ITEM 1. BUSINESS
General
Origins of the Company.
The shares of the Company were registered for trading in all 50 states and fully listed on the NASDAQ stock exchange, stock symbol CBOU in November, 1982.
The Company is now concentrating its activities on obtaining contracts to raise money for charitable organizations using the proprietary 1 "pay-per-call" telephone numbers 1 900 "DEMOCRAT", 1 900" REPUBLICAN", 1 900 "STOP ABUSE", 1 900 "HIV AIDS", 1 900 HIV KIDS, 1 900 "GET MADD" and others.
The Company began its corporate existence as Caribou Energy, Inc. (the "Company"), and was incorporated under the laws of the State of Colorado on October 3, 1978. The Company's initial corporate purpose was to engage in the oil and gas business. Initial oil and gas industry activities of the Company, commencing in 1978, consisted primarily of the acquisition of undeveloped acreage in the Denver-Julesburg Basin in Colorado and Nebraska, drilling 16 wells through two joint ventures and one limited partnership organized by the Company, and participation in 14 wells drilled in joint ventures organized by other industry operators. Three additional wells were drilled during fiscal year 1983. No further wells were drilled; no additional limited partnerships or joint ventures were entered into by the Company in 1984 or thereafter.
The Company began to look seriously for an acquisition with additional resources. It acquired North American Equity in 1984 which brought approximately US$6.650,000 in oil and gas properties into the Company. The oil and gas industry continued its decline and after several years and the new properties became uneconomic. The Company continued to search for other acquisitions. On June 19, 1992, the Company signed an agreement (the "Agreement," which was set forth as Exhibit A to the Company's 1992 10-K filing, and which is incorporated herein by this reference) which agreement was duly ratified by shareholders changing the direction of the Company (see the Company's 10-K filing for 1992 for complete details) to the telecommunications industry,.
Although no revenues have been generated as a result of or in direct consequence of the new business of the Company, the Company signed charitable fund raising agreements with Broadway Cares, Inc. (the "Broadway Cares Agreement"), a group formed by the New York theatre community to fight A.I.D.S., in April 1993, and additional charitable fund raising agreements were signed between the Company and the Action For Peace Foundation (dedicated to helping the women and children of Bosnia in association with United Nations' agencies) (the "Peace Agreement") and with the National Coalition Against Domestic Violence (the "NCADV Agreement"), in October 1993 and November 1993, respectively (see the Company's 1994 10-K filing for complete details and copies of the Peace Agreement, which was set forth as Exhibit A thereto, and the NCADV Agreement, which was set forth as Exhibit B thereto). Both of these contracts have been serviced by the E.T. Foundation, Inc. a Washington, D.C., not-for-profit organization. The Company has also made proposals to represent a number of other charitable organizations in their fund raising activities as well. Additional agreements with other charitable organizations are anticipated during the next fiscal year.
It would be necessary for the Company to raise a substantial amount of money to obtain financial benefits from the various Agreements. Extensive television advertising campaigns would cost millions of dollars, and it would be the Company's obligation to come up with the funds necessary to get such campaigns going. To assist the Company in making additional marketing connections for its "1-900" charitable fund raising program, the Company opened offices in Germany during October 1993 and in Switzerland during February 1994. Although fund raising efforts did not bear fruit immediately, the Company continues its efforts to raise money to conduct its fund raising activities.
In early 1996, the Company's original core business of oil and gas exploration and development appeared to be rebounding in the United States and throughout the Western Hemisphere. Directors and officers of the Company were approached by various people in the oil and gas business and encouraged to take part in new oil exploration ventures. The Company viewed these overtures seriously.
