SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ending March 31, 2003
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, 2003, 49,848,919 common shares, $.001 par value per share, were
outstanding.
AGTsports, Inc.
INDEX
Part I FINANCIAL INFORMATION
Item 1. Balance Sheets (unaudited) F-1
March 31, 2003 and September 30, 2002
Statements of Operations (unaudited) F-2
For the Three Months Ended March 31, 2003 and 2002
Statements of Cash Flows (unaudited) F-4
For the Three Months Ended March 31, 2003 and 2002
Notes to Financial Statements F-6
Item 2. Management's Discussion and Analysis F-6
Item 3. Controls and Procedures F-7
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
Certification F-9
AGTsports, Inc.
(A Development Stage Company)
Balance Sheets
ASSETS
(Unaudited)
March 31, 2003 September 30, 2002
-------------- ------------------
Current:
Cash $ 234 $ 38,854
Other receivables -- 37,500
------------ ------------
Total current assets 234 76,354
Property and equipment, net 1,742 2,160
------------ ------------
Total assets $ 1,976 $ 78,514
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 26,039 $ 32,731
Accrued expenses (approximately 99% payable to related
parties at March 31, 2003 and September 30, 2002) 229,582 228,628
Notes payable - current 105,490 113,217
------------ ------------
Total current liabilities 361,111 374,576
Notes payable (less current portion) -- --
------------ ------------
Total liabilities 361,111 374,576
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;
3,500,000 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 (24,495,305) (24,432,232)
------------ ------------
Total shareholders' deficit (359,135) (296,062)
------------ ------------
Total liabilities and shareholders' deficit 1,976 $ 78,514
============ ============
Please 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
2003 2002 2003 2002 March 31, 2003
------------ ------------ ------------ ------------ --------------
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 99% and 89%
paid to related parties in 2003 and 2002) 14,831 27,714 29,681 44,413 4,270,163
General and administrative 11,206 12,100 27,158 19,432 3,571,844
Depreciation and amortization 216 366 432 694 2,489,562
Advertising -- -- -- 306,112
Contract services -- -- -- 4,985,397
Cost of unsuccessful offering -- -- -- 56,860
Travel and entertainment 278 288 919,834
Territory reacquisition -- -- -- 1,465,075
------------ ------------ ------------ ------------ ------------
Total expenses 26,253 40,458 57,271 64,827 21,648,334
------------ ------------ ------------ ------------ ------------
Preoperative loss (26,253) (40,458) (57,271) (64,827) (17,741,900)
Other income (expenses):
Interest income -- -- -- -- 1,081
Rent income -- -- -- 14,992
Interest expense (2,802) (294) (5,589) (550) (719,513)
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 (2,802) (294) (5,589) (550) (8,247,451)
------------ ------------ ------------ ------------ ------------
Net loss before extraordinary items and
provision for income taxes (29,055) (40,752) (62,860) (65,377) (25,989,351)
Provision for income taxes -- -- 1,711,801
------------ ------------ ------------ ------------ ------------
Loss before extraordinary items (29,055) (40,752) (62,860) (65,377) (27,701,152)
Extraordinary items:
Debt forgiveness -- -- -- -- 1,812,911
Debt forgiveness (net of $390 and $100,690 in
income taxes for 2001 and 2000, respectively) 1,164,319
Debt forgiveness - AGTsports Australia Pty Ltd. -- -- -- -- 339,155
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (29,055) $ (40,752) $ (62,860) $ (65,377) $(24,384,767)
============ ============ ============ ============ ============
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,
--------------------------- --------------------------
2003 2002 2003 2002
----------- ------------ ----------- -----------
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
(Unaudited) Period from
Three Months Ended January 6, 1986
March 31, (Inception) to
-------------------------- March
2003 2002 2003
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ (14,996) $ (10,302) $(5,057,878)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Return of capital - limited partnership -- -- 500,000
Receipts from notes receivable -- -- 80,772
Loans made -- -- (237,328)
Purchase/Disposal of assets 3,751 (377) (364,476)
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 3,751 (377) 264,456
----------- ----------- -----------
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 -- -- (157,106)
Advances from affiliates -- -- 1,421,542
Payments to affiliates -- -- (509,317)
Advances on line of credit (net) (127) (317) 156,927
Preferred stock dividends paid in cash -- -- (6,000)
Advances on notes payable 11,500 10,000 816,034
----------- ----------- -----------
Net cash provided by (used in) financing activities 11,373 9,683 4,793,656
----------- ----------- -----------
Net increase (decrease) in cash $ 128 $ (996) $ 234
Cash at beginning of period 106 1,024 --
----------- ----------- -----------
Cash at end of period $ 234 $ 28 $ 234
=========== =========== ===========
Please read accompanying notes.
F-4
AGTsports, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited) Period from
Three Months Ended January 6, 1986
March 31, (Inception) to
--------------- March
2003 2002 2003
------ ------ -----------
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 $ -- $ 80
====== =====
Taxes paid $ -- $ --
====== =====
Please read accompanying notes.
F-5
AGTsports, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003
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, 2002.
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 $62,860 and $65,377 for the
six months ended March 31, 2003 and 2002, respectively. At March 31, 2003 and
September 30, 2002, the Company has a net working capital deficit of $361,111
and $298,222, respectively, and a shareholders' deficit of $359,135 and
$296,062, 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, 2003, 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, 2003, the Company had no current business operations. The
Company has experienced operating expenses of $26,253 for the three-month period
ending March 31, 2003 and $40,752 for the same period in 2002. The revenues for
the period were none in 2003 or 2002. For the three months ended March 31, 2003
the Company reported a net loss of $29,055. 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 $234 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.
ITEM 3: Controls and Procedures
Within the 90 day period prior to the date of this report, we evaluated the
effectiveness and operation of our disclosure controls and procedures pursuant
to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective. There have been no significant
changes in internal controls or other factors that could significantly affect
internal controls subsequent to the date we carried out our evaluation.
PART II.
ITEM 1. Legal Proceedings
During the quarter ended March 31, 2003, 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, 2003, 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: No reports on Form 8-k were filed by the company
during the quarter ended March 31, 2003.
Exhibit Number Title Location
99.1 Certification of Chief Executive Officer Attached
and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
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, 2003 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, 2003 By: /s/ Cory J. Coppage
President
F-8
Chief Executive Officer and Chief Financial Officer - Sarbanes-Oxley Act
Section 302 Certification
I, Cory J. Coppage, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AGTsports, Inc.,;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 27, 2003
/s/ Cory Coppage
- ----------------
Cory Coppage
Chief Executive Officer
Chief Financial Officer
In stating that the above matters are true "based on his knowledge," the signer
does not mean that he knows such matters to be true, but means that after
reasonable inquiry he does not know of any facts which indicate to him that such
matters are not true. He further notes that there are no "other certifying
officers."