
Shareholders deficit:
Common stock, $.10 par value,
authorized 500,000,000 shares,
356,249,977 issued and outstanding $35,624,998
Preferred stock, $.10 par value,
authorized 5,000,000 shares
428,928 issued and outstanding 42,893
Additional paid-in capital (23,226,413)
Accumulated deficit (12,518,201)
Total shareholders' deficit $(76,723)
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $26,219
See accompanying notes to financial statements
EUTRO GROUP HOLDING, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
REVENUE $ 0
Administrative and operating expenses 764,306
Loss from continuing operations before
other income (expense) (764,306)
Other income (expenses)
Gain on sale of fixed assets $2,544
Interest expense (679) 1,865
Net loss $ (762,441)
Earnings per share of common stock $ (0.0034)
See accompanying notes to financial statements
EUTRO GROUP HOLDING, INC.
STATEMENT OF CHANGE IN SHAREHOLDERS EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1999
Common Common Additional
Stock Stock Paid In Accumulated
Shares $.10 Par Value Capital Deficit
Balance-September
100,793,040 10,079,304 $(872,551) $(11,755,760)
Issuance of common stock
49,4900,000 4,990,000 (4,729,0090)
Issuance of common stock for services
(rendered and settlement of other long term liabilities
205,556,937 20,555,694 (17,624,853)
Net loss
_________ ________ ___________ (762,441)
Balance- September 30, 1999
356,249,977 $35,624,998 $(23,226,413) $(12,518,201)
EUTRO GROUP HOLDING, INC.
CASH FLOW
FOR THE YEAR ENDED SEPTEMBER 30, 1999
Cash flows from operating activities:
Net loss
$(762,441)
Adjustments to reconcile net loss to
net cash used by operating activities:
Gain on sale of fixed assets $(2.544)
Issuance of common stock for services
rendered and other long term liabilities 2,954,530
Changes in operating assets and liabilities:
Accounts payable and accrued expenses (129,581)
Preferred dividends 34,314
Other long term-liabilities (2,342,131) 514,588
Net cash used in operating activities (247,853)
Cash flow from investing activities:
Proceeds from sale of furniture and equipment 10,770
Cash flow from financing activities:
Proceeds from sale of common stock 237,302
Increase in Cash 219
Cash at beginning of year 0
Cash at end of year $219
See accompanying notes to financial statements
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
Note 1: Organization, Business and Significant Accounting Policies
Organization
Eutro Group Holding, Inc. was incorporated under the laws of the State of
Florida in September, 1991. In that month, it completed a reverse
acquisition of Bio Analytic Laboratories, Inc, which then became a wholly
owned operating subsidiary of the Company. On May 6) 1998, the
Company sold it's Bio-Analytic Laboratories, Inc. subsidiary. Since May 6,
1998, the Company has not had an operating subsidiary.
Business
Eutro Group Holding, Inc. is a holding company. Its principal business is
to own operating subsidiaries and assist these companies, as well is other
small and medium size companies, with research, development, marketing
and sales. Additionally, the Company will assist in the development of
business plans and specializes in, financial public relations.
Computation of loss per share
Net loss per share is based upon the weighted average number of shares of
Common Stock and common equivalent shares consisting of options
(using the treasury stock method ) outstanding for each of the periods
presented. Common equivalents shares are not considered if the result
would be anti-dilutive
Note 2: Going Concern Consideration
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern The Company has a very
laminated operating history, has a shareholder and working capital
deficiency of $76,723 and $102,723 respectively and had losses since
inception. The Company's lack of financial resources and liquidity at
September 30, 1999 raises substantial doubt about its ability to continue as
a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. The Company has
been dependent upon raising debt and equity funding to remain in
existence as a going concern Its continued existence is also dependent on
equity funding.
With respect to the Company's going concern considerations, on May 17,
1999, negotiations were concluded by which Eutro Group Holding, Inc.
would be acquired by Ivy Entertainment.Com. Inc. in a reverse merger.
EUTRO GROUP HOLDING, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
As consideration for this reverse merger, the Company will issue and
exchange 8,575,000 shares of its common stock, after it has undergone a
250 for 1 reverse split. These shares are to be issued to the sole
shareholder of Ivy, Mr. Richard Gladstone, in exchange for 1000 shares of
common stock of Ivy which is the total amount of common stock issued
and outstanding. The shares of the Company's common stock received by
Mr. Gladstone pursuant to the reverse acquisition agreement will be
restricted stock as defined in Rule 144 of the Securities act.
