Item 14. Principal
Accountant Fees and Services
PART I
ITEM 1. BUSINESS
We were
incorporated under the laws of the State of Nevada on February 3,
1999. We were organized primarily for the purpose of establishing a
website information system specializing in the medical industry.
This concept was terminated by management during the latter part of
the year 2000 and all rights to the Company's previous website
(
www.txsave.com
) were transferred to the
Company's former President, Irving Abrams.
In
January 2001, we acquired from James J. Reidy an exclusive license to
patents relating to technology that produces pure drinking water
directly from the air. At this time, we entered into a consulting
agreement with Mr. Reidy who was going to assist the Company in
arranging for the manufacture and sale of WaterStar machines that
were based on the acquired technology. .In March 2002, we decided to
abandon this business.
On
April 5, 2002, we entered into a Stock Exchange and Merger Agreement
with Gold Entertainment Group, Inc. (the "Company"). In
connection with this merger, our previous management team resigned
and a new management team, consisting of Hamon Francis Fytton and Dan
Boyer joined our company.
New management intends to engage in the business of providing
pre-paid Internet access cards to be marketed through retail
locations. It further intends to establish a network of distributors
to market a variety of the Company's pre-paid Internet access cards
through their existing channels. To accomplish this, the Company
intends to build on existing relationships with potential
distributors and to focus on strategic partnerships for distribution,
marketing and billing systems. The Company took initial steps to
develop this business during the fiscal year ended January 31, 2003.
Employees
As of January 31,
2004, we did not have any employees. Hamon Frances Fytton, the Chief
Executive Officer of Gold Entertainment, has been providing and
overseeing all business activities of the company.
ITEM 2.
PROPERTIES
Our corporate
headquarters are located in Fort Lauderdale Florida in a 300 square
foot office facility in an executive office suite. We have a
month-to-month lease through January 2003
.
We believe that the facilities are well maintained, in substantial
compliance with environmental laws and regulations, and adequately
covered by insurance. We also believe that these leased facilities
are not unique and could be replaced, if necessary, at the end of the
term of the existing leases.
ITEM 3. LEGAL
PROCEEDINGS
None
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET
FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock
currently trades on the Pink Sheets under the symbol "GEGP".
Set forth below is the range of high and low information for our
common stock as traded on the
Pink
Sheets
during fiscal 2004 and fiscal 2003.
This information regarding trading on the Pink Sheets represents
prices between dealers and does not reflect retail mark-up or
markdown or commissions, and may not necessarily represent actual
market transactions.
-
|
Fiscal
Period
|
HIGH
|
LOW
|
|
2003:
|
|
|
|
First
quarter (February - April 30, 2002)
|
$0.1
|
$0.004
|
|
Second
quarter (May 1 - July 30, 2002)
|
$0.004
|
$0.001
|
|
Third
quarter (August 1 - October 30, 2002)
|
$0.008
|
$0.001
|
|
Fourth
quarter (November 1 - January 31, 2003)
|
$0.20
|
$0.001
|
|
2004:
|
|
|
|
First
quarter (February - April 30, 2003)
|
$0.01
|
$0.001
|
|
Second
quarter (May 1 - July 30, 2003)
|
$0.01
|
$0.001
|
|
Third
quarter (August 1 - October 30, 2003)
|
$0.20
|
$0.001
|
|
Fourth
quarter (November 1 - January 31, 2004)
|
$0.001
|
$0.001
|
As of January 31,
2004, there were
74
record holders of our outstanding common stock.
COMMON STOCK
The Company has
never declared or paid cash dividends on its common stock and the
Company's Board of Directors intends to continue its policy for the
foreseeable future.. Future dividend policy will depend upon the
Company's earnings, financial condition, contractual restrictions
and other factors considered relevant by the Company's Board of
Directors and will be subject to limitations imposed under Delaware
law.
On March 25, 2002,
the Board of Directors implemented a 1 for 25 reverse split of the
Company's common stock. On September 26, 2002, the Company
implemented a 2.5 for 1 forward stock split.
ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
OVERVIEW
We did not generate
any revenues in the fiscal year ended January 31, 2004 or the fiscal
year ended January 31, 2003 and have not generated any revenues since
our inception on February 3, 1999. Our general and administrative
expenses were $1,200 in fiscal 2004 and $107,513 in fiscal 2003. Our
operating expenses were significantly higher in fiscal 2003 because
we were trying to develop the Water Treatment Center during this time
period. We decided to lower in fiscal 2004 because when we tried to
develop the Water Treatment Center. Since inception, on February 3,
1999, our general and administrative expenses have been $661,376.
