FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: September 30, 2000
Commission file number: 33-19961
HomeGate Corporation (formerly Spartan Oil Corporation)
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(exact name of registrant as specified in its charter)
Delaware 75-2224650
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(State of Incorporation) (IRS ID No.)
13663 Jupiter Road, Suite 401, Dallas Texas 75238
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 214-343-9700
Check whether the registrant files 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 [ ]
Shares of common stock outstanding at September 30, 2000:
8,220,888
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements 1 - 7
Item 2. Managements's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II - OTHER INFORMATION 9
<PAGE>
HOMEGATE CORPORATION
(formerly Spartan Oil Corporation)
BALANCE SHEETS
September 30, 2000
ASSETS
------
Sept 30, 2000
-----------------
CURRENT ASSETS:
Cash $11,344
Accounts receivable 60,776
Investment - equity securities 1,500,000
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Total Current Assets 1,572,120
OTHER ASSETS:
Deferred income tax asset 13,153
Trademark 306,944
-----------------
Total Other Assets 320,097
TOTAL ASSETS $1,892,217
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
Accounts payable $45,500
Accrued expenses 23,596
Note payable 265,000
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Total Liabilities $334,096
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 50,000,000 shares
authorized, 8,220,888 shares issued and outstanding 8,221
Additional paid in capital 1,930,849
Unrealized loss on equity securities (300,000)
Accumulated Deficit (80,949)
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Total Stockholders' Equity 1,558,121
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,892,217
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F-1
<PAGE>
HOMEGATE CORPORATION
(formerly Spartan Oil Corporation)
STATEMENT OF OPERATIONS
Three Months Ended September 30, 2000
Three months
ended
Sept 30, 2000
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REVENUE: $141,503
OPERATING EXPENSE:
Depreciation and amortization 9,028
Interest expense 6,893
General and administrative 208,349
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Total Operating Expense 224,270
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Operating income (82,767)
Federal income tax benefit 13,655
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NET LOSS ($69,112)
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Weighted average shares outstanding - taking
into account the 6 for 1 reverse stock split 8,154,308
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LOSS PER SHARE - basic and diluted ($0.01)
=================
F-2
<PAGE>
<TABLE>
<CAPTION>
HOMEGATE CORPORATION
(formerly Spartan Oil Corporation)
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from February 25, 2000 to September 30, 2000
Common Paid In Accumulated
Shares Amount Capital Deficit
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<S> <C> <C> <C> <C>
Balance at February 25, 2000
(date of inception) 0 0 0 0
Stock issued:
upon capitalization 2,000,000 2,000 133,243
for marketable securities 5,200,000 5,200 1,794,800
Paid in capital 14,709
Net loss - thru June 30, 2000 (11,837)
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Balance
June 30, 2000 7,200,000 7,200 1,942,752 (11,837)
in reverse acquisition with
Spartan Oil Corporation
on July 6, 2000 (see Note) 1,020,888 1,021 (11,903)
Net loss - thru September 30, 2000 (69,112)
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Balance
September 30, 2000 8,220,888 8,221 1,930,849 (80,949)
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</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
HOMEGATE CORPORATION
(formerly Spartan Oil Corporation)
STATEMENT OF CASH FLOWS
Three Months Ended September 30, 2000
Three months
ended
Sept 30, 2000
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<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($69,112)
Adjustments for items not requiring cash:
Deprecaition and amortization $9,028
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Paid in capital/deficit in conjuction with reverse
merger with Spartan Oil Corporation (10,833)
Increase in accounts receivable (23,680)
Increase in accounts payable and accrued expenses 62,725
Increase in other assets 2,141
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NET CASH (USED) BY OPERATING ACTIVITIES: (29,731)
CASH FLOWS FROM INVESTING ACTIVITIES:
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (60,000)
Sale of common stock -0-
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NET INCREASE IN CASH ($89,731)
CASH, BEGINNING OF PERIOD 101,075
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CASH, END OF PERIOD $11,344
=================
</TABLE>
F-4
<PAGE>
HOMEGATE CORPORATION
Notes to Financial Statements
September 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - The Company was incorporated in the State of Delaware on
February 25, 2000 under the name of HMGT Management Corporation. On July 6,
2000, the Company performed a reverse merger with Spartan Oil Corporation which
was accounted for as a purchase. On August 1, 2000, the Company changed its name
to HomeGate Corporation. The company manages hotels.
Basis of Accounting - The Company prepares its financial statements on the
accrual method of accounting, recognizing income when earned and expenses when
incurred.
Cash Equivalents - The Company considers all highly liquid investments with an
original maturity of three months or less as cash equivalents.
Investments - The Company owns an equity position in Ameri-First Financial
Group, Inc. (Ameri- First). Ameri-First is a public company traded on the OTC BB
(bulletin board). These securities were contributed to the Comapny as part of
its capitalization from its largest shareholder, Amerand Corproation. These
securities are classified as available for sale securities and are reported at
fair market value as of September 30, 2000 with unrealized gains or losses
reported in the equity section of the balance sheet. The securities were
contributed to the Company on June 29, 2000. As of September 30, 2000, the
market value of the stock was $0.75 per share, which generates an unrealized
loss of $300,000.
