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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 10/15/07 Online Gaming Systems Ltd 10KSB 12/31/06 4:23 Dittrich Ja..Virginia/FA
Document/Exhibit Description Pages Size 1: 10KSB Annual Report HTML 123K 2: EX-31.1 Certification HTML 9K 3: EX-31.2 Certification HTML 9K 4: EX-32.1 Certification HTML 6K
|
| Form 10-KSB |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-KSB
———————
X | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2006 | |
|
|
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: _____________ to _____________ | |
———————
ONLINE GAMING SYSTEMS, LTD.
(Name of small business issuer in its charter)
———————
Delaware | 13-3858917 | |
(State or Other Jurisdiction | (Commission | (I.R.S. Employer |
of Incorporation) | File Number) | Identification No.) |
C/o Advanced Resources Group, LTD, 5 Erie Street, Garfield, NJ 07026
(Address of Principal Executive Office) (Zip Code)
(973) 253-6131
(Small Business Issuer’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
———————
Securities registered pursuant to Section 12(b) of the Act: | ||
| None |
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|
|
|
Securities registered pursuant to Section 12(g) of the Act: | ||
Common Stock, $.001 Par Value | ||
| (Title of Class) |
|
———————
Check whether the issuer (1) has 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 Small Business Issuer was required to file such reports), | |||||
and (2) has been subject to such filing requirements for the past 90 days. |
| Yes | X | No | |
| |||||
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Small Business Issuer’s knowledge, in definitive proxy or information statements | |||||
incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. | X |
| |||
| |||||
Indicate by check mark whether the Small Business Issuer is a shell company (as defined in Rule 12b-2 of the Act). | X | Yes |
| No | |
|
| ||||
State issuer’s revenue for its most recent fiscal year. $0 | |||||
| |||||
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. The aggregate market value at October 1, 2007of shares of the Small Business Issuer's Common Stock, $.001 par value per share (based upon the closing price of $0.16 per share of such stock on the “Pink sheets” on such date), held by non-affiliates of the Small Business Issuer was approximately $3,110,046. | |||||
| |||||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. At October 1, 2007, there were outstanding 336,190,941 shares of the Small Business Issuer's Common Stock, $.001 par value. | |||||
| |||||
Transitional Small Business Disclosure Format (Check one): | X | Yes |
| No | |
INDEX
i
PART I
Item 1.
Description of Business.
GENERAL
We are making this statement in order to satisfy the "safe harbor" provisions contained in the Private Securities Litigation Reform Act of 1995. This Annual Report on Form 10-KSB includes forward-looking statements relating to the business of the Company. Forward-looking statements contained herein, or in other statements made by the Company are made based on Management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those matters expressed in or implied by forward-looking statements. The Company believes that the following factors, among others, could affect its future performance and cause actual results of the Company to differ materially from those expressed in, or implied by, forward-looking statements made by, or on behalf of the, Company; (a) general economic, business and market conditions; (b) competition; (c) the success of advertising and promotional efforts; (d) the existence or absence of adverse publicity; (e) changes in relationships with the Company's major customers or in the financial condition of those customers; and (f) the adequacy of the Company's financial resources and the availability and terms of any additional capital. Such forward-looking statements are based on assumptions that the Company will continue to design, market and provide successful new services, that competitive conditions will not change materially, that demand for the Company’s services will continue to grow, that the Company will retain and add qualified personnel, that the Company’s forecasts will accurately anticipate revenue growth and the costs of producing that growth, and that there will be no material adverse change in the Company’s business. In light of the significant uncertainties inherent in the forward-looking information included in this Form 10-KSB, actual results could differ materially from the forward-looking information contained in this Annual Report on Form 10-KSB.
OVERVIEW
As of the end of May, 2003, Online Gaming Systems, Ltd. (the “Company” or the “Small Business Issuer”) was dormant and was seeking a merger with an operating business. Until 2003, the Company developed and marketed interactive products and services in the gaming, entertainment and information technology fields. We were incorporated in the state of Colorado in October 1939 under the name "Pacific Gold, Inc." to explore and develop gold and silver ore prospects and to operate mining and milling facilities. Pacific Gold, Inc. conducted limited mining activities until operations ceased. After we changed our name to The CEEE Group, we then sought new business opportunities as a development stage entity.
