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.
Item 2. Properties.
Reference is hereby made to item 2 of the previously filed 10K/A.
Item 3.
Item 3. Legal Proceedings.
Reference is hereby made to item 3 of the previously filed 10K/A.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
Reference is hereby made to item 4 of the previously filed 10K/A.
PART II
Item 5.
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.
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.
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.
Item 7.
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.
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.
EQUITY TECHNOLOGIES & RESOURCES, INC. (Formerly Equity AU, Inc.) (A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
Independent Auditors' Report............................................
Balance Sheets..........................................................
Statements of Operations................................................
Statements of Stockholders' Equity (Deficit)............................
Statements of Cash Flows...............................................
Notes to the Financial Statements......................................
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
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
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.
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.
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:
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.
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.
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.
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.
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