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 Quarterly Period ended September 30, 2003
Commission File Number 000-31032
GL ENERGY AND EXPLORATION, INC.
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(Exact name of registrant as specified in charter)
Delaware 52-2190362
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
#300-1497 Marine Drive, West Vancouver, B.C. V7T 1B8
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (604) 926-2873
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of October 20, 2003, the Company
had outstanding 26,693,614 shares of its common stock, par value $0.001.
TABLE OF CONTENTS
ITEM NUMBER AND CAPTION PAGE
PART I
ITEM 1. FINANCIAL STATEMENTS................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND PLAN OF OPERATIONS......... 8
ITEM 3 CONTROLS AND PROCEDURES................................ 12
PART II
ITEM 1. LEGAL PROCEEDINGS...................................... 13
ITEM 2. CHANGES IN SECURITIES ................................. 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES........................ 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.... 14
ITEM 5. OTHER INFORMATION...................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................... 14
2
PART I
ITEM 1. FINANCIAL STATEMENTS
GL Energy and Exploration, Inc.
(A Company in the Development Stage)
Consolidated Balance Sheets
Unaudited Audited
September 30, December 31,
2003 2002
------------- -------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 405 $ 34,456
Investment in Joint Venture 20,000 --
Prepaid Expenses 2,280 200
------------- -------------
TOTAL ASSETS $ 22,685 $ 34,656
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 21,476 $ 242
Accounts Payable - Related Party 32,000 --
Accrued Obligation to Platoro West Incorporated -- 27,132
Due to Shareholders 45,800 67,225
------------- -------------
Total Liabilities 99,276 94,599
Minority Interest 306 116
Shareholders' Equity:
Preferred Stock - $0.001 par value; 5,000,000 shares
authorized, no shares issued and outstanding -- --
Common Stock - $0.001 par value; 100,000,000 shares
authorized, 26,693,614 and 1,083,614 shares
outstanding at September 30, 2003 and
December 31, 2002 26,694 1,084
Additional Paid-in Capital 168,277 163,356
Deficit Accumulated During the Development Stage (271,867) (224,499)
------------- -------------
Total Shareholders' Deficit (76,897) (60,059)
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TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 22,685 $ 34,656
============= =============
See notes to financial statements
3
GL Energy and Exploration, Inc.
(A Company in the Development Stage)
Consolidated Statements of Operations
Unaudited Unaudited
Three Months Three Months
Ended Ended
September 30, 2003 September 30, 2002
------------------ ------------------
REVENUES
Revenues $ -- $ --
Cost of Revenues -- --
------------------ ------------------
Gross Margin -- --
EXPENSES
Mineral Rights -- 7,411
Legal and Accounting 6,313 13,227
General and Administrative 7,375 20,201
------------------ ------------------
Total Expenses 13,688 40,839
Minority Interest in Losses of Subsidiary 241 (16)
------------------ ------------------
Loss from Operations (13,929) (40,823)
------------------ ------------------
Forgiveness of Debt 34,464 --
Gain on Disposal of Subsidiary -- --
------------------ ------------------
NET INCOME (LOSS) 20,534 (40,823)
================== ==================
Net Income (Loss) per Share - Basic
and Diluted $ 0.00 $ (0.04)
Shares used in per Share Calculation:
Basic and Diluted 25,513,614 1,068,476
See notes to financial statements
4
GL Energy and Exploration, Inc.
(A Company in the Development Stage)
Consolidated Statements of Operations
Unaudited Unaudited Unaudited
Nine Months Nine Months Inception
Ended Ended To
September 30, 2003 September 30, 2002 September 30, 2003
------------------ ------------------ ------------------
REVENUES
Revenues $ -- $ -- $ --
Cost of Revenues -- -- --
------------------ ------------------ ------------------
Gross Margin -- -- --
EXPENSES
Mineral Rights 9,832 14,743 85,830
Legal and Accounting 32,760 27,942 127,579
General and Administrative 57,312 21,972 111,128
------------------ ------------------ ------------------
Total Expenses 99,904 64,657 324,537
Minority Interest in Losses of Subsidiary 190 (45) 56
------------------ ------------------ ------------------
Loss from Operations (100,094) (64,612) (324,593)
------------------ ------------------ ------------------
Forgiveness of Debt 34,464 -- 34,464
Gain on Disposal of Subsidiary 18,261 -- 18,261
------------------ ------------------ ------------------
NET LOSS $ (47,369) $ (64,612) $ (271,868)
================== ================== ==================
Net Loss per Share - Basic and Diluted $ (0.00) $ (0.06)
Shares used in per Share Calculation:
Basic and Diluted 11,885,812 1,043,253
See notes to financial statements
5
GL Energy and Exploration, Inc.
