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 June 30, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
ENG Enterprises, Inc.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation or organization)
000-11225
(Commission File Number)
84-0899587
(IRS Employer Identification Number)
50 North Third Street, Fairfield, IA 52556
(Business address and zip code)
(515) 472-1500
(Registrant's telephone number, including area code)
5882 South 900 East, Suite 202, Salt Lake City, Utah 84121
(Former Address)
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 June 30, 2000
- ---------------------------------------- -------------------------------
Common Stock, $0.01 par value 1,241,541*
* This number reflects the effect of the 200% stock dividend
payable on or about August 17, 2000.
ITEM 1. FINANCIAL STATEMENTS
ENG Enterprises, Inc.
Balance Sheet
June 30, 2000
(Unaudited)
Assets $ 0
Liabilities and Stockholders' Equity
Liabilities $ 0
Stockholders' equity:
Preferred stock; $1.00 par value; 10,000,000
shares authorized; 2,619 shares issued and
outstanding 2,619
Common stock; $.01 par value; 100,000,000
shares authorized; 1,241,541 shares issued
and outstanding 12,415
Capital in excess of par value 10,524,021
Accumulated deficit (10,539,055)
Total stockholders' equity 0
$ 0
2
ENG Enterprises, Inc.
Statements of Operations
Six-Month Period Three-Month Period
Ended June 30, Ended June 30,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ $ $ $
Expenses
Net income (loss) $ $ $ $
Income (loss) per common
share, basic $ $ $ $
Average outstanding shares,
basic 1,368,271 848,604 1,387,541 848,604
3
ENG Enterprises, Inc.
Statement of Changes in Stockholders' Equity
Six Months Ended June 30, 2000
Preferred Stock Common Stock
Shares Shares Additional
Issued and Par Issued and Par Paid-In Stock Accumulated
Outstanding Value Outstanding Value Capital Subscription Deficit Total
Balance, December
31, 1999 2,791 $2,791 348,456 $3,485 $ 6,683,457 $ 59,870 $( 6,749,603) $ 0
Restatement of
prior period 3,781,175 (3,781,175)
Balance, December
31, 1999 (restated) 2,791 2,791 348,456 3,485 10,464,632 59,870 (10,530,778) 0
Issuance of stock
subscribed 120,000 1,200 58,670 (59,870)
Conversion of
preferred stock (172) (172) 5,391 53 119
Cancellation on
previously issued
common shares (60,000) (600) 600
Retroactive
restatement for
200 percent stock
dividend declared 827,694 8,277 (8,277)
Balance, June
30, 2000 2,619 $2,619 1,241,541 $12,415 $10,524,021 $ 0 $(10,539,055) $ 0
4
ENG Enterprises, Inc.
Statements of Cash Flows
Six-Month Period
Ended June 30,
2000 1999
(Unaudited) (Unaudited)
Operating activities
Net income $0 $0
Net increase in cash 0 0
Cash at beginning of period 0 0
Cash at end of period $0 $0
The accompanying notes are an integral part of the financial
statements.
5
ENG Enterprises, Inc.
Notes to Financial Statements
Periods Ended June 30, 2000 and 1999 (Unaudited)
1. Financial Statements
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments necessary for a fair statement of
financial position at June 30, 2000, the results of operations
for the six- and three-month periods ended June 30, 2000 and
1999, and cash flows for the six-month periods ended June 30,
2000 and 1999, have been made. Certain reclassifications have
been made in the financial statements for the year ended December
31, 1999 in order to conform to the June 30, 2000 presentation.
None of the reclassifications affected the results of operations
or cash flows for the periods presented.
The unaudited financial statements and notes are presented as
permitted by Form 10-QSB. Accordingly, certain information and
note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted. The accompanying financial
statements and notes should be read in conjunction with the
audited financial statements and notes of the Company for the
fiscal year ended December 31, 1999.
The accumulated deficit at the beginning of 2000 has been
adjusted to correct an error in the recording of forgiveness of
debt by related parties that occurred in 1999, 1996, and prior.
