10QSB 1 omega_0904.txt FORM 10QSB AT SEPTEMBER 30, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended Commission File Number September 30, 2004 333-51180 OMEGA VENTURES GROUP, INC. ------------------------------ (Exact name of registrant as specified in its charter) NEVADA ---------- (State or other jurisdiction of incorporation or organization) 87-0661638 ------------- (I.R.S. Employer Identification No.) 136 East South Temple, Suite 1600, Salt Lake City, Utah 84111 ------------------------------------------------------------- (Address of principal executive offices) (801) 363-2599 ---------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12 (b) of the Act: None ----- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No ----- ----- State the number of shares outstanding of each of the registrants classes of common equity, as of the latest practicable date. Common stock, par value $.001; 42,639,597 shares outstanding as of September 30, 2004 PART I - FINANCIAL INFORMATION Item 1. Financial Statements OMEGA VENTURES GROUP, INC. AND SUBSIDIARIES ( Development Stage Company) CONSOLIDATED BALANCE SHEETS - unaudited September 30, 2004 and December 31, 2003
=========================================================================== Sept 30, Dec 31, 2004 2003 ----------- ----------- ASSETS CURRENT ASSETS Cash $ - $ 1,006 ----------- ----------- Total Current Assets - 1,006 ----------- ----------- FURNITURE AND EQUIPMENT - net depreciation 7,612 10,135 ----------- ----------- OTHER ASSETS Surety deposit 25,386 25,000 Web site - net of accumulated amortization 3,269 4,022 Land 131,500 79,400 ----------- ----------- 160,155 108,422 ----------- ----------- $ 167,767 $ 119,563 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Note payable - land - current $ 19,067 $ 4,584 Accounts payable - affiliates 123,794 125,977 Accounts payable 52,609 47,509 ----------- ----------- Total Current Liabilities 195,470 178,070 ----------- ----------- LONG TERM NOTE PAYABLE - land - net of current 99,200 64,176 ----------- ----------- STOCKHOLDERS' DEFICIENCY Preferred stock 100,000,000 shares authorized, at $.001 par value - none issued - - Common stock 400,000,000 shares authorized, at $0.001 par value; 42,639,597 shares issued and outstanding 42,640 38,974 Capital in excess of par value 708,711 628,810 Deficit accumulated during the development stage (878,254) (790,467) ----------- ----------- Total Stockholders' Deficit (126,903) (122,683) ----------- ----------- $ 167,767 $ 119,563 =========== ===========
The accompanying notes are an integral part of these financial statements. 2 OMEGA VENTURES GROUP, INC. AND SUBSIDIARIES ( Development Stage Company) STATEMENT OF OPERATIONS - unaudited For the Three and Nine Months Ended September 30, 2004 and 2003 and the Period September 19, 2000 (Date of Inception) to September 30, 2004
==================================================================================== Sept 19, 2000 Three Months Nine Months to Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, 2004 2003 2004 2003 2004 ----------- ----------- ----------- ----------- ----------- REVENUES $ - $ - $ - $ - $ - ----------- ----------- ----------- ----------- ----------- EXPENSES Market development 1,373 6,484 20,733 84,630 377,998 Depreciation & amortization 1,092 646 3,276 1,938 9,230 Administrative 6,806 46,424 32,100 84,011 418,097 Exploration 1,900 - 25,150 - 41,584 Development of web site - preliminary project stage - - - - 25,000 ----------- ----------- ----------- ----------- ----------- NET LOSS - before other expense (11,171) (53,554) (81,259) (170,579) (871,909) OTHER EXPENSE Interest income - 35 95 104 278 Interest expense (3,300) - (6,623) - (6,623) ----------- ----------- ----------- ----------- ----------- NET LOSS $ (14,471) $ (53,519) $ (87,787) $ (170,475) $ (878,254) =========== =========== =========== =========== =========== NET LOSS PER COMMON SHARE Basic $ - $ - $ - $ - AVERAGE OUTSTANDING SHARES (stated in 1,000's) Basic 42,065 36,549 41,307 35,573 ----------- ----------- ----------- ----------- Diluted 47,164 - 46,406 - ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 3 OMEGA VENTURES GROUP, INC. AND SUBSIDIARIES ( Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Period September 19, 2000 (Date of Inception) to September 30, 2004
==================================================================================== Capital in Common Stock Excess of Accumulated Shares Amount Par Value Deficit ------------------------------------------------- Balance September 19, 2000 - - - - Issuance of common stock for cash at $.001 - September 19, 2000 16,000,000 16,000 - - Issuance of common stock for web site - September 25, 2000 - Note 3 6,000,000 6,000 19,000 - Issuance of common stock for cash at $.01 - October 10, 2000 5,000,000 5,000 44,810 - Net operating loss for the period September 19, 2000 to December 31, 2000 - - - (47,010) Issuance of common stock for cash at $.0012 - January 2001 2,500,000 2,500 500 - Net operating loss for the year ended December 31, 2001 - - - (11,639) Issuance of common