UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended - March 31, 2007
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-27256
Advanced Resources Group, LTD.
f/k/a Online Gaming Systems, LTD.
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(Name of Small Business Issuer in its charter)
Delaware 13-3858917
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
5 Erie Street, Garfield, NJ 07026
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(Address of principal executive offices)
Registrant's telephone number, including area code: (973) 253-6131
Indicate by check mark whether the Registrant (1) has 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) has been subject to
such filing requirements for the past 90 days. YES [ ] NO [x ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. YES [x] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of June 30, 2007, the Registrant has outstanding 97,315,953 shares of
Common Stock $.001 par value.
Traditional Small Business Disclosure Format YES [ ] NO [x]
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 31, 2007 and December 31,
2006 (unaudited) 3
Consolidated Statements of Operations for the
three months ended March 31, 2007 and 2006 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 2007 and 2006 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION 9
ITEM 3. CONTROLS AND PROCEDURES 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 10
ITEM 2. Changes in Securities 10
ITEM 3. Defaults upon Senior Securities 10
ITEM 4. Submission of Matter to a Vote of Security Holders 10
ITEM 5. Other Information 10
ITEM 6. EXHIBITS 10
SIGNATURES 10
Page Two
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
CONSOLIDATED BALANCE SHEET
as of March 31, 2007 and December 31. 2006
(Unaudited)
March 31, December 31,
2007 2006
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ASSETS $ 0 $ 0
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Total Assets $ 0 $ 0
=========== ===========
LIABILITIES AND STOCKHOLDERS'EQUITY
Total Liabilities $ 0 $ 0
STOCKHOLDERS' EQUITY
Convertible Preferred stock - $0.001 par value, 10,000,000 shares
authorized: No shares issued and outstanding - -
Common stock - $0.001 par value, 200,000,000 shares
authorized: 97,315,953 shares issued and outstanding 97,316 97,316
Additional paid in capital 1,633,169 22,958,479
Treasury Stock 1,125,012 Common Shares - At Cost (1,730,485) (1,730,485)
Accumulated Deficit - (21,325,310)
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Total Stockholders' Equity $ 0 $ 0
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 0 $ 0
=========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page Three
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended as of March 31, 2007 and 2006
(Unaudited)
For the three months ended
March 31,
--------------------------------
2007 2006
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Revenues $ 0 $ 0
Cost of Sales 0 0
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Gross Profit $ 0 $ 0
Operating Expenses 0 0
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Net Income $ 0 $ 0
=========== ===========
Earnings per Share of Common Stock
Basic and Diluted $ 0 $ 0
Weighted average shares outstanding
Basic and Diluted 97,315,953 96,190,941
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page Four
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended as of March 31, 2007 and 2006
(Unaudited)
For the three months ended
March 31,
-------------------------------
2007 2006
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OPERATING ACTIVITIES:
Earnings from Operations $ 0 $ 0
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Net Cash - Operating Activities 0 0
INVESTING ACTIVITIES:
Net Cash - Investing Activities 0 0
FINANCING ACTIVITIES:
Net Cash - Financing Activities 0 0
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Change in Cash 0 0
Cash - Beginning Of Period 0 0
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Cash - End Of Period $ 0 $ 0
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Supplemental Disclosure of Cash Flow
Information:
Cash Paid During the Period For:
Interest $ 0 $ 0
Taxes $ 0 $ 0
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page Five
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007
(UNAUDITED)
(1) Organization
Nature of Business - On October 23, 2006, the Company agreed to merge with
WS Acquisition Corp., in a transaction to be consummated in 2007. Mr. William
Stehl, President and Chairman of the Board of the Company, is sole
shareholder and sole officer of WS Acquisition Corp. Under the merger
agreement, Mr. Stehl will receive 240,000,000 shares of the Company common
stock and 60,000,000 shares of the Company preferred stock in exchange for
all the shares of WS Acquisition Corp common stock. The shares have not
been issued as of December 31, 2007. In January 2007 the Company changed
its name to Advanced Resources Group, Inc. The Company is located in
Garfield, New Jersey. At March 31, 2007 and at December 31, 2006, the
Company was dormant and had ceased operations in May 2003. Before May 2003,
the Company primarily developed and marketed interactive gaming products and
services through the Internet. The Company established Online Gaming
Systems Australia Pty., as a wholly owned subsidiary, to offer sports book
sales in Australia and the Pacific Island region. On December 31, 2005, the
Company was majority owned by Hosken Consolidated Investors and
Subsidiaries, a South African Company. Hosken Consolidated Investors is an
investment holding company involved in various technology industries. In
the second quarter of 2006, Hosken Consolidated Investors executed a stock
purchase agreement to sell 77,767,153 (approximately 81%) shares of the
outstanding common stock of the Company to a non-related third party buyer.
