UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: June 30, 2003
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from __________ to _______________
Commission file number: 000-28113
ELECTRA CAPITAL, INC.
---------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 88-0451101
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Po Box 1175, Palm Beach, FL 33480
- ----------------------------------- -----------------------------------
(Address of Principal Executive Offices) (Zip Code)
(561) 822 9995
-----------------------------------
(Issuer's Telephone Number, Including Area Code)
ASGA, Inc.
-----------------------------------
(Former Name and Address if Changed Since Last Report)
Check whether the issuer: (1) 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 [X] No [_]
The number of shares outstanding of the issuer's stock, $0.001 par value per
share, as of June 30, 2003 was 11,209,989.
Transitional Small Business Disclosure Format (check one): Yes [_] No [X]
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets.................................................F-2
Consolidated Statements of Operations.......................................F-3
Consolidated Statements of Stockholders' Equity.............................F-4
Consolidated Statements of Cash Flows.......................................F-5
Notes to Consolidated Financial Statements..................................F-6
F-1
Electra Capital, Inc.
(f/k/a ASGA, Inc.)
Consolidated Balance Sheets
June 30, 2003 December 31, 2002
------------------ -----------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 1,773 $ 105
Accounts receivable, net of allowance for doubtful accounts of
$0 and $49,808 0 0
------------------ -----------------
Total current assets 1,773 105
------------------ -----------------
PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment 0 0
Less: Accumulated depreciation 0 0
------------------ -----------------
Total property and equipment 0 0
------------------ -----------------
OTHER ASSETS
Investment in marketable equity securities 0 0
Other assets, net 0 1,480
------------------ -----------------
Total other assets 0 1,480
------------------ -----------------
Total Assets $ 1,773 1,585
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 224,225 $ 213,873
Accrued salaries and payroll taxes 36,000 25,000
Lawsuit contingent liability 500,000 500,000
Short-term loan 0 0
------------------ -----------------
Total current liabilities 760,225 738,873
------------------ -----------------
Total Liabilities 760,225 738,873
------------------ -----------------
STOCKHOLDERS' EQUITY(DEFICIT)
Preferred stock, $0.001 par value, 50,000,000 and 10,000,000
authorized; 0 issued and outstanding 0 0
Common stock, $0.001 par value, 100,000,000 and 50,000,000 shares
authorized; 99,999,989 and 909,989 issued and 11,391,989 and
909,989 outstanding 11,000 910
Additional paid-in capital in excess of par 48,728,282 48,537,372
Stock subscriptions receivable 0 0
Retained earnings (deficit) (49,497,734) (49,275,570)
------------------ -----------------
Total stockholders' equity(deficit) (758,452) (737,288)
------------------ -----------------
Total Liabilities and Stockholders' Equity(Deficit) $ 1,773 $ 1,585
================== =================
The accompanying notes are an integral part of the financial statements
F-2
Electra Capital, Inc.
(F/k/a ASGA, Inc.)
Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- --------------------------------
2003 2002 2003 2002
-------------- -------------- --------------- --------------
REVENUES
Fees revenue, net $ 0 $ 0 $ 0 $ 0
Sponsorship revenue 0 112,378 0 133,541
-------------- -------------- --------------- --------------
Net sales 0 112,378 0 133,541
COST OF SALES
Purses paid 0 30,750 0 30,750
Other 0 90,781 0 91,898
-------------- -------------- --------------- --------------
Total cost of sales 0 121,531 0 122,648
-------------- -------------- --------------- --------------
Gross margin 0 (9,153) 0 10,893
OPERATING EXPENSES
Advertising 0 3,764 0 4,083
Salaries 15,000 19,214 30,000 60,878
General and administrative expenses 165,167 631,048 192,164 767,291
Amortization and depreciation 0 869 0 1,808
Bad debt expense 0 0 0 0
-------------- -------------- --------------- --------------
Total operating expenses 180,167 654,895 222,164 834,060
-------------- -------------- --------------- --------------
Operating income (180,167) (664,048) (222,164) (823,167)
-------------- -------------- --------------- --------------
OTHER INCOME (EXPENSE)
Interest income 0 2 0 2
Interest expense 0 (3,371) 0 (8,446)
Gain on disposal of subsidiary 0 0 0 106,981
Gain on debt forgiveness 0 12,850 0 12,850
-------------- -------------- --------------- --------------
Total other income (expense) 0 9,481 0 111,387
-------------- -------------- --------------- --------------
Net income (loss) (180,167) (654,567) (222,164) (711,780)
-------------- -------------- --------------- --------------
OTHER COMPREHENSIVE INCOME (LOSS)
Gain (loss) in value of available for sale securities 0 676,000 0 676,000
-------------- -------------- --------------- --------------
Comprehensive income (loss) $ (180,167) 21,433 (222,164) (35,780)
============== ============== =============== ==============
Net income (loss) per common share, basic $ (0.15) $ (0.03) $ (0.21) $ (0.03)
============== ============== =============== ==============
Weighted average number of common shares
outstanding 1,235,418 21,999,876 1,080,564 21,968,184
============== ============== =============== ==============
The accompanying notes are an integral part of the financial statements
F-3
Electra Capital, Inc.
(f/k/a ASGA, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
Total
Number Additional Stock Stockholders'
of Common Paid-In Subscriptions Retained Equity
Shares Stock Capital Receivable Earnings (Deficit)
------------- ----------- -------------- -------------- ------------- --------------
BEGINNING BALANCE,
April 9, 1999 0 $ 0 $ 0 $ 0 $ 0 $ 0
Shares issued for cash 1 0 900 0 0 900
Net loss 0 0 0 0 (48,114) (48,114)
------------- ----------- -------------- -------------- ------------- --------------
BALANCE, December 31, 1999 1 0 900 0 (48,114) (47,214)
Net loss 0 0 0 0 (860,902) (860,902)
------------- ----------- -------------- -------------- ------------- --------------
BALANCE, December 31, 2000 1 0 900 0 (909,016) (908,116)
Reverse merger 1,935 2 11,905 0 0 11,907
S-8 shares for services 182 0 532,500 0 0 532,500
144 shares for services 3 0 4,200 0 0 4,200
Net loss 0 0 0 0 (1,032,282) (1,032,282)
------------- ----------- -------------- -------------- ------------- --------------
BALANCE, December 31, 2001 2,121 2 549,505 0 (1,941,298) (1,391,791)
S-8 shares for services 78 0 93,360 0 0 93,360
1 for 200 reverse split 0 0 0 0 0 0
Divestiture of subsidiary 0 0 0 0 1,380,910 1,380,910
144 shares for services 400,000 400 39,999,600 0 0 40,000,000
S-8 shares for services 34,000 34 6,599,966 0 0 6,600,000
S-8 shares for services 23,987 24 728,592 0 0 728,616
144 shares for services 24,200 24 43,176 0 0 43,200
Exercise of options 2,000 2 99,998 0 0 100,000
144 shares for fixed assets 423,599 424 423,175 0 0 423,599
1 for 50 reverse split, rounding 4 0 0 0 0 0
Net loss 0 0 0 0 (48,715,182) (48,715,182)
------------- ----------- -------------- -------------- ------------- --------------
ENDING BALANCE, December 31,
2002 909,989 910 48,537,372 0 (49,275,570) (737,288)
144 shares for cash and subscription 90,000 90 44,910 (20,000) 0 25,000
Subscription received 0 0 0 20,000 0 20,000
Stock issued for services 9,760,000 9,760 136,240 0 0 146,000
144 shares for cash 240,000 240 9,760 0 0 10,000
Net loss 0 0 0 0 (222,164) (222,164)
------------- ----------- -------------- -------------- ------------- --------------
ENDING BALANCE, June 30, 2003
(Unaudited) 10,999,989 $ 11,000 $ 48,728,282 $ 0 $ (49,497,734) $ (758,452)
============= =========== ============== ============== ============= ==============
The accompanying notes are an integral part of the financial statements
F-4
Electra Capital, Inc
(f/k/a ASGA, Inc.)