In April, 1996, the Company acquired a majority control of Spectrum Oil Corporation ("Spectrum") and agreed to provide $18 million in financing for Spectrum's hydrocarbon concessions in the Republic of Paraguay, which totaled approximately 15 million acres, subject to the terms of an agreement between Spectrum and the Company. Geologic and seismic data indicated that there could be tens of millions of barrels of oil in the leased area. The Company's Agreement to acquire Spectrum and finance its concessions was subject to verification of the agreements by which Spectrum acquired development rights to the concessions. The Company negotiated a private placement of 8 million share purchase warrants at a price of $2.00 per share for a period of two years. The financing would have guaranteed the funds necessary to complete the acquisition of Spectrum and to fulfill the financial commitments of Spectrum to the oil and gas concessions in Paraguay. However, by July, 1996, Spectrum was in default of its agreements with the owners of the Paraguayan concessions and the Company terminated all agreements between Spectrum and the Company. Thereafter, the Company agreed to tender back to Spectrum the majority control shares of Spectrum which it had given to the Company in connection with its agreements with the Company in exchange for the 8 million shares of the Company's common stock which had been given to Spectrum pursuant to the said agreements.
The Company thereafter negotiated an Option Agreement directly with the owners of the Paraguayan hydrocarbon concessions. The terms of this Agreement required the Company to complete a ten-year exploration and development program at a cost of approximately $300 million. The Company negotiated a $350 million financing agreement with Petek A.G., a Swiss investment firm, which required the Company to issue 1.5 billion shares of its common stock for payment against delivery. In November 1996, the shares were electronically delivered to Barclay's Bank in London, United Kingdom, against payment of US$350 million. In February, 1997, the shares were returned by Barclays to the Company and Barclay's withdrew from the financing.
The Company and its counsel have taken the position that the individuals, companies and financial institutions which either profited from the referenced transaction or which participated in the transaction should compensate the Company for the use of its securities and for breach of the original contractual arrangements to the Company's detriment. The Company's lawyers are investigating the Company's remedies as a result of these transactions and are confident that the Company will be successful.
The Company is continuing its efforts to finance the Paraguayan hydrocarbon concessions. In late 1997 and early 1998 the Asian economic crisis adversely affected the world price of oil, however, activity in the oil and gas industry has historically been cyclical and the Company considers that this crisis has already been discounted and should not adversely affect ongoing negotiations. Although it is anticipated that European telephony and telecommunication standards should reach North American standards within the next two years, the Company cannot fully utilize its systems or services in Europe until those standards have been met. In order to conserve its financial resources, the Company has decided to scale down its European operations until promotion of its technology is warranted by advances in the European telecommunications standards.
Financial Information About Industry Segments. Since inception, Company revenues, operating profit or loss and identifiable assets have all been attributable to the telecommunications industry and the oil and gas industry. The Company no longer has any purpose to file financial information regarding the amounts of revenue from sales to unaffiliated customers, operating profit or loss and identifiable assets attributable to this segment inasmuch as the Company no longer has revenue generated from its telecommunications assets or from active oil and gas assets. The Company has no revenue, and no other relevant financial information, associated with the telecommunications industry or with the charitable fund raising industry to date.
Narrative Description of Business. Until June 1992, the Company was engaged in the oil and gas exploration business and in the production and sale to wholesalers of crude oil and natural gas. The Company acquired oil and gas property interests, mainly leases through its contacts in the petroleum industry and then sold fractional undivided interests in a portion of the acreage to individual investors and industry firms in connection with exploratory drilling programs (limited partnerships and joint ventures). The Company also participated in drilling exploratory and development wells through joint ventures organized by other industry operators.
As of June 1992, the Company entered into an entirely different business. It acquired a company with certain ownership rights (the "Rights") to a telecommunications system capable of answering and/or otherwise handling multiple telephone calls per minute (the "System"). The System was designed for use with voice mail, and has unique and highly useful features. The Company determined that such a system could most advantageously be used for charitable fund raising in conjunction with 1-900 numbers. As reported above, the Company entered into several Agreements for charitable fund raising during the calendar year 1993.
The Rights pertain to the "E.T. TeleManagement," "1-900," "1-800" and E.T. "TeleManagement" VoiceMail systems, as reported in the company's 1992 10-K filing.
