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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2004
OR
[ ] 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: 0-27256
ONLINE GAMING SYSTEMS, LTD.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3858917
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
C/o Advanced Resources Group, LTD, 5 Erie Street, Garfield, NJ 07026
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(Address of principal executive offices)
Registrant's telephone no., including area code: (973) 253-6131
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 past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding as of May 31, 2007
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Common Stock, $.001 par value 97,315,953
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TABLE OF CONTENTS
Heading PART I. FINANCIAL INFORMATION Page
Item 1 Financial Statements............................................ 2
Balance Sheet-June 30, 2004 (Unaudited)......................... 3
Statement of Operations-Six Months Ended June 30, 2004
(Unaudited)..................................................... 4
Statement of Operations-Three Months Ended June 30,
2004 (Unaudited)................................................ 5
Statement of Cash Flows-Six Months Ended June 30, 2004
(Unaudited)..................................................... 6
Notes to Financial Statements (Unaudited)....................... 7-8
Item 2 Management's Discussion and Analysis or Plan of Operation ...... 9
PART II. OTHER INFORMATION
Item 1 Legal Proceedings............................................... 10
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds..... 10
Item 3 Defaults Upon Senior Securities................................. 10
Item 4 Submission of Matters to a Vote of Securities Holders........... 10
Item 5 Other Information............................................... 10
Item 6 Exhibits........................................................ 10
Signatures.................................................................. 11
PART I
Item 1. Financial Statements
The following unaudited financial statements for the six-month
periods ended June 30, 2004 and 2003 have been prepared by
Online Gaming Systems, Ltd. (the "Company").
ONLINE GAMING SYSTEMS, LTD.
Financial Statements
June 30, 2004
Page 2 of 11
ONLINE GAMING SYSTEMS, LTD.
BALANCE SHEET
JUNE 30, DECEMBER 31,
2004 2003
------------ ------------
(Unaudited)
ASSETS:
CURRENT ASSETS:
Cash $ -- $ --
Other Current Assets -- --
------------ ------------
TOTAL CURRENT ASSETS -- --
------------ ------------
PROPERTY AND EQUIPMENT-Net -- --
------------ ------------
OTHER ASSETS
Deposit -- --
Intangible Assets-Net -- --
------------ ------------
TOTAL ASSETS $ -- $ --
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Cash Overdraft $ -- $ --
Accounts Payable and Accrued Expenses -- --
Accrued Interest-Related Party 1,719,496 1,719,496
Advances - Related Party -- --
Convertible Notes Payable - Related Party 2,474,907 2,474,907
------------ ------------
TOTAL CURRENT LIABILITIES 4,194,403 4,194,403
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' (DEFICIT):
Convertible Preferred Stock-Par Value $.001 Per Share;
Authorized 10,000,000 Shares, None Issued and Outstanding -- --
Common Stock-Par value $.001 Per Share;
Authorized 200,000,000 Shares, Issued and outstanding-
97,315,953 Shares at September 30, 2004 97,316 97,316
Additional Paid-in Capital 18,764,076 18,764,076
Treasury Stock, 1,125,012 Common Shares-At Cost (1,730,485) (1,730,485)
Accumulated (Deficit) (21,325,310) (21,325,310)
------------ ------------
TOTAL STOCKHOLDERS' (DEFICIT) (4,194,403) (4,194,403)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ -- $ --
============ ============
The Accompanying Notes are an Integral Part of these Financial Statements.
Page 3 of 11
ONLINE GAMING SYSTEMS, LTD.
STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
2004 2003
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REVENUE
Related Party $ -- $ --
Other -- 146,780
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TOTAL REVENUE -- 146,780
COST OF SALES -- --
------------ ------------
GROSS PROFIT -- 146,780
OPERATING EXPENSES:
General and Administrative -- 398,313
Depreciation and Amortization -- 92,342
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TOTAL OPERATING EXPENSES -- 490,655
------------ ------------
[LOSS] FROM OPERATIONS (--) (343,875)
------------ ------------
OTHER [EXPENSES] INCOME:
Interest Expense-Related Party (--) (395,618)
Interest Expense (--) (--)
Settlement of debt -- --
Other Income [Expense] -- 2,589,774
------------ ------------
OTHER [EXPENSES] INCOME - NET -- 2,194,156
------------ ------------
INCOME(LOSS) FROM OPERATIONS BEFORE
INCOME TAX [BENEFIT] EXPENSE -- 1,850,281
INCOME TAX [BENEFIT] EXPENSE -- --
------------ ------------
NET INCOME (LOSS) $ -- $ 1,850,281
============ ============
BASIC AND DILUTED NET [LOSS]
PER SHARE OF COMMON STOCK $ -- $ .02
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING-BASIC AND DILUTED 97,315,953 96,802,698
The Accompanying Notes are an Integral Part of these Financial Statements.