To effectuate the merger Ivy must represent to the Company that it has a
minimum of $5,000,000 in tangible assets when the merger is compered.
On August 10, 1999 the shareholders of the Company approved the
reverse merger of the Company and Ivy.
Note 3: Shareholder' Deficit
During the year ended September 30, 1999 the Company issued
49,900,000 shares of common stock and received proceeds of $237,302.
In exchange for services from non-employees and in settlement of
long-term liabilities the Company issued 205,556,937 shares of common
stock.
Note 4: Income Taxes
Statement of Financial Accounting Standards No. 109 (FAS 109),
"Accounting for Income Taxes' is effective for financial statements
issued for fiscal years beginning on or after December 15, 1992. Under
FAS 109 deferred income taxes generally represent the future tax effect of
existing differences between the book and tax bases of assets and
liabilities, using the tax rates and laws existing as of the latest balance
sheet date. The Company has not elected early adoption of this statement.
The adoption of FAS 109 is not expected to have a material effect on the
Company's financial position or results of due to the Company's NOL
position and recent losses. The Company expects to record a deferred tax
asset which will be fully reserved through the recording of a 100%
valuation allowance.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following should be read in conjunction with the financial statements
and notes thereto appearing in Item 1 of this form. As indicated in the
Financial Statements, there is substantial doubt about Eutro Group
Holding, Inc.'s ability to continue as a going concern beyond December
31, 1999, due to its ongoing illiquidity.
It is highly unlikely that Eutro Group Holding, Inc. can satisfy its cash
requirements for the next 12 months without resorting to raising additional
funds through the sale of common stock.
Eutro plans no product research and development for the term of the Plan.
During the period covered by the financial statements and the next 12
months of this Plan, Eutro significantly changed the focus of its business
activities from business and financial consulting to the sale of the
company to a more financially secure organization that could make better
use of its OTC Electronic Bulletin Board listing. In other words, to
become the target of a reverse merger.
After a prolonged search and discussions with several possible merger
partners, Eutro management decided that the candidate offering the best
solution to its problems was the company IVY Entertainment.Com, Inc.
In-depth discussion with Ivy management only reinforced Eutro's
conviction that this course of action was in the best interest of its share
holders.
IVY Entairtainment.Com (IVY) was incorporated under Florida law on
May 25, 1999. It is a development stage company that currently has no
operations or business activities. It intends to expend its operations
through acquisitions and by entering into distribution and marketing
agreements with select companies having particular focus on the
entertainment, hospitality, financial and technology industries. IVY has
entered into a letter of intent with Strategic Management Corp., a company
that intends to be a one stop financial services firm catering to small
business owners and individuals with a net worth of $500,000 or more. To
enhance its entertainment division, IVY has entered into a marketing
agreement with Touch Entertainment, Inc. to distribute its touch screens to
night clubs and eateries throughout the world. To enhance its technology
division, IVY has entered into a distribution agreement with Sense
Technologies, Inc. to distribute its biometric (fingerprint) employee
verification and authentication system and with Global Communication
Networks, Inc. to distribute its internet services and long distance
telephone services.
The offices of IVY Entertainment.Com are located at 2505 Boca Raton
Boulevard, Suite 1, Boca Raton , Florida, 33431. The telephone number
is (561) 367 8565.
IVY intends to create an active trading market for its common stock by
engaging in a reverse merger with a public shell. On May 17, IVY entered
into a definitive stock-for-stock exchange agreement with Eutro Group
Holding, Inc. Pursuant to such acquisition agreement, IVY shareholders
will acquire a controlling interest of approximately 85% in Eutro.
Eutro will then be under new management that intends to change the
company name to Strategic Alliance Group, Inc.
There are five obligations binding both parties to the reverse merger. First,
present Eutro shareholders must approve a 250 to 1 reverse stock split of
Eutro common stock. Second, Eutro must satisfy all its liabilities. Third,
IVY is committed to having assets, valued at a minimum of
$5,000,000. Fourth, the closing of the reverse merger must take place on
or before July 31, 1999, unless extended by the mutual consent of both
parties. Fifth, the reverse merger is subject to satisfactory due diligence
by both parties.