Accounts receivable - The accounts receivable carried by the Company are all
from hotels under management by the Company.
Fixed Assets - Fixed assets are stated at cost. Depreciation will be provided
for fixed assets over the estimated useful life of the asset using a
straight-line method.
Trademarks - Trademarks are shown at cost and are classified as other assets.
The trademarks are being amortized over 15 years using the straight line method.
F-5
<PAGE>
HOMEGATE CORPORATION
Notes to Financial Statements
September 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)
Income Taxes - The Company follows the provisions of Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of events that have been included in the Company's financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between financial statement
and tax basis of assets and liabilities using enacted tax rates in effect when
these differences are expected to reverse. Valuation allowances are established,
when appropriate, to reduce deferred tax assets to the amount expected to be
realized. The Company has recorded a net tax asset of $13,153. All of the
Company's net operating loss is expected to be used in the near future.
Use of Estimates - The preparation of 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
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Earnings Per Share - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," which requires presentation of basic
earnings per share ("Basic EPS") and diluted earnings per share ("Diluted EPS").
The computation of Basic EPS is computed by dividing income available to common
stockholders by the weighted average number of outstanding common shares during
the period. Diluted EPS gives effect to all dilutive potential common shares
outstanding during the period. The computation of Diluted EPS does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on earnings.
The shares used in the computation as of September 30, 2000 is as
follows:
Basic EPS and diluted EPS 8,154,308
Fair Value Of Financial Instruments - The carrying value of cash and cash
equivalents, notes receivable, accounts payable, approximates fair value due to
the relatively short maturity of these instruments.
F-6
<PAGE>
HOMEGATE CORPORATION
Notes to Financial Statements
September 30, 2000
NOTE 2 - NOTE PAYABLE
As of September 30, 2000 the Company was obligated to Prime Hospitality, Inc. of
New Jersey for $265,000. This note was originally signed on February 25, 2000
and calls for monthly payments of $15,000 with a maturity date of February 25,
2001. The note carries an interest rate of 10%. Collateral for this note is
assignment of all outstanding interest in VPSI, LP, a limited partnership of
hotels owned by the Ameri-First Financial Group, Inc. and the trademarks used by
these hotels. The obligation has been assigned to the Company along with the
trademark.
NOTE 3 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 50,000,000 shares of common stock with a par
value of $0.001, of which 8,220,888 shares are issued and outstanding.
The Company is authorized to issue 5,000,000 shares of preferred stock with a
par value of $1.00. There are no preferred shares outstanding.
F-7
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
---------------------
The Company was incorporated in the State of Delaware on February 25, 2000 under
the name of HMGT Management Corporation. On July 6, 2000, the Company performed
a reverse merger with Spartan Oil Corporation which was accounted for as a
purchase. On August 1, 2000, the Company changed its name to HomeGate
Corporation. The company manages hotels.
Upon the merger of HMGT Management Corporation (HMGT) and Spartan Oil
Corporation (Spartan), the directors of HMGT became directors of Spartan and the
name was changed to HomeGate Corporation. Due to the fact that HMGT shareholders
were the majority shareholders of Spartan (now HomeGate), the purchase was
accounted using the purchase method of accounting as a reverse merger. As a
result, the financial statements of HomeGate reflect the operations of HMGT
through the date of the reverse merger. Comparative financial statements are not
presented since HMGT was incorporated on February 25, 2000, and had no prior
year operations.
The Company has long term management contracts for the management of hotels
owned by Ameri-First Financial Group, Inc. of Dallas, Texas. The management
contracts provide a fee of 4% of Gross Revenue with an incentive of 2% of gross
operating profit and an accounting fee of $1,500 per month per property.
As of August 24, 2000, three additional management contracts were acquired. As
of September 30, 2000, the Company had ten hotels under management.
The Company is seeking additional management contracts and is also seeking to
purchase some hotels for its own portfolio.
In November of 2000, the Company sued Ameri-First Financial Group, Inc. for its
failure to perform under the management agreements. The suit was settled the
same month.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not involved in any legal proceedings.
Item 2. Changes in Securities.
Registrant has made no changes in its securities.
Item 3. Defaults Upon Senior Securities.
Registrant has no senior securities and accordingly no
defaults.
Item 4. Submission of Matters to a Vote of Security Holders.
Registrant submitted the matter of merging HMGT Management
Corporation into Spartan Oil Corporation. This merged was
approved by the shareholders on July 6, 2000. The transaction
was filed on Form 8-K as described in Item 6.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
The Registrant filed a report on Form 8-K notifying
shareholders of a meeting to vote on an agreement of merger whereby the
Registrant:
a) performed a six to one reverse stock split;
b) issued two million shares for 100% of the outstanding stock of
HMGT Corporation, a hotel management company; and
c) change the name of the corporation to HomeGate Corporation.
9
<PAGE>
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 there unto duly authorized.
HomeGate Corporation
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(Registrant)
BY: /s/ Gary W. Bell
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Gary W. Bell
Its: President
DATE: November 17, 2000
Dallas, Texas
10