The Company has no other patents, trademarks, licenses, franchises or concessions. Telecommunications services and charitable fund raising are not seasonal activities.
In April, 1996, the Company re-entered the oil and gas industry by entering into agreement with respect to Paraguayan oil and gas concessions, as set forth above under "Origins of the Company."
Due to the nature of the Company's business, there are no significant working capital items carried on its books (i.e., accounts receivable, inventory, etc.), although a significant amount of equipment is carried on its books.
Due to the nature of the Company's business, there is no backlog of orders. There is no portion of the Company's business which may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of government.
The Company is continuing its efforts to finance the Paraguayan hydrocarbon concessions. In late 1997 and early 1998 the Asian economic crisis adversely affected the world price of oil, however, activity in the oil and gas industry has historically been cyclical and the Company considers that this crisis has already been discounted and should not adversely affect ongoing negotiations.
1 900 cash flow projections contained in the business plan are substantial, however, should be met within the first year of signing a contract. Even though the auditors chose to write off the Company's telecommunications assets over a four year period, the Company considers its telephone technology purchased in 1992 still has substantial value. Although it is anticipated that European telephony and telecommunication standards should reach North American standards within the next two years, the Company cannot fully utilize its systems or services in Europe until those standards have been met. In order to conserve its financial resources, the Company has decided to scale down its European operations until promotion of its technology is warranted by advances in the European telecommunications standards.
Financial Information About Foreign and Domestic Operations and Export Sales. The Company opened offices in Germany and Switzerland to assist in financing the various projects of the Company. It entered into an Option Agreement with respect to hydrocarbon concessions in the Republic of Paraguay in 1996, but there are no foreign operations or export sales at this time. This is changing rapidly and it is anticipated that the Company will have expanded its operations in Europe and South America by fiscal 1999.
Employment. The Company has no full-time employees. The policy of the Company has been to utilize consultants and other professionals on and ad hoc, when needed, basis until the size of the Company warrants the employment of paid employees. The Company anticipates the need for paid employees during fiscal 1999. The Company considers its employee relations to be satisfactory under the circumstances.
Competition. The Company's activities in the oil exploration industry as well as in the telecommunications and fund raising industries involve two extremely competitive industries. The oil industry in America, after a decade-long decline, with a price collapse in the mid-eighties with a corresponding decline in demand, made a significant comeback in the mid 1990's before declining again in late 1997, and the fund raising industry and the telecommunications industry are among the most rapidly growing industries in the world. In both industries, the Company is one of thousands of firms which make money, or propose to make money, from its operations. In the oil industry, the Company faces competition from hundreds of wildcatters and a number of giant corporations like Exxon, Shell, and others. In the telecommunications industry, competition comes from giant corporations like AT&T and from thousands of small companies, offering an ever-increasing array of telecommunications products and services; and in the charitable fund raising industry, there are a number of organizations which raise money, and a myriad of charitable organizations formed for a myriad of purposes. Competition is both general and specific: there are a number of approaches to making money in the oil exploration industry, and there are many other ways to raise money for charities besides advertising 1-900 telephone numbers.
ITEM 2.
ITEM 2. PROPERTIES
The Company has its registered offices in Denver, Colorado and has no properties under development at this time.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are now pending by or against the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended September 30, 1998, no significant matters came to a vote of security holders of the Company.
PART II
ITEM 5.
ITEM 5.MARKET PRICE FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the NASDAQ Electronic Bulletin Board, stock symbol ETCP. The following table sets forth the high and low sales price, in United States Dollars, for each quarterly period during the three most recent fiscal years.
1997 - 19981996 - 19971995 - 19961994 - 19951993 - 1994 Quarter EndedHigh LowHigh LowHigh LowHigh LowHigh Low
December 310.50 0.251.25 0.751.25 1.251.25 1.252.50 1.25
March 310.50 0.250.75 0.25 1.25 1.251.25 1.251.75 .40
June 300.50 0.250.75 0.251.25 1.251.25 1.25. .40 .15
September 300.50 0.010.50 0.251.25 1.251.25 1.25 .03 .01
As of September 30, 1998, there are approximately 9,396 registered holders of record of the Company's Common Stock.
