1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File number: 0-11225
ENERGETICS, INC.
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(Exact name of registrant as specified in charter)
Delaware 84-0899587
- ------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6337 South Highland Dr. #130 Salt Lake City, Utah 84121
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(Address of principal executive offices) (Zip Code)
801-269-9500
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Registrant's telephone number, including area code
13111 East Briarwood Avenue, Suite 300, Englewood, Colorado 80112
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(Former name, former address, and former fiscal year, if changed since last
report.)
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), Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Class Outstanding as of September 30, 1999
------------------------- ------------------------------------
Common Stock, $0.001 56,573,601
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ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheets of the Company as of September 30, 1999 and
December 31, 1998, and the related unaudited statements of operations for the
three and nine month periods ended September 30, 1999 and 1998, and the period
from January 1, 1995 (inception of development stage) to September 30, 1999,
the unaudited statement of stockholders' equity for the period from January
1,1995 (inception of development stage) through September 30, 1999, and the
unaudited statements of cash flows for the nine month periods ended September
30, 1999 and 1998, and the period from January 1, 1995 (inception of
development stage) through September 30, 1999, are attached hereto and
incorporated herein by this reference.
Operating results for the nine months ended September 30, 1999, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 1999.
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ENERGETICS, INC.
(Development Stage Company)
BALANCE SHEETS
September 30, 1999, and December 31, 1998
September 30, December 31,
1999 1998
------------- ------------
ASSETS
CURRENT ASSETS
Cash $ - $ -
------------- ------------
Total Current Assets $ - $ -
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,568,662 $ 2,568,662
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Total Current Liabilities 2,568,662 2,568,662
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STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized, at
$1.00 par value; 2,317 shares
issued and outstanding 2,317 2,317
Common stock
100,000,000 shares authorized, at
$0.001 par value; 56,573,601
shares issued and outstanding 565,736 565,736
Capital in excess of par value 5,998,594 5,998,594
Accumulated deficit (9,135,309) (9,136,309)
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Total Stockholders' Equity (2,568,662) (2,568,662)
------------ ------------
$ - $ -
============ ============
The accompanying notes are an integral part of these financial statements.
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ENERGETICS, INC.
(Development Stage Company)
Statement of Operations
For the Three and Nine Months Ended September 30, 1999 and 1998
and the Period from January 1, 1995 to September 30, 1999
Three Months Three Months Nine Months Nine Months January 1, 1995
September 30, September 30, September 30, September 30 to
1999 1998 1999 1998 September 30, 1999
------------ ------------ ------------ ------------ -------------
REVENUES $ - $ - $ - $ - $ -
EXPENSES - - - - 1,351,491
------------ ------------ ------------ ------------ ------------
NET LOSS $ - $ - $ $ $ (1,351,491)
============ ============ ============ ============ ============
GAIN (LOSS) PER COMMON SHARE
Basic $ - $ - $ - $ -
============ ============ ============ ============
Diluted $ - $ - $ - $ -
============ ============ ============ ============
AVERAGE OUTSTANDING SHARES
Basic 56,573,601 56,573,601 56,573,601 56,573,601
============ ============ ============ ============
Diluted 68,160,701 68,160,701 68,160,701 68,160,701
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
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ENERGETICS, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from January 1, 1995 (date of inception
of development stage) to September 30, 1999
Capital in
Preferred Stock Common Stock Excess of Accumulated
Shares Amount Shares Amount Par Value Deficit
------- --------- ---------- ---------- ---------- -----------
Balance January 1, 1995
(note 1) 2,317 $ 2,317 56,573,601 $ 565,736 $5,998,594 $ (7,783,818)
Net loss for the year ended - - - - - (1,055,475)
December 31, 1995
Net loss for the year ended
December 31, 1996 - - - - - (98,672)
Net loss for the year ended
December 31, 1997 - - - - - (98,672)
Net loss for the year ended
December 31, 1998 - - - - - (98,672)
------- --------- --------- --------- ---------- -----------
Balance December 31, 1998 2,317 2,317 56,573,601 565,736 5,998,594 (9,135,309)
Net loss for the nine
months ended September 30,
1999 - - - - - -
------- --------- --------- --------- ---------- -----------
Balance September 30, 1999 2,317 $ 2,317 56,573,601 $ 565,736 $5,998,594 $(9,036,637)
======= ========== ========== ========= ========== ===========
The accompanying notes are an integral part of these financial statements.
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ENERGETICS, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
and the Period from January 1, 1995 to June 30, 1998
Nine Months Nine Months January 1, 1995
September 30, September 30, to
1999 1998 September 30, 1999
------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $ - $ - $ (1,351,491)
Adjustments to reconcile net
loss to net cash provided by
operating activities
Loss of assets - - 956,803
Changes in accounts payable - - 296,016
------------ ------------ ------------
Net Cash Used by Operations - - -
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
- - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
- - -
------------ ------------ ------------
Net Increase (Decrease) in Cash - - -
Cash at Beginning of Period - - -
------------ ------------ ------------
Cash at End of Period $ - $ - $ -
============ ============ ============
The accompanying notes are an integral part of these financial statements.
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ENERGETICS, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the state of Delaware on August
2, 1982 with authorized common stock of 10,000,000 shares at a par value of
$.01 and 10,000,000 preferred stock at a par value of $1.00. Since inception
the Company has been engaged in the business of the exploration, development,
and production of oil and natural gas through three wholly owned subsidiaries.