Page 4 of 11
ONLINE GAMING SYSTEMS, LTD.
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30,
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2004 2003
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REVENUE
Related Party $ -- $ --
Other -- 118,744
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TOTAL REVENUE -- 118,744
COST OF SALES -- --
------------ ------------
GROSS PROFIT -- 118,744
OPERATING EXPENSES:
General and Administrative -- 164,412
Depreciation and Amortization -- 46,171
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TOTAL OPERATING EXPENSES -- 210,583
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[LOSS] FROM OPERATIONS -- (91,839)
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OTHER [EXPENSES] INCOME:
Interest Expense-Related Party -- (197,809)
Interest Expense -- --
Settlement of debt -- --
Other Income [Expense] -- 2,589,774
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OTHER [EXPENSES] INCOME - NET -- 2,391,965
------------ ------------
INCOME(LOSS) FROM OPERATIONS BEFORE
INCOME TAX [BENEFIT] EXPENSE -- 2,300,126
INCOME TAX [BENEFIT] EXPENSE -- --
------------ ------------
NET INCOME (LOSS) $ -- $ 2,300,126
============ ============
BASIC AND DILUTED NET [LOSS]
PER SHARE OF COMMON STOCK $ -- $ 0.02
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING-BASIC AND DILUTED 97,315,953 97,052,698
The Accompanying Notes are an Integral Part of these Financial Statements.
Page 5 of 11
ONLINE GAMING SYSTEMS, LTD.
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------------
2004 2003
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OPERATING ACTIVITIES:
[Loss] from Operations $ -- $ 1,850,281
Adjustments to Reconcile Net [Loss] Income to
Net Cash [Used for] Operating Activities:
Depreciation and Amortization -- 92,342
Exchange of assets for cancellation of indebtedness -- (2,659,188)
Issuance of common stock for cancellation of indebtedness -- 54,000
Changes in Assets and Liabilities:
[Increase] Decrease in:
Note Receivable -- --
Other Assets -- 3,707
Increase [Decrease] in:
Accounts Payable and Accrued Expenses -- (38,904)
Accrued Interest - Related Party -- 395,618
----------- -----------
NET CASH - OPERATING ACTIVITIES: (--) (309,558)
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INVESTING ACTIVITIES:
Purchase of Patents and Licenses -- --
Purchase of Property, Equipment, and Capitalized Software (--) (35,245)
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NET CASH - INVESTING ACTIVITIES (--) (35,245)
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FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock -- --
Proceeds from Sale of Treasury Stock -- --
Increase (Decrease) in Loan Payable to Officer -- --
Proceeds from Note Payable -- --
Proceeds from Convertible Note Payable - Related Party -- 400,000
Repayment of Convertible Note Payable - Related Party -- --
Repayments of Note Payable -- --
Repayments of Lease Payable -- --
----------- -----------
NET CASH - FINANCING ACTIVITIES -- 354,876
----------- -----------
[DECREASE] INCREASE IN CASH AND CASH EQUIVALENTS -- 10,073
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -- 10,073
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ -- $ --
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the years for:
Interest $ -- $ --
Taxes -- --
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
The Company exchanged assets with a book value of $340,812 for $3,000,000
convertible note payable resulting in a non-cash profit of $ 2,659,188
During the six month period ended June 30, 2003, the Company issued 900,000
shares of common stock to a former consultant in exchange for cancellation of
indebtedness.
The Accompanying Notes are an Integral Part of these Financial Statements.
Page 6 of 11
ONLINE GAMIING SYSTEMS, LTD.
Notes to Financial Statements (Unaudited)
June 30, 2004
Note 1 - Basis of Preparation
The accompanying unaudited financial statements of Online
Gaming Systems, Ltd (the " Company") have been prepared in
accordance with Regulation S-B promulgated by the Securities
and Exchange Commission and do not include all of the
information and footnotes required by generally accepted
accounting principles in the United States for complete
financial statements. In the opinion of management, these
interim financial statements include all adjustments necessary
in order to make the financial statements not misleading. The
results of operations for such interim period are not
necessary indicative of results of operations for a full year.
The unaudited financial statements should be read in
conjunction with the audited financial statements and notes
thereto of the Company and management's discussion and
analysis of financial condition and results of operations
included in the Annual Report on Form 10-KSB for the year
ended December 31, 2003.