stock for cash at $.10 - net of offering costs - July 22, 2002 5,098,500 5,099 405,735 - Net operating loss for year ended December 31, 2002 - - - (389,097) Issuance of common stock for services at $.04 - January through March 2003 - net of cancellations 1,750,000 1,750 68,250 - Issuance of common stock for expenses at $.02 - March 27, 2003 125,000 125 2,375 - Issuance of common stock for cash at $.15 - May 30, 2003 200,000 200 29,800 Issuance of common stock for cash at $.023 - October 20, 2003 2,500,000 2,500 55,140 - Issuance of common stock for expenses at $.01 - December 2, 2003 300,000 300 2,700 - Return and cancellation of common stock - December 2003 (500,000) (500) 500 - Net operating loss for the year ended December 31, 2003 (342,721) ------------------------------------------------- Balance December 31, 2003 38,973,500 38,974 628,810 (790,467) Issuance of common stock for cash at $.015 - February 20, 2004 1,000,000 1,000 14,000 - Issuance of common stock for expenses at $.03 1,543,232 1,543 44,567 - Issuance of common stock for expenses at $.02 - August 25, 2004 1,122,865 1,123 21,334 - Net operating loss for the nine months ended September 30, 2004 - - - (87,787) ------------------------------------------------- Balance September 30, 2004 42,639,597 $ 42,640 $ 708,711 $(878,254) =================================================
The accompanying notes are an integral part of these financial statements. 5 OMEGA VENTURES GROUP, INC. AND SUBSIDIARIES ( Development Stage Company) STATEMENT OF CASH FLOWS - unaudited For the Nine Months Ended September 30, 2004 and 2003 and the Period September 19, 2000 (Date of Inception) to September 30, 2004
=========================================================================== Sept 19, 2000 Sept 30, Sept 30, to Sept 30, 2004 2003 2004 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (87,787) $(170,475) $ (878,254) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 3,276 1,938 11,414 Change in deposits (386) - (386) Change in accounts payable 52,424 101,695 246,376 Issuance of capital stock for web site - - 25,000 Issuance of capital stock for services 68,567 1,750 190,177 Net Decrease in Cash From Operations 36,094 (65,092) (405,673) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Surety deposit - - (25,000) Purchase of web site - - (5,027) Purchase of land (52,100) - (131,500) Purchase of equipment - - (15,084) ----------- ----------- ----------- (52,100) - (176,611) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock 15,000 - 582,284 Net Increase (Decrease) in Cash (1,006) (65,092) - ----------- ----------- ----------- Cash at Beginning of Period 1,006 90,601 - ----------- ----------- ----------- Cash at End of Period $ - $ 25,509 $ - =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 6 OMEGA VENTURES GROUP, INC. AND SUBSIDIARIES ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS September 30, 2004 =========================================================================== 1. ORGANIZATION The Company was incorporated under the laws of the State of Nevada on September 19, 2000 with the name "Office Managers, Inc" with authorized common stock of 50,000,000 shares at $0.001 par value. On November 13, 2003 the name was changed to "Omega Ventures Group, Inc." in connection with an increase in the authorized common stock to 400,000,000 shares, with the same par value, and the addition of authorized preferred shares of 100,000,000 shares with a par value of $.001. No terms have been determined for the preferred stock and no shares have been issued. The Company was organized for the purpose of acquiring and developing a web site on the World Wide Web devoted exclusively to office managers for the purpose of delivering office products and related professional services over the internet. On February 13, 2003 the Company organized "Vogue Environmental Solutions, Inc"., a wholly owned subsidiary. The subsidiary has no assets or liabilities and no operations. On September 5, 2003 the Company organized "Western Gas Corporation" , a wholly owned subsidiary, for the purpose of the acquisition and exploration of oil and gas leases. On November 24, 2003 the Company organized "Arizona Land Corporation", a wholly owned subsidiary, for the purpose of engaging in land development. The Company is in the development stage. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Methods ------------------ The Company recognizes income and expenses based on the accrual method of accounting. Dividend Policy --------------- The Company has not adopted a policy regarding payment of dividends. Amortization of Web Site ------------------------ Costs of the preliminary development of the web site are expensed as incurred and costs of the application and post- implementation are capitalized and amortized over the useful life of the fully developed web site. The web site is fully developed and amortization over five years was started in 2003. 