Consolidated Statements of Cash Flows
Six Months Ended June 30,
(unaudited)
2003 2002
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (222,164) $ (711,780)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 0 1,808
Common stock issued for services 146,000 637,910
Amortization of deferred revenue 0 (105,733)
Gain on disposal of subsidiary 0 (106,981)
Gain on forgiveness of debt 0 (12,850)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 0 (27,808)
Increase (decrease) in accounts payable 11,832 64,917
Increase (decrease) in accrued interest payable 0 6,500
Increase (decrease) accrued salaries and taxes 11,000 19,192
------------- --------------
Net cash provided (used) by operating activities (53,332) (234,825)
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of fixed assets 0 (5,000)
Loan to related party 0 (197,807)
------------- --------------
Net cash provided (used) by investing activities 0 (202,807)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of bank overdraft 0 33,674
Common stock issued in exchange for cash 55,000 0
Cash received on option exercise 0 100,000
Cash received from third party loan 0 300,000
Payments on third party loans 0 0
Cash received from bank loan 0 0
Line of credit advances 0 0
Cash removed on disposal of subsidiary 0 (244)
Cash received from related party loans 0 100
Payments on related party loans 0 (604)
------------- --------------
Net cash provided (used) by financing activities 55,000 432,926
------------- --------------
Net increase (decrease) in cash and equivalents 1,668 (4,706)
CASH and equivalents, beginning of period 105 4,768
------------- --------------
CASH and equivalents, end of period $ 1,773 $ 62
============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Payment of interest in cash $ 0 $ 5,076
============= ==============
Non-Cash Activities:
Common stock issued for stock subscription receivable $ 20,000 $ 0
============= ==============
Receipt of marketable equity securities for deferred revenue $ 0 $ 1,586,000
============= ==============
The accompanying notes are an integral part of the financial statements
F-5
Electra Capital, Inc.
(f/k/a ASGA, Inc.)
Notes to Consolidated Financial Statements
(Information with regard to the six months ended
June 30, 2003 and 2002 is unaudited)
(1) Summary of Significant Accounting Policies
The Company Electra Capital, Inc. conducts business from its office in Palm
Beach, Florida. The Company was organized under the laws of the State of
Nevada on February 16, 2000. The Company changed its name in September
2003.
The financial statements have been prepared in conformity with accounting
principles generally accepted in the United States. In preparing the
financial statements, management is required to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the dates of the
balance sheets and statements of operations for the periods then ended.
Actual results may differ from these estimates. Estimates are used when
accounting for allowance for bad debts, collectibility of accounts
receivable, amounts due to service providers, depreciation, litigation
contingencies, among others.
a) Revenue recognition. The Company formerly promoted professional golf
tournaments. Revenue was recognized for financial statement purposes upon
completion of each tournament.
b) Net income per share, basic. Net income per share is computed by
dividing the net income by the weighted average number of shares
outstanding during the period. Net income per share, diluted, is not
presented as no potentially dilutive securities are outstanding.
c) Cash equivalents. The Company considers all highly liquid debt
instruments with an original maturity of three months or less to be cash
equivalents. At times during any year, there may be a concentration of cash
at any one bank or financial institution in excess of insurance limits.
d) Accounts receivable and allowance for bad debts. At June 30, 2003, the
Company's accounts receivable consists of receivables from tournament
sponsors, which the Company had fully reserved for at December 31, 2002,
but has now fully written-off as they have been deemed uncollectable.
e) Fixed assets. Fixed assets are recorded at cost. Depreciation is
computed on the straight-line method, based on the estimated useful lives
of the assets of generally five or ten years. Expenditures for maintenance
and repairs are charged to operations as incurred. Depreciation expense was
$0 and $939 for the six months ended June 30, 2003 and 2002, respectively.
f) Principles of consolidation. The consolidated financial statements
include the accounts of ASGA Tour, Inc., its wholly-owned subsidiary.