In 1973, we changed our name to Cine-Chrome Laboratories, Inc. and operated a film-processing lab in California. From 1984 until June 1994, we did not conduct any operations, transactions or business activities. In June 1994, we began acting as a corporate advisory operation, which included acting as a "finder" with respect to U.S. public companies and providing advisory services concerning corporate structure and raising capital. Beginning in 1996 until 2003, we concentrated our business operations primarily on the manufacturing, marketing and development of interactive gaming products and services. This business became dormant in 2003.
In July 1996, we consummated a share exchange pursuant to an Exchange of Stock Agreement and Plan of Reorganization with Atlantic International Capital Ltd. (“AIC”), a Delaware corporation, and the former stockholders of AIC. As a result, the business of AIC became our business.
On November 22, 1996, we merged with, and into, a wholly owned Delaware subsidiary, Atlantic International Entertainment, Ltd. We, among other things:
·
changed our state of incorporation to Delaware
·
increased our authorized capital stock to 110,000,000 (100,000,000 shares of common stock, $.001 per share (the "Common Stock") and 10,000,000 shares of preferred stock, $.001 par value per share (the "Preferred Stock");
·
Performed a 1 for 3 reverse stock split.
In August 1999 we changed our name to Online Gaming Systems, Ltd. In September 2000, we relocated our corporate offices to Las Vegas, Nevada. In November 2002, we increased our authorized Common Stock from 100,000,000 to 200,000,000. Since May 2003, until December 31, 2006, we have been dormant and were seeking a business combination.
On October 23, 2006, the Company agreed to merge with WS Acquisition Corp. (“WS Acquisition”), in a transaction to be consummated in 2007. Mr. William Stehl, President and Chairman of the Board of the Company, is the sole stockholder and sole officer of WS Acquisition. Under the merger agreement, Mr. Stehl will receive 240,000,000 shares of Company common stock and 60,000,000 shares of Company preferred stock in exchange for all of the shares of WS Acquisition common stock.
1
The Company’s executive offices are located c/o Advanced Resources Group, Ltd., 5 Erie Street, Garfield, NJ 07026. The telephone number of the Company is (973) 253-6131.
Description of Business
The Company ceased business operations in May 2003 and was dormant during the period covered by this report. Before May, 2003, the Company produced internet gaming software used by internet gaming sites. Since May 2003, until December 31, 2006, we have been dormant and seeking a business combination.
Item 2.
Description of Property.
The Company does not own or lease any property since the Company ceased operations in May 2003.
Item 3.
Legal Proceedings.
The Company is not a party to any pending or threatened litigation, either as plaintiff or defendant.
Item 4.
Submission of Matters to a Vote of Security Holders.
On October 23, 2006, the holder of approximately 81% of the outstanding Common Stock appointed William A. Stehl and Richard Dunning as directors of the Company, to serve until their successors are elected and qualified. The Company did not submit any other matters to a vote of securityholders during the period covered by this report.
2
PART II
Item 5.
Market for Common Equity and Related Stockholder Matters.
During 2005 and 2006, the Company’s common stock traded on the “pink sheets” electronic trading system under the trading symbol “OGAM.” The following table sets forth the high and low closing prices for our common stock as reported on the “pink sheets” electronic trading system for each full quarterly period within the two most recent fiscal years.
Fiscal Year Ending December 31, 2005
Quarter | Date | High | Low |
1st | $.018 | $.0015 | |
2nd | $.025 | $.0102 | |
3rd | $.015 | $.007 | |
4th | $.008 | $.005 |
Fiscal Year Ending December 31, 2006
Quarter | Date | High | Low |
1st | $.0021 | $.0015 | |
2nd | $.025 | $.01 | |
3rd | $.016 | $.007 | |
4th | $.019 | $.005 |
During the period covered by this report, market maker quotations were posted on the “pink sheets” electronic trading system. All prices indicated are as reported to us by broker–dealer(s) making a market in our securities. The quotations indicated above reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
As of December 31, 2006, there were approximately 750 Holders of Record of our Common Stock, including brokerage firms, clearinghouses, and/or depository firms holding our securities for their respective clients. We do not know the exact number of beneficial owners of our securities.