7 OMEGA VENTURES GROUP, INC. AND SUBSIDIARY ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) September 30, 2004 =========================================================================== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued Basic and Dilutive Net Income (Loss) Per Share ---------------------------------------------- Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report. The dilutive common shares includes 5,098,500 shares that may be issued. Income Taxes ------------ The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized. On September 30, 2004, the Company and its subsidiaries had a net operating loss available for carry forward of $878,254. The income tax benefit of approximately $263,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The net operating loss will expire in 2024. Capitalization of Oil Leases Costs ------------------------------------- The Company uses the successful efforts cost method for recording its oil lease interests, which provides for capitalizing the purchase price of the project and the additional costs directly related to proving the properties and amortizing these amounts over the life of the reserve when operations begin or a shorter period if the property is shown to have an impairment in value or expensing the remaining balance if it is proven to be of no value. Expenditures for oil well equipment are capitalized and depreciated over their useful lives. Environmental Requirements -------------------------- At the report date environmental requirements related to the oil and gas leases acquired are unknown and therefore an estimate of any future cost cannot be made. Financial and Concentrations Risk --------------------------------- The Company does not have any concentration or related financial credit risk. 8 OMEGA VENTURES GROUP, INC. AND SUBSIDIARY ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) September 30, 2004 =========================================================================== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued Financial Instruments --------------------- The carrying amounts of financial instruments, including cash and accounts payable, are considered by management to be their estimated fair values due to their short term maturities. Revenue Recognition ------------------- Revenue will be recognized on the sale and delivery of a product or the completion of a service provided. Advertising and Market Development ---------------------------------- The Company will expense advertising and market development costs as incurred. Principles of Consolidation --------------------------- The consolidated financial statements include the assets, liabilities, and operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated. Estimates and Assumptions ------------------------- Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements. Office Equipment ---------------- Office equipment is depreciated over 3 and 7 years using the straight line method. Cost $ 15,084 Less accumulated depreciation 7,472 -------- Net 7,612 -------- 9 OMEGA VENTURES GROUP, INC. AND SUBSIDIARY ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) September 30, 2004 =========================================================================== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued Recent Accounting Pronouncements -------------------------------- The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements. 3. OIL AND GAS LEASES During September 2003 Western Gas Corporation (subsidiary) acquired an undivided 2.5% working interest, with a 1.875% net revenue in a 75% interest, in an oil and gas lease known as "Manahuilla Creek Prospect" located in Goliad County , Texas. The lease has not been proven and therefore all costs for acquisition and exploration have been expensed. 4. ACQUISITION OF WEB SITE On September 25, 2000 the Company acquired the web site and the domain name "officemanagers.net", (which was in the preliminary development stage) from Apex Resources, Inc.(an affiliate), by the issuance of 6,000,000 common shares of the Company, for the purpose of pursuing its business interest as outlined in note 1. The value of the web site was recorded at $25,000, the acquisition cost to Apex Resources Group, Inc., before the sale to the Company. Costs of the preliminary development of the web site are expensed as incurred and costs of the application and post- implementation are capitalized and amortized over an estimated useful life of five years. The web site is fully developed and amortization started in 2003. 5. LONG TERM NOTE PAYABLE Arizona Land Corporation (subsidiary) is obligated under two installment sales contracts for the purchase of land. The payments due, under the contracts, are 180 monthly payments of $1,327, including interest of 11%. 6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES Officers-directors, and affiliated companies (affiliated by common officers) have acquired 36% of the common stock issued. The Company affiliates have made no interest demand loans to the Company of $123,794. 