(A Company in the Development Stage)
Consolidated Statements of Cash Flows
During the Development Stage
Unaudited Unaudited Unaudited
Nine Months Nine Months Inception
Ended Ended To
September 30, 2003 September 30, 2002 September 30, 2003
------------------ ------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (47,369) $ (64,612) $ (271,868)
Adjustments to Reconcile Net Deficit to Cash:
Common Stock Issued for Services 10,531 -- 10,631
Fair Value of Services Received -- -- 5,400
Minority Interest 190 (45) 56
Provided by (Used in) Operations:
Prepaid Expenses (2,080) (200) (2,280)
Accounts Payable 21,234 4,858 21,476
Accounts Payable - Related Party 32,000 -- 32,000
Accrued Obligation to Platoro West Incorporated (27,132) 4,998 --
------------------ ------------------ ------------------
NET CASH USED IN OPERATING ACTIVITIES (12,626) (55,001) (204,335)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to Related Parties (21,425) (38) 45,800
Issuance of Common Stock -- 50,000 158,940
------------------ ------------------ ------------------
NET CASH PROVIDED USED IN FINANCING ACTIVITIES (21,425) 49,962 204,740
NET CHANGE IN CASH AND CASH EQUIVALENTS (34,051) (5,039) 405
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 34,456 59,073 --
------------------ ------------------ ------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 405 $ 54,034 $ 405
================== ================== ==================
Supplemental Non-cash Transactions:
Issuance of common stock for assets $ 20,000 $ -- $ 20,000
================== ================== ==================
See notes to financial statements
6
GL Energy and Exploration, Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
1. General
The accompanying unaudited financial statements have been prepared in
conformity with the accounting principles stated in the audited financial
statements for the year ended December 31, 2002, and reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of the
financial position as of September 30, 2003, and the results of operations for
the periods presented. These statements have not been audited but have been
reviewed by the company's independent certified public accountants. The
operating results for the interim periods are not necessarily indicative of
results for the full fiscal year.
The notes to the consolidated financial statements appearing in the
company's annual report as filed on SEC Form 10-KSB for the year ended December
31, 2002, should be read in conjunction with this quarterly report on Form
10-QSB.
2. Common Stock
The Company's Board of Directors obtained written consents from a
majority of the stockholders as of April 23, 2003, approving a change in the
capitalization of the Company to effect a reverse split of the common stock at
the rate of one share for every 22 shares outstanding and thereafter to increase
the authorized common stock, $.001 par value ("Common Stock"), from 4,545,454
shares to 100,000,000 and adopting a performance equity plan for 10,000,000
shares (on a post-stock split basis) of Common Stock . All share and per share
amounts have been restated to reflect the retroactive effect of the stock split.
During the nine months ended September 30, 2003 the Company issued a
total of 25,610,000 shares of common stock on a post reverse split basis. The
issuances were as follows:
As consideration for the asset acquisition agreement, the company
issued 17,500,000 shares of unregistered common stock to Donald Byers, our
current President and Chairman of the Board and 2,500,000 shares of unregistered
common stock to Arthur Lang, our current Secretary, Treasurer and Director.
The Company issued 210,000 of the registered shares under the 2003
Performance Equity Plan to 3 individuals for past consulting services provided.
The Company issued 3,040,000 registered common shares under the 2003
Performance Equity Plan to 3 independent contractors for the purpose of future
shareholder and corporate publicity consulting services.
The Company issued 2,360,000 registered common shares under the 2003
Performance Equity Plan to 2 independent public relations firms for the purpose
of shareholder consulting services.