The Company has not paid any cash dividends on the Common Stock in the past and the Board of Directors does not anticipate declaring any cash dividends on the Common Stock in the foreseeable future.
Item 6.
Managements’ Discussion and Analysis or Plan of Operation.
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S EXPANSION INTO NEW MARKETS, COMPETITION, TECHNOLOGICAL ADVANCES AND AVAILABILITY OF MANAGERIAL PERSONNEL AND THE ABILITY TO MERGE WITH A STRATEGIC PARTNER.
OVERVIEW
The Company became dormant in May 2003. Until May 2003, the Company developed and marketed Internet and private network transaction based products that it offered to licensed gaming operators in regulated jurisdictions. Since May 2003, until December 31, 2006, we have been dormant and are seeking a business combination.
RESULTS OF OPERATIONS
The Company permanently ceased operations in May 2003, therefore no discussion and analysis of financial condition and results of operations would be relevant.
3
LIQUIDITY AND CAPITAL RESOURCES
The Company permanently ceased operations in May 2003, therefore no discussion and analysis of financial condition and results of operations would be relevant.
Item 7.
Financial Statements.
ONLINE GAMING SYSTEMS, LTD.
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | 5 |
|
|
Consolidated Balance Sheet at December 31, 2006 | 6 |
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2006 and 2005 | 7 |
|
|
Consolidated Statements of Changes in Stockholders’ (Deficiency) Equity for the Years Ended December 31, 2006 and 2005 | 8 |
|
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Consolidated Statements of Cash Flows for the Years Ended December 31, 2006 and 2005 | 9 |
|
|
Notes to the Consolidated Financial Statements | 10 to 12 |
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Online Gaming Systems, Ltd. and Subsidiary
We have audited the accompanying consolidated balance sheet of Online Gaming Systems, Ltd. and its subsidiary (“the Company”) as of December 31, 2006, and the related consolidated statements of operations, changes in stockholders' (deficiency) equity, and cash flows for each of the two years in the period ended December 31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Online Gaming Systems, Ltd. and its subsidiary as of December 31, 2006, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.
| |
| Certified Public Accountants |
Cranford, New Jersey
5
ONLINE GAMING SYSTEMS, LTD.
CONSOLIDATED BALANCE SHEET
|
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|
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Total Assets | $ | -- |
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
Commitments and Contingencies |
| -- |
Stockholders’ Equity: |
|
|
Convertible Preferred Stock-Par Value $.001 Per Share; |
| -- |
Common Stock-Par value $.001 Per Share; |
| 97,316 |
Additional Paid-in Capital |
| 22,958,479 |
Treasury Stock,1,125,012 Common Shares-At Cost |
| (1,730,485) |
Accumulated Deficit |
| (21,325,310) |
Total Stockholders’ Equity | $ | -- |
|
|
|
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements
6
ONLINE GAMING SYSTEMS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years Ended December 31, | ||||
|
| 2005 | |||
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Revenues | $ | -- |
| $ | -- |
Cost of Sales |
| -- |
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| -- |
Gross Profit |
| -- |
|
| -- |
Operating Expenses |
| -- |
|
| -- |
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Net Earnings | $ | -- |
| $ | -- |
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Basic and Diluted Earnings | $ | -- |
| $ | -- |
|
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Weighted Average Shares of Common |
| 96,190,941 |
|
| 96,190,941 |
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
7
ONLINE SYSTEMS, LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIENCY) EQUITY
|
| Preferred Stock |
|
| Common Stock |
| Additional Paid-in Capital |
|
| Treasury Stock |
| Accumulated Deficit |
| Total Stockholder’s (Deficiency) Equity |
| ||||||||||||
Number of Shares |
| Amount | Number of Shares |
| Amount |
| Number of Shares |
| Amount | ||||||||||||||||||
Balance December 31, 2004 |
| -- |
| $ | -- |
|
| 97,315,953 |
| $ | 97,316 |
| $ | 18,764,076 |
|
| (1,125,012 | ) | $ | (1,730,485 | ) | $ | (21,325,310 | ) | $ | (4,194,403 | ) |
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Net Earnings |
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| -- |
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| -- |
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Balance December 31, 2005 |
| -- |
|
| -- |
|
| 97,315,953 |
|
| 97,316 |
|
| 18,764,076 |
|
| (1,125,012 | ) |
| (1,730,485 | ) |
| (21,325,310 | ) |
| (4,194,403 | ) |
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Third Quarter 2006 - Cancellation by principal stockholder of outstanding principal convertible note balance and accrued interest. |
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| 4,194,403 |