Inter-company balances and transactions have been eliminated.
g) Significant transactions. In September 2001, the Company purchased
the100% ownership of American Senior Golf Association, Inc. in a reverse
acquisition accounted for as a reorganization of American Senior Golf
Association, Inc. In March 2002, the Company divested American Senior Golf
Association, Inc. to its President and principal ultimate stockholder. To
accomplish this transaction, the President agreed to transfer shares of the
Company to American Senior Golf Association, Inc. in an amount which, over
time, will be sufficient to liquidate its debts. Concurrent with this
transaction, the ASGA tour fixed assets were transferred to the Company,
and the Company was granted an unrestricted license to the name and logo of
ASGA for no additional consideration.
h) Interim financial information. The financial statements for the six
months ended June 30, 2003 and 2002 are unaudited and include all
adjustments which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring nature.
The results for the six months are not indicative of a full year results.
F-6
Electra Capital, Inc.
(f/k/a ASGA, Inc.)
Notes to Consolidated Financial Statements
(2) Income Taxes. Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax and
financial reporting purposes. The Company had net operating loss carry-
forwards for income tax purposes of approximately $49,504,900 expiring
$101,200, $554,400, $48,715,200 and $229,300 at December 31, 2020, 2021,
2022 and 2023, respectively. The amount recorded as deferred tax asset as
of June 30, 2003 is approximately $20,000,000, which represents the amount
of tax benefit of the loss carry-forward. The Company has established a
100% valuation allowance against this deferred tax asset, as the Company
has no history of profitable operations.
(3) Stockholders' Equity. The Company has authorized 100,000,000 shares of
$0.001 par value common stock and 20,000,000 shares of $0.001 par value
preferred stock, with 999,989 and 0 shares issued and outstanding at March
31, 2003. Rights and privileges of the preferred stock are to be determined
by the Board of Directors prior to issuance. In March 2002, the Company
completed a 1 for 200 reverse stock split, retiring 21,867,860 shares, and
increased the authorized common shares to 50,000,000 and preferred shares
to 10,000,000. In December 2002, the Company completed a 1 for 50 reverse
stock split, retiring 44,589,461 shares. All financial information has been
restated to reflect these reverse splits. American Senior Golf Association,
Inc. issued 1 share of its common stock in exchange for $900 in cash to its
founders on April 9, 1999. These shares were exchanged for 1,935 shares of
ASGA, Inc. as part of the reverse acquisition in September 2001. Subsequent
to the reverse acquisition, the Company issued 3 shares of restricted
common stock and 182 shares of S-8 unrestricted common stock in exchange
for services, valued at $4,200 and $532,500, respectively. In January 2002,
the Company issued 78 shares of S-8 common stock in exchange for services,
valued at $93,360. In March 2002, subsequent to the reverse split, the
Company issued 400,000 restricted shares of common stock to its officers
for services, and 34,000 shares of unrestricted, (S-8), shares of common
stock to four consultants for services. These shares were valued at
$40,000,000 and $6,800,000. In April 2002, the Company issued 2,520 shares
of unrestricted, (S-8), common stock to four consultants and legal counsel
in exchange for services rendered, valued at $522,850. In May 2002, a
stockholder exercised options for 2,000 shares of common stock for $100,000
in cash. In May 2002, the Company issued 67 shares of unrestricted, (S-8),
and 200 shares of restricted common stock to legal counsel and a
consultant, valued at $4,166 and $6,200, respectively. In June, July and
September, the Company issued 21,400 shares of unrestricted, (S-8), common
stock for services valued at $201,600. In September 2002, the Company
issued 4,000 shares of restricted common stock in exchange for services,
valued at $13,500. In October 2002, the Company issued 20,000 shares of
restricted common stock to two consulting companies for services valued at
$23,750. In November 2002, the Company issued 423,488 shares of restricted
common stock in exchange for fixed assets valued at $423,599. In December
2002, the Company completed a 1 for 50 reverse split of the common stock.
As a result, at December 31, 2002, there was 909,989 shares issued and
outstanding.