Had the error not been made, net income for 1999 would have
decreased by $906,754 ($3.21 per share) and net loss for 1996 and
prior would have increased by $2,874,421 ($.05 per share).
ENG Enterprises, Inc. (the "Company") has filed a Form 10-KSB for
the year ended December 31, 1999, which contained unaudited 1998
financial statements. Management is uncertain as to what effect
this will have on current operations during 2000.
2. Subsequent Events and Going Concern
On July 14, 2000, the Company acquired all of the issued and
outstanding shares of GOL India.com, Inc. ("GOL India"). The
consideration given to the Company consisted of the issuance of
15,750,000 shares of its common stock to USA Global Link, Inc.,
the former parent company of GOL India, representing 94.5 percent
of the total outstanding common stock of the Company. This
transaction will be accounted for as a reverse acquisition, which
is similar to a purchase of the Company by GOL India. As part of
this transaction, the Company will apply to change its name to
"Global Online India, Inc."
GOL India was incorporated on April 20, 2000 and was established
to provide e-commerce and e-business services to consumers and
businesses around the world. For the period ended June 30, 2000,
GOL India, which is a development stage enterprise, had not
commenced operations and its financial statements contain a
disclosure indicating that there was substantial doubt about its
ability to continue as a going concern.
6
The Company's ability to continue as a going concern is dependent
on obtaining funds to finance its operations. Management
believes that its present actions including the acquisition of
GOL India and its plans to raise capital will enable the Company
to continue, although no assurance to that effect can be given.
3. Earnings Per Share
On July 14, 2000, the Company declared a 200 percent stock
dividend on all shares issued. Earnings per share and average
outstanding shares for the six- and three-month periods ended
June 30, 2000 and 1999 have been retroactively restated to
reflect this stock dividend.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
This report may contain "forward-looking" statements. The
Registrant 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 Registrant or its
management or Board of Directors; (c) statements of future
economic performance; (d) statements of assumptions underlying
other statements and statements about the Registrant and its
business relating to the future; and (e) any statements using the
words "anticipate," "expect," "may," "project," "intend" or
similar expressions.
The Registrant 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
Registrant has been engaged in the business of the exploration,
development and production of oil and natural gas.
During 1995 the Registrant ceased operations of its remaining
assets, and has since remained inactive. Since discontinuing
operations, the Registrant has had no operations and has been
seeking a potential business acquisition or merger in an effort
to commence business operations.
Subsequent Events
On June 12, 2000, the Registrant entered into an Agreement and
Plan of Reorganization (the "Agreement") with GOL India.com, Inc.
("GOL India") to purchase 100% ownership of GOL India in exchange
for Common Stock of the Registrant. GOL India, incorporated as a
Delaware corporation, is part of the Global Online.com strategy
of USA Global Link to build an international e-commerce meta-hub
and was established to provide e-commerce services and e-business
solutions to consumers and businesses in India and around the
world through its wholly-owned subsidiary GOL India Portal
Private Limited ("GOL India Portal"), a New Delhi-based Indian
company, and Internet access and web hosting services to
residential and
7
business customers through a 49% ownership in GOL India Internet
Service Provider Private Limited ("GOL India ISP"), a New Delhi-
based Indian company incorporated on March 12, 1998. Subject to
approval by the Government of India, the transfer of this 49%
interest in GOL India ISP is to occur from another wholly owned
subsidiary by GOL India's parent company, USA Global Link, Inc.
GOL India operates the Indian web site "www.GOLIndia.com", an e-
commerce meta-hub providing online services to the Indian
expatriate population around the world in the following
categories: news, chat, Bollywood, e-greetings, tickets, sports,
stocks, auctions, classifieds, yellow and white pages, and jobs.
GOL India ISP received on June 7, 1999 one of approximately 20
"Category A" national ISP licenses issued by the Government of
India. GOL ISP also signed on October 24, 1999 a memorandum of
understanding with Uttar Pradesh Development Systems Corporation
Limited (UPDESCO), a Uttar Pradesh government undertaking, to
provide Internet access, web hosting and other Internet-related
services to the state government of Uttar Pradesh.