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| 4,194,403 |
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Net Earnings |
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| -- |
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| -- |
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Balance December 31, 2006 |
| -- |
| $ | -- |
|
| 97,315,953 |
| $ | 97,316 |
| $ | 22,958,479 |
|
| (1,125,012 | ) | $ | (1,730,485 | ) | $ | (21,325,310 | ) | $ | 0 |
|
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
8
ONLINE GAMING SYSTEMS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||
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| 2005 | |||
Operating Activities: |
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Earnings from Operations | $ | -- |
| $ | -- |
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Net Cash – Operating Activities |
| -- |
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| -- |
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Investing Activities: |
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Net Cash - Investing Activities |
| -- |
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| -- |
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Financing Activities: |
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Net Cash – Financing Activities |
| -- |
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| -- |
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Change in Cash |
| -- |
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| -- |
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Cash – Beginning of Year |
| -- |
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| -- |
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Cash – End of Year | $ | -- |
| $ | -- |
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Supplemental Disclosures of Cash Flow Information: |
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Cash paid during the years for: |
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Interest | $ | -- |
| $ | -- |
Taxes |
| -- |
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| -- |
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
9
ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[1] Organization
Nature of Business – Online Gaming Systems, Ltd. [the "Company"] is located in Garfield, New Jersey. At December 31, 2006, the Company was dormant and had ceased operations in May, 2003. Before May 2003, the Company primarily developed and marketed interactive gaming products and services through the Internet. The Company established Online Gaming Systems Australia Pty., as a wholly owned subsidiary, to offer sports book sales in Australia and the Pacific Island region. On December 31, 2005, the Company was majority owned by Hosken Consolidated Investments and Subsidiaries ["HCI"], a South African Company. HCI is an investment holding company involved in various technology industries. In the second quarter of 2006, HCI executed a stock purchase agreement to sell 77,767,153 (approximately 81%) shares of the outstanding common stock of the Company to a non-related third party buyer. In August 2006, the stock purchase agreement was consummated and HCI cancelled the outstanding convertible note of $2,474,907 plus interest owed to it by the Company.
On October 23, 2006, the Company agreed to merge with WS Acquisition Corp. (“WS Acquisition”), in a transaction to be consummated in 2007. Mr. William Stehl, President and Chairman of the Board of the Company, is the sole stockholder and sole officer of WS Acquisition. Under the merger agreement, Mr. Stehl will receive 240,000,000 shares of Company common stock and 60,000,000 shares of Company preferred stock in exchange for all of the shares of WS Acquisition common stock. (see Note 8).
[2] Summary of Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its only subsidiary, Online Gaming Systems Australia, Pty. Ltd. All material intercompany accounts and transactions have been eliminated.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents - The Company considers all highly liquid investments, with a maturity of three months or less when purchased, to be cash equivalents. .
Property and Equipment and Depreciation - Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the lesser of the term of the related lease or the estimated useful lives of the improvements.
Routine maintenance and repair costs are charged to expense as incurred and renewals and improvements that extend the useful life of the assets are capitalized. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is reported within the consolidated statements of operations.
Revenue Recognition - Revenue is recognized once four criteria are met: (1) the Company must have persuasive evidence that an arrangement exists, (2) services have been performed and accepted by the customer, (3) the selling price must be fixed and determinable and (4) collectibility must be reasonably assured.
