UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QSB
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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 - September 30, 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 September 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 September 30, 2007 and December 31,
2006 (unaudited) 3
Consolidated Statements of Operations for the
three months ended September 30, 2007 and 2006 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended September 30, 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
fka Online Gaming Systems, LTD
Balance Sheets
September 30, 2007 and December 31, 2006
September 30, December 31,
2007 2006
------------ ------------
Assets
Current Assets
Cash $ 128 $ --
Advances receivable 23,800 --
------------ ------------
Total Current Assets 23,928 --
Total Assets $ 23,928 $ --
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Shareholder loans $ 78,821 $ --
------------ ------------
Total Current Liabilities 78,821 --
Total Liabilities -- --
Stockholders' Equity
Convertible Preferred Stock - Par Value $.001 Per Share;
Authorized 10,000,000 shares, none issued -- --
Common Stock - Par Value $.001 Per Share;
Authorized 200,000,000 Shares, Issued and
Outstanding 97,315,953 Shares 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 (54,893) (21,325,310)
------------ ------------
(54,893) --
Total Liabilities and Stockholders' Equity $ 23,928 $ --
============ ============
The accompanying Notes are an integral part of these financial statements
Page Three
Advanced Resources Group, LTD
fka Online Gaming Systems, LTD
Statements of Operations
For the Periods Ending September 30, 2007 and September 30, 2006
September 30, September 30,
2007 2006
------------ ------------
Revenues $ -- $ --
Cost of Sales -- --
------------ ------------
Gross Profit -- --
Operating Expenses 52,943 --
------------ ------------
Net Income $ (52,943) $ --
============ ============
Basic and Diluted Earnings Per Share of Common Stock $ (0.00) $ --
Weighted Average Shares of Common Stock Outstanding 97,315,953 96,190,941
The accompanying Notes are an integral part of these financial statements
Page Four
Advanced Resources Group, LTD
fka Online Gaming Systems, LTD
Statements of Cash Flows
For the Periods Ending September 30, 2007 and September 30, 2006
September 30, September 30,
2007 2006
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Operating Activities:
Earnings from operations $(52,943) $ --
-------- --------
Net Cash - Operating Activities (52,943) --
Investing Activities:
Advances receivable (23,800) --
-------- --------
Net Cash - Investing Activities (23,800) --
Financing Activities
Shareholder loans 76,820 --
-------- --------
Net Cash - Financing Activities 76,820 --
-------- --------
Change in Cash 77 --
Cash - Beginning of Period 51 --
-------- --------
Cash - End of Period $ 128 $ --
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ --
Taxes $ -- $ --
The accompanying Notes are an integral part of these financial statements
Page Five
ADVANCED RESOURCES GROUP, LTD.
(f/k/a ONLINE GAMING SYSTEMS, LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 September 30,
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
September 30, 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 September 30, 2007 respectively, due to the Company's
business operations being dormant.
As of December 31, 2006 and September 30, 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 September 30, 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
September 30, 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 September 30, 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 September 30, 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
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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
The Company's prior operations were permanently ceased May 2003. Accordingly, no
discussion and analysis of financial condition and results of operations is
required.
In August, 2006, Ahead Investments, LTD. ("Ahead"), the Company's 81%
stockholder sold its stock of the Company to Lanmac Associates ("Lanmac"), an
unrelated party, thus changing the control of the Company to a new stockholder.
As part of that transaction, Ahead released the Company from debt owed by the
Company to Ahead in the amount of $2,474,907 plus interest.
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 September 30, 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 September
30, 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 September 30, 2006.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
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.
31.2 Certification by acting Chief Financial 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: October 5, 2008
By: /s/ Richard Dunning
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Richard Dunning
President
Page Ten