SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ending March 31, 2002
Commission File Number 0-16447
AGTsports, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1022287
---------------------- -------------------------
(State of incorporation) (I.R.S. Employer ID Number)
7255 E. Quincy Avenue, Suite 550, Denver, CO 80237
(Address of principal executive offices) (Zip code)
(303) 437-9434
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of Securities Exchange Act of 1934 during the
preceding 12 months (or for such a 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 [X ] No [ ]
As of March 31, 2002, 49,848,919 common shares, $.001 par value per share, were
outstanding.
AGTsports, Inc.
INDEX
Part I FINANCIAL INFORMATION
Item 1. Balance Sheets F-1
March 31, 2002 and September 30, 2001
Statements of Operations F-2
Three Months Ended March 31, 2002 and 2001
Statements of Cash Flows F-4
Three Months Ended March 31, 2002 and 2001
Notes to Financial Statements F-6
Item 2. Management's Discussion and Analysis F-6
Part II OTHER INFORMATION
Item 1. Legal Proceedings F-7
Item 2. Changes in Securities F-7
Item 3. Default on Senior Securities F-7
Item 4. Submission of Matters to a
Vote of Security Holders F-7
Item 5. Other Information F-7
Item 6. Exhibits and Reports on Form 8-K F-8
Part III SIGNATURES F-8
AGTsports, Inc.
(A Development Stage Company)
Balance Sheets
ASSETS
(Unaudited)
March 31, 2002 September 30, 2001
-------------- ------------------
Current:
Cash $ 28 $ 1,024
------------ ------------
Total current assets 28 1,024
Property and equipment, net 2,932 3,249
------------ ------------
Total assets $ 2,960 $ 4,273
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 30,960 $ 20,297
Accrued expenses (approximately 99% payable to related
parties at March 31, 2002 and September 30, 2001) 188,945 145,227
Notes payable - current 18,851 9,168
------------ ------------
Total current liabilities 238,756 174,692
Notes payable (less current portion) -- --
------------ ------------
Total liabilities 238,756 174,692
Shareholders' deficit:
Convertible Preferred stock, $.001 par value;
1,500,000 shares authorized; 1,498,395
shares issued and outstanding 1,498 1,498
Convertible Preferred stock, $1.00 par value;
5,000,000 shares authorized; No
shares issued and outstanding -- --
Common stock, $.001 par value; 50,000,000
shares authorized; 49,848,919 shares issued
and outstanding 49,849 49,849
Treasury stock -- --
Additional paid-in capital 24,084,823 24,084,823
Deficit accumulated during the development stage (24,371,966) (24,306,589)
------------ ------------
Total shareholders' deficit (235,796) (170,419)
------------ ------------
Total liabilities and shareholders' deficit $ 2,960 $ 4,273
============ ============
Plase read accompanying notes. F-1
AGTsports, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited) (Unaudited) January 6, 1986
Three Months Ended March 31, Six Months Ended March 31, (Inception)
----------------------------- ---------------------------- Through
2002 2001 2002 2001 March 31, 2002
------------ ------------ ------------ ------------ ---------------
Revenue:
Territory sales $ -- $ -- $ -- $ -- $ 1,612,009
Other revenue -- -- -- -- 2,294,425
------------ ------------ ------------ ------------ ------------
-- -- -- -- 3,906,434
------------ ------------ ------------ ------------ ------------
Expenses:
Cost of purchased goods for resale -- -- -- -- 162,378
Salaries and director compensation -- -- -- -- 3,421,109
Professional services (approximately 75% and 93%
paid to related parties in 2002 and 2001) 27,714 19,741 44,413 35,800 4,204,025
General and administrative 12,100 7,224 19,432 18,636 3,524,294
Depreciation and amortization 366 267 694 431 2,488,359
Advertising -- -- -- -- 306,112
Contract services -- -- -- -- 4,985,397
Cost of unsuccessful offering -- -- -- -- 56,860
Travel and entertainment 278 -- 288 55 919,389
Territory reacquisition -- -- -- -- 1,465,075
------------ ------------ ------------ ------------ ------------
Total expenses 40,458 27,232 64,827 54,922 21,532,998
------------ ------------ ------------ ------------ ------------
Preoperative loss (40,458) (27,232) (64,827) (54,922) (17,626,564)
Other income (expenses):
Interest income -- -- -- -- 1,081
