<PAGE>
<PAGE> 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 March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission File No. 0-24688
G/O INTERNATIONAL, INC.
-----------------------
(Name of Small Business Issuer in its Charter)
COLORADO 76-0025986
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
11849 Wink
Houston, Texas 77024
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (713) 783-1204
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether 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 court.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
March 31, 1998
Common Voting Stock - 6,135,372 shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management and commence below,
together with related Notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Registrant.
<PAGE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and December 31, 1997
<PAGE>
<TABLE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Balance Sheet
<CAPTION>
ASSETS
March 31, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 30,453 $ 9,848
Accounts receivable 70,000 -
Total Current Assets 100,453 9,848
OTHER ASSETS
Organization costs 960 1,920
Horses 104,700 70,700
Total Other Assets 105,660 72,620
TOTAL ASSETS $ 206,113 $ 82,468
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 14,558 $ 58
Accrued interest - 165
Advances from stockholders (Note 3) 141,885 39,385
Total Current Liabilities 156,443 39,608
MINORITY INTEREST 66,763 72,879
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.01 par value,
20,000,000 shares authorized;
6,135,372 shares issued and outstanding 61,354 61,354
Additional paid-in capital 2,339,226 2,339,228
Accumulated deficit prior to the
development stage (2,330,609) (2,330,609)
Deficit accumulated during the
development stage (87,064) (99,992)
Total Stockholders' Equity (Deficit) (17,093) (30,019)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 206,113 $ 82,468
</TABLE>
<TABLE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
From
Inception on
January 1,
For the Three Months Ended 1991 Through
March 31, March 31,
1998 1997 1998
<S> <C> <C> <C>
REVENUES
Horse sales $ 70,000 $ 60,000 $ 184,925
Other income - - 58
Total Revenues 70,000 60,000 184,983
COST OF SALES 27,100 41,770 106,110
GROSS MARGIN 42,900 18,230 78,873
EXPENSES:
General and administrative 32,544 33,885 195,678
Interest expense 2,751 627 4,643
Total Expenses 35,295 34,512 200,321
NET LOSS FROM OPERATIONS 7,605 (16,282) (121,448)
MINORITY INTEREST 5,323 5,502 34,384
NET LOSS $ 12,928 $ (10,780) $ (87,064)
LOSS PER SHARE $ (0.00) $ (0.01)
</TABLE>
<TABLE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, January 1, 1991
(inception of development
stage) 323,866 $ 3,239 $2,321,443 $(2,330,609)
Net loss for the year ended
December 31, 1991 - - - (72)
Balance, December 31, 1991 323,866 3,239 2,321,443 (2,330,681)
Net loss for the year ended
December 31, 1992 - - - (1,466)
Balance, December 31, 1992 323,866 3,239 2,321,443 (2,332,147)
Net loss for the year ended
December 31, 1993 - - - (1,678)
Balance, December 31, 1993 323,866 3,239 2,321,443 (2,333,825)
Shares issued to directors
in lieu of services
rendered and offset of
advances, 1,500,000
shares at $0.01 per share
on May 6, 1994 1,500,000 15,000 - -
Issuance of shares for
legal services at $0.01
per share on July 26,
1994 150,000 1,500 - -
Net loss for the year ended
December 31, 1994 - - - (24,350)
Balance, December 31,
1994 1,973,866 19,739 2,321,443 (2,358,175)
Shares returned back to the
Company and canceled in
February 1995 (18,494) (185) 185 -
Issuance of shares for cash,
October 23, 1996 at $0.01
per share 2,000,000 20,000 - -
Shares issued to directors
in lieu of services
rendered, November 1995
at $0.01 per share 30,000 300 - -
Net loss for the year ended
December 31, 1995 - - - (4,095)
Balance, December 31,
1995 3,985,372 39,854 2,321,628 (2,362,270)
Issuance of 2,000,000
shares for cash, March
12, 1996 at $0.01 2,000,000 20,000 - -
Issuance of 50,000 shares
for services on October
31, 1996 at $0.01 per
share 50,000 500 - -
Liquidating dividend - - (6,400) -
Net loss for the year ended
December 31, 1996 - - - (25,510)
Balance, December 31,
1996 6,035,372 60,354 2,315,228 (2,387,780)
Issuance of 40,000 shares
for cash on October 2,
1997 at $0.25 per share 40,000 400 9,600 -
Issuance of 60,000 shares
for services on October 29,
1997 at $0.01 per share 60,000 600 14,400 -
Net loss for the year ended
December 31, 1997 - - - (42,821)
Balance, December 31,
1997 6,135,372 61,354 $2,339,228 $(2,430,601)
Net income for the three
months ended March 31,
1998 - - - 12,928
Balance, March 31, 1998 6,135,372 $ 61,354 2,339,228 $2,417,673
</TABLE>
<TABLE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
From
Inception on
January 1,
For the Three Months Ended 1991 Through
March 31, March 31,
1998 1997 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET (LOSS) INCOME $ 12,928 $ (10,780) $ (87,064)
Reconciliation of net loss to
cash provided (used)
in operating activities:
Common stock issued in lieu of
services rendered and offset
of advances - - 32,300
Amortization expense - - 1,280
Minority interest (6,118) (5,502) (35,177)
(Increase) decrease in accounts
receivable (70,000) (60,000) (70,000)
(Increase) decrease in prepaid
expenses - 986 -
(Increase) decrease in organization