As a result of the
forgoing, our net loss for the fiscal year ended January 31, 2004 was
$1,200 and $107,513 for fiscal 2003. Our cumulative loss was
LIQUIDITY AND
CAPITAL RESOURCES
At January 31, 2004,
we had no cash on hand. Our current liabilities consisted of
accounts payable and acrued expenses of $123,300, and a loan payable
to a related party of $81,400. Our stockholder's equity was
negative $204,700.
Our operations are
currently funded by capital contributions from our directors. We are
actively seeking investment capital from a variety of sources. It is
anticipated that no significant investment will be realized until the
stock is actively traded.
Our average
monthly operating costs are approximately $100 and we expect that
we will need approximately $1,000 for working capital during the
next three month period between February and April. Our primary
expenses are normal operating costs including salaries, payments
under the severance agreements for two of our former executives and other operating costs.
FACTORS THAT MAY
AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK
We are a
development stage company
We are in the
development stage and our proposed operations are subject to all of
the risks inherent in the establishment of a new business enterprise,
including the absence of an operating history. Our proposed
product, pre-paid Internet access cards, remain in development, has
not been tested in its commercial applications, and there can be no
assurance regarding its commercial success. The likelihood of
the Company's success must be considered in light of the problems,
expenses, difficulties, complications, and delays frequently
encountered in connection with the formation of a new business and
the competitive environment in which we will operate. In order to
commence operations, we have to develop and implement relationships
with suppliers and customers that do not yet exist. We have had no
revenues to date and there can be no assurance of future revenues. As
a result of the start-up nature of our business and the fact that we
will incur start-up expenses, we expect to sustain initial operating
losses.
No
Assurances of Revenue or Profitability
We anticipate that
our primary source of revenue will come from the sale of our pre-paid
Internet access cards. However, we have not conducted any marketing
tests and do not know if people will purchase our pre-paid Internet
access cards. If people do not purchase a sufficient number of
Internet access cards, we will not generate enough revenues to cover
our overhead expenses and will not be profitable.
We need
additional capital
The market for
pre-paid Internet access cards is capital intensive and it will
require significant capital expenditures to complete and develop this
business. We expect to make significant capital expenditures in the
future to develop this business. If we are unable to secure needed
additional financing, if and when needed, it may limit our ability to
develop the pre-paid Internet access card business. In the event
that our plans or assumptions change or prove to be inaccurate or if
cash flow proves to be insufficient, due to unanticipated expenses or
otherwise, it may seek to minimize cash expenditures and/or obtain
additional financing in order to support our plan of operations.
Additional funding, whether obtained through public or private debt
or equity financing, or from strategic alliances, may not be
available when needed or may not be available on terms acceptable to
us
.
Our business
model is not proven
Our business plan,
based on the pre-paid Internet access cards, is relatively unproven.
In order for our business plan to
succeed
,
we must create a market demand for our products, or, rather,
successfully promote our products as superior substitutes for
products that have already achieved market acceptance. Our
likelihood of success depends on our ability to develop these
products and communicate effectively their superiority to the
marketplace. We must convince businesses that use the Internet, that
our Internet access cards have competitive advantages to support
marketing them. To be successful, we must market our Internet
access cards so that they achieves market acceptance by our targeted
potential customers
.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are included following the signature page to this Form 10-KSB.