In August 2006, the stock purchase agreement was consummated and Hosken
Consolidated Investors cancelled the outstanding convertible note of
$2,474,907 plus interest owed to it by the Company.
(2) Summary of Significant Accounting Policies
Principles of Consolidation - These financial statements include the
accounts of the Company and its subsidiaries. All material inter-company
accounts and transactions have been eliminated.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
Cash and Cash Equivalents - The Company considers all highly liquid
investments, with a maturity of three months or less when purchased, to be
cash.
Property and Equipment and Depreciation - Property and equipment are stated
at cost. Depreciation is computed primarily using the straight-line method
over the estimated useful lives of the assets. Leasehold improvements are
amortized using the straight-line method over the lesser of the term of the
related lease or the estimated useful lives of the improvements.
Routine maintenance and repair costs are charges to expense as incurred and
renewals and improvements that extend the useful life of the assets are
capitalized. Upon sale or retirement, the related cost and accumulated
depreciation are eliminated from the respective accounts and resulting gain
or loss is reported within the financial statements.
Revenue Recognition - Revenue is recognized once four criteria are met
(1) the Company must have persuasive evidence that an arrangement exists,
(2) services have been performed and accepted by the customer, (3) the selling
price must be fixed and determinable and (4) collectability must be
reasonably assured.
Page Six
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007
(UNAUDITED)
(2) Summary of Significant Accounting Policies (continued)
Income Taxes - The Company provides deferred taxes on the tax effects of
differences between the financial reporting and tax bases of the Company's
assets and liabilities at the enacted tax rates in effect for the years in
which the differences are expected to be reversed. The Company evaluates
the recoverability of the deferred tax assets and established a valuation
allowance when it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
Earnings Per Share - Basic earnings per share is computed by dividing the
earnings available to common stockholders by the weighted average number of
common shares issued and outstanding during the period.
Going Concern - These financial statements have been prepared on a going
concern basis. The Company has not generated significant revenues or profits
to date. This factor among others raises considerable doubt the Company
will be able to continue as a going concern. The Company's continuation as
a going concern depends upon its ability to generate sufficient cash flow to
conduct its operations and its ability to obtain additional sources of
capital and financing. The accompanying consolidated financial statements
do not include any adjustments that may result from the outcome of this
uncertainty. Management's plans to relieve these problems by continuing to
raise working capital either through stock sales or loans.
Significant Risks and Uncertainties - The Company places its cash with high
credit quality institutions to limit its credit exposure. The Company
routinely assesses the credit worthiness of its customers before a sale
takes place and as such believes its credit risk exposure is limited. The
Company performs ongoing credit evaluations of its customers but does not
require collateral as a condition of service.
(3) Convertible Notes Payable - Related Party
At December 31, 2005, the Company had a $2,474,907 convertible note payable
balance due to Hosken Consolidated Investments. Terms of the revised loan
agreement provides for an extension of the maturity to repay all principal
outstanding and related accrued interest by December 31, 2006. The notes
payable are secured by substantially all assets of the Company. As of
December 31, 2005 the Company had accrued $1,719,496 in interest related to
the convertible debt borrowing. No interest has been accrued in 2006 due to
the business being dormant.
In the second quarter of 2006, Hosken Consolidated Investments executed a
stock purchase agreement to sell 77,767,153 (approximately 81%) shares of
the outstanding common stock of the Company at June 30, 2006 to a non-
related third party buyer. In August 2006, the stock purchase agreement was
consumed and Hosken Consolidated Investments canceled the outstanding
convertible note of $2,474,907 plus interest owed to it by the Company.
(4) Income Taxes
There is no provision for income taxes for the year and period ending
December 31, 2006 and March 31, 2007 respectively, due to the Company's
business operations being dormant.
As of December 31, 2006 and March 31, 2007, the Company had a gross deferred
tax asset of approximately $6,700,000. The deferred tax asset primarily
consists of approximately $16,700,000 of federal net operating loss tax
carry-forwards expiring in years 2012 through 2022. The gross deferred tax
asset is offset by a valuation allowance of $6,700,000 at December 31, 2006
and March 31, 2007 respectively. The Company's ability to utilize its
carry-forward may be subject to certain limitations in future periods,
including Section 382 of the Internal Revenue Code of 1986, as amended.