3. Investment in Joint Venture
In June 2003, GL Energy & Exploration, Inc. ("GEEX") issued 20,000,000
shares of common stock, for an investment in a mining claim in Chile. These
shares were issued to two individuals, as follows: Donald Byers - 17,500,000 and
Arthur Lang - 2,500,000. In addition, the Purchase Agreement provided that the
current directors and officers would resign effective upon fulfilling the
Securities and Exchange Commission notice requirements pursuant to the proxy
rules and Schedule 14C, at which time Messrs. Byers and Lang would become
directors and Mr. Byers would be appointed the president and Mr. Lang would be
appointed the secretary and treasurer of GEEX.
4. Management Agreement
The Company entered into a management agreement with our President and
Chairman of the Board for $8,000 per month in lieu of wages. The agreement also
includes providing office space for the Company in lieu of rent. These
management fees will be accrued and will not be paid until the Company receives
adequate funding.
5. Forgiveness of Debt
The Company had an agreement with Platoro West Incorporated, a mineral
exploration company, under which that company would locate, stake out and record
mining claims that the mineral exploration company believed to contain high
concentrations of tungsten. The mineral exploration company staked 30 unpatented
claims for GL Energy pursuant to this contract. If the Company defaulted under
the contract, the remedy specified in the agreement called for the Company to
convey to Platoro West all of its right title and interest in the mining claims
and to all the mineral resources located therein. On August 7, 2003 the Company
notified Platoro West that it was terminating this agreement and forfeited all
its rights and interest in the applicable mining claims. The Company recognized
other income of $34,464 for the forgiveness of debt due to Platoro West upon
cancellation of the agreement and the transfer of all rights to the claims.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
When used in this Form 10QSB and in future filings by GL Energy and
Exploration, Inc. with the Securities and Exchange Commission, the words or
phrases "will likely result," "management expects," or "we expect," "will
continue," "is anticipated," "estimated," or similar expression or use of the
future tense, are intended to identify forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking statements,
each of which speak only as of the date made. These statements are subject to
risks and uncertainties, some of which are described below and others are
described in other parts of this Form 10QSB. Actual results may differ
materially from historical earnings and those presently anticipated or
projected. We have no obligation to publicly release the result of any revisions
that may be made to any forward-looking statements to reflect anticipated events
or circumstances occurring after the date of such statements.
Business
GL Energy and Exploration, Inc. was incorporated in the state of
Delaware on October 7, 1998 under the name LRS Group Incorporated. On October
15, 1998, the name of the corporation was changed to LRS Capital, Inc. On
October 10, 2001 the name of the corporation was changed to GL Energy and
Exploration, Inc. GL Energy is a development stage company.
Prior to May 29, 2003 our plan of operation was to be engaged in the
exploration of mining prospects with tungsten mineralization located in the
Western United States. We had an agreement with Platoro West Incorporated, a
mineral exploration company, under which that company would locate, stake out
and record mining claims that the mineral exploration company believed to
contain high concentrations of tungsten. The mineral exploration company staked
30 unpatented claims for GL Energy pursuant to this contract. If we defaulted
under the contract, the remedy specified in the agreement called for us to
convey to Platoro West all of our right title and interest in the mining claims
and to all the mineral resources located therein. On October 10, 2001, GL Energy
formed GL Tungsten, Inc. as a subsidiary incorporated in the state of Nevada,
for the purpose of conducting the mining exploration activities of the company.
GL Energy and Platoro West each assigned its respective obligations under the
mineral exploration agreement to GL Tungsten. GL Energy owns 99.3% and Platoro
West owns .7% of GL Tungsten. On August 7, 2003 we notified Platoro West that we
were terminating this agreement and forfeited all our rights and interest in the
applicable mining claims.
In February 2003 we formed a new wholly owned subsidiary, GL Gold, Inc.
GL Gold agreed to an asset purchase agreement, dated as of February 25, 2003, to
acquire a permitted gold mine as well as two un-permitted groups of mining
claims, which may have gold mineralization. At its election, the company may
also acquire certain mining equipment. The mining claims and assets are located
in Oregon. The agreement required the company to pay a $10,000 deposit, as well
as $590,000 for the mining claims and $150,000 for the equipment. The purchase
was subject to a number of conditions, which originally required completion on
or before April 30, 2003, including the company raising the purchase amounts,
and completing its due diligence. In April 2003, the company and the seller
agreed to extend the closing deadline to July 31, 2003. In lieu of funding this
project we disposed of this subsidiary as noted below.
