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 Quarter Ended September 30, 1997
OR
[ ] 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 33-20582
EQUITY AU, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2276137
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 940037, Maitland, Florida 32794-0037
(Address of principal executive offices, including zip code)
(407) 647-3952
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has: (1) 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) been subject to such
filing requirements for the past 90 days. Yes X No_
Number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of July 14, 1998
Class A Common Stock, par value $.001 3,344,760
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Heading Page
PART I. FINANCIAL STATEMENTS
Item 1. Balance Sheets - September 30, 1997 and 4
December 31, 1996
Statements of Operations and Accumulated Deficit -
Three months ended September 30, 1997 and 1996, and
Nine months ended September 30, 1997 and 1996 5
Statements of Stockholders Equity--December 31, 1994
through September 30, 1997 6-7
Statements of Cash Flows - Three months ended
September 30, 1997 and nine months ended
September 30,1997 8-9
Notes to Financial Statements 10-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Securities Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 18
<PAGE>
PART I
Item 1. Financial Statements
The following, unaudited Financial Statements for the three month
periods ended September 30, 1997 and 1996, and for the nine month periods ended
September 30, 1997 and 1996 include all adjustments which management believes
are necessary for the financial statements to be presented in conformity with
generally accepted accounting principals.
(THIS SPACE INTENTIONALLY LEFT BLANK)
<PAGE>
<TABLE>
<CAPTION>
EQUITY AU, INC.
BALANCE SHEET
September 30, 1997
ASSETS
September 30, December 31,
1997 1996
---- ----
CURRENT ASSETS (Unaudited) (Unaudited)
<S> <C> <C>
Cash $ 0 $ 154
------------------ -----------------
TOTAL ASSETS $ 0 $ 154
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 87,003 $ 87,003
Accrued expenses 39,276 34,975
Dividends payable 148,246 114,766
Notes payable 108,196 99,377
------------------ -----------------
Total current liabilities 382,721 336,121
------------------ -----------------
TOTAL LIABILITIES 382,721 336,121
------------------ -----------------
STOCKHOLDERS' (DEFICIT)
Preferred stock, Series A, $1.00 Par Value 148,000 148,000
Preferred stock, Series B, $1.00 Par Value 283,200 288,200
Preferred stock, Series C, $1.00 Par Value 10,200 10,200
Common stock, Class A, $0.001 Par Value 912 911
Common stock, Class B, $0.001 Par Value 1,000 1,000
Additional paid-in capital 11,623,161 11,618,162
Accumulated deficit (12,449,194) (12,402,440)
------------------ -----------------
Total Stockholders' (Deficit) (382,721) (335,967)
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 0 $ 154
================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
EQUITY AU, INC.
Statement of Operations
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(Unaudited)
INCOME:
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
Direct Costs - - - 1,135
------------------ ------------------- ----------------- -----------------
Total Income - - - 1,135
GROSS PROFIT - - - 1,135
================== =================== ================= =================
EXPENSES:
General and Administrative 18,028 39,235 40,440 77,172
------------------ ------------------- ----------------- -----------------
Total Expenses 18,028 39,235 40,440 77,172
LOSS FROM OPERATIONS (18,028) (39,235) (40,440) (77,172)
================== =================== ================= =================
OTHER INCOME (EXPENSE):
Interest expense (1,449) (1,196) (6,314) (1,196)
------------------ ------------------- ----------------- -----------------
Total Other Income
(Expense) (1,449) (1,196) (6,314) -
NET LOSS BEFORE INCOME
TAXES $ (19,477) $ (40,431) $ (46,754) $ (77,233)
================== =================== ================= =================
Income taxes - - - -
NET LOSS (19,477) (40,431) (46,754) (77,233)
================== ==================== ================== ==================
Net Loss Per Common Share $ (0.02) $ (0.04) $ (0.00) $ (0.08)
================== =================== ================= =================
Weighted average common
shares outstanding 912,032 911,232 912,031 911,232
================== =================== ================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
EQUITY AU, INC.
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from December 31, 1994 to September 30, 1997
(Unaudited)
PREFERRED STOCK
Preferred Stock - A Preferred Stock - B Preferred Stock - C
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance
December 31, 1994 148,000 $ 148,000 288,200 $ 288,200 10,200 $ 10,200
------- ------------- ------- ------------- ------ -------------
Balance
December 31, 1995 148,000 $ 148,000 288,200 $ 288,200 10,200 $ 10,200
------- ------------- ------- ------------- ------ -------------
Balance
December 31, 1996 148,000 $ 148,000 288,200 $ 288,200 10,200 $ 10,200
------- ------------- ------ -------------
Class B Conversion
to Common (5,000) (5,000)
------- -------------
Balance
September 30, 1997 148,000 $ 148,000 283,200 $ 283,200 10,200 $ 10,200
------- ------------- ------- ------------- ------ -------------
<CAPTION>
COMMON STOCK
Class A Common Class B Common Paid in Accumulated
Shares Amount Shares Amount Capital Deficit
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 612,471 $ 612 100,000 $ 1,000 11,559,423 $ (11,954,266)
Issuance of common stock:
for cash 270,789 271 184,029
for services 25,000 25 26,225
1993 dividend on
Preferred Series A 1,619 2 17,715 (17,717)
1994 dividend on
Preferred Series A 1,353 1 14,799 (14,800)
Net loss (212,633)
Balance
December 31, 1995 911,232 $ 911 100,000 $ 1,000 11,618,162 $ (12,199,416)
---------- ------------- ------- ------------- ---------- --------------
Net loss (203,024)
Balance
December 31, 1996 911,232 $ 911 100,000 $ 1,000 11,618,162 $ (12,402,440)
---------- ------------- ------- ------------- ---------- --------------
Class B Conversion
to Common 800 1 4,999
Net loss (46,754)
Balance
September 30, 1997 912,032 $ 912 100,000 $ 1,000 11,623,161 $ (12,449,194)
========== ============= ======= ============= ========== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
EQUITY AU, INC.