costs 960 - 960
Increase (decrease) in accounts
payable 14,500 7,112 8,629
Increase in accrued expenses (165) - -
Increase (decrease) in advances from
stockholders 102,500 10,000 141,885
Net Cash (Used) by Operating
Activities 54,605 (58,184) (7,187)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of houses - 35,770 -
Purchase of investments - - (3,200)
(Increase) Decrease of horses (34,000) - (104,700)
Net Cash (Used) by Investing
Activities (34,000) 35,770 (107,900)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividend - - (6,400)
Cash from minority shareholders - - 101,940
Cash from sales of stock - - 50,000
Net Cash Provided from Financing
Activities - - 145,540
NET CHANGE IN CASH 20,605 (22,414) 30,453
CASH AT BEGINNING OF PERIOD 9,848 34,091 -
CASH AT END OF PERIOD $ 30,453 $ 11,677 $ 30,453
CASH PAID FOR:
Interest $ - $ - $ -
Income taxes - - -
NON-CASH ITEMS
Common stock issued in lieu of
services rendered and offset or
advances $ - $ - $ 32,300
Common stock returned and
canceled $ - $ - $ 185
</TABLE>
G/O INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements
March 31, 1998 and December 31, 1997
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared
by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1998
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with general accepted
accounting principles have been condensed or omitted. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's December
31, 1997 audited consolidated financial statements. The results of operations
for the periods ended March 31, 1998 and 1997 are not necessarily indicative
of the operating results for the full year.
NOTE 2 - ORGANIZATION
G/O International, Inc. (the Company) was initially incorporated under
the laws of the State of Colorado in June, 1973 as Rocky Mountain Ventures,
Inc. During mid 1978, the Company experienced financial difficulties, at
which time new officers and directors were elected, the Company changed its
business activity from hard rock mining to oil and gas exploration,
development and production, and offices were relocated from Denver, Colorado,
to its present location in Houston, Texas.
On February 4, 1986, the Company filed for protection under Chapter 11
of the United States Bankruptcy Code. The Company ceased operations in 1988
and did not conduct any business activity other than the closing of its
bankruptcy filing and other organizational activities until it acquired
Waterbury Resources, Inc.
The Company is now considered to be in the development stage (effective
January 1, 1991 for accounting purposes) and has not commenced planned
principal operations. For disclosure purposes, the accompanying Statement of
Stockholders' Equity (Deficit) has been reflected from the date of the
inception of the development stage. The Company has paid a partially
liquidating dividend. The dividend was in the form of shares of two of its
subsidiaries.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
followed in connection with the preparation of the consolidated financial
statements.
Income Taxes - Income taxes have been provided on financial statement
income. There are no deferred income taxes arising from timing differences
which result from income and expense items being reported for financial
accounting and tax reporting purposes in different periods (see Note 8).
Loss Per Share - The Company computes loss per share by the weighted
average method. Fully diluted earnings per share are not presented because
the Company does not have common stock equivalents. As discussed below, the
Company's Board of Directors authorized a reverse split of its outstanding
Common Stock. All loss per share disclosures have been retroactively restated
to reflect the reverse split.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with maturities of three months or less to be cash equivalents.
Use of Estimates - The preparation of consolidated 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 disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Principles of Consolidation - The accompanying financial statements
include the accounts of the Company and its wholly owned subsidiary Antares
Trading, Inc. and its 50.7% owned subsidiary Waterbury Resources, Inc.
NOTE 4 - BANKRUPTCY FILING
On February 4, 1986, the Company filed a voluntary petition pursuant to
Chapter 11 of Title 11 of the United States Bankruptcy Code. At the time of
its filing, the Company had liabilities in excess of $950,000.
In accordance with the Company's Second Amended Plan of Reorganization
the creditors were broken down into nine separate classes for individual
satisfaction. A total of $1,496 of debt was paid in cash, $562,098 of debt
was paid through transfer of secured property interest, and the balance of
$338,061 of debt was satisfied through the issuance of 338,062 shares of its
previously unissued common stock. On March 13, 1992 the Bankruptcy Court
issued its final decree and the Chapter 11 bankruptcy was closed.
NOTE 5 - ADVANCES FROM STOCKHOLDERS
Stockholders of the Company have advanced funds to the Company to cover
settlement of bankruptcy obligations and ongoing administrative expenses. The
advances bear no interest and are repayable on demand as funds become
available. Total advances amounted to $39,385 at December 31, 1996.