On May 29, 2003, GL Energy and Exploration Inc. ("GEEX") and Wellstar
International Inc., a Nevada corporation ("Wellstar"), entered into an asset
purchase agreement ("Purchase Agreement") to acquire all of Wellstar's 60%
interest in two mineral claims located in Chile, known as LaBarca Deposit and
Duna Choapa Norte Deposit (together referred to as the "Claims") and certain
Joint Venture Agreements between SEM Mining Corporation S.A. and Wellstar
("JVA's"). The rights include the interest to market and benefit from certain
specified heavy metal minerals that may be obtained from the Claims, including
gold, rutile, zircon, magnetite, ilmenite, nickel and rare earth oxides. There
is no assurance that these Claims have any of these mineralizations or that they
will occur in commercial levels or be economically recoverable. The obligations
under the JVA's include having to raise capital to fund the Pilot Plant. This
funding obligation, which may be subject to schedule adjustments, includes
US$2,000,000 which was originally due on or before June 22, 2003 and
US$8,000,000 on or before January 22, 2004, On July 1, 2003, GL Energy and SEM
Mining Corporation S.A. ("SEM") have amended their Joint Venture Agreement
relative to GEEX advancing $2,000,000 US to SEM by June 22, 2003 in order to
finance the Pilot Plant Phase into commercial production. GEEX, under the
revised terms, will advance the sum of US$2,000,000 for the Pilot Plant on or
before January 22, 2004 relative to the 60% interest. The terms and conditions
for the funding of the JVA for the Production Plant Phase remained unchanged at
US$8,000,000 by January 22, 2004.
8
On July 1, 2003 we signed a Letter of Intent with a venture capital
firm from the U.S. The loan amount was $3,000,000 in US currency for the
purchase and construction of a Pilot Plant for the Duna Chaopa Norte and La
Barca ore-body. The Company has terminated the finalization of this Letter of
Intent.
On July 28, 2003 we signed a Term Sheet with Cornell Capital Partners
LP whereby Cornell would commit to fund up to $11,000,000 in US currency to GL
Energy and Exploration Inc. from time to time over the course of 24 months. The
timing and amounts would be at the discretion of GL Energy and the aggregate
dollar amount in any thirty-day calendar period would be up to a maximum of
$1,000,000. The Company is now in the due diligence phase of the Term Sheet. We
can give no assurance that this financing arrangement will be completed.
History of the Claims
The personnel of SEM Mining originally started preliminary evaluation
work on the La Barca-Choapa Norte heavy mineral sands project in late 1995 as
part of a larger series of heavy mineral sands deposits. In 1996 and 1997 the La
Barca-Choapa Norte project in conjunction with the adjoining Choapa Sur project
were extensively explored and tested which involved huge drill sampling, mapping
and bench testing with environmentally friendly and modern gravity and
electro-magnetic systems to recover the heavy mineral components Rutile
(Titanium), ilemenite, magnetite, olivine, rare earth oxides, and fine free
gold. In 1997 the company conducted tests to develop marketable products
utilizing the light mineral components of the deposits.
Consideration for JVA's
The consideration for the Claims and JVA's was 20,000,000 shares of the
GEEX's common stock, $.001 par value. These shares were issued to two
individuals, at the direction of Wellstar, as follows: Donald Byers - 17,500,000
and Arthur Lang - 2,500,000. In addition, the Purchase Agreement provided that
the current directors and officers would resign effective upon fulfilling the
Securities and Exchange Commission notice requirements pursuant to the proxy
rules and Schedule 14C, at which time Messrs. Byers and Lang would become
directors and Mr. Byers would be appointed the president and Mr. Lang would be
appointed the secretary and treasurer of GEEX.
As a result of the issuance of the 20,000,000 shares of Common Stock
and the change of the Board of Directors and officers, there has been a change
of control of GEEX.
In connection with the acquisition, we transferred our wholly owned
subsidiary, GL Gold, Inc., to a debt holder in partial repayment of an
outstanding loan. All obligations of GL Gold as noted were transferred with the
subsidiary. The transfer will also permit GEEX to focus its efforts on the
Claims and fulfilling its obligations under the JVA's.
Financial Condition and Changes in Financial Condition
Overall Operating Results:
We had no revenues for the quarter ended September 30, 2003, or since
our inception.