Income Taxes – The Company provides deferred taxes on the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to be reversed. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Earnings Per Share - Basic earnings per share is computed by dividing the earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the amount of earnings for the period available to each share of common stock outstanding during the reporting period, while giving effect to all dilutive potential common shares that were outstanding during the period, such as common shares that could result from the potential exercise or conversion of securities into common stock. The computation of diluted earnings per share does not assume conversion, exercise, or contingent issuance of securities that would have an antidilutive effect on per share amounts, [i.e. increasing earnings per share or reducing loss per share]. The dilutive effect of outstanding options and warrants and their equivalents are reflected in dilutive earnings per share by the application of the treasury stock method which recognizes the use
10
of proceeds that could be obtained upon exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds should be used to purchase common stock at the average market price during the period. Options and warrants will have a dilutive effect only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants. At December 31, 2006 and 2005 all outstanding options were anti-dilutive for earning per share calculations (see Note 6).
The Company adopted Statement of Financial Statement of Financial Accounting Standards No. 123 (revised), “Share-Based Payment” (“FAS123(R)”) effective January 1, 2006. Provisions of FAS123(R) require companies to recognize the fair value of stock option grants as a compensation cost in their financial statements. In addition to stock options granted after the effective date, companies are required to recognize a compensation cost with respect to any unvested stock options outstanding as of the effective date equal to the grant date fair value of those options with the cost related to unvested options to be recognized over the vesting period of the options.
[3] Significant Risks and Uncertainties
Concentrations of Credit Risk - The Company places its cash with high credit quality institutions to limit its credit exposure. The Company routinely assesses the credit worthiness of its customers before a sale takes place and as such believes its credit risk exposure is limited. The Company performs ongoing credit evaluations of its customers but does not require collateral as a condition of service.
[4] Convertible Notes Payable - Related Party
At December 31, 2005 the Company had a $2,474,907 convertible note payable balance due HCI. Terms of the revised loan agreement provides for an extension of the maturity to repay all principal outstanding and related accrued interest by December 31, 2006. The notes payable are secured by substantially all assets of the Company. As of December 31, 2005, the Company has accrued $1,719,496 in interest related to the convertible debt borrowing. No interest has been accrued in 2006 and 2005 due to the business being dormant.
In the second quarter of 2006, HCI executed a stock purchase agreement to sell 77,767,153 (approximately 81%) shares of the outstanding common stock of the Company at June 30, 2006 to a non-related third party buyer. In August 2006, the stock purchase agreement was consummated and HCI cancelled the outstanding convertible note of $2,474,907 plus interest owed to it by the Company.
[5] Income Taxes
There is no provision for income taxes for each of the years ended December 31, 2006 and 2005 due to the Company’s business operations being dormant.
As of December 31, 2006, the Company had a gross deferred tax asset of approximately $6,700,000. The deferred tax asset primarily consists of approximately $16,700,000 of federal net operating loss tax carryforwards expiring in years 2012 through 2022. The gross deferred tax asset is offset by a valuation allowance of $6,700,000 at December 31, 2006. The Company’s ability to utilize its NOL carryforwards may be subject to certain limitations in the future periods, including Section 382 of the Internal Revenue Code of 1986, as amended.
[6] Stock Options
[A] On January 1, 1997, the Company adopted an Incentive Stock Option Plan for Employees, Directors, Consultants and Advisors [the "Plan"]. The Plan expired December 31, 2006. Employees, directors, consultants and advisors of the Company, or any of its subsidiary corporations, are eligible for participation in the Plan. The Plan provides for stock to be issued pursuant to options granted and shall be limited to 250,000 shares of Common Stock, $.001 par value. The shares have been reserved for issuance in accordance with the terms of the Plan. At the November 2002 stockholder meeting, the stockholders approved an amendment to the plan to increase the maximum number of shares of common stock issuable upon exercise of options granted under the plan to 10,000,000. In December 2002, the Board of Directors authorized the issuance of 5,300,000 incentive stock options under the plan to five members of management. In 2003, the five members of management terminated their employment and under the terms of the Plan the options expired The Company did not grant any incentive stock options during each of the years ended December 31, 2006 and 2005. As of December 31, 2006, there were no outstanding options under the Plan.