NOTE 6 - CAPITAL TRANSACTIONS
On May 6, 1994, the Company's Board of Directors authorized a reverse
split of its outstanding common stock. The reverse split was on a basis of 1
(one) share for each 100 shares outstanding (1 for 100). However, no
shareholders' holding was to be reduced to less than 100 shares. The total
number of shares of common stock outstanding after the split was 323,866. The
reverse stock split is reflected on a retroactive basis.
On May 6, 1994, the Company's shareholders adopted, ratified and
approved Board of Directors' resolutions authorizing the issuance of a total
of 1,500,000 post-split shares of its previously unissued common stock to a
director and the former legal counsel (750,000 shares each) in exchange for
services rendered and advances made totaling $15,000.
On July 26, 1994, the Company's Board of Directors entered into a
compensation agreement calling for the issuance of 150,000 post-split shares
of its previously unissued commons stock, valued at $1,500, in exchange for
legal services rendered by its current legal counsel.
During 1995 18,494 shares of common stock was turned back to the
Company and canceled due to rounding of shares in the reverse split of the
Company's common stock.
On October 23, 1995 the Company issued 2,000,000 shares of its common
stock at $0.01 per share for a total of $20,000.
During November 1995, 30,000 shares of common stock was issued to
Directors of the Company in lieu of services rendered, valued at $0.01 per
share.
In March of 1996, 2,000,000 shares of common stock were issued for cash
of $20,000 or $0.01 per share.
In October of 1996, 50,000 shares of common stock were issued for
services valued $0.01 or $500.
NOTE 7 - RELATED PARTY TRANSACTIONS
The President of the Company provides office space and other clerical
services at no cost to the Company.
NOTE 8 - INCOME TAX
During 1993 the Company adopted Statement of financial Accounting
Standards No.109 - "Accounting for income Taxes" (SFAS 109). SFAS 109 is an
asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's consolidated financial statements or tax
returns. In estimating future tax consequences, SFAS 109 generally considers
all expected future events other than enactments of changes in the tax law or
rates. Previously, the Company accounted for income taxes under APB Opinion
No. 11. Under SFAS 109, in the year of adoption, previously reported results
of operations for that year should be restated to reflect the effects of
applying SFAS 109, and the cumulative effect of adoption on prior years'
results of operations should be shown in the income statement in the year of
change it was determined that there was no cumulative effect on the prior year
earnings. For tax purposes, the Company had available, at December 31, 1996,
not operating loss ("NOL") carry forwards for regular Federal Income Tax
purposes of an estimated $2,064,959 which are estimated to expire as shown
below. A valuation, allowance has been established for estimated tax benefits
of the loss carry overs which are not expected to be realized.
Year Amount
1998 $ 73,718
1999 1,891,249
2006 72
2007 1,466
2008 1,678
2009 24,350
2010 4,095
2011 25,510
2012 42,821
NOTE 9 - GOING CONCERN
The Company has experienced losses totaling $87,064 from inception of
its development stage. The Company also has limited assets and operating
capital with a stockholder deficit of $17,093 at March 31, 1998. In light of
this circumstance, the ability of the Company to continue as a going concern
is substantially in doubt. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Management plans are to seek another entity that wants to consummate an
acquisition by allowing the purchasing entity to buy or exchange unissued
shares of the Company's common stock in order to become a part of a public
company. Management believes their plans will provide the Company with the
ability to continue in existence. In the interim management has committed to
meeting its operating expenses.
Item 2. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
All material operations of the Company during the quarterly period
ended March 31, 1998, were those of its 50.7%-owned subsidiary,
Waterbury Resources, Inc., a Cayman Islands corporation ("Waterbury"). The
Company intends to continue to seek out the acquisition of assets, property or
business that may be beneficial to the Company and its stockholders.
Results of Operations.
- ----------------------
The Company discontinued its operations on approximately December
15, 1989. During the quarterly period ended March 31, 1998, Waterbury, the
Company's 50.7%-owned subsidiary, received revenues of $70,000 from the sales
of horses.
Taking into account general and administrative expenses of $32,544;
costs of sales of $27,100; and interest expense of $2,751, on a consolidated
basis, the Company had net income from operations of $7,605 during this
period, as compared to a net loss from operations of $16,282 during the
quarterly period ended March 31, 1997.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None; not applicable.
Item 2. Changes in Securities.
----------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None; not applicable.
Item 5. Other Information.
------------------
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
SIGNATURES
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 thereunto duly authorized.
G/O INTERNATIONAL, INC.
Date: May 18, 1998 By /s/ J.L. Burns
-------------- -------------------
Jack Burns, Director
President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 30453
<SECURITIES> 0
<RECEIVABLES> 70000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100453
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 206113
<CURRENT-LIABILITIES> 156443
<BONDS> 0
0
0
<COMMON> 61354
<OTHER-SE> (78447)
<TOTAL-LIABILITY-AND-EQUITY> 206113
<SALES> 70000
<TOTAL-REVENUES> 70000
<CGS> 27100
<TOTAL-COSTS> 27100
<OTHER-EXPENSES> 32544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2751
<INCOME-PRETAX> 7605
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12928
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
