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 June 30, 1998
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 Identification Number)
incorporation or organization)
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 - June 30, 1998 and 4
December 31, 1997
Statements of Operations and Accumulated Deficit Three
months ended June 30, 1998 and 1997, and
Six months ended June 30, 1998 and 1997 5
Statements of Stockholders Equity--December 31, 1995
through June 30, 1998 6-7
Statements of Cash Flows - Three months ended June 30, 1998
and the six months ended June 30, 1998 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 June 30, 1998 and 1997, and for the six month periods ended June
30, 1998 and June 30, 1997 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
June 30, 1998
ASSETS
June 30, December 31,
1998 1997
---- ----
CURRENT ASSETS (Unaudited) (Unaudited)
<S> <C> <C>
Cash $ 0 $ 0
------------------ -----------------
TOTAL ASSETS $ 0 $ 0
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 45,003 $ 45,003
Accrued expenses 34,875 40,725
Dividends payable 180,776 159,281
Notes payable 6,000 61,011
------------------ -----------------
Total current liabilities 266,654 306,020
------------------ -----------------
TOTAL LIABILITIES 266,654 306,020
------------------ -----------------
STOCKHOLDERS' (DEFICIT)
Preferred stock, Series A, $1.00 Par Value 148,000 148,000
Preferred stock, Series B, $1.00 Par Value 271,200 272,200
Preferred stock, Series C, $1.00 Par Value 10,200 10,200
Common stock, Class A, $0.001 Par Value 3,345 2,201
Common stock, Class B, $0.001 Par Value 1,000 1,000
Additional paid-in capital 11,803,239 11,726,372
Accumulated deficit (12,503,638) (12,465,993)
------------------ -----------------
Total Stockholders' (Deficit) (266,654) (306,020)
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 0 $ 0
================== =================
</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 Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(Unaudited)
INCOME:
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
------------------ ------------------- ----------------- -----------------
Total Income - - - -
GROSS PROFIT
EXPENSES:
General and Administrative 20,235 11,184 37,495 22,412
------------------ ------------------- ----------------- -----------------
Total Expenses 20,235 11,184 37,495 22,412
LOSS FROM OPERATIONS (20,235) (11,184) (37,495) (22,412)
================== =================== ================= =================
OTHER INCOME (EXPENSE):
Interest expense (150) (1,434) (150) (4,865)
------------------ ------------------- ----------------- -----------------
Total Other Income
(Expense) (150) (1,434) (150) (4,865)
NET LOSS BEFORE INCOME
TAXES $ (20,385) $ (11,618) $ (37,645) $ (27,277)
================== =================== ================= =================
Income taxes - - - -
NET LOSS (20,385) (12,218) (37,645) (27,277)
================== ==================== ================== ==================
Net Loss Per Common Share $ (0.01) $ (0.01) $ (0.01) $ (0.03)
================== =================== ================= =================
Weighted average common
shares outstanding 3,344,760 991,830 3,344,760 911,232
================== =================== ================= =================
</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, 1995 to June 30, 1998
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, 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 (16,000) $ (16,000)
------- -------------
Balance
December 31, 1997 148,000 $ 148,000 272,200 $ 272,200 10,200 $ 10,200
------- ------------- ------ -------------
Class B Conversion
to Common (1,000) $ (1,000)
------- -------------
Balance
June 30, 1998 148,000 $ 148,000 271,200 $ 271,200 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, 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 $11,618,169 $ (12,402,440)
---------- ------------- ------- ------------- ----------- --------------
Class B Conversion
to Common 2,399 3 15,997
Stock issued for
notes payable 257,500 258 51,242
Stock issued for
wages payable 1,029,500 1,029 40,971
Net loss (63,533)
---------- ------------- ------- ------------- ----------- --------------
Balance
December 31, 1997 2,200,631 2,201 100,000 1,000 11,726,372 (12,465,993)
Stock issued for
services 20,000 20 4,980
Class B Conversion
to Common 145 - 1,000
Stock issued for
Debt 1,123,984 1,124 70,887
Net loss (17,260)
---------- ------------- ------- ------------- ----------- --------------
Balance
June 30, 1998 3,344,760 $ 3,345 100,000 $ 1,000 $11,803,239 $ (12,503,638)
========== ============= ======= ============= =========== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
EQUITY AU, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1998 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (20,385) $ (37,645)
Adjustments to reconcile net loss to net cash
used by operating activities:
Dividends payable 10,735 21,495
Accrued interest converted to stock 6,000 6,000
Stock issued for services 5,000
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses (5,850) (5,850)
---------------- ----------------
NET CASH (USED) BY OPERATING ACTIVITIES: (9,500) (11,000)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt 9,500 11,000
---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 9,500 11,000
---------------- ----------------
NET DECREASE IN CASH: 0 0
CASH AT BEGINNING OF PERIOD: 0 0
---------------- ----------------
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, 1997 Annual Report on Form 10-KSB. The results of
operations for the three months and six ending June 30, 1998, are
not necessarily indicative of the operating results that may
result for the year ending December 31, 1998. The accounting
policies followed by the Company are set forth in Note 1 to the
Company's financial statements in its December 31, 1997 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 6/30/98 compared to Three Months ended 6/30/97
During each of these periods the mining operations were shut down,
there were no revenues during either period.
General and administrative expenses increased from $11,184 to $20,235,
81%, due to an increase in professional fees.
Six Months ended 6/30/97 compared to Six Months ended 6/30/96
During each of these periods the mining operations were shut down,
there were no revenues during either period.
General and administrative expenses increased from $22,412 to $37,495,
67%.
Liquidity and Capital Resources
At June 30, 1998, the Company had no assets, total liabilities of
$266,654 and total stockholders deficit of ($266,654) compared with no assets,
total liabilities of $306,020 and total stockholders deficit of $(306,020) at
March 31, 1997. There has been no significant change in account balances due to
the shut down of operations during these periods. Management is uncertain of
when mining operations will continue and can give no assurances that operations
will continue during the current fiscal year. For the present time the Chairman
of the Company is funding the cash requirements of the Company. There is no
assurance as to how long the Chairman will fund the Company. The Company is now
looking for an acquisition or merger candidate. Management can give no
assurances as to when, or if, a candidate will be identified.
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 89,000 shares will be returned
to the Company if the loan proceeds are not received.
<PAGE>
PART II
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
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 June 30, 1998.
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, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 266,654
<BONDS> 0
0
429,400
<COMMON> 4,345
<OTHER-SE> (700,399)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 150
<INCOME-PRETAX> (20,385)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,385)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,385)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