ITEM 8. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On June 6, 2002,
Anderson, Anderson & Song, L.C. ("AAS") resigned as our
independent certified public accountant. The report of AAS on our
consolidated financial statements for fiscal 2002, fiscal 2001 did
not contain an adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting
principles. Furthermore, AAS did not advise us that:
1) internal
controls necessary to develop reliable consolidated financial
statements do not exist, or
2) information has
come to the attention of AAS which made in unwilling to rely upon
management's representations or made it unwilling to be associated
with the consolidated financial statements prepared by management, or
3) the scope of the
audit should be expanded significantly, or information has come to
the attention of AAS that they have concluded will, or if further
investigated might, materially impact the fairness or reliability of
a previously issued audit report or the underlying consolidated
financial statements, or the consolidated financial statements issued
or to be issued covering the fiscal periods subsequent to January
31,, 2002 (including information that may prevent it from rendering
an unqualified audit report on those consolidated financial
statements) or made in unwilling to rely on management's
representations or to be associated with the consolidated financial
statements prepared by management or,
4) information has
come to the attention of AAS that they have concluded will, or if
further investigated might, materially impact the fairness or
reliability of a previously issued audit report or the underlying
consolidated financial statements or the consolidated financial
statements issued or to be issued covering the fiscal periods
subsequent to January 31, 2002 through June 7, 2002, the date of the
Form 8-K filing reporting the change in accountants, that had not
been resolved to the satisfaction of AAS or which would have
prevented AAS from rendering an unqualified audit report on such
consolidated financial statements.
During our two most
recent fiscal years and all subsequent interim periods through June
7, 2002, there were no disagreements with AAS on any matters of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which, if not resolved to the
satisfaction of AAS would have caused it to make reference to the
subject matter of the disagreements in connection with its reports on
these financial statements for those periods.
In May 2002, we
engaged Baum & Company, P.A.as our independent certified public
accountant. Our decision to engage new accountants was approved by
our Audit Committee in May 2002.
We did not consult
with Baum & Company, P.A. regarding the application of accounting
principles to a specific transaction, either completed or proposed,
or the type of audit opinion that might be rendered on our financial
statements, and no written or oral advice was provided by Baum &
Company that was a factor considered by us in reaching a decision as
to the accounting, auditing or financial reporting issues.
.
ITEM 8A. CONTROLS
AND PROCEDURES
Evaluation of
Disclosure Controls and Procedures
We were not able to
carry out an evaluation, under the supervision and with the
participation of our management, including Hamon Francis Fytton, our
Chief Executive Officer and Chief Financial Officer , of the
effectiveness of our disclosure controls and procedures as of the end
of January 31, 2004, the period covered by this Annual Report on Form
10-KSB because the financial statements were prepared after the date
of this Annual Report. However, Hamon Francis Fytton did review our
disclosure controls and procedures as of December 15, 2004 and based on
this evaluation, he has concluded that our disclosure controls and
procedures were effective in accumulating and communicating to our
management, including them, material information required to be
included in the reports we file or submit under the Securities
Exchange Act of 1934 as appropriate to allow timely decisions
regarding required disclosures.
Changes in
Internal Control over Financial Reporting
Based
on an evaluation, under the supervision and with the participation of
Hamon Francis Fytton, our Chief Executive Officer and Chief Financial
Officer, there has been no change in our internal control over
financial reporting during our last fiscal quarter, identified in
connection with the evaluation, that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting
ITEM 8B. OTHER
INFORMATION
We
did not file any reports on Form 8-K during the three month period
between October 31, 2003 through January 31, 2004.
PART III
ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table
sets forth certain information with respect to our executive
officers, directors and significant employees as of January 31, 2004.
|
Name
|
Age
|
Position
|
|
Hamon
Francis Fytton
|
52
|
Chief
Executive Officer, Chief Financial Officer
And
Chairman of the Board
|
|
Mark
Boyer
|
54
|
Director
|
Mr.
Fytton has served as our Chief Executive Officer, Chief Financial
Officer and Director of Gold Entertainment since March 26, 2002. Mr.
Fytton has over 20 years experience in the computer industry,
commencing with Sperry Univocal in London, England and later in their
Chicago office. Having been involved in all aspects of the computer
industry notably as a Network Specialist with Xerox Corporation,
Software Product Manager for Crowntek Networks and Product Manager
with Microsoft Corporation, this demonstrates a firm foundation in
the computer industry. Mr. Fytton has also operated Internet
Web-sites for several years, has acted as an Internet consultant and
conducted seminars throughout the U.S. and Canada. Most recently Mr.
Fytton was the co-founder and Chief Technical Administrator for the
Internet Advisory Corporation, a public corporation.
Marc Boyer has
served as our VP Technical Services and Director since March 26,
2002. Marc Boyer is a graduate of the IHPST at the University of
Toronto, where he did his Master's work in the development of
communication technology and neurophysiology. He has specialized in
the use of Database technology and Interactive Multimedia for
Training and Business. He helped develop a startup company Blue Owl
Multimedia Inc that partnered with Philips Electronics in Einhoven to
create MPEG based interactive training CD's using hyperscripts and
real actors. This involved original research on a new type of motion
video GUI that was supported by the National Research Council. He has
worked for corporations and colleges in the development of Internet
based distance training including the Humber College School of
Hospitality. In addition Marc is an experienced programmer who has
also developed and delivered training programs in VB, VBA, Cold
Fusion, ASP and a number of other application technologies.