The Company has never declared or paid cash dividends to holders of its Common Stock. It does not anticipate paying any dividends in the foreseeable future.
ITEM 6.
ITEM 6.SELECTED FINANCIAL DATA
See attached page.
ITEM 6.SELECTED FINANCIAL DATA
1998* 1997* 1996* 1995* 1994*
Cash Assets $ 50,327 0 0 0 9,659
Equipment 0 0 34,270 164,772 285,193
Other Assets- Voice-Mail 1 1 11,662,5003,325,000
Total Assets233,210243,842339,0732,193,0334,046,571
Current Liabilities120,207107,577 81,409 65,762 32,800
Notes Payable 0 00 0 0
Debentures Payable464,633 38,235 733,3612,058,636 3,444,089
Total Liabilities233,210243,842 339,073 2,193,033 4,046,571
Shareholders' Equity (351,630) 98,030(395,697) 68,635 569,682
Revenues 0 00 0 0
Expenses (449,660) (1,146,273) (4,153,668) 2,790,795 2,566,377
Net Gain (Loss) (449,660) (1,146,273) (4,153,668) (2,790,795)(2,566,377)
Shares Out- standing 58,787,216 58,787,216 58,787,216 25,787,216 39,360,791
Net Gain (Loss) Per Share (0.0076) (.0225) N/A N/A N/A
&WP6-34;Figures given are for fiscal year end, not calendar year end. The Company's fiscal year ends on September 30th.
ITEM 7.
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations Fiscal 1998 v. Fiscal 1997
Overall
The Company's entry into the area of charitable fund raising using 1-900 "pay-per-call" telephone numbers has continued during this fiscal year. 1 900 "DEMOCRAT" and 1 900 "REPUBLICAN" continue to have the potential to generate many tens of millions of dollars in revenues for the Company. Until the marketing plan of the Company begins to develop cash flow, the development stage of the program will continue to draw from the Company's asset resources.
During this fiscal year, the Company has attempted to negotiate a resolution with financial institutions which management concludes have made a profit from dealings involving the Company's securities but refused to compensate the Company as required by several contracts. The Company expects to ultimately obtain compensation and is negotiating with relevant parties. Although it is anticipated that European telephony and telecommunication standards should reach North American standards within the next two years, the Company cannot fully utilize its systems or services in Europe until those standards have been met. In order to conserve its financial resources, the Company has scaled down its European operations until promotion of its technology is warranted by advances in the European telecommunications standards.
The Company is still considering reentering the oil and gas exploration industry which was once its mainstay by negotiating the terms of a financing agreement that would allow the Company to reenter negotiations to develop oil and gas reserves in the Republic of Paraguay at an estimated cost of $300 million. The Company also continued its entry into the area of charitable fund raising using 1-900 "pay-per-call" telephone numbers during this fiscal year. Cash assets at the close of fiscal 1998 were $50,327 as compared to $0 in 1997 and $0 in 1996; fixed assets were estimated to be worth $534,886 in 1998 but depreciated to 0 as compared to the same in 1997 and 1996; the Rights and associated product development expenditures (subject to the amortization schedule set forth in the Financial Statements) were $1 in 1998, the same as 1997 and down from 1996 at $1,662,500. Total assets were $233,210 compared to $243,842 in 1997, $339,073 in 1996, $2,193,033 in 1995 and $4,046,571 in 1994.
The Company believes that during fiscal 1999, it will both re-establish its presence in the petroleum industry and commence its charitable fund raising activities, as described in the business plan of the Company, to raise such funds as are necessary to possibly not only finance the election of the next President of the United States through the use of its proprietary 1 900 "DEMOCRAT" AND 1 900 "REPUBLICAN" telephone numbers, but to affect the election campaign reform laws and forge changes to the system for political fund raising in the United States .
Extraordinary Items
There were no extraordinary items reported in this fiscal year.