Rent income -- -- -- -- 14,992
Interest expense (294) (103) (550) (208) (711,589)
Loss on equity securities -- -- -- -- (8,652,613)
(Loss) gain on disposal of assets -- -- -- -- 2,814,846
Provision for loan loss -- -- -- -- (528,342)
Equity in loss of joint venture -- -- -- -- (748,650)
Loss on purchase of subsidiaries -- -- -- -- (442,419)
Settlement of claims -- -- -- -- (71,398)
Other income -- -- -- -- 84,565
------------ ------------ ------------ ------------ ------------
Total other income (expenses), net (294) (103) (550) (208) (8,239,527)
------------ ------------ ------------ ------------ ------------
Net loss before extraordinary items and
provision for income taxes (40,752) (27,335) (65,377) (55,130) (25,866,091)
Provision for income taxes -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Loss before extraordinary items (40,752) (27,335) (65,377) (55,130) (25,866,091)
Extraordinary items:
Debt forgiveness -- -- -- -- 1,265,429
Debt forgiveness - AGT Sports Australia Pty Ltd. -- -- -- -- 339,155
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (40,752) $ (27,335) $ (65,377) $ (55,130) $(24,261,507)
============ ============ ============ ============ ============
Please read accompanying notes. F-2
AGTsports, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited) (Unaudited)
Three Months Ended March 31, Six Months Ended March 31,
----------------------------------- -----------------------------------
2002 2001 2002 2001
---------------- ---------------- --------------- ----------------
Basic earnings per share
Loss per common share before extraordinary items $ (0.001) $ (0.001) $ (0.001) $ (0.001)
Extraordinary items per common share -- -- -- --
--------------- --------------- --------------- ---------------
Net income (loss) per common share $ (0.001) $ (0.001) $ (0.001) $ (0.001)
=============== =============== =============== ===============
Weighted-average shares of common stock outstanding 49,848,919 49,848,919 49,848,919 49,848,919
=============== =============== =============== ===============
Fully diluted earnings per share
Loss per common share before extraordinary items $ (0.001) $ (0.001) $ (0.001) $ (0.001)
Extraordinary items per common share -- -- -- --
--------------- --------------- --------------- ---------------
Net income (loss) per common share $ (0.001) $ (0.001) $ (0.001) $ (0.001)
=============== =============== =============== ===============
Weighted-average shares of common stock outstanding 49,848,919 49,848,919 49,848,919 49,848,919
=============== =============== =============== ===============
Please read accompanying notes. F-3
AGTsports, Inc.
(A Development Stage Company)
Statements of Cash Flows
Period from
(Unaudited) January 6, 1986
Six Months Ended (Inception) to
March 31, March
-------------------------------- ---------------
2002 2001 2002
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities (10,302) 28 (5,008,959)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Return of capital - limited partnership -- -- 500,000
Receipts from notes receivable -- -- 80,772
Loans made -- -- (237,328)
Purchase of assets (377) -- (364,462)
Purchase of stock in affiliate -- -- (10,000)
Proceeds from sale of investments -- -- 277,739
Proceeds from insurance settlement -- -- 17,749
----------- ----------- -----------
Net cash provided by (used in) investing activities (377) -- 264,470
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of common stock options -- -- 54,363
Proceeds from issuance of common stock -- -- 3,038,189
Payments on capital lease financing -- -- (20,976)
Principal payments on notes payable -- -- (138,106)
Advances from affiliates -- -- 1,421,542
Payments to affiliates -- -- (509,317)
Advances on line of credit (net) (317) -- 157,288
Preferred stock dividends paid in cash -- -- (6,000)
Advances on notes payable 10,000 -- 747,534
----------- ----------- -----------
Net cash provided by (used in) financing activities 9,683 -- 4,744,517
----------- ----------- -----------
Net increase (decrease) in cash $ (996) $ 28 $ 28
Cash at beginning of year 1,024 -- --
----------- ----------- -----------
Cash at end of year $ 28 $ 28 $ 28
=========== =========== ===========
Please read accompanying notes. F-4
AGTsports, Inc.
