U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[x] Annual report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 (No fee required, effective October 7, 1996.)
For the fiscal year ended December 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No fee required)
For the transition period from _____________ to _____________ .
Commission file number 33-20582
Equity AU, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware 75-2276137
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P.O. Box 940037, Maitland, Florida 32794-0037
(Address of Principal Executive Offices) (Zip Code)
(407) 647-3952
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Class A Common Stock, par value $.001 per share
(Title of Class)
<PAGE>
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 ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Note 1: Form 10K
This form 10K reflects the audited financial statements of Equity AU,
Inc. for the year ended December 31, 1999 performed by HJ & Associates, L.L.C.
(formerly Jones, Jensen, and Company) of Salt Lake City, Utah.
The issuer's revenues for the year ended December 31, 1999 were $0.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of October 28, 1999 was $292,667.
The number of shares outstanding of the issuer's common equity, as of
December 31, 1999 was 9,972,350 shares.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [x]
<PAGE>
PART I
Item 1. Business.
GENERAL
Reference is hereby made to item 1 of the previously filed 10K/A.
HISTORY AND CURRENT ACTIVITY
Reference is hereby made to item 1 of the previously filed 10K/A.
Item 2. Properties.
Reference is hereby made to item 2 of the previously filed 10K/A.
Item 3. Legal Proceedings.
Reference is hereby made to item 3 of the previously filed 10K/A.
Item 4. Submission of Matters to a Vote of Security Holders.
Reference is hereby made to item 4 of the previously filed 10K/A.
<PAGE>
PART II
Item 5. Market for Common Equity & Related Stockholder Matters.
Reference is hereby made to item 5 of the previously filed 10K/A.
RECENT SALES OF UNREGISTERED SECURITIES
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. These shares were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.
On October 3, 1997 the Company repaid indebtedness to various note
holders by issuing 257,500 shares of its common stock. The shares were exempt
from registration pursuant to Sections 4(2) or 3(b) under the Securities Act.
On October 3, 1997 the Company issued 1,029,500 shares to the past
president of the Company for wages owed. The shares were exempt from
registration pursuant to Sections 4(2) or 3(b) under the Securities Act.
On June 8, 1998 the Company issued 1,123,984 shares to the Chairman of
the Company for debt and related interest owed. The shares were exempt from
registration pursuant to Sections 4(2) of 3(b) under the Securities Act.
Item 6. Management's Discussion & Analysis of Financial Condition & Results of
Operations.
Statements made or incorporated in this report include a number of
forward-looking statements within the meaning of Section 27(a) of the Securities
Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934.
Forward-looking statements include, without limitation, statements containing
the words "anticipates", "believes", "expects", "intends", "future", and words
of similar import which express management's belief, expectations or intentions
regarding the Company's future performance or future events or trends. Reliance
should not be place on forward-looking statements because they involve known and
unknown risks, uncertainties and other factors, which may cause actual results,
performance or achievements of the Company to differ materially from anticipated
future results, performance or achievements expressly or implied by such
forward-looking statements. In addition, the Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
RESULTS OF OPERATIONS
For the Year Ended December 31,1999 compared to the Year Ended December 31,
1998.
<PAGE>
During the year ended December 31, 1999 the Company had no operations.
General and administrative expenses were $157,286 for the year of 1999.
Expenses include the rental of office space and consulting fees to keep the
corporation current and dividends on preferred stock. Any changes in the profit
and loss accounts are due to the terminated operations. The Company recorded a
net loss of $157,286 in 1999, compared to $146,688 in 1998.
For the Year Ended December 31, 1998 compared to the Years Ended December 31,
1997 and December 31, 1996.
During the year ended December 31, 1996 the Company briefly resumed
mining operations which had been terminated in 1994. Operations yielded $413 of
gold sales to the Dallas Gold Exchange. The cost of contract labor to produce
the gold was $15,569, resulting in a gross profit of ($15,156). During 1995
there were no mining operations.
General and administrative expenses increased $96,770, 51%, to $287,836
during fiscal 1996 from $191,066 during fiscal 1995. These expenses primarily
include professional fees, salary to the Company's president and accrued
dividend expense. In 1997, General and administrative expenses were $55,790,due
to the decrease in activity in attracting a merger or development candidate. In
1998, these expenses increased to $146,688.