9
We incurred $13,688 in operating expenses for the quarter ended
September 30, 2003. The expenses included legal and accounting fees of $6,313
incurred in connection with our compliance filings with the Securities and
Exchange Commission and fees associated with the preparation of documents
relating to the funding agreement. Investor relation expenses were a negative
$10,964 due to the cancellation during the current quarter of a previous
investor relation agreement totaling $17,250. These expenses had been accrued at
June 30, 2003. We had new investor related expenses of $6,286 of which $2,360
were non-cash expenses. We issued 1,180,000 shares of our common stock each to
two shareholder relations firms out of our S-8 stock plan at a value of $2,360.
We entered into a management agreement with our president for $8,000 per month
in lieu of wages. These management fees will be accrued and will not be paid
until the Company receives adequate funding. We incurred $24,000 in accrued
management fees during the quarter.
During the current quarter we recognized other income of $34,464 for
the forgiveness of debt due to Platoro West. As previously noted we cancelled
that agreement in August and transferred all our rights to Platoro in lieu of
the amounts owed them.
We incurred $40,839 in operating expenses for the prior year quarter
ended September 30, 2002. The expenses included legal and accounting fees
incurred in connection with our compliance filings with the Securities and
Exchange Commission and expenses incurred for mineral rights. In addition, the
expenses for the quarter included the expenses of conducting a study of the
existing mineralization reports relating to the company's Pilot Mountain
project.
For the nine months ended September 30, 2003 our operating expenses
totaled $99,904. Legal and accounting fees were $32,760 and were incurred in
connection with the asset purchase agreement, accounting services as well as SEC
compliance filings. Management fees totaled $32,000. Investor relations and
other consulting fees were $16,593. Consulting fees for past services paid in
shares of common stock totaled $5,130. The remaining expenses were incurred for
normal business operations.
In addition, we recognized a gain on our disposal of GL Gold in the
amount of $18,261.
Expenses for the prior year nine months ended September 30, 2002
totaled $64,657 and were incurred primarily for mineral rights and legal and
accounting fees for SEC compliance filings.
Liquidity and Capital Resources:
Since our inception we have had minimum working capital to fund our
operations. In order to fund our operations we have relied on the sale of our
common stock and loans from shareholders.
To fund our mining exploration operations to date, we sold shares of
our common stock. These sales were comprised of 2,364,624 shares of our common
stock registered in 2001 and our Regulation S offering of 1,000,000 shares in
2002, which also had attached warrants to purchase 2,000,000 shares of common
stock. These warrants expired on July 31, 2003. All shares and warrants are on a
pre-stock split basis.
We have also relied on loans from shareholders to fund operations. In
conjunction with the asset acquisition agreement we transferred GL Gold to
shareholders as repayment on loans that they had made to the Company. In
addition, Donald Byers, our President, Chairman of the Board and majority
shareholder and two other shareholders have loaned the Company $45,800 to date
to settle the remaining balance of debt due these shareholders as well as to
fund our business operations. These loans do not bear interest and will be
repaid upon the Company receiving funding.
We currently have a working capital deficit and only a minimum of
operating cash with which we can fund our future operations. We must obtain
adequate funding in order to fulfill our obligations under the asset acquisition
agreement for the completion of the pilot and production plants. If we do not
receive adequate funding, we will have to discontinue or substantially scale
back our operations.
10
On July 28, 2003 we signed a Term Sheet with Cornell Capital Partners
LP whereby Cornell would commit to fund up to $11,000,000 in US currency to GL
Energy and Exploration Inc. from time to time over the course of 24 months. The
timing and amounts would be at the discretion of GL Energy and the aggregate
dollar amount in any thirty-day calendar period would be up to a maximum of
$1,000,000. The Company is now in the due diligence phase of the Term Sheet. We
can give no assurance that this financing arrangement will be completed. If we
are successful in receiving this funding we have a contingent liability totaling
$521,000 that will be due to 2 individuals for consulting services rendered in
connection with the asset acquisition agreement and assistance in locating the
funding.
We intend to seek either debt or equity capital or both. We have no
commitments for funding from any unrelated parties or any other agreements that
will provide us with adequate working capital. We cannot give any assurance that
we will locate any funding or enter into any agreements that will provide the
required operating capital to fund our operations. In addition, we may also
consider strategic alliances and mergers and acquisitions as a means to pursue
our business plan or otherwise fund the company.