(A Development Stage Company)
Statements of Cash Flows
Period from
(Unaudited) January 6, 1986
Three Months Ended (Inception) to
March 31, March
----------------------------- ---------------
2002 2001 2002
---------- ----------- -----------
Noncash financing and investing activities:
Common stock issued in connection with the
settlement of certain accrued liabilities $ -- $ -- $ 175,106
========== =========== ===========
Common stock issued in connection with the settlement
of notes payable $ -- $ -- $ 1,631,506
========== =========== ===========
Common stock issued in connection with the settlement
of accounts payable $ -- $ -- $ 61,487
========== =========== ===========
Common stock issued in connection with the settlement
of certain accrued interest $ -- $ -- $ 164,638
========== =========== ===========
Preferred stock issued in connection with settlement
of notes payable $ -- $ -- $ 12,175
========== =========== ===========
Preferred stock issued in connection with settlement
of accounts payable $ -- $ -- $ 2,050
========== =========== ===========
Preferred stock issued in connection with settlement
of accrued interest $ -- $ -- $ 71,356
========== =========== ===========
Accrued dividends converted to note payable $ -- $ -- $ 87,000
========== =========== ===========
$1 Par preferred stock converted to common stock $ -- $ -- $ 999,000
========== =========== ===========
Preferred stock dividends included in accounts payable $ -- $ -- $ 45,000
========== =========== ===========
Assets acquired and liabilities assumed
in connection with purchase of Tea Times
of America, Inc.
Notes payable $ -- $ -- $ 218,500
========== =========== ===========
Accrued liabilities $ -- $ -- $ 35,320
========== =========== ===========
Accounts receivable $ -- $ -- $ 5,771
========== =========== ===========
Goodwill $ -- $ -- $ 28,682
========== =========== ===========
Common stock retired in connection with termination
of VAST joint venture $ -- $ -- $ 119,350
========== =========== ===========
Common stock issued in connection with acquisitions $ -- $ -- $ 174,880
========== =========== ===========
Common stock issued in connection with the purchase
of royalty rights $ -- $ -- $ 125,000
========== =========== ===========
Marketable securities received as contribution to capital $ -- $ -- $ 152,000
========== =========== ===========
Marketable securities contributed to capital $ -- $ -- $ (152,000)
========== =========== ===========
Additional paid in capital received $ -- $ -- $ 5,314,678
========== =========== ===========
Additional paid in capital contributed $ -- $ -- $(5,314,678)
========== =========== ===========
Transfer assets to limited partnership and
termination pursuant to agreement $ -- $ -- $ --
========== =========== ===========
Issuance of common stock in exchange for
investment in joint venture $ -- $ -- $ 868,000
========== =========== ===========
Issuance of common stock in exchange for
liability to issue common stock $ -- $ -- $ 3,187,349
========== =========== ===========
Loan assumed by shareholder $ -- $ -- $ 70,000
========== =========== ===========
Supplemental information:
Interest paid $ 152 $ 103
=========== ===========
Taxes paid $ -- $ --
=========== ===========
Please read accompanying notes. F-5
AGTsports, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002
NOTE 1 - MANAGEMENT REPRESENTATION
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions to Form 10-QSB and does not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for any interim
period are not necessarily indicative of results for the year. These statements
should be read in conjunction with the financial statements and related notes
included in the Company's Annual Report to shareholders on Form 10-KSB/A for the
year ended September 30, 2001.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the financial
statements, the Company has incurred net losses of $65,377 and $55,130 for the
six months ended March 31, 2002 and 2001, respectively. At March 31, 2002 and
September 30, 2001, the Company has a net working capital deficit of $238,728
and $173,668, respectively, and a shareholders' deficit of $235,796 and
$170,419, respectively all of which raise substantial doubt about the Company's
ability to continue as a going concern. Management has developed plans intended
to remedy these conditions. These plans include seeking other sources of
financing such as the completion of a possible business combination and the sale
of common stock. No assurances can be given as to the success of these plans.