Our directors serve
for a term of one year, or until their successors shall have been
elected and qualified. Our executive officers are appointed and
serve at the discretion of the Board of Directors. One of our
executive officers, Mr. Chan has an employment agreement with us.
BOARD COMMITTEES
We have an audit
committee consisting of Mr. Fytton and Mr. Boyer. The audit
committee recommends the engagement of independent auditors to the
board, initiates and oversees investigations into matters relating to
audit functions, reviews the plans and results of audits with our
independent auditors, reviews our internal accounting controls, and
approves services to be performed by our independent auditors.
DIRECTOR'S
COMPENSATION
Our directors did
not receive any compensation for serving on our Board of Directors
during fiscal 2003.
COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the
Exchange Act requires our directors and executive officers and person
who own beneficially more than 10% of our common stock to file
reports of ownership and changes in ownership of such common stock
with the Securities and Exchange Commission, and to file copies of
such reports with us. Based solely on a review of the copies of such
reports furnished to the Company and written representations that no
other reports were required, the Company believes that during the
year ended January 31, 2003, its officers, directors and 10%
shareholders complied with all Section 16(a) filing requirements
except Frances Fytton and Mark Boyer were not timely in the filing of
their Initial Statement of Beneficial Ownership of Securities and Mr.
Fytton filed a late Form 4 representing his contribution of shares to
the Company, and the previous officers and directors were not timely
in filing their reports indicating they were no longer subject to
Section 16.
ITEM 10.
EXECUTIVE COMPENSATION
The following table
sets forth certain compensation information for the fiscal years
ended January 31, 2004, 2003 and 2002 with regard to Hamon Francis
Fytton, our Chief Executive Officer and Chief Financial Officer since
March 26, 2002 and Donald Brumlik, our President from December 31,
2001 through March 26, 2002.
|
Position
|
Year
|
Salary
|
Bonus
|
Other Compensation
|
|
Hamon Francis Fytton (1)
|
|
|
|
2004
|
$0
|
$0
|
$0
|
|
|
2003
|
$0
|
$0
|
$0
|
|
|
2002
|
$0
|
$0
|
$0
|
|
David Brumlik (2)
|
|
|
|
2004
|
$0
|
$0
|
$0
|
|
|
2003
|
$0
|
$0
|
$0
|
|
|
2002
|
$0
|
$0
|
$0
|
-
Mr. Fytton became
our Chief Executive Officer on March 26, 2002.
-
Mr. Brumlik
resigned as our Chief Executive Officer on March 26, 2002 when the
principals of Gold Entertainment acquired our company.
OPTION GRANTS IN
FISCAL 2004
We did not grant
any options to any of our officers and directors during fiscal 2003.
Aggregated Option
Exercises In Fiscal Year Ended March 31, 2003 And Option Values
None
of our officers and directors exercised any options during fiscal
2003.
EMPLOYMENT
AGREEMENTS
We do not have any
employment agreements with any of our executive officers during
fiscal 2003.
ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table
set forth as of January 31, 2004, certain information concerning
beneficial ownership of our common stock by:
-all directors of
Gold Entertainment,
-all executive
officers of Gold entertainment.
-persons known to
own more than 5% of our common stock;
Unless otherwise
indicated, the address for each person is Gold Entertainment Group, Inc.,
2805 E. Oakland Park Blvd., Suite 363, Ft. Lauderdale, Florida
33306. As of January 31, 2004, we had 10,426,362 shares of our
common stock issued and outstanding. As used herein, the term
beneficial ownership with respect to a security is defined by Rule
13d-3 under the Securities Exchange Act of 1934 as consisting of sole
or shared voting power (including the power to vote or direct the
vote) and/or sole or shared investment power (including the power to
dispose or direct the disposition of) with respect to the security
through any contract, arrangement, understanding, relationship or
otherwise, including a right to acquire such power(s) during the next
60 days. Unless otherwise noted, beneficial ownership consists of
sole ownership, voting and investment rights.