The transaction closed on July 14, 2000 in accordance with the
terms and conditions contained in the Agreement dated June 12,
2000, by and between the Registrant and GOL India.
The Registrant has acquired 100% of the issued and outstanding
Common Stock of GOL India, making GOL India a wholly owned
subsidiary of the Registrant. USA Global Link, Inc., a Delaware
corporation and 100% majority shareholder of GOL India, has been
issued 15,750,000 pre-dividend shares (47,250,000 post-dividend
shares) of restricted Common Stock of the Registrant,
representing 94.5% of the outstanding Common Stock of the
Registrant.
The Board of Directors of the Registrant approved a two hundred
percent (200%) Common Stock dividend on July 14, 2000. The stock
dividend has been approved on a pro-rata basis to all existing
shareholders of the Registrant as of July 14, 2000 through the
issuance of two (2) shares of Common Stock for each outstanding
common share of the Registrant payable on or about August 17,
2000. This two hundred percent Common Stock dividend will result
in the total number of outstanding shares of Common Stock in the
Registrant being 50,004,275 on August 18, 2000.
To better reflect its business of providing Internet-related ISP
and e-commerce services in India and to Indian expatriates around
the world, the Registrant will be known as "Global Online India,
Inc.". The Board of Directors has approved the change of the
Registrant's name, which is expected to occur on or about August
17, 2000.
As part of the Agreement, the former Board of Directors of the
Registrant has resigned and a new Board of Directors has been
appointed. The new Board of Directors consists of: Christopher W.
Hartnett, Larry Chroman, Lee Fergusson, David Morgan, Marc
Freeman and Prakash Srivastava.
Furthermore, the Board of Directors appointed the following
executive officers of the Registrant: Christopher W. Hartnett,
Chairman; Prakash Srivastava, Vice Chairman; Anthony Santelli,
Chief Executive Officer; Larry Chroman, International President;
and Lee Fergusson, President and Chief Operating Officer.
8
As part of the transaction, it was also agreed that the remaining
outstanding Class A and Class B Preferred Shares would convert
into Common Stock of the Registrant. In accord with the
Agreement, the 57 outstanding Class B Preferred Shares converted
into 1,781 shares of Common Stock prior to the closing, and the
2,562 outstanding Class A Preferred Shares converted into 80,050
shares of Common Stock after the closing.
The Registrant has filed with the Securities and Exchange
Commission a form SC 14F1/A on June 26, 2000, a report of change
in majority of directors; a Form 8-K on July 17, 2000, a notice
of the acquisition of GOL India and other events related to the
Agreement; and a Preliminary 14(c) Information Statement on July
18, 2000 and a Definitive 14(c) Information Statement on July 28,
2000, notifying of the proposed name change. These filings are
fully incorporated by reference into this 10-QSB filing.
Year 2000 Computer Problem
The Year 2000 or Y2K problem concerns potential failure of
certain computer software to correctly process information
because of the software's inability to calculate dates. The
Registrant had no operations or current equipment during the
reporting period April 1 to June 30, 2000 which might have been
affected by the Year 2000 computer glitch, and therefore
experienced no Y2K problems.
Results of Operations
During the reporting period April 1 to June 30, 2000 the
Registrant had no assets or capital, with no operations or income
since approximately 1995. It was anticipated that the Registrant
would have required only nominal capital to maintain its
corporate viability; necessary funds were provided by the
Registrant's existing shareholders, its officers or directors
until the completion of the acquisition of GOL India.
As a result of the acquisition of GOL India, the Registrant
expects that operations will begin in the reporting period July 1
to September 30, 2000.
In the opinion of management, inflation has not and will not have
a material effect on the operations of the Registrant.