Change in Officers and Directors
As part of the asset acquisition agreement previously discussed,
Mitchell Geisler and Cindy Roach resigned as officers and directors of the
Company. Donald Byers and Arthur Lang were appointed as new officers and
directors.
Donald Byers is the president and sole owner of Byers & Associates, a
firm that is a financial and business consulting firm located in Vancouver,
British Columbia, with clients among privately and publicly traded corporations.
He has held these positions since 1985. Mr. Byers is the sole director of
Wellstar International Inc.
Arthur Lang is the sole owner of a private real estate development
company operating in Penticton, B.C. since 1990.
On July 23, 2003, Mr. P.J. Santos, P. Eng. was appointed to the Board
of Directors of the Company. Mr. Santos is President and CEO of SEM Mining
Corporation S.A. ("SEM"). SEM retains 40% interest (the Operator) together with
GEEX's 60% interest in 2 Joint Venture Agreements.
Description of Properties
Our executive office has relocated to #300-1497 Marine Drive, West
Vancouver, B.C., Canada. At this location, we share an undesignated amount of
space with another entity. Currently, our rent is included in the management
agreement with our president.
New Accounting Pronouncements
In November 2002, the FASB issued Financial Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 sets forth the
disclosures required to be made by a guarantor in its financial statements about
its obligations under certain guarantees that it has issued. It also clarifies
that a guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The adoption of FIN 45 is not expected to have a material effect on
the Company's financial position or results of its operations.
In December 2002, the FASB issued Statements of Financial Accounting
Standards No. 148 "Accounting for Stock-Based Compensation--Transition and
Disclosure--an amendment of FASB Statement No. 123, This Statement amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The adoption of SFAS 148 is not expected to
have a material effect on the Company's financial position or results of its
operations.
11
In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity",
which requires that certain financial instruments be presented as liabilities
that were previously presented as equity or as temporary equity. Such
instruments include mandatory redeemable preferred and common stock, and certain
options and warrants. SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003 and is generally effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of SFAS
150 is not expected to have a material effect on the Company's financial
position or results of its operations.
ITEM 3. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in company
reports filed or submitted under the Securities Exchange Act of 1934 (the
"Exchange Act") is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
company reports filed under the Exchange Act is accumulated and communicated to
management, including the Company's Chief Executive Officer and Chief Financial
Officer (the "Certifying Officers"), as appropriate to allow timely decisions
regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, the
Certifying Officers carried out an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of
September 30, 2003. Their evaluation was carried out with the participation of
other members of the Company's management. Based upon their evaluation, the
Certifying Officers concluded that the Company's disclosure controls and
procedures were effective.
The Company's internal control over financial reporting is a process
designed by, or under the supervision of, the Certifying Officers and effected
by the Company's Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of the Company's financial
reporting and the preparation of the Company's financial statements for external
purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes policies and procedures that pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the Company's assets; provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of the Company's financial statements in accordance with generally
accepted accounting principles, and that the Company's receipts and expenditures
are being made only in accordance with the authorization of the Company's Board
of Directors and management; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on its financial
statements. There has been no change in the Company's internal control over
financial reporting that occurred in the quarter ended September 30, 2003, that
has materially affected, or is reasonably likely to affect, the Company's
internal control over financial reporting.
12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
Changes in Common Equity
On April 17, 2003, the Board authorized a reverse split of the common
stock at the rate of one share for every 22 shares then outstanding and
thereafter an amendment to Article FOURTH of the Company's Certificate of
Incorporation to increase the number of authorized shares of common stock, $.001
par value, from 4,545,454 to 100,000,000, as a result of which the total
capitalization will be returned to 105,000,000 shares of capital stock, of which
5,000,000 shares will be designated preferred stock and 100,000,000 will be
designated common stock. On April 23, 2003, stockholders holding an aggregate of
14,286,792 shares of common stock, representing approximately 59.93% of the
outstanding voting securities of the Company, executed and delivered to the
Company written consents authorizing and approving the Capital Change. In the
judgment of the Board, the change of the Company's capitalization is desirable
to consolidate the outstanding float to enhance its desirability as an
investment and to make available sufficient shares of common stock to be able to
raise additional funds in the future, provide for stock awards outside the 2002
Performance Equity Plan and 2003 Plan, if at all, and to conduct other capital
transactions. The common stock does not have any pre-emptive rights. None of the
rights of the common stock are being changed as a result of the Capital Change
and therefore the rights of the stockholders will remain unchanged. Stockholders
will not be required to exchange outstanding stock certificates for new
certificates in connection with the Capital Change. If any fractional shares
result from the reverse split, on the basis of the aggregate number of shares
held by a stockholder, the fractional share will be rounded up to the next whole
share.