Liquidity and Capital Resources
At September 30, 1998, the Company had $50,327 cash assets, but total current assets of$ 233,210 compared to $0 cash assets and $243,842 in fiscal 1997, $0 and $339,073 in 1996, and no cash assets and total current assets of $2,193,033 in 1995. The Company is not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way.
Capital Resources and Expenditures
There were no significant capital expenditures made by the Company during the fiscal year ended September 30, 1998. Further, until the Company concludes a financing, the Company had no known material commitments for additional capital expenditures as of September 30, 1998. Management of the Company knows of no material trends, favorable or unfavorable, with respect to the Company's capital resources.
Inflation
The results of the Company's operations have not been significantly affected by inflation during the last three fiscal years ended September 30, 1998.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Such financial statements and schedules as are available are attached hereto.
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Identification of Executive Officers and Directors
NameAgePosition with CompanyDirector Since
Sidney B. Fowlds58Chairman of the BoardOctober 31, 1986 John Johnston73Vice PresidentOctober 31, 1986 Robert M. Miller 56Secretary-TreasurerOctober 31, 1992
Mr. Fowlds and Mr. Johnston were elected to serve on October 31, 1986, reelected at the annual meeting in 1988, reelected at the Special Shareholders' Meeting held in mid-1992, reelected at the annual meeting in 1994, reelected at the annual meeting in 1996, and have served since. Mr. Miller was elected to serve at the Special Shareholders' Meeting held in 1992, reelected at the annual meeting in 1994, reelected at the annual meeting in 1996, and has served since. They were all elected to serve until the next annual shareholders' meeting or until their respective successors are elected and qualified. Officers of the Company hold office until the meeting of the Board of Directors after the next annual shareholders' meeting or until removal by the Board of Directors.
Business Experience
Sidney B. Fowlds:See the Company's 1987 Annual Report, Exhibit C.
John Johnston: See the Company's 1987 Annual Report, Exhibit D.
Robert M. Miller:See the Company's December 1993 Quarterly Report, Exhibit A.
Involvement in Certain Legal Proceedings
None.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company during the fiscal year ended September 30, 1998, to each executive officer who received in excess of $60,000 (there were none) and to all executive officers as a group.
Cash Compensation Table Identity of Group Capacities in which served Cash Compensation All executive officersExecutive Officers$0 (includes all cash bonuses) as a group Employment Arrangements
Details of any Employment Contracts as exist between any officer of the Company set forth above and the Company itself have already been disclosed in previous 10-K filings for the Company. No additional contracts were entered into between any Directors and/or officers of the Company and the Company itself during the fiscal year ended September 30, 1998.
Compensation Pursuant to Plans
Once existent policies of the Company relating to compensation pursuant to plan(s), stock options, and the like have long been repealed by action of the Board of Directors until such time as the Company can produce a regular profit.
Other Compensation
The Company did not provide any other compensation to any of its executive officers which is not disclosed above.
Compensation of Directors
The Company has no standard or other arrangement pursuant to which directors are compensated for services as a director, including for attendance at meetings.
Termination of Employment and Change of Control Arrangement
None.
ITEM 12.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information, as of September 30, 1998, with respect to beneficial ownership of the Company's common stock, $0.01 par value, of the Company's officers and directors, both individually and as a group, and the record and/or beneficial owners of more than five percent of the Company's common stock:
Security Ownership of Certain Beneficial Owners (Name of Holder; Number of Shares; Percentage of Outstanding Common Shares Held)
North American Oil and Gas; 2,578,700; 4.39%
Officers and directors and beneficial owners of more than 5% of the Company's common stock as a group; North American Oil and Gas; 2,578,700; 4.39%
Changes in Control
The Company knows of no other arrangements the operations of which may at a subsequent date result in a change in control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others Not applicable.
Certain Business Relationships None.
Indebtedness of Management None.
PART IV
ITEM 14.