IVY's authorized capital consists of 20,000,000 shares of Common Stock,
par value $.01 per share and 10,000,000 shares of Preferred Stock par
value $.01 per share. As of September 1, 1999, IVY has 1,000 shares of
common stock issued and outstanding.
As Eutro has no permanent full time employees, there is no problem of
significant changes or reductions. No long term fixed contract exists with
any temporary employment service.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
(a) Pending legal proceedings
On September 1, 1999, Eutro Group Holding, Inc. had no pending legal
proceedings against it and its management was not aware of any that were
awaiting filing.
(b) Pending governmental agency procedures
On September 1, 1999, Eutro Group Holding, Inc. had no pending
governmental agency procedures against it and its management was not
aware of any that were awaiting submission by any governmental agency.
Item 2. Changes in Securities
(a) There have been no modifications in the instruments defining the
rights of the holders of any class of registered securities.
(b) There has been no material limitation or qualification of the rights
evidenced by any class of registered securities by the issuance or
modification of any other class of securities.
There are no legal restrictions on working capital or limitations upon the
payment of dividends. The only restricting factors in either of these two
items are a paucity of earnings.
Item 3. Defaults Upon Senior Securities.
As indicated in Form 10-SB previously filed, the registrant is in default on
the dividend payment on its Series A Preferred Stock. The amount of
arrears is indicated in the financial statements contained in Part I of this
report.
Item 4. Submission of Matters to a Vote of Security Holders.
There has been no submission of any matter to a vote of security holders
during the period covered by this report, through the solicitation of
proxies or otherwise.
On August 10, 1999, the Registrant held a special
meeting of its Board of Directors. In this meeting, the proxies that were
solicited and received by August 9, 1999, were voted. The matters
presented to the Board of Directors were the following:
1. To approve and adopt amended and restated Articles of
Incorporation of Eutro Group Holding, Inc. in the form attached to the
Proxy Statement dated July 9, 1999.
2. To authorize and grant the Board of Directors to approve and
ratify the removal of Article 9 of the original corporation (Bio-Analytic
Laboratories, Inc. a Florida corporation) amended without stockholder
approval in October, 1991, through reverse acquisition of Eutro Group
Holding, Inc.
3. To approve and authorize the Board of Directors, in its sole
discretion, to proceed if it is deemed necessary, with a reverse stock split
not to exceed I for 250 with cash in lieu of fractional shares.
4. To approve and grant the Board of Directors the authority to
increase the authorized share capital to 100,000,000 shares, after the
reverse split. This also shall occur if the Board of Directors shall deem it
necessary.
5. To approve and grant the Board of Directors the authority to
acquire Ivy Entertainment.Com, Inc. a Florida corporation, in
consideration of 8,575,000 shares of Eutro Group Holding, Inc. new
common stock for 100% of the capital stock of Ivy. The new Eutro shares
shall be restricted shares under SEC Rule 144.
6. To approve the change of name of Eutro Group Holding, Inc. to
Strategic Alliance Group, Inc.
All the above were approved by the voting of proxies which were 64% in
favor of adoption.
Item 5. Other Information.
On October 18, 1999, the State of Florida received and accepted Articles
of Amendment to the Articles of Incorporation for Eutro Group Holding,
Inc. which changed its name to Strategic Alliance Group, Inc. The
document number of the corporation is G66158.
On November 12, 1999, Officer/Director Resignations were filed with the
Department of State of Florida, resigning the following persons from the
board of directors of Strategic Alliance Group, Inc. and as officers of the
Company.
Floyd D. Wilkenson
Daniel Birbilis
William Burckart
Mack L. Hunter
Brad Wilkenson
On November 12, 1999, Articles of Amendment to the Articles of
Incorporation of Strategic Alliance Group, Inc. were filed with the
Florida Department of State appointing a new Board of Directors
composed of:
Richard Gladstone
Howard Helfant
Mark Colacurio
The date of the Amendment's adoption is November 11, 1999. It was
adopted without shareholder action which is not required.
Item 6. Exhibits and Reports on Form 8-K
See attached.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, there unto
duly authorized.
EUTRO GROUP HOLDING, INC.
Date: February 14, 2000
Mark Colacurio
Director