[B] Non-incentive stock options and warrants may be granted to employees or non-employees at fair market value or at a price less than fair market value of the common stock at the date of grant. There were no non-incentive stock options and warrants
11
granted during each of the years ended December 31, 2006 and 2005. The following is a summary of non-incentive stock options and warrants transactions for the two years ended December 31, 2006:
|
|
|
| Weighted-Average |
|
|
| Shares |
| Exercise Price |
|
Outstanding at December 31, 2004 |
| 1,557,334 |
| $ 2.25 |
|
Granted |
| -- |
| -- |
|
Exercised |
| -- |
| -- |
|
Canceled |
| 1,424,000 |
| 2.25 |
|
|
|
|
|
|
|
Outstanding at December 31, 2005 |
| 133,334 |
| 2.25 |
|
Exercisable at December 31, 2005 |
| 133,334 |
| 2.25 |
|
Granted |
| -- |
| -- |
|
Exercised |
| -- |
| -- |
|
Canceled |
| 133,334 |
| 2.25 |
|
|
|
|
|
|
|
Outstanding at December 31, 2006 |
| -- |
|
|
|
Exercisable at December 31, 2006 |
| -- |
|
|
|
The Company uses the Black-Scholes option valuation model to estimate the fair value of options. Option valuation models require the input of highly subjective assumptions including the expected stock price volatility.
[7] New Authoritative Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
[8] Subsequent Event
In January 2007, the Company changed its name to “Advanced Resources Group, Ltd.” and consummated the transaction with WS Acquisition described in Note 1, above, to exchange 240,000,000 shares of Company common stock and 60,000,000 shares of Company preferred stock for all of the common stock of WS Acquisition.
12
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 8A.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.
With the participation of management, the Company’s Chief Executive Officer evaluated the effectiveness of the design and operation of its disclosure controls and procedures at the conclusion of the fiscal year ended December 31, 2006. Based upon this evaluation, the Chief Executive Officer concluded that the Company’s disclosure controls and procedures were effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange Commission.
Change In Internal Controls
There were no significant changes in the Company’s internal controls or, to the knowledge of the Company’s management, in other factors that could significantly affect internal controls subsequent to the date of the Company’s most recent evaluation of its disclosure controls and procedures utilized to compile information included in this filing.
Item 8B.
Other Information.
None
13
PART III
Item 9.
Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission"). Officers, directors and greater than ten percent shareholders are required by the Commission's regulations to furnish the Company with copies of all Section 16(a) forms they file.
DIRECTORS
The directors of the Company and their positions with the Company during the period covered by this report are set forth below. All of the Company’s former officers resigned in May 2003, when the Company became dormant. The Company’s former director resigned March 30, 2006, and the majority stockholder of the Company elected William A. Stehl and Richard Dunning as directors on October 23, 2006.
Name | Age | Position |
William A. Stehl | 62 | President, Chief Executive Officer and Director |
52 | Executive Vice President, Chief Operating Officer and Director |
William A. Stehl was appointed a Director of the Company on October 23, 2006 by majority written consent of stockholders. Since 2002, Mr. Stehl has been engaged as an independent consultant and researcher specializing in the application of new technology in the mineral industry, with a special emphasis on the reduction of environmental impact relating to mining and metal recovery operations. In addition, he began the exploration of new methods in alternative energy production and enhanced metal recovery as well as improved wastewater treatment. His work has taken him to virtually every area of the world and has given him a global familiarity with the problems associated with the development of natural resources and potential solutions for those problems. Mr. Stehl attended Pratt Institute School of Engineering, The New School and Harpur College, in engineering subjects.
Richard Dunning was appointed a Director of the Company on October 23, 2006 by majority written consent of stockholders. Since 1996, Mr. Dunning has been an officer and director of 21st century Funding and since 2002, Mr. Dunning has been a director of International Surfacing, Inc. Mr. Dunning attended Denver University and the University of Colorado, receiving a BA in Psychology and Political Science in 1985. Mr. Dunning also attended the University of Colorado Law School.