In January 2003, the Company issued 70,000 shares of restricted common
stock to an officer of the Company in exchange for services provided to the
Company prior to becoming an officer. The Parties agreed to void this
issuance in March 2003, when an investor was found who was willing to
purchase 90,000 shares of restricted common stock in exchange for $25,000
in cash and a $20,000 subscription receivable, or $0.50 per share at a time
when the market price of the stock was $0.35 per share, although there was
no volume and this investor believes that there is a potential opportunity
with the Company. The Company received the subscription receivable in cash
in June 2003. On June 3, 2003, the Company sold 240,000 Rule 144 restricted
shares in exchange for $10,000 in cash, or at $0.04 per share. On June 30,
2003, the Company issued 9,760,000 shares of unrestricted common stock,
under an S-8 registration, in exchange for services valued at $146,400, or
$0.015 per share which was the market price on that day, pursuant to two
consulting contracts. In June 2003, the Company issued 89 million shares of
common stock into escrow in anticipation of an agreement being completed.
In October the Company elected to cancel these shares as an agreement has
not been completed. In October 2003, 4,430,000 of the S-8 shares issued in
June 2003, were also cancelled.
F-7
Electra Capital, Inc.
(f/k/a ASGA, Inc.)
Notes to Consolidated Financial Statements
4) Commitments and Contingencies. In the normal course of business, the
Company is subject to proceedings, lawsuits and other claims. Such matters
are subject to many uncertainties and outcomes are not predictable with
assurance. While these matters could affect the operating results of any
year when resolved in future periods and while there can be no assurance
with respect thereto, management believes that after final disposition, any
monetary liability or financial impact to the Company would not be material
to the financial statements.
(5) Going Concern. The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company's
financial position and operating results raise substantial doubt about the
Company's ability to continue as a going concern, as reflected by the net
loss of $49,504,900 accumulated through June 30, 2003. The ability of the
Company to continue as a going concern is dependent upon obtaining
additional capital and financing along with identifying a viable business
opportunity and negotiating a contract which will allow the Company to
undertake such opportunity. The Company is currently evaluating several
such opportunities as well as negotiating for potential funding consistent
with the opportunities available to it. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern. The Company has exited its former business
industry and is evaluating the options available to it. The Company is
currently seeking additional capital.
(6) Lawsuit contingency. The Company is a defendant in a civil suit filed in
New Jersey. This suit asks for the repayment of a $300,000 loan that was
made to the Company's former president personally. The Company received no
real value from this loan. The Company is vigorously defending this suit,
and believes that it will prevail. However, the Company has recorded a
$500,000 reserve as a contingency, since lawsuit outcomes are very often
unpredictable.
F-8
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion is intended to assist in the understanding and
assessment of significant changes and trends related to our results of
operations and our financial condition together with our consolidated
subsidiaries. This discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this Quarterly Report on Form 10-QSB. Historical results and percentage
relationships set forth in the statement of operations, including trends which
might appear, are not necessarily indicative of future operations.
OVERVIEW
We were incorporated in the State of Nevada on February 16, 2000 under the name
"Transportation Safety Lights, Inc." to market innovative safety lights
developed by the Company's founders. Our founders believed that our products
would improve the safety and efficiency in the trucking and logistics industries
by significantly reducing the number of vehicles colliding with tractor-trailer
trucks making wide turns, primarily at intersections. A reduction in the number
of these collisions in turn would reduce (a) casualty losses, (b) property
losses, and (c) equipment and manpower downtime.
On September 8, 2001, the Company and World Quest, Inc. ("WQI") entered into an
Agreement for the Exchange of Common Stock, under which the Company issued
16,321,750 shares of common stock to WQI in exchange for all of the issued and
outstanding stock of American Senior Golf Association, Inc., a Delaware
corporation ("American Senior Golf"), the operator of the ASGA Tour, and the
American Senior Golf Association, a membership business devoted to professional
and amateur golfers aged 45 and older. As a result of this transaction, American
Senior Golf became a wholly owned subsidiary of the Company and we changed our
name to "ASGA, Inc."