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1)Financial Statements
Auditors ReportF-1
Balance SheetsF-2
Statements Of OperationsF-4
Statements of Shareholders EquityF-5
Statements of Cash FlowsF-6
Notes to Financial StatementsF-7
(2) Financial Statement Schedules for the fiscal year ended September 30, 1998
All other schedules called for under Regulation S-X are not submitted because they are not applicable or not required or because the required information is not material or is included in the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports were made on Form 8-K during the fiscal year ended September 30, 1998.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
AUDIT REPORTS
AS OF
September 30, 1998 and 1997
Janet Loss, C.P.A., P.C. 3525 South Tamarac Drive, Suite 120 Denver, Colorado 80237
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM PAGE
Report of Certified Public Accountant.................... 1
Balance Sheets, September 30, 1998 and 1997.............................. 2-3
Statements of Operations, For Years Ended September 30, 1998 and 1997.............. 4
Statements of Stockholders' Equity, For Years Ended September 30, 1998 and 1997.............. 5
Statements of Cash Flows, For Years Ended September 30, 1998 and 1997.............. 6
Notes to Financial Statements............................ 7-9
Janet Loss, C.P.A., P.C. 3525 South Tamarac Drive, Suite 120 Denver, Colorado 80237 (303) 220-0227
Board of Directors E.T. Capital, Inc. Suite 315 - 650 West Georgia Street Vancouver, B.C., Canada V6BN7
I have audited the Balance Sheets of E.T. Capital, Inc. as of September 30, 1998 and 1997, and the Statements of Operations, Stockholders' Equity and Cash Flows for the years ended September 30, 1998 and 1997.
I conducted my audit in accordance with generally accepted auditing standards. These standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes assessing the accounting principl es used and significant estimate made by management, as well as evaluating the overall financial statement presentation.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of E.T. Capital, Inc. (a development stage company) as of September 30, 1998 and 1997, and the results of its operations and its cash flow for the years ended September 30, 1998 and 1997.
"Janet Loss"
Janet Loss, C.P.A., P.C.
October 9, 1998
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
September 30,September 30, 1998 1997
CURRENT ASSETS: Cash on Hand$ 50,327$ 0
FIXED ASSETS: Equipment (Note 2) 534,886 534,886
Less accumulated depreciation 534,886 534,886)
Net Fixed Assets 0 0
OTHER ASSETS: Rights' Title, net of amortization (Note 2)$ 1 $ 1
Product Development Expenditures, net of amortization (Note 2) 182,882 243,841
Option (Note 8) 0
Total Other Assets 182,883 243,842
TOTAL ASSETS$ 233,210$ 243,842
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
September 30,September 30, 1998 1997
CURRENT LIABILITIES: Accounts Payable $ 120,207 $ 107,577
LONG-TERM LIABILITIES: (Note 4) Debenture Payable, Xanthos Management Corporation 464,633 38,235
STOCKHOLDERS' EQUITY (DEFICIT): Common stock, $.01 par value, 10,000,000,000 authorized, 58,787,216 shares issued and outstanding 4,516,079 4,516,079
Paid-In-Capital in excess of par value 20,069,869 20,069,869
(Deficit) Accumulated during the Development Stage (24,937,587) (24,487,918)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)( 351,630) 98,030
SUB-TOTAL:( 351,630)( 98,030)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):$ 233,210$ 243,842
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the YearFor the Year Ended Ended September 30,September 30,
REVENUES$ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES: Accounting$ 1,500$ 1,875 Amortization (Note 2) 60,959 60,960 Auto Expenses, gas and repairs 12,000 12,000 Consulting Fees 72,890 623,750 Depreciation Expenses (Note 2) 0 34,270 Filing and Transfer Fees11,13024,293 Rent Expense50,40050,400 Telephone Expense36,00036,000 Travel and Promotions 180,000 180,000