MEETINGS AND COMMITTEES
The Board held no meetings during the year ended December 31, 2006. From time to time during such year, the Board acted by written consent. The Company has no standing compensation or audit committees. The Board of Directors performs the typical functions of such committees. The Committee recommends engagement of the Company’s independent accountants approves services performed by such accountants and reviews and evaluates the Company’s accounting system and its system of internal controls.
14
Item 10.
Executive Compensation.
The following table provides certain summary information concerning the compensation earned, by the Company's Chief Executive Officer and its Chairman for services rendered in all capacities to the Company and its subsidiaries for each of the last three fiscal years. No individuals received any cash or other compensation in the years ended December 31, 2006, 2005 or 2004. Such individuals will be hereafter referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL POSITION | YEAR | SALARY | BONUS |
William A. Stehl (1) President and Chief Executive Officer | 2006 | $ -- |
|
Richard Dunning (1) Executive Vice President, Chief Operating Officer | 2006 | $ -- |
|
Lawrence P. Tombari (2) Former President and Chief Financial Officer | 2005 2004 | $ -- -- | -- |
Gary A. Ramos (3) Former President and Chief Executive Officer | 2005 2004 | $ -- $ -- | -- |
(1) Appointed October 23, 2006
(2) Resigned May 2003
(3) Resigned March 2002
Stock Options
On January 1, 1997, the Company adopted an Incentive Stock Option Plan for Employees, Directors, Consultants and Advisors (the "Plan"). The Plan expired December 31, 2006. Employees, directors, consultants and advisors of the Company, or any of its subsidiary corporations, were eligible for participation in the Plan. The Plan provided for stock to be issued pursuant to options granted and was limited to 250,000 shares of Common Stock, $.001 par value. The shares were reserved for issuance in accordance with the terms of the Plan. The exercise of these options may be for all or any portion of the option and any portion not exercised will remain with the holder until the expiration of the option period.
During 2006 and 2005, the Company did not issue any stock options under the Plan.
During 2002 the Board of Directors and shareholders approved amendments to the Plan that, among other things, increased the number of shares available under the Plan to 10,000,000.
No options were granted during 2005, 2004 or 2003. All options granted to any named executive officers expired in 2003
Board of Directors Compensation
In the past, the Company compensated directors who are also executive officers of the Company for service on the Board of Directors. Directors received $1,500 per meeting and are reimbursed for their expenses incurred in attending meetings of the Board of Directors.
The Company has paid no compensation to any directors since the Company became dormant in May 2003. The Company has no plan to pay directors at this time.
Long-Term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans.
Other
No director or executive officer is involved in any material legal proceeding in which he is a party adverse to the Company or has a material interest adverse to the Company.
Employment Agreements
None
15
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of December 31, 2006, information regarding the beneficial ownership of the Company's Common Stock by each person known by the Company to own five percent or more of the outstanding shares, by each of the directors and officers, and by the directors and officers as a group.(1) As of October 1, 2007, 336,190,941 shares of the Common Stock of the Company were issued and outstanding.
Name and Address of Beneficial Owner (2) | Amount of Beneficial Ownership | Percent of Class |
LanMac Associates | 78,698,120 | 81.6% |
William A. Stehl | 0 | 0% |
0 | 0% | |
All Officers and Directors as a Group | 0 | 0% |
(2 Persons) |
|
|
(1)
Beneficial ownership has been determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934. Generally, a person is deemed to be the beneficial owner of a security if he has the right to acquire voting or investment power within 30 days.
(2)
Unless otherwise stated, the address for the beneficial owner is 5 Erie Street, Garfield, NJ 07026.
Item 12.
Certain Relationships and Related Transactions, and Director Independence.
In prior years, the Company’s operating shortfalls were funded largely by its largest stockholder, HCI. In 2006 and 2005, however, HCI did not provide any funds to the Company. During 2003, HCI funded the Company $400,000 in the form of convertible notes. During 2002, HCI funded the Company $1,590,000 in the form of convertible notes.
All of the notes issued to HCI were cancelled in August 2006.
Item 13.
Exhibits.