Plan of Operations
As a result of the acquisition described above, the Registrant
intends to begin operating two types of Internet-related
business: 1) online business-to-business (B2B) and business-to-
consumer (B2C) e-commerce services to Indian residential and
business customers and to the Indian expatriate population around
the world; and 2) Internet access and application service
provider (ASP) services, such as web hosting, through its
ownership in GOL India ISP.
Global Online India intends to become an ISP and meta-hub for the
projected 8.0 million residential and business Internet users
throughout India and e-commerce provider for the more than 20.0
million Indian expatriates around the world. Global Online India
has already launched
9
its Indian-centric meta-hub at "www.GOLIndia.com", and is in the
process of designing and building out its 50-node ISP in the
largest cities of India.
It is anticipated that the Registrant will need an infusion of
capital within the next three months to successfully implement
its plan of operation. The most likely method available to it
for raising such capital would be the private sale of its
securities or borrowing from either a commercial or private
lender. It is unlikely that it could make a public sale of
securities within this period. There can be no assurance,
however, that the Registrant will be able to obtain this funding
when and if needed, or that such funding, if available, can be
obtained on terms acceptable to the Registrant.
Factors that may affect the successful implementation of this
plan of operations include a slow down in the growth of Indian e-
commerce and Internet use, a significant increase in competition
for Internet products and services in India, a breakdown in
security of online transactions and the transmittal of
confidential information over the Internet, and the consequences
of regulations and foreign state or federal laws.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
Pursuant to Section 1.6(a) of the Agreement described above, on
June 13, 2000 the Registrant cancelled 60,000 shares of its
Common Stock held by Milagro Holdings, Inc., thereby reducing
Milagro Holdings, Inc. total Common Stock to 60,000.
In consideration for the acquisition of 100% of the shares of GOL
India, USA Global Link, Inc., a Delaware corporation and 100%
majority shareholder of GOL India, has been issued 15,750,000 pre-
dividend shares (47,250,000 post-dividend shares) of restricted
Common Stock of the Registrant, representing 94.5% of the
outstanding Common Stock of the Registrant.
Pursuant to Section 1.6(c) of the Agreement, certain consultants,
advisors and finders were issued 422,758 pre-dividend shares
(1,268,274 post-dividend shares) of restricted Common Stock of
the Registrant.
The Board of Directors of the Registrant approved a two hundred
percent (200%) Common Stock dividend on July 14, 2000. The stock
dividend has been approved on a pro-rata basis to all existing
shareholders of the Registrant as of July 28, 2000 through the
issuance of two (2) shares of Common Stock for each outstanding
common share of the Registrant payable on or about August 17,
2000. This 200% Common Stock dividend will result in the total
number of outstanding shares of Common Stock in the Registrant
being 50,004,275.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the
quarter for which this report is filed.
The Board of Directors of the Registrant and a majority of the
shareholders approved to change the name of the Registrant at a
meeting on July 14, 2000. USA Global Link, Inc. owns 15,750,000
of pre-dividend shares of common stock of the Registrant, which
represents approximately 94.5% of the total number of outstanding
shares of the Registrant eligible to vote. Therefore, other than
USA Global Link's vote, no vote of any other shareholder of the
Registrant was required to authorize to change the name. USA
Global Link, Inc. was not required to solicit and did not solicit
votes or consents from any of the Registrant's other
shareholders.
The Registrant has filed with the Securities and Exchange
Commission a Preliminary 14(c) Information Statement on July 18,
2000 and a Definitive 14(c) Information Statement on July 28,
2000, notifying of the proposed name change. These filings are
fully incorporated by reference into this 10-QSB filing.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No Form 8-K's were filed during the quarter for which this report
is filed, however the Registrant has filed with the Securities
and Exchange Commission a Form 8-K on July 17, 2000, a notice of
the acquisition of GOL India and other events related to the
Agreement, and a Form 8-K/A on August 10, 2000 with change in
Registrant's certifying accountants and financial statements, pro
forma financial information and exhibits. These filings are fully
incorporated by reference into this 10-QSB filing.
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.
ENG ENTERPRISES, INC.
Dated: August 14, 2000
By: /S/ Lee Fergusson, President
11