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 424,879$ 1,023,548
NET (LOSS) BEFORE OTHER INCOME (EXPENSES)( 424,879)( 1,023,548)
OTHER INCOME AND (EXPENSES): Interest Expense( 24,781)( 122,724) Loss on expired options( 0)( 1) TOTAL OTHER INCOME AND (EXPENSES)( 24,781) ( 122,725)
NET (LOSS)$( 294,332)$( 1,146,273)
NET (LOSS) PER SHARE$( .0088)$( .0225)
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF STOCKHOLDERS' EQUITY CommonTotal Class A StockAdditionalDevelopment Stockholders' $.0001Par Value Paid-In StageEquity Shares Amount Capital (Deficit) (Deficit) Balances, October1, 199658,757,216$4,516,869$18,429,869 $(23,341,645) $ ( 395,697)
Issue 1,500,000,000 shares at $.234 per share, Oct. 1, 1996 1,500,000,000 15,000,000 335,000,000 350,000,000
Cancellation of 1,500,000,000 share issued @ .234 per share, Feb.15, 1997 (1,500,000,000) (15,000,000) (335,000,000) 0 (350,000,000)
Sale of 8,000,000 shares of treasury stock @ $.215 September 21, 1997 0 0 1,640,000 0 1,640,000
Net (Loss) for the Year Ended September 30, 1997 0 0 0 (1,146,273) (1,146,273)
Balances, September 30, 199758,787,216$ 4,516,079$ 20,069,869$ (24,487,918 $ 98,030
Net (Loss) for the Year Ended September 30, 1998 0 0 0 ( 449,660) ( 449,660)
Balances, September 30, 199858,787,216$ 4,516,079$ 20,069,869$ (24,937,578) $ ( 351,630)
The accompanying notes are an integral part of the financial statements. E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the YearFor the Year Ended Ended September 30,September 30,
Net Cash Flows From Operating Activities:
Net (loss)$( 449,660)$( 1,146,273)
Adjustments to Reconcile Net (Loss) to Cash (Loss) From Operating Activities:
Amortization 60,959 60,960 Depreciation 0 34,270
Sub-total( 388,701) ( 1,051,043)
Increase in Accounts Payable 12,630 26,168
(Decrease) Increase in Debenture Payable, Xanthos Management Corp. 426,398 ( 695,126)
Increase (Decrease) due to sale And purchase of 8,000,000 Shares of treasury stock 0 ( 1)
Option 0 1
INCREASE (DECREASE) IN CASH 50,327
CASH, BEGINNING OF PERIOD 0
CASH, END OF THE PERIOD$ 50,327$ 0
The accompanying notes are an integral part of the financial statements.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 1 - HISTORY
E.T. Capital, Inc. (formerly Caribou Energy Inc.)was incorporated in Colorado in 1978. The Company was originally engaged in oil and gas exploration from its inception until 1988. In 1988, the Company abandoned all of its oil and gas properties and all accounts associated with oil and gas have been written off.
In 1992, E.T. Capital, Inc. (the Colorado Corporation) secured all the rights, title and interest to the E.T. "TeleManagement" VoiceMail System and 1-800 and 1-900 "pay-per-call" telephone numbers and information center from a Nevada corporation, E.T. Network, Inc., for $6,650,000.00. This purchase was financed by the sale of 20,000,000 Regulation "S" restricted shares of the Company.
As of October 1, 1994, the Colorado Corporation changed its name to E.T. Capital, Inc.
E.T. Network, Inc. was a Nevada corporation which owned the world-wide rights to the E.T. "TeleManagement" VoiceMail System and the 1-800 and 1-900 "pay - -per-call" telephone numbers and information center. Its wholly-owned subsidiary was Encryption Technology Canada, Inc. (E.T.). This subsidiary owned the rights for the VoiceMail system in Canada.
The assets of E.T. network, Inc. (the Nevada Corporation) and Encryption Technology Canada, Inc. were then transferred to the Colorado Corporation. Encryption Technology Canada, Inc. has been de-registered and is no longer in existence.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting The company is on the accrual basis of accounting for financial statements and income tax purposes.