STATEMENT OF CASH FLOWS
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1997 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (19,477) $ (46,754)
Adjustments to reconcile net loss to net cash
used by operating activities:
Dividends payable 11,160 33,480
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses 1,449 4,301
---------------- ----------------
NET CASH (USED) BY OPERATING ACTIVITIES: (6,868) (8,973)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt 6,819 8,819
---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 6,819 8,819
---------------- ----------------
NET DECREASE IN CASH: (49) (154)
CASH AT BEGINNING OF PERIOD: 49 154
---------------- ----------------
CASH AT END OF PERIOD: $ 0 $ 0
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
EQUITY AU, INC.
Notes to Condensed Financial Statements
(Unaudited)
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared
by the Company without audit. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary
to present fairly the financial position, results of operations
and cash flows as of the dates and for the period presented herein
have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission rules and
regulations. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
December 31, 1996 Annual Report on Form 10-KSB. The results of
operations for the three months and nine ending September 30,
1997, are not necessarily indicative of the operating results that
may result for the year ending December 31, 1997. The accounting
policies followed by the Company are set forth in Note 1 to the
Company's financial statements in its December 31, 1996 Annual
Report on Form 10-KSB.
8
<PAGE>
Item 2. Management's Discussion & Analysis of Financial Condition and Results of
Operations
Results of Operations
Three Months ended 9/30/97 compared to Three Months ended 9/30/96 Nine
Months ended 9/30/97 compared to Nine Months ended 9/30/96
During each of these periods the mining operations were shut down,
there were no revenues during either period.
Management is funding the necessary expenses to maintain the Company in
a current status until an acquisition can be identified.
Liquidity and Capital Resources
At September 30, 1997, the Company had total assets of $0, total
liabilities of $382,721 and total stockholders deficit of ($382,721) compared
with total assets of $154, total liabilities of $336,121 and total stockholders
deficit of $(335,967) at March 31,1996. There has been no significant change in
account balances due to the shut down of operations during these periods. There
were also no new borrowings. Management is funding all expenditures at the
present time. Management is uncertain of when mining operations will continue
and can give no assurances that operations will continue during the current
fiscal year. On June 6, 1997 the Company issued 8,900,000 restricted shares to
General Enterprises and Trading Company (Isle of Man) Ltd. for the promise to
loan the Company $100,000 and to pledge to the Company a Capital Asset
Certificate for $5,000,000 which would be used to secure additional borrowings.
The Company has not received the $100,000, or the pledge of the asset
certificate. This issuance of stock has not been reflected in the Company's
accounting records because the consideration for the Company's shares has not
been received. Per the terms of the agreement the 8,900,000 shares will be
returned to the Company if the loan proceeds are not received. Management is
presently looking for acquisition candidates, and can give no assurances as to
if and when they may make an acquisition.
<PAGE>
PART II
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
On September 24, 1997 the Company effected a 1 for 100 reverse
split of the Class A common stock.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On September 16, 1997 the Company entered into an agreement
with Chain -O- Mines Holdings, Inc., (Chain), whereby the Company would exchange
90% of its Class A common stock for 100% of Chain's outstanding stock in a
reverse merger. Chain would provide mining technology, and other mining related
consideration. Additionally, a supplemental agreement was signed between the
Company and Chain. Per the terms of the agreement Chain would provide $250,000
for working capital. The Company would exchange 100% of its Class B common
voting stock upon receipt of the deed for mining properties or other valuable
consideration. Through the date of this report Chain has provided no
consideration and the companies have not exchanged shares per the agreement or
the supplemental agreement. On June 11, 1998, the agreement was formally
terminated.
Item 6. Exhibits and Reports on Form 8-K
(a) This Item is not applicable to the Company.
(b) No Report on form 8-K was filed by the Company during the three
month period ended September 30, 1997.
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, thereunto duly authorized.
EQUITY AU, INC.
(Registrant)
BY: /s/ James Arch
---------------------
JAMES ARCH, President
Dated: July 16, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 382,721
<BONDS> 0
0
441,400
<COMMON> 1,912
<OTHER-SE> (826,033)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,028
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,449
<INCOME-PRETAX> (19,477)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,477)
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0
</TABLE>