The Company had other income of $99,968 during fiscal 1996 compared
with other expense of ($19,048) during fiscal 1995. The difference is due
primarily to the gain recognized when notes payable were called due and the
pledged assets were foreclosed on. The assets had previously been written down
to salvage value during prior years. The Company had no other income in 1997 or
1998.
The Company experienced a net loss of $203,024 in fiscal 1996 compared
with a net loss of $212,633 in fiscal 1995. The net loss in 1997 was $63,553 and
the net loss in 1998 was $150,823.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had $1,011 in assets and total
stockholders deficit of $(321,335) compared with total assets of $4,820 and
total stockholders deficit of $(142,408)at December 31, 1998. The Company
borrowed $61,000 from Kentrust, Inc., whose CEO is a director of the Company, in
1998,for general operating expenses. In 1999, an additional $104,500 was
borrowed from Kentrust,Inc. During 1999 the entire sum of $165,500 became due
and began accruing interest. The Company also incurred a late payment penalty of
$16,550. Kentrust, Inc. has been paying the expenses of the Company until an
acquisition or merger is effected. There is no assurance that Kentrust, Inc. can
or will, continue to fund the company company and no assurance as to when or if
the company will be able to find a merger or acquisition company.
At December 31, 1997, the Company had total assets of $0 and total
stockholders deficit of $(135,181) compared with total assets of $154 and total
stockholders deficit of $(335,967) at December 31, 1996. The decrease in total
assets of $171,774, between 1995 and 1996 is due to the write off of the
Company's property and equipment upon foreclosure by a note holder for which the
property and equipment had been pledged. Total liabilities at December 31, 1996
increased $31,250, 10%, from $304,871 to $336,121. The increase is due primarily
to the accrual for dividends payable of $114,766.
<PAGE>
Item 7. Financial Statements and Supplementary Data.
The following financial statements and documents are filed herewith on
the pages listed below, as part of Item 7 of this report.
The December 31, 1999 audited Financial Statements, and the March 31,
2000 Financial Statements. The balance sheet of the Company and the related
statement of operations for 1998 were audited and filed from inception of the
development stage to December 31, 1998.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There are no disagreements with the independent accountants, nor have
there been any changes in accounting firms. Management has continued to use
services of Jones,Jensen and Company, now HJ & Associates, Salt Lake City,Utah
to perform the audits for year end December 31, 1999, and the First Quarter for
the year 2000.
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report............................................ F-3
Balance Sheets.......................................................... F-4
Statements of Operations................................................ F-5
Statements of Stockholders' Equity (Deficit)............................ F-6
Statements of Cash Flows............................................... F-10
Notes to the Financial Statements...................................... F-12
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Equity Technologies & Resources, Inc.
(formerly Equity AU, Inc.)