Page Seven
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007
(UNAUDITED)
(5) Equity
On October 23, 2006, the Company agreed to merge with WS Acquisition Corp.,
in a transaction to be consummated in 2007. Mr. William Stehl, President
and Chairman of the Board of the Company, is sole shareholder and sole
officer of WS Acquisition Corp. Under the merger agreement, Mr. Stehl will
receive 240,000,000 shares of the Company common stock and 60,000,000 shares
of the Company preferred stock in exchange for all the shares of WS Acquisition
Corp common stock. The shares have not been issued as of December 31, 2007.
In addition, the Company does not have the authorized share to complete the
agreement. If the shares had been authorized and issued at March 31, 2007 the
number of preferred shares outstanding would have been 60,000,000 and the
number of common shares outstanding would have been 337,315,953.
(6) Stock Options
On January 1, 1997, the Company adopted an Incentive Stock Option Plan for
Employees, Directors, Consultants and Advisors. This plan expired December 31,
2006. Employees, directors, consultants and advisors of the Company are
eligible for participation in the plan. The plan provides for stock to be
issued pursuant to options granted and shall be limited to 250,000 shares of
common stock, $.001 par value. The shares have been reserved for issue in
accordance with the terms of the plan. At November 2002 stockholder meeting,
the stockholders approved an amendment to the plan to increase the maximum
number of shares of common stock issuable upon exercise of options granted
under the plan to 10,000,000. In December 2002, the Board of Directors
authorized the issuance of incentive stock options under this plan to five
members of management. In 2003, the five members of management terminated
their employment and under the terms of the plan the options expired. The
Company did not grant any incentive stock options during year or period ended
December 31, 2006 and March 31, 2007 respectively. As of December 31, 2006
and March31, 2007 there were no outstanding options under the plan.
Non-incentive stock options and warrants may be granted to employees or non-
employees at fair value or at the price less than fair market value of the
common stock at the date of the grant. There were no non-incentive options
and warrants granted during the periods ended December 31, 2006 and March
31, 2007.
The following is a summary of the non-incentive options and warrants
transactions for the periods;
Shares Exercise Price
Outstanding at December 31, 2005 133,334 $2.25
Exercisable at December 31, 2005 133,334 $2.25
Granted 0
Exercised 0
Canceled 133,334
Outstanding at December 31, 2006 0
Exercisable at December 31, 2006 0
The Company uses the Black-Scholes option valuation model to estimate the
fair of options. Option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.
(7) Subesquent Event
The Company's board of directors consummated the WSA acquisition on
October 21, 2007 when a valuation of the acquired stockpile was concluded.
The acquisition was recorded at the FMV of the stock price on October 21, 2007
of $.17 or $51,000,000.
Page Eight
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Three Months Ended March 31, 2007 and 2006
The Company permanently ceased operations in May 2003, therefore no discussion
and analysis of financial condition or results of operations would be relevant.
FORWARD - LOOKING STATEMENTS
The matters discussed in Management's Discussion and Analysis and throughout
this report that are forward-looking statements are based on current
management expectations that involve risk and uncertainties.
Potential risks and uncertainties include, without limitation; the impact of
economic conditions generally and in the industry for Internet gaming
products and services; dependence on key customers; continued competitive and
pricing pressures in the industry; open-sourcing of products; rapid product
improvement and technological change; capital and financing availability;
and other risks set forth herein.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company maintains a system of disclosure controls and procedures designed
to ensure that information required to be disclosed in its Exchange Act
Reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and such information is accumulated and communicated to management, including
the Chief Executive Officer and acting Principal Financial Officer, to allow
timely decisions regarding required disclosure. Management necessarily applies
its judgment in assessing the costs and benefits of such controls and
procedures, which, by their nature, can provide only reasonable assurance
regarding management's control objective.
With the participation of management, the Company's Chief Executive Officer
and acting Principal Financial Officer evaluated the effectiveness of the
design and operation of its disclosure controls and procedures as of the end
of the period covered by this report. Based on this evaluation, the Company's
Chief Executive Officer and acting Principal Financial Officer concluded that
the Company's disclosures and procedures were effective at March 31, 2006.
Change In Internal Controls
There were no significant changes in the Company's internal controls over
financial reporting that occurred during the three month period ended
March 31, 2007 that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.
Page Nine
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no legal proceedings filed or threatened involving the
Company during the three month period ended March 31, 2006.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS
31.1 Certification by Chief Executive Officer pursuant to
Section 302 of Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer and acting Chief
Financial Officer pursuant to Section 906 of Sarbanes-Oxley
Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Advanced Resources Group, Ltd.
Date: September 17, 2008
By: /s/ Richard Dunning
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Richard Dunning
President