<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
APRIL 6, 1999
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED)
SPORTSNUTS.COM INTERNATIONAL, INC.
----------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 333-14477 87-0561426
- ---------------------------- ---------------------------- ----------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
THE TOWERS AT SOUTH TOWNE #2, SUITE 550,
10421 SOUTH 400 WEST, SALT LAKE CITY, UTAH 84095
------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (801) 816-2500
None
(Former name or former address, if changed since last report.)
The Registrant filed the 8-K to which this Amendment relates on April 20, 1999.
In that filing, the Registrant stated that, for purposes of Item 7 therein, it
would elect to file its financial Statements at a later date as permitted by
Item 7 of Form 8-K. This amendment is solely for purposes of filing the
Registrant's Financial Statements.
<PAGE> 2
Item 7. Financial Statements and Exhibits
(a) Audited Financial Statements of business acquired SPORTSNUTS.COM, Inc.
as of and for the years ended December 31, 1998 and 1997
(b) Unaudited Financial Statements as of and for the three months ended
March 31, 1999
(c) Pro Forma Condensed and Combined Financial Statements
1
<PAGE> 3
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of SPORTSNUTS.COM, Inc.
We have audited the accompanying balance sheets of SPORTSNUTS.COM, Inc. (a
Delaware corporation) as of December 31 1998 and 1997, and the related
statements of income, retained deficit, and cash flows for the years then ended.
These financial statements are the responsibility of the management of
SPORTSNUTS.COM, Inc. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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 financial statements referred to above present fairly, in
all material respects, the financial position of SPORTSNUTS.COM, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company incurred a loss from operations and has a net
capital deficiency, which raise substantial doubt about its ability to continue
as a going concern. Management's plans regarding those matters also are
described in Note 10. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
As discussed in Note 12 to the financial statements, the Company's intangible
assets, accumulated deficit, and expenses previously reported as $148,601,
$1,866,635, and $1,940,582, respectively, in our audit report dated March 10,
1999 changed to $0, $2,015,235, and $2,039,078, respectively, for 1998. For
1997, the Company's intangible assets, accumulated deficit, and expenses
previously reported as $48,361, $368,335, and $907,155, respectively, in our
audit report dated March 10, 1999 changed to $0, $416,696, and $955,507,
respectively. This reclassification was made subsequent to the issuance of the
financial statements. The financial statements have been restated to reflect
this change.
/s/ Squire & Co.
Orem, Utah
June 16, 1999
2
<PAGE> 4
SPORTSNUTS.COM, INC.
BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Inventory $ 16,584 $ 84,928
Prepaid expenses 37,645 --
Current portion-deferred tax asset -- 5,009
----------- -----------
Total current assets 54,229 89,937
FIXED ASSETS:
Vehicles -- 94,636
Office equipment and furnishings 59,343 51,396
Computer equipment 53,981 18,782
----------- -----------
113,324 164,814
Accumulated depreciation 21,754 14,292
----------- -----------
Net fixed assets 91,570 150,522
OTHER ASSETS:
Long-term portion-deferred tax asset -- 35,704
----------- -----------
$ 145,799 $ 276,163
=========== ===========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Cash overdraft $ 48,203 $ 2,306
Accounts payable 195,200 109,046
Accrued liabilities 47,345 2,311
Current portion-notes payable 301,618 324,977
Deferred tax liability 1,258 188
----------- -----------
Total current liabilities 593,624 438,828
LONG-TERM LIABILITIES:
Notes payable -- 212,004
Deferred tax liability -- 2,082
----------- -----------
Total long-term liabilities -- 214,086
Stockholders' equity:
Common stock 50,000,000 $.0001 par value
shares authorized; 11,077,000 and 7,786,000
issued and outstanding in 1998 and 1997, 1,125 779
respectively
Additional paid-in capital 1,651,285 41,096
Accumulated deficit (2,015,235) (416,696)
Stock subscriptions receivable (85,000) (1,930)
----------- -