The financial statements do not include any adjustments that might result should
the Company be unable to continue as a going concern.
NOTE 3 - CHANGES IN SECURITIES
During the Quarter ended March 31, 2002, there were no changes in the securities
of the Company.
ITEM 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
As of March 31, 2001, the Company had no current business operations. The
Company has experienced operating expenses of $40,752 for the three-month period
ending March 31, 2002 and $27,335 for the same period in 2001. The revenues for
the period were none in 2002 or 2001. For the three months ended March 31, 2002
the Company reported a net loss of $40,752. Losses can be expected to continue
until a profitable business is achieved. While the Company is seeking capital
sources for investment, there is no assurance that sources can be found.
F-6
Liquidity and Capital Resources
The Company had $28 in cash capital at the end of the period. The Company will
be forced to either borrow money or make private placements of stock in order to
fund any limited operations. No assurance exists as to the ability to achieve
loans or make private placements of stock.
PART II.
ITEM 1. Legal Proceedings
During the quarter ended March 31, 2002, the Company was not a party to, nor
aware of, any legal proceedings involving the Company that, in the opinion of
Management, were material to the future of the Company.
ITEM 2. Changes in Securities
None.
ITEM 3. Default on Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Security Holders during this
reporting period.
ITEM 5. Other Information
As of March 31, 2002, the Company had no other reportable events which were not
previously disclosed in the below referenced exhibits and reports.
The Company's Articles of Incorporation as amended entitle it to transact any
lawful business or businesses for which corporations may be incorporated
pursuant to the Colorado Corporation Code. The Company can be defined as a
"shell" company, whose sole purpose at this time is to locate and consummate a
merger or acquisition with a private entity. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company. The Company's plan
is to seek, investigate and, if such investigation warrants, acquire an interest
in business opportunities presented by persons or firms seeking the perceived
advantages of a corporation which reports under Section 13 and 15 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Such perceived benefits
may include facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock options or
similar benefits to key employees, providing liquidity (subject to restrictions
of applicable statutes) for all shareholders and other factors. The Company
anticipates that the selection process of such potential business opportunities
will be complex and extremely risky, and no assurance can be provided the
Company will be successful in these endeavors.
F-7
ITEM 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
(i) Report on Form 8-K, dated February 8, 2002, containing AGTsports,
Inc. letter of intent to acquire all of the issued and
outstanding shares of Plenum Wireless, Inc., a private,
development stage wireless mobile computing and communications
products business based in Georgetown, Texas.
(ii) Report on Form 8-K, dated March 8, 2002, containing AGTsports,
Inc progress report on the proposed acquisition of Plenum
Wireless, Inc. The progress report announced a special
shareholder meeting subject to the proposed acquisition during
the second quarter of 2002.
(iii)Report on Form 8-K, dated March 21, 2002, containing AGTsports,
Inc. announcement of the termination of the letter of intent and
proposed acquisition of Plenum Wireless, Inc. ("Plenum") On March
21, 2002 the Company received written notice from Plenum of its
decision to immediately terminate and not proceed further with
the acquisition in accordance with the February 8, 2002 binding
letter of intent.
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.
AGTsports, Inc.
Dated: March 31, 2002 By: /s/ Cory J. Coppage
-------------------------------
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Dated: March 31, 2002 By: /s/ Cory J. Coppage
-------------------------------
President
F-8