During 1995 the Company ceased operations resulting from the loss of its
remaining assets leaving the Company with the debt shown in the balance sheet
.and has since remained inactive.
The company is considered to have been in the development stage since January
1, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On December 31, 1998, the Company had a net operating loss carry forward of
$9,135,309. The tax benefit from the loss carry forward has been fully
offset by a valuation reserve because the use of the future tax benefit is
doubtful since the Company has no operations. The loss carryover will expire
beginning in years 1998 though 2019.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Financial instruments
- ---------------------
The carrying amounts of financial instruments, including accounts payable, are
considered by management to be their estimated fair values. These values are
not necessarily indicative of the amounts that the Company could realize in a
current market exchange.
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ENERGETICS, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (Loss) Per Share
- -------------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding using the treasury stock method in
accordance with FASB No. 128.
3. ACCOUNTS PAYABLE
The Company issued various notes payable for advances to the Company by
related parties and the notes were not timely paid which resulted in default
and are now considered as current accounts payable and including the accrued
interest payable.
4. PREFERRED STOCK
The preferred stock is convertible into common stock at the rate of one share
of preferred stock for 5,000 shares of common stock at the option of the
stockholder. The preferred shares carry a cumulative dividend rate of 8%. No
dividends can be declared on the common stock until the cumulative dividends
are paid on the preferred.
5. RELATED PARTY TRANSACTIONS
Related parties own 82% of the outstanding common stock.
6. GOING CONCERN
The Company does not have the necessary working capital to service its
liabilities for the coming year and may be forced into bankruptcy.
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company but
it does not have the working capital to be successful in this effort.
Continuation of the Company as a going concern is dependent upon obtaining the
working capital to service its debt and to provide working capital for its
planned activity. All of the debt shown in the balance sheet is due to related
parties and they have agreed to withheld any collection action during the
coming year and the management of the Company has developed a strategy, which
they believe can obtain the needed working capital through additional equity
funding and long term debt which will enable the Company to continue
operations for the coming year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
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This report may contain "forward-looking" statements. The Company is
including this cautionary statement for the express purpose of availing itself
of the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include, but are not
limited to: (a) projections of revenues, capital expenditures, growth,
prospects, dividends, capital structure and other financial matters; (b)
statements of plans and objectives of the Company or its management or Board
of Directors; (c) statements of future economic performance; (d) statements of
assumptions underlying other statements and statements about the Company and
its business relating to the future; and (e) any statements using the words
"anticipate," "expect," "may," "project," "intend" or similar expressions.
Year 2000 Disclosure
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The Company is working to resolve the potential impact of the year 2000
on the ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a minimum
number of computer programs in its operations. The Company has not completed
its assessment, but currently believes that costs of addressing this issue
will not have a material adverse impact on the Company's financial position.
However, if the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a material financial
risk to the Company. In order to assure that this does not occur, the Company
plans to devote all resources required to resolve any significant year 2000
issues in a timely manner.
The Company was incorporated under the laws of the state of Delaware on
August 2, 1982 with authorized common stock of 100,000,000 shares at a par
value of $.01 and 10,000,000 preferred stock at a par value of $1.00. Since
inception the Company has been engaged in the business of the exportation,
development and production of oil and natural gas through three wholly owned
subsidiaries. During 1995 the Company ceased operations by the loss of its
remaining assets leaving the Company with the debt shown in the balance sheet,
and has since remained inactive.
The company is considered to have been in the development stage since
January 1, 1995.
Results of Operations
- ---------------------
The Company is considered a development stage company with no assets
or capital and with no operations or income since approximately 1995.
It is anticipated that the Company will require only nominal capital to
maintain the corporate viability and necessary funds will most likely be
provided by the Company's existing shareholders or its officers and directors
in the immediate future until the completion of the a acquisition or merger.
However, unless the Company is able to complete a acquisition or merger
or obtain outside financing, there is substantial doubt about its ability to
continue as a going concern.
In the opinion of management, inflation has not and will not have a
material effect on the operations of the Company until such time as the
Company successfully completes an acquisition or merger. At that time,
management will evaluate the possible effects of inflation on the Company as
it relates to its business and operations following a successful acquisition
or merger.
Plan of Operation
- -----------------
Because the Company lacks funds, it may be necessary for the officers and
directors to either advance funds to the Company or to accrue expenses until
such time as a successful business consolidation can be made. Management
intends to hold expenses to a minimum and to obtain services on a contingency
basis when possible. The Company's directors may receive compensation for
services provided to the Company until such time as an acquisition or merger
can be accomplished. However, if the Company engages outside advisors or
consultants, it may be necessary for the Company to attempt to raise
additional funds. As of the date hereof, the Company has not made any
arrangements or definitive agreements to use outside advisors or consultants
or to raise any capital.
In the event the Company does need to raise capital most likely the
only method available to the Company would be the private sale of its
securities. It is unlikely that it could make a public sale of securities or
be able to borrow any significant sum from either a commercial or private
lender. There can be no assurance that the Company will be able to obtain
additional funding when and if needed, or that such funding, if available, can
be obtained on terms acceptable to the Company.
The Company does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal
cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
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No exhibits are included as they are either not required or not
applicable.
(b) Reports on Form 8-K.
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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.
ENERGETICS, INC.
Dated: October 29, 1999
By /S/ John Chymbryk , President