Fixed Assets and Depreciation Fixed assets are made up of computer equipment, cellular phones and furniture. The furniture was put into use October, 1991, and equipment was put into use October 1, 1992. Both furniture and equipment are being depreciated over their estimated life.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 2 - CONTINUED
Amortization The purchased rights for the TeleManagement VoiceMail system and the 1-800 and 1-900 "pay-per-call" telephone numbers are being amortized over the estimated useful life of four (4) years.
Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Note 3 - RELATED PARTIES As the corporation was unable to meet its financial obligations as they became due, one of the major shareholders of the Company, Xanthos Management Corporation, offered to pay the obligations on behalf of the Company and agreed to make payments as required, such payments secured by and subject to the terms of a debenture duly filed and registered with the Secretary of State for the State of Colorado.
The Board of Directors of E.T. Capital, Inc. authorized management fees of $25,000.00 per month for office, telephone, automobile and travel, and promotion be paid to Xanthos Management Corporation.
Note 4 - DEBENTURE PAYABLE, BEARER This debenture is dated October 31, 1992 and is secured by the company assets of E.T. "TeleManagement" System, 1-900 services, 1-800 services, VoiceMail services and Computer Centers. The total aggregate principal amount of the debenture shall be $5,000,000.00 may be outstanding at any time and interest shall be payable at ten (10) percent per annum.
Note 5 - FISCAL YEAR The Company adopted a fiscal year end of September 30th.
Note 6 - CURRENCY EXCHANGE The financial statements are presented in dollar amounts based on the United States Currency Exchange.
E.T. CAPITAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 7 - ACQUISITIONS AND FINANCING In April, 1996 the Company acquired a majority control of Spectrum Oil Corporation and agreed to finance Spectrum's hydrocarbon concessions in Paraguay totaling approximately 15 million acres subject to the terms of an agreement between Spectrum and the Company. Geologic and seismic data indicate that there could be tens of millions of barrels of oil in the leased area. The Company agreed to acquire majority control of Spectrum and to finance Spectrum Oil's hydrocarbon concessions in the Republic of Paraguay subject to verification of the Spectrum's agreements under which they held the development rights to the concessions. Financing to make this acquisition and to proceed with the work program of approximately US$18 million was subject to the terms of an agreement between Spectrum and the Company. The Company negotiated a Private Placement of 8 million common shares of the Company at a price of US$1.25 carrying 8 million share purchase warrants at a price of US$2.00 per share for a period of two years. This financing would guarantee the funds necessary to complete the acquisition of Spectrum and fulfill the financial commitments of Spectrum to the oil and gas concessions in Paraguay. In July of 1996, Spectrum was in default of its agreements with the owners of the Paraguayan concessions and the Company terminated all Agreements between Spectrum and the Company. The 8 million share financing was reversed, the shares of the Company were returned to the Company and the majority control shares of Spectrum were returned.
Note 8 - OPTION The Company negotiated an Option Agreement directly with the owners of the Hydrocarbon concessions in the Republic of Paraguay. The terms of the Agreement require the Company to complete a ten year exploration and development program of approximately US$300 million. The Company negotiated a US$350 million financing with Petek AG, a Swiss Investment firm which require the Company to issue 1.5 billion shares for payment against delivery. In November 1996, the shares were electronically delivered to Barclay's Bank in London, England against payment of US$350 million. In February 1997, the shares were returned by Barclay's to the Company Barclay's withdrew from the financing. The Company's lawyers are investigating the Company's remedies as a result of this transaction and are confident that the Company will be successful.
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, duly authorized.
Dated: October 10, 1998
E.T. CAPITAL, INC. (the "Company")
By: /s/ Sidney B. Fowlds Chairman of Board of Directors
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 Company and in the capacities and on the dates indicated.
Dated: October 10, 1998/s/ Sidney B. Fowlds
Director: Sidney B. Fowlds
Dated: October 10, 1998/s/ John Johnston
Director: John Johnston
Dated: October 10, 1998/s/ Robert M. Miller
Director: Robert M. Miller