Note 2 - Significant Accounting Policies
The accounting policies followed by the Company are set forth
in Note 2 to the Company's financial statements in the
December 31, 2003 Form 10-KSB.
Note 3 - Per Share Data
Per share basic data are based on the weighted average number
of common shares outstanding during the respective periods.
The diluted net income per share is based upon the common
stock outstanding during the period and the effect of all
dilutive potential common shares outstanding. The computation
of diluted earnings per share does not assume conversion,
exercise or contingent issuance of securities that would have
an anti-dilutive effect on earnings per share.
Note 4 - Major Customers
There were no major customers during the six-month period
ending June 30, 2004:
Page 7 of 11
ONLINE GAMIING SYSTEMS, LTD.
Notes to Financial Statements (Unaudited)
June 30, 2004
Note 5 - Convertible Notes Payable - Related Party
At June 30, 2004, the Company had a $2,474,907 convertible
note payable balance due Hosken Consolidated Investments
["HCI"]. HCI is a South African investment holding company
involved in various technology industries. Terms of the
revised loan agreement provides for an extension of the
maturity to repay all principal outstanding and related
accrued interest by a future date to be determined. The notes
payable are secured by substantially all assets of the
Company. The Company recorded interest expense of $ --- and
$395,618 for the six months ended June 30, 2004 and June 30,
2003 respectively. As of June 30, 2004, the Company has
accrued $1,719,496 in interest related to the convertible debt
borrowing.
During the quarter ended March 31, 2003, the Company had
advances of $400,000 from HCI in the form of convertible notes
payable. Terms of the conversion feature provide for the
principal balance to be converted into shares of the Company's
common stock at a rate equal to the fair value per share at
the date of conversion.
At June 30, 2003 the Company exchanged all its assets as well
as its wholly owned Australian subsidiary for forgiveness of
$3,000,000 convertible note payable due to HCI.
Note 6 - Capital Stock
In the second quarter of 2003, the Company issued 900,000
shares of common stock with a market value of $.06 per share
for cancellation of indebtedness.
Note 7- Subsequent Events
In 2006 the Company's major shareholder, Hosken Consolidated
Investments ["HCI"], executed a stock purchase agreement to
sell 77,767,153 (79%) shares of common stock of the Company to
a non-related third party buyer
Page 8 of 11
Item 2. Management's Discussion and Analysis or Plan of Operatio.
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
The Company permanently ceased operations in May 2003, therefore no discussion
and analysis of financial condition and results of operations would be relevant.
FORWARD - LOOKING STATEMENTS
The matters discussed in Management's Discussion and Analysis and throughout
this report that are forward-looking statements are based on current management
expectations that involve risk and uncertainties.
Potential risks and uncertainties include, without limitation; the impact of
economic conditions generally and in the industry for Internet gaming products
and services; dependence on key customers; continued competitive and pricing
pressures in the industry; open-sourcing of products; rapid product improvement
and technological change; capital and financing availability; and other risks
set forth herein.
CONTROLS AND PROCEDURES
(a) Explanation of disclosure controls and procedures. The Company's chief
executive officer and its chief financial officer after evaluating the
effectiveness of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14(c) and 15-d-14(c) as of a date within 90 days of the
filing date of the quarterly report (the "Evaluation Date") have concluded that
as of the Evaluation Date, the Company's disclosure controls and procedures were
adequate and effective to ensure that material information relating to the
Company and its consolidated subsidiary would be made known to them by others
within those entities, particularly during the period in which this quarterly
report was being prepared.
(b) Changes in internal controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's disclosure controls and procedures subsequent to the Evaluation
Date, nor any significant deficiencies or material weaknesses in such disclosure
controls and procedures requiring corrective actions. As a result, no corrective
actions were taken.
Page 9 of 11
ONLINE GAMING SYSTEMS, LTD.
PART II
Item 1. Legal Proceedings
There were no legal proceedings filed or threatened involving the Company during
the three-month period ended June 30, 2004.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
This Item is not applicable to the Company.
Item 3. Defaults upon Senior Securities
This Item is no applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
This Item is not applicable to the Company.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits
(a) Reports on Form 8-K.
Not Applicable
(b) Exhibits.
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
32.1 Certification Pursuant to 18 USC Section 1350, Section 906 of the
Sarbanes-Oxley Act of 2002
32.1 Certification Pursuant to 18 USC Section 1350, Section 906 of the
Sarbanes-Oxley Act of 2002
Page 10 of 11
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ONLINE GAMING SYSTEMS, LTD.
Dated: June 30, 2007 By /s/ RICHARD DUNNING
---------------------------------
Richard Dunning, President
Acting Chief Financial Officer
Page 11 of 11