10 OMEGA VENTURES GROUP, INC. AND SUBSIDIARY ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) September 30, 2004 =========================================================================== 7. CAPITAL STOCK During July 2002 the Company completed the sale of an offering of 5,098,500 units at $.10 per unit. Each unit consists of one share of common stock, one redeemable A warrant to purchase an additional common share at $.50 by July 10, 2003 (expired), and one redeemable B warrant to purchase an additional common share at $1.20 by July 10, 2007 which would amount to the issuance of 5,098,500 additional shares. On the report date no warrants had been redeemed. During 2003, the Company issued 2,175,000 restricted common shares for services and 2,700,000 for cash. During February 2004 the Company issued 1,000,000 restricted common shares for cash. During June and September 2004 the Company issued 2,666,097 restricted common shares for expenses. 8. GOING CONCERN The Company intends to continue the development of its business interests, however, there is insufficient working capital necessary to be successful in this effort and to service its debt. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective, through short term related party loans, long term financing, and additional equity funding, which will enable the Company to operate for the coming year. Item 2. Plan of Operations This Form 10-QSB contains certain forward-looking statements. For this purpose any statements contained in this Form 10-QSB that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties. Actual results may differ materially depending on a variety of factors. For a complete understanding, this Plan of Operations should be read in conjunction with Part I- Item 1. Financial Statements to this Form 10- QSB. General ------- The primary business of Omega Ventures Group Inc., is to oversee the operations of its three wholly-owned subsidiaries: - Western Gas Corporation - Arizona Land Corporation - Vogue Environmental Solutions, Inc. 11 Western Gas Corporation ----------------------- During the quarter, PB Energy Partners, the operator of the BB Gayle #1 gas notified the Company that the well at Manahuilla Creek in Goliad, Texas, had been drilled and perforated. The well did not prove to be of commercial value. Arizona Land Corporation ------------------------ Arizona Land did not acquire any additional properties during the quarter. All funds available to Arizona Land during the quarter were used to reduce the balances owed on the properties currently owned by Arizona Land. As of September 30, 2004, Arizona Land is no longer delinquent on any of its properties. Vogue Environmental Solutions, Inc. ----------------------------------- Due to a lack of funds, Vogue Environmental Solutions did not engage in active operations during the quarter. Source of Funds --------------- On July 10, 2002, the Company closed its initial public offering pursuant to an effective registration statement with the SEC. The Company received total net proceeds of $410,834 from the offering. From July 10, 2002, until the third quarter 2003, the Company relied primarily on the proceeds of that offering to fund its operations. By the end of the third quarter 2003, the Company had spent all of the funds raised in the offering. Since that time the Company has been dependent upon loans from related parties and private sales of its securities to fund its operations. NOTE 8 OF THE NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS states that the Company will need additional capital to service its debt and funds it planned activities, which raises substantial doubt about the Company's ability to continue as a going concern. The Company has never generated revenue and it is unlikely the Company will realize any significant revenue through the third quarter of 2004, which also raises substantial doubt about the Company's ability to continue as a going concern. To continue operations, the Company will need to obtain funding from third parties. This funding may be sought by means of private equity or debt financing by the Company. The Company currently has no commitments from any party to provide funding and there is no way to predict when, or if, any such funding could materialize. There is no assurance that the Company will be successful in obtaining additional funding on attractive terms or at all. If the Company is unsuccessful in obtaining additional funding, the Company may be unable to continue operations as it has insufficient working capital necessary to meet its expenses and service its debt. Results of Operations --------------------- During the period from inception, September 19, 2000, to September 30, 2004, the Company has generated no revenue. The Company does not expect to generate any material revenues through the third quarter of 2004. 