On April 23, 2003, a majority of the stockholders of the company
approved a performance equity plan for 10,000,000 shares (on a post-stock split
basis) of Common Stock ("2003 Performance Equity Plan"). The rights of the
common stock were not changed.
During the quarter ended June 30, 2003 we issued 210,000 of the
registered shares under the 2003 Performance Equity Plan to 3 individuals for
past consulting services provided. These services were valued at $5,130.
The Board of Directors approved a Resolution on June 12th, 2003
authorizing the issuance of 3,040,000 registered common shares under the 2003
Performance Equity Plan to 3 independent contractors for the purpose of future
shareholder and corporate publicity consulting services. These services were
valued at $3,040.
In August 2003 we issued 2,360,000 registered common shares under the
2003 Performance Equity Plan to 2 independent public relations firms for the
purpose of shareholder consulting services. These services were valued at
$2,360.
The common stock is quoted on the over-the-counter market (OTC BB)
under the symbol "GEEX" and quoted in the pink sheets published by the National
Quotations Bureau. Effective September 30, 2003 the Company has met all of the
listing requirements and has been accepted on the Berlin Stock Exchange and will
trade under the ticker symbol GE6.BE and German Securities CUSIP number WKN
914350. The trading volume in the Common Stock has been and is extremely
limited.
13
Recent Sales of Unregistered Securities
On May 29, 2003, as consideration for the asset acquisition agreement,
the company issued 17,500,000 shares of unregistered common stock to Donald
Byers, our current President and Chairman of the Board and 2,500,000 shares of
unregistered common stock to Arthur Lang, our current Secretary, Treasurer and
Director. These shares were issued on a post split basis.
The company issued 170,000 shares of its common stock in lieu of cash
to the Geologist that wrote the August 2002 report on our tungsten property.
These shares were issued on a pre-split basis.
In July 25, 2002, the company completed an offering under Regulation S
to two accredited investors. Each investor subscribed for 500,000 shares on a
pre-stock split basis of common stock for $25,000 cash. Under the subscription
agreements the investors were also granted common stock warrants authorizing
each investor the right to purchase up to 1,000,000 shares of common stock on a
pre-stock split basis at $0.25 per share, on a pre-stock dividend basis. The
warrants expired on July 31, 2003 and were not exercised.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
GL Energy and Exploration Inc. obtained written consents from a
majority of the stockholders as of April 23, 2003, approving a change in the
capitalization of the Company to effect a reverse split of the common stock at
the rate of one share for every 22 shares outstanding and thereafter to increase
the authorized common stock, $.001 par value ("Common Stock"), from 4,545,454
shares to 100,000,000 and adopting a performance equity plan for 10,000,000
shares (on a post-stock split basis) of Common Stock ("2003 Performance Equity
Plan").
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3.1 Certificate of Amendment to the Certificate of
Incorporation (1)
4.1 Form of 2003 Equity Performance Plan (1)
10.1 Form of Asset Acquisition Agreement, dated as of May 29,
2003 (2)
31.1 Certification of Chief Executive Officer, pursuant to
Rule 13a-14(a) of the Exchange Act, as enacted by Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, pursuant to
Rule 13a-14(a) of the Exchange Act, as enacted by Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer and Chief
Financial Officer, pursuant to 18 United States Code
Section 1350, as enacted by Section 906 of the
Sarbanes-Oxley Act of 2002.
(1) Previously filed with Form DEF 14c (information statement) on
May 5, 2003.
(2) Previously filed with the Form 8-K on June 13, 2003
b) Reports on Form 8-K None
14
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GL ENERGY AND EXPLORATION, INC.
-------------------------------
(Registrant)
By: /s/ Donald Byers
------------------------------------
Donald Byers, President and Chairman
of the Board (Principal Executive
Officer and Principal Accounting
Officer)
Date: November 14, 2003
15