Exhibits:
3.1
Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Form 10-KSB for the fiscal year ended December 31, 1996.
3.2
Bylaws of the Company, incorporated by reference to Exhibit 3.2 to the Company's Form 10-KSB for the fiscal year ended December 31, 1996.
4.1
Specimen Common Stock Certificate, incorporated by reference to Exhibit 4.1 to the Company’s Form 10-KSB for the fiscal year ended December 31, 1996.
10.6
Stock Purchase Agreement dated March 10, 1999 by and between Atlantic International Entertainment, Ltd. and Centerline Associates, Inc., incorporated by reference to Exhibit 10.6 to the Company’s Form 10-QSB for the quarter ended March 31, 1999.
10.7
Stock Option and Incentive Plan adopted by Board of Directors on March 25, 1999, incorporated by reference to Exhibit 10.7 to the Company’s Form 10-QSB for the quarter ended March 31, 1999.
10.8
Stock Purchase Agreement dated December 10, 1999 by and between Atlantic Internet Holdings, Inc., incorporated by reference to Exhibit 10.8 to the Company’s Form 10-KSB for the year ended December 31, 1999.
31.1
Certification by Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2
Certification by Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
16
Item 14.
Principal Accounting Fees and Services.
Moore Stephens, P.C. were our primary auditors for the fiscal years ended December 31, 2006 and 2005.
Audit Fees
For Moore Stephens’ audit of our annual financial statements, review of Form 10-KSB, and for their review of our Quarterly Reports on Form 10-QSB, Moore Stephens billed us a total of $17,000 and $15,000 for the fiscal years ended December 31, 2006 and 2005, respectively.
Tax Fees: None.
All Other Fees: None.
The Board of Directors Pre-Approval Policy and Procedures
We do not have a separate Audit Committee. Our full Board of Directors performs the functions of an Audit Committee. During fiscal year 2003, the Board of Directors adopted policies and procedures for the pre-approval of audit and non-audit services for the purpose of maintaining the independence of our independent auditors. We may not engage our independent auditors to render any audit or non-audit service unless either the service is approved in advance by the Board of Directors or the engagement to render the service is entered into pursuant to the Board of Director's pre-approval policies and procedures. On an annual basis, the Board of Directors may pre-approve services that are expected to be provided to us by the independent auditors during the following 12 months. At the time such pre-approval is granted, the Board of Directors must (1) identify the particular pre-approved services in a sufficient level of detail so that management will not be called upon to make judgment as to whether a proposed service fits within the pre-approved services and (2) establish a monetary limit with respect to each particular pre-approved service, which limit may not be exceeded without obtaining further pre-approval under the policy.
The Board has considered whether the provision of the services described above under the caption "All Other Fees" is compatible with maintaining Moore Stephen’s independent audit.
17
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.
Date: October 15, 2007
| ONLINE GAMING SYSTEMS, LTD. | |
|
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|
|
|
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| By: | /s/ Richard Dunning |
|
| |
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| President |
18
| This 10KSB Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 11/22/96 | ||||
| 12/31/96 | 8-K, NT 10-K, 10KSB | |||
| 1/1/97 | ||||
| 3/10/99 | ||||
| 3/25/99 | SB-2/A | |||
| 3/31/99 | 10QSB, NT 10-Q | |||
| 12/10/99 | ||||
| 12/31/99 | 10KSB, NT 10-K, 10KSB/A | |||
| 12/31/03 | 10KSB | |||
| 12/31/04 | 10KSB | |||
| 3/31/05 | 10QSB | |||
| 6/30/05 | 10QSB | |||
| 9/30/05 | 10QSB | |||
| 12/31/05 | 10KSB | |||
| 1/1/06 | ||||
| 3/30/06 | ||||
| 3/31/06 | 10QSB | |||
| 6/30/06 | 10QSB | |||
| 9/30/06 | 10QSB | |||
| 10/23/06 | ||||
| For The Period Ended | 12/31/06 | |||
| 9/18/07 | ||||
| 10/1/07 | ||||
| Filed On / Filed As Of | 10/15/07 | |||
| Top | List All Filings | |||
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