(A Development Stage Company)
Maitland, Florida
We have audited the accompanying balance sheets of Equity Technologies &
Resources, Inc. (formerly Equity AU, Inc.) (a development stage company) as of
December 31, 1999 and the related statements of operations, stockholders' equity
(deficit), and cash flows for the years ended December 31, 1999 and 1998 and
from inception of the development stage on January 1, 1994 through December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Technologies &
Resources, Inc. (formerly Equity AU, Inc.) (a development stage company) as of
December 31, 1999 and the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998, and from inception of the development
stage on January 1, 1994 through December 31, 1999 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 6 to the
financial statements, the Company is a development stage company with recurring
losses which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 6. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
May 30, 2000
F-3
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Balance Sheets
ASSETS
December 31,
1999
-----------------
CURRENT ASSETS
<S> <C>
Cash $ 1,011
-----------------
Total Current Assets 1,011
-----------------
TOTAL ASSETS $ 1,011
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 19,424
Accrued expenses (Note 2) 80,422
Dividends payable (Note 4) 25,000
Notes payable (Note 3) 32,000
Notes payable - related party (Note 3) 165,500
-----------------
Total Current Liabilities 322,346
-----------------
Total Liabilities 322,346
-----------------
CONTINGENCIES AND COMMITMENTS (Note 2)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, Class A, $1.00 par value, 2,000,000 shares
authorized, 50,000 shares issued and outstanding 50,000
Preferred stock, Class B, $1.00 par value, 300,000 shares
authorized, -0- shares issued and outstanding -
Preferred stock, Class C, $1.00 par value, 100,000 shares
authorized, -0- shares issued and outstanding -
Common stock, Class A, $0.001 par value, 99,900,000 shares
authorized, 9,972,350 shares issued and outstanding 9,972
Common stock, Class B, $0.01 par value, 100,000 shares
authorized, 100,000 shares issued and outstanding 1,000
Additional paid-in capital 12,324,191
Accumulated deficit (12,706,498)
-----------------
Total Stockholders' Equity (Deficit) (321,335)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,011
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Operations
From
Inception of the
Development
Stage
on January 1,
For the Years Ended
December 31, 1994 Through
-------------------------------------- December 31,
1999 1998 2000
------------------ ------------------ ------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
------------------ ------------------ ------------------
EXPENSES
General and administrative 157,286 146,688 414,372
------------------ ------------------ ------------------
Total Expenses 157,286 146,688 414,372
------------------ ------------------ ------------------
LOSS FROM OPERATIONS (157,286) (146,688) (414,372)
------------------ ------------------ ------------------
OTHER INCOME (EXPENSE)
Interest expense (21,592) (4,135) (30,833)
------------------ ------------------ ------------------
Total Other Income (Expense) (21,592) (4,135) (30,833)
------------------ ------------------ ------------------
LOSS BEFORE DISCONTINUED
OPERATIONS (178,877) (150,823) (445,205)
LOSS ON DISCONTINUED
OPERATIONS - - (3,870,504)
------------------ ------------------ ------------------
NET LOSS $ (178,877) $ (150,823) $ (4,315,709)
================== ================== ==================
BASIC LOSS PER SHARE $ (0.02) $ (0.02)
================== ==================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,972,350 7,407,442
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception of the Development Stage on January 1, 1994 to December 31, 1999
Preferred Stock - A Preferred Stock - B Preferred Stock - C
-----------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 148,000 $ 148,000 78,500 $ 78,500 - $ -
Preferred stock issued for
cash at $1.00 per share - - 203,500 203,500 6,000 6,000
Preferred stock issued for
services at $1.00 per share - - 6,200 6,200 4,200 4,200
------------ ------------ ------------ ------------ ----------- -------------
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
Shares converted to
Class A common stock - - (5,000) (5,000) - -
Shares converted to
Class A common stock - - (11,000) (11,000) - -
Canceled shares (98,000) (98,000) (272,200) (272,200) (10,200) (10,200)
------------ ------------ ------------ ------------ ----------- -------------
Balance
December 31, 1997 50,000 50,000 - - - -
------------ ------------ ------------ ------------ ----------- --------
Balance,
December 31, 1998 50,000 50,000 - - - -
------------ ------------ ------------ ------------ ----------- --------
Balance,
December 31, 1999 50,000 $ 50,000 - $ - - $ -
============ ============ ============ ============ =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
From Inception of the Development Stage on January 1, 1994 to December 31, 1999
Class A Common Class B Common Additional