Following the acquisition of American Senior Golf, we established a wholly owned
subsidiary named "Transportation Safety Lights, Inc." ("TSL"). Through TSL, we
are continuing to pursue our original business plan of developing and marketing
innovative tractor-trailer truck safety lights developed by our founders.
However, our primary business focus was on developing the ASGA Tour as the
premier intermediary professional golf tour in the United States for
professional and highly skilled amateur golfers aged 45 and older. Early in
2003, the Company elected to exit this line of business and are seeking a
replacement strategy.
The Company's Form 10-KSB for December 31, 2002 and Form 10-QSB for March 31,
2003 are going to be amended within 10 business days to reflect the $500,000
reserve for the lawsuit. Upon completion of those amendments, the Company will
then file an amendment to this Form 10-QSB to remove the then confusing language
herewith.
In September 2003, The Company changed its name to ElectraCapital, Inc.
The Company strongly recommends reading the Company's recent Annual Report on
Form 10-KSB in conjunction with this Quarterly report on Form 10-QSB, since the
Company has exited these busniesses.
RESULTS OF OPERATIONS
Results of Operations for the Three Months ended June 30, 2003 and 2002
Revenues
Total revenues decreased by $112,378 in the second quarter of 2003, a decrease
of 100%. In addition, our total revenues in the first quarter of 2002 consisted
entirely of sponsorship revenue. The decline in revenue was the result of the
Company exiting the Golf Tour industry.
Cost of Sales
Cost of sales decreased $121,531 in the second quarter of 2003, a decrease of
100%. The decline in cost of sales was the result of having no revenue.
10
Salaries
Salary expense decreased to $15,000 in the second quarter of 2003, compared to
$19,214 in the second quarter of 2002, a decrease of $4,214 or 22%. This
decrease was the result of a reduction of employees from 2 to 1.
General and Administrative Expenses
General and administrative expenses decreased to $172,317 in the second quarter
of 2003, compared to $631,048 in the second quarter of 2002, an decrease of
$458,731 or 73%. The decrease in these costs primarily resulted from the exit of
the golf tour industry and the Company dramatically reducining its expenditures.
Amortization and Depreciation
Amortization and depreciation was $0 in the second quarter of 2003, compared to
$869 in the second quarter of 2002. We have recorded a 100% impairment of our
fixed assets, since they are industry specific, and until we are able to sell
said assets, we do not believe that there is a measurable residual value.
Net Losses
For the quarter ended June 30, 2003 and 2002, we recorded net losses of $187,317
and $654,567, respectively. Our improved results principally were affected by
reductions in salary expenses and general and administrative expenses.
Our ability to continue as a going concern is dependent on our ability to obtain
sufficient cash to allow us to continue our evaluation of several opportunities
currently available to the Company. However, we cannot assure you that we will
be able to identify these opportunities, to acquire the businesses involved if
identified, or to integrate the businesses if acquired.
Results of Operations for the Six Months ended June 30, 2003 and 2002 Revenues
Total revenues decreased by $133,541 in the six months of 2003, a decrease of
100%. In addition, our total revenues in the six months of 2002 consisted
entirely of sponsorship revenue. The decline in revenue was the result of the
Company exiting the Golf Tour industry.
Cost of Sales
Cost of sales decreased $122,648 in the six months of 2003, a decrease of 100%.
The decline in cost of sales was the result of having no revenue.
Salaries
Salary expense decreased to $30,000 in the six months of 2003, compared to
$60,878 in the six months of 2002, a decrease of $30,878 or 51%. This decrease
was the result of a reduction of employees from 2 to 1.
General and Administrative Expenses
General and administrative expenses decreased to $199,314 in the six months of
2003, compared to $767,291 in the six months of 2002, an decrease of $567,977 or
74%. The decrease in these costs primarily resulted from the exit of the golf
tour industry and the Company dramatically reducining its expenditures.
Amortization and Depreciation
Amortization and depreciation was $0 in the six months of 2003, compared to
$1,808 in the six months of 2002. We have recorded a 100% impairment of our
fixed assets, since they are industry specific, and until we are able to sell
said assets, we do not believe that there is a measurable residual value.