12 As of September 30, 2004, the Company had an accumulated deficit of $878,254 funded by paid-in capital. At September 30, 2004, the Company had total current liabilities of $195,470 compared to total current liabilities of $178,070 on September 30, 2003. These increases in accumulated deficit and total current liabilities are the result of increases in notes and accounts payable as well as increased borrowing from Company affiliates to fund operations in 2004 as compared to 2003. During the three and the nine months ended September 30, 2004, the Company spent $1,373 and $20,733 respectively in market development expenses compared to $6,484 and $84,630 respectively in the corresponding three and nine month periods ended September 30, 2003. The decrease in market development expenses is primarily the result of the Company having very limited resources to fund its operations and therefore, scaling back the number of employees and consultants hired by the Company. During the three and nine months ended September 30, 2004, the Company spent $6,806 and $46,424 respectively on administrative expenses compared to $32,100 and $84,011 respectively in the corresponding periods of 2003. Administrative expenses decreased in both the three and nine month periods ended September 30, 2004, compared to the same periods of 2003, primarily as a result of the reduction in the overall activity of the Company dictated by the Company's lack of funds. During the three and nine months ended September 30, 2004, the Company spent $1,900 and $25,150 respectively on exploration activities undertaken by Western Gas. The Company had no such expenses during the corresponding periods of 2003 because it had not yet formed Western Gas. During the three and nine months ended September 30, 2004, the Company realized net losses of $14,471 and $87,787 respectively compared to net losses of $53,519 and $170,475 respectively for the three and nine months ended September 30, 2003. The reduction in net loss in the three and nine months ended September 30, 2004, compared to September 30, 2004 is primarily the result of the Company scaling back its active operations as funds available to the Company have diminished. Liquidity and Capital Resources ------------------------------- The Company has financed its operations mainly through the sale of its common stock and through loans from related parties. Since inception, the Company has been entirely dependent upon outside sources of financing for continuation of operations. As stated previously, there is no assurance that the Company will be successful in obtaining additional funding on acceptable terms or at all. As of September 30, 2004, the Company had no cash on hand. During the quarter, the Company issued 1,122,865 restricted common shares in satisfaction of expenses totaling $22,457. It is unclear at this time whether the Company will have sufficient funds to maintain operations through the fourth quarter of 2004. As discussed above, the Company has exhausted the funds raised in its initial public offering, and all funds subsequently raised in private placement transactions. Moreover, it is unlikely the Company will realize material revenue from the operations of any of its subsidiaries in through the third quarter of 2004. Therefore, unless the Company is able to raise additional funding through the sell of equity or debt securities, it is unclear how long the Company may be able to continue operations. 13 Item 3. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures. ------------------------------------------------- The Company's Chief Executive Officer and Chief Financial Officer have conducted an evaluation of the Company's disclosure controls and procedures (as defined in Rule 13A-15(e) under the Securities Exchange Act of 1934 ("Exchange Act") as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based on their evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the applicable periods specified by the SEC's rules and forms. (b) Changes in Internal Controls and Procedures. -------------------------------------------- During the period covered by this quarterly report, there were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15) or 15d-15 under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting. PART II - OTHER INFORMATION Item 2. Changes in Securities No instruments defining the rights of the holders of any class of registered securities have been materially modified, limited or qualified during the quarter ended September 30, 2004. In September the Company issued 1,122,865 restricted common shares to Olympus Capital Group, Inc., of funds advanced in the amount of $22,457 to cover Company expenses. The shares were issued without registration under the Securities Act of 1933 in reliance on an exemption from registration provided by Section 4(2) of the Securities Act of 1933. Item 6. Exhibits and Reports on Form 8-K a. Reports on Form 8-K None. b. Exhibits. The following exhibits are included as part of this report: Exhibit No. Exhibit ----------- ------- 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this to be signed on its behalf by the undersigned thereunto duly authorized. OMEGA VENTURES GROUP, INC. November 22, 2004 /S/ John M. Hickey -------------------------------------- John M. Hickey, Principal Executive Officer November 22, 2004 John Ray Rask -------------------------------------- John Ray Rask, Principal Financial Officer 15