----------------------------------------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------------ ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
January 1, 1994 571,254 $ 570 100,000 $ 1,000 $ 11,216,634 $ (8,390,740)
Common stock issued for
services at $0.10 per share 35,000 35 - - 95,071 -
Common stock issued for
services at $0.10 per share 4,598 5 - - 45,974 -
Common stock issued for
dividends at $0.11 per share 1,619 2 - - 17,715 -
Net loss for the year ended
December 31, 1994 - - - - - (3,563,526)
------------ ------------ ------------ ------------ ------------- -------------
Balance,
December 31, 1994 612,471 612 100,000 1,000 11,375,394 (11,954,266)
Common stock issued for
cash at $0.01 per share 270,789 271 - - 184,029 -
Common stock issued for
services at $1.05 per
share 25,000 25 - - 26,225 -
Common stock issued for
dividends at $10.94 per
share 1,619 2 - - 17,715 (17,717)
Common stock issued for
dividends at $10.93 per
share 1,353 1 - - 14,799 (14,800)
Net loss for the year ended
December 31, 1995 - - - - - (212,633)
------------ ------------ ------------ ------------ ------------- -------------
Balance,
December 31, 1995 911,232 911 100,000 1,000 11,618,162 (12,199,416)
Net loss for the year ended
December 31, 1996 - - - - - (61,828)
------------ ------------ ------------ ------------ ------------- -------------
Balance
December 31, 1996 911,232 $ 911 100,000 $ 1,000 $ 11,618,162 $ (12,261,244)
------------ ------------ ------------ ------------ ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
From Inception of the Development Stage on January 1, 1994 to December 31, 1999
Class A Common Class B Common Additional
----------------------------------------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------------ ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
December 31, 1996 911,232 $ 911 100,000 $ 1,000 $ 11,618,162 $ (12,261,244)
Stock issued in exchange
for preferred B stock at
$6.25 per share 800 1 - - 4,999 -
Fractional shares issued 315 - - - 1 -
Stock issued for services
at $0.06 per share 200,000 200 - - 11,800 -
Stock issued for debt
at $0.20 per share 257,500 258 - - 51,242 -
Stock issued for services
at $0.10 per share 1,029,500 1,030 - - 100,970 -
Stock issued for services
at $0.06 per share 20,000 20 - - 1,180 -
Stock issued in exchange
for preferred B stock
at $6.88 per share 1,599 2 - - 10,998 -
Contributed capital on
cancellation of shares (8,402) (9) - - 388,802 -
Net loss for the year ended
December 31, 1997 - - - - - (115,504)
------------ ------------ ------------ ------------ ------------- -------------
Balance
December 31, 1997 2,412,544 $ 2,413 100,000 $ 1,000 $ 12,188,154 $ (12,376,748)
------------ ------------ ------------ ------------ ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
From Inception of the Development Stage on January 1, 1994 to December 31, 1999
Class A Common Class B Common Additional
----------------------------------------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------------ ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
December 31, 1997 2,412,544 $ 2,413 100,000 $ 1,000 $ 12,188,154 $ (12,376,748)
Reversal of cancellation of
common A shares 214,000 214 - - (214) -
Shares issued at $0.063 per
share to repay note payable 86,841 86 - - 5,384 -
Shares issued to officer at
$0.063 per shares for consulting
services rendered 6,836 7 - - 424 -
Shares issued at $0.063 per
share to officer for consulting
services rendered 1,123,984 1,124 - - 70,030 -
Shares issued at $0.063 per
share to officer for consulting
services rendered 128,145 128 - - 7,955 -
Shares issued to officer to
pay off note payable for
consulting services rendered 6,000,000 6,000 - - 52,458 -
Net loss for the year ended
December 31, 1998 - - - - - (150,873)
------------ ------------ ------------ ------------ ------------- -------------
Balance, December 31, 1998 9,972,350 9,972 100,000 1,000 12,324,191 (12,527,621)
Net loss for the year ended
December 31, 1999 - - - - - (178,877)
------------ ------------ ------------ ------------ ------------- -------------
Balance, December 31, 1999 9,972,350 $ 9,972 100,000 $ 1,000 12,324,191 $ (12,706,498)
============ ============ ============ ============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Cash Flows
From
Inception of the
Development
Stage
on January 1,
December 31, For the Years Ended
-------------------------------------- 1994 Through
1999 1998 December 31, 2000
------------------ ------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (178,877) $ (150,873) $ (4,315,708)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common stock issued for services - 79,718 284,815
Preferred stock issued for services - - 10,400
Depreciation and amortization - - 70,532
Bad debt expense - - 129,240
Discontinued operations - - 2,820,586
Dividend expense - - 29,801
Changes in operating assets and liabilities:
Decrease in accounts receivable - - 20,921
Increase (decrease) in accounts payable 23,027 379 1,626
Increase (decrease) in accrued expenses 21,541 9,126 62,264
------------------ ------------------ ------------------
Net Cash Used by Operating Activities (134,309) (61,650) (885,523)
------------------ ------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment - - (3,201)
Sale of land - - 64,000
------------------ ------------------ ------------------
Net Cash Provided by Investing Activities - - 60,799
------------------ ------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - 287,800
Sale of preferred stock - - 209,500
Proceeds from long-term debt 130,500 66,470 333,935
Principle payments on long-term debt - - (5,500)
------------------ ------------------ ------------------
Net Cash Provided by Financing Activities 130,500 66,470 825,735
------------------ ------------------ ------------------
NET INCREASE (DECREASE) IN CASH (3,809) 4,820 1,011
CASH AT BEGINNING OF PERIOD 4,820 - -
------------------ ------------------ -------------
CASH AT END OF PERIOD $ 1,011 $ 4,820 $ 1,011
================== ================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception of the
Development
Stage
on January 1,
December 31, For the Years Ended
-------------------------------------- 1994 Through
1999 1998 December 31, 2000
------------------ ------------------ ------------------
Cash paid during the year for:
<S> <C> <C> <C>
Interest $ - $ - $ 8,509
Income taxes $ - $ - $ -
NON-CASH FINANCING:
Common stock issued for services $ - $ 79,668 $ 284,815
Preferred stock issued for services $ - $ - $ 10,400
Common stock issued for dividends $ - $ - $ 50,234
Paid-in capital through cancellation of
preferred stock $ - $ - $ 380,400
Paid-in capital through cancellation of
common stock $ - $ - $ 8,394
Common stock issued for debt $ - $ - $ 115,428
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. History
The Company was organized on March 4, 1988 as a Delaware
corporation under the name Sherry Lynn Corporation. The Company
was organized as a public company for the purpose of finding a
suitable combination partner.
On December 6, 1988, the Company changed its name to Equity Gold,
Inc. The number of shares of common stock authorized to be issued
changed from 50,000,000 to 150,000,000 with a par value of $0.001
per share of common stock.
On December 14, 1989, the Company merged with Gold Equity, Inc., a
Delaware corporation. The surviving corporation was Equity Gold,
Inc.
On February 7, 1989, the Company changed its name to Equity AU,
Inc.
On April 14, 1989, the Company changed the number of authorized
shares of common stock to 99,900,000.
On November 7, 1991, the Company authorized 2,000,000 shares of
preferred stock with a par value of $1.00 each.
On February 19, 1992, the Company authorized 99,900,000 shares of
Class A common shares with a par value of $0.001 per share. The
Company authorized 100,000 shares of Class B common shares with a
par value of $0.01 per share.
In January, 2000, the Company elected to change its official name
from Equity AU, Inc. to Equity Technologies & Resources, Inc.
The Company engaged in research and development of a process to
extract gold and other precious metals on various real properties
located in Arkansas. Partnerships were formed prior to 1994 by the
Company or by affiliates of the Company to raise working capital,
acquire mineral claims, rights, facilities and equipment and to
explore for precious metals. In 1994, the Company was notified by
general partners of the partnerships that they were terminated and
dissolved.
The Company has had no significant operations since August 1993
and entered the development stage on January 1, 1994. During
September 1996, the Company resumed operations and again suspended
operations in December 1996. The Company can make no assumptions
as to if and when operations will resume again.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year
end.
F-12
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
c. Use of Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make certain estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
d. Basic Loss Per Share
The computation of basic loss per share of common stock is based
on the weighted average number of shares issued and outstanding
during the periods of the financial statements as follows. Fully
diluted loss per share is not presented because of the
antidilutive nature of the common stock equivalents.
December 31,
-----------------------------
1999 1998
------------- -------------
Numerator - loss $ (178,877) $ (150,823)
Denominator - weighted
average number of shares
outstanding 9,972,350 7,407,442
------------- -------------
Loss per share $ (0.02) $ (0.02)
============= =============
e. Income Taxes
The Company is subject to the greater of federal income taxes
computed under the regular system or the alternative minimum tax
system. The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income taxes." The statement
requires the use of an asset and liability approach for the
accounting and financial reporting of income tax. No deferred tax
asset has been recognized for the operating loss carryforward as
it is more likely than not that all or a portion of the net
operating loss will not be realized and any valuation allowance
would reduce the benefit to zero.
f. Cash and Cash Equivalents
For purposes of financial statement presentation, the Company
considers all highly liquid investments with a maturity of three
months or less, from the date of purchase to be cash equivalents.
NOTE 2 - CONTINGENCIES AND COMMITMENTS
The Company owed $58,830 as of December 31, 1999 in federal taxes.
Penalties and interest continue to accrue. Management has
determined that this will have no significant or material adverse
effect on the results of operations.
F-13
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 2 - CONTINGENCIES AND COMMITMENTS (Continued)
On December 31, 1997, the Company canceled 8,402 Class A shares of
common stock. These shares had been authorized for issue during
prior years. No details were available as to whom the shares
should be issued to. Management canceled these shares which
resulted in contributed capital of $8,394.
On December 31, 1997, the Company canceled 98,000 shares of Class
A preferred stock, 272,200 shares of Class B preferred stock, and
10,200 shares of Class C preferred stock. No record of owners of
these shares could be determined. The results of the cancellation
of these shares was contributed capital of $380,400. All dividends
associated with the canceled shares were also canceled. The
Company may be liable to the owners of these shares, should the
owners of these shares be identified.
At December 31, 1998, a creditor made a claim for approximately
$20,000. Management contends the amount is not owed due to
non-performance by the Lessor. The amount has been due since
February 1994.
At December 31, 1998, a creditor made a claim for approximately
$19,000. Management contends the amount is not owed due to
non-performance by the creditor. The amount has been due since
June 1996.
NOTE 3 - NOTES PAYABLE
Notes payable of the Company are as follows:
<TABLE>
<CAPTION>
December 31,
1999
------------------
<S> <C>
Unsecured notes payable to a related party,
past due, bearing 12% interest. $ 165,500
Unsecured promissory notes bearing interest at 10%. Interest
payable annually in either stock or cash, or both. The lenders may
earn bonus distributions based on the productivity of mining
operations. Due on demand. 6,000
Non-interest bearing notes payable to various
parties, secured by guarantees of common
stock. Due on demand. 26,000
Non-interest bearing notes payable to related
parties, secured by guarantees of common
stock. Due on demand. -
------------------
Balance forward $ 197,500
------------------
F-14
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 3 - NOTES PAYABLE (Continued)
December 31,
1999
------------------
<S> <C>
Balance forward $ 197,500
Unsecured, non-interest bearing notes payable
to various parties. Due on demand -
Less related party notes (165,500)
------------------
Total notes payable 32,000
Less current portion (32,000)
------------------
Total Long-Term Debt $ -
==================
Scheduled maturities of notes payable are as follows:
2000 $ 197,500
==================
</TABLE>
NOTE 4 - CAPITAL STOCK
a. Preferred Stock - Series A
The Company is authorized to issue 2,000,000 shares of non-voting
preferred shares, at a par value of $1.00 per share. These shares
accrue a 10% dividend annually. The cumulative amount of dividend
was $25,000 and $20,000 at December 31, 1999 and 1998,
respectively. These preferred shares are convertible into Class A
common stock at a conversion rate of 5.5 common shares for each
preferred share. There were 50,000 shares issued and outstanding
at December 31, 1999.
Dividends paid during 1995 amounted to $17,717 for 1993 and
$14,800 for 1994. No dividends have been paid since 1995.
b. Preferred Stock - Class B
The company is authorized to issue 300,000 shares of non-voting
preferred shares, at a par value of $1.00 per share. These shares
accrue a 10% dividend payable annually on June 30 of each year.
The cumulative amount of dividend was $-0- at December 31, 1999
and 1998. These preferred shares are convertible into Class A
common stock at a conversion rate of 16 common shares for each
preferred share. There were no shares issued and outstanding at
December 31, 1999. Management canceled all outstanding shares and
related dividends payable in 1997.
F-15
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 4 - CAPITAL STOCK (Continued)
c. Preferred Stock - Class C
The Company is authorized to issue 100,000 shares of non-voting
preferred shares at a par value of $1.00 per share. These shares
accrue a 10% dividend annually. The cumulative amount of dividend
was $-0- at December 31, 1999 and 1998. These preferred shares are
convertible into Class A common stock at a conversion rate of 12
common shares for each preferred share. There were $-0- shares
issued and outstanding at December 31, 1999. Management canceled
all outstanding shares and related dividends payable in 1997.
d. Preferred Stock
The Company is authorized to issue 1,400,000 shares of its
non-voting preferred stock at a par value of $1.00 per share.
There were no shares issued and outstanding at December 31, 1999.
e. Common Stock - Class A
The Company is authorized to issue 99,900,000 Class A common
shares, at a par value of $0.001 per share. These shares have full
voting rights. There were 9,972,350 shares outstanding as of
December 31, 1999.
In October 1997, the Company issued 9,150,000 post-split shares of
Class A common stock for cash and mining rights. These shares were
canceled due to non-performance of the terms of the agreements.
25,000 shares were returned in October 1997. 1,487,000 of these
shares were used to settle debt of the Company. At December 31,
1999, 145,000 remained outstanding.
In September 1997, the Company authorized a reverse stock split of
100-for-1. Shares outstanding have retroactively been restated.
The Company issued 161,944 and 135,284 shares as dividends in 1995
for 1993 and 1994 dividends accrued.
In May 1995, the Company issued in error 9,617,000 shares to a
related party that were returned to the Company and canceled
during 1996. There was no consideration exchanged in the issuance
or cancellation of these shares.
F-16
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 4 - CAPITAL STOCK (Continued)
f. Common Stock - Class B
The Company is authorized to issue 100,000 shares of its Class B
common shares at a par value of $0.01 per share. The Class B
shares have the right to elect a majority of the Board of
Directors of the Company. There were 100,000 shares issued and
outstanding as of December 31, 1999. All Class B shares of common
stock are held by a director at December 31, 1999.
NOTE 5 - RELATED PARTY TRANSACTIONS
Arkansas American Mining and Exploration, Inc. (AAME) was owned
and controlled by the founders of the Company. In 1988, AAME
exchanged mining claims, milling facility and a core drilling rig,
for the Company's common stock.
In 1994, a related party loaned the Company $152,000 secured by
the Company's land, buildings, and equipment. This note, plus
interest, was due in the fourth quarter of 1996. The Company
defaulted on the note. The property and equipment were claimed by
the note holder and written off by the Company.
During 1995, the Company paid $25,000 for services rendered by
related parties and issued 2,500,000 shares of Class A common
stock for additional services valued at $26,225.
During 1997, the Company issued 1,029,500 shares of common A stock
to a former President of the Company for services valued at
$102,000. An agreement has been made with this former officer for
continued consulting services.
On December 23, 1998, the Company borrowed $61,000 from Kentrust,
Inc., an entity whose CEO is a director of the Company. The note
carried a 10% interest rate, and was due on December 23, 1999. In
1999, the Company borrowed an additional $104,500 from Kentrust at
10%. During the year, the entire $165,500 became overdue and began
accruing interest at a rate of 12% per annum. A $16,550 penalty
for late payment was also levied against the Company.
F-17
<PAGE>
EQUITY TECHNOLOGIES & RESOURCES, INC.
(Formerly Equity AU, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 6 - GOING CONCERN
The Company has no capital resources available to meet current
obligations and develop its properties and bring into production a
profitable mining operation. The adverse effect on the Company's
results of operation due to its lack of capital resources can be
expected to continue until such time as the Company is able to
generate additional capital from other sources.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management has
implemented, or developed plans to implement, a number of actions
to address these conditions including: maintaining the most
attractive mining properties; selling the precious gems; obtaining
additional financing; and, investigating various joint venture
opportunities.
Additional funding will be necessary for the Company's development
plans. There can be no assurance that additional funding will be
available when needed or, if available, that the terms of such
financing will not adversely affect the Company's results from
operations.
The financial statements do not include any adjustment to reflect
the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
F-18
<PAGE>
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, Chairman
Dated: June 29, 2000
5