Net Losses
For the six months ended June 30, 2003 and 2002, we recorded net losses of
$229,314 and $711,780, respectively. Our improved results principally were
affected by reductions in salary expenses and general and administrative
expenses.
11
Our ability to continue as a going concern is dependent on our ability to obtain
sufficient cash to allow us to continue our evaluation of several opportunities
currently available to the Company. However, we cannot assure you that we will
be able to identify these opportunities, to acquire the businesses involved if
identified, or to integrate the businesses if acquired.
LIQUIDITY AND CAPITAL RESOURCES
The Company is a defendant to a lawsuit. Should the Company not prevail in its
defense, the Company has no ability to pay any damages. The Company has
established a contingency reserve of $500,000 related to this lawsuit.
Management believes that the Company will be sucessful in its defense and
counter and cross claims. The law firm retained to defend the Company will
provide no opinion as to potential outcome based on their firm policy to not
provide such opinion.
Our liquidity requirements arise from net cash used in operating activities
Net cash used in operating activities was $28,332 for the six months ended June
30, 2003 and $234,825 for the six months ended June 30, 2002.
Net cash used by investment activities was $0 for the six months ended June 31,
2003 and $202,807 for the six months ended June 30, 2002.
Net cash provided by financing activities was $55,000 for the six months ended
June 30, 2003 and $432,926 for the six months ended June 30, 2002. The net cash
provided by financing activities for these periods was due primarily to the
receipt of proceeds of various loans or the sale of common stock.
We actively are seeking additional funding.
FORWARD-LOOKING STATEMENTS
This quarterly report contains statements about future events and expectations
which are characterized as forward-looking statements. Forward-looking
statements are based on our management's beliefs, assumptions and expectations
of our future economic performance, taking into account the information
currently available to them. These statements are not statements of historical
fact. Forward-looking statements involve risks and uncertainties that may cause
our actual results, performance or financial condition to be materially
different from the expectations of future results, performance or financial
condition we express or imply in any forward-looking statements. Factors that
could contribute to these differences include those discussed under the heading
"Risk Factors" in our Annual Report on Form 10-KSB, which was filed with the SEC
on May 21, 2003.
The words "believe", "may", "will", "should", "anticipate", "estimate",
"expect", "intends", "objective" or similar words or the negatives of these
words are intended to identify forward-looking statements. We qualify any
forward-looking statements entirely by these cautionary factors.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company has retained legal counsel to defend this lawsuit. Counsel will not
provide any opinion as outcome as a matter of firm policy. Management believes
that the Company will prevail on the suit as filed as well as counter and cross
claims. However, management has elected to establish a contingency reserve of
$500,000 related to this lawsuit.
Item 2. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
During the six months ended June 30, 2003, we did not sell any of our securities
which were not registered under the Securities Act of 1933, as amended (the
"Securities Act") except as follows:
1. We issued 90,000 shares of our common stock to a private investor in
exchange for $25,000 in cash and a stock subscription for $20,000 in cash.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. Exhibits required by Item 601 of Regulation S-B are
incorporated herein by reference and are listed below.
Exhibits # Description
- ---------- --------------------------
EX-31 * Section 302 Cerification of the Sarbanes-Oxley Act of 2002
EX-32 * Section 906 Certification of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K. During the fiscal quarter ended March 31, 2003,
the Company filed the following Current Reports on Form 8-K:
1. On May 7, 2003, we filed a Current Report on Form 8-K reporting under Item
4 - Change in certifying auditors and Item 9 - replacement of directors and
officers.
2. On January 10, 2003, we filed a Current Report on Form 8-K reporting under
Item 4 - Change in certifying auditors and Item 5 - other events - reverse
stock split.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ELECTRA CAPITAL, INC.
-----------------------
(Registrant)
By: /s/ Stephen H. Durland
- ---------------------------------------
Stephen H. Durland
Acting Chief Executive Officer and Chief Financial Officer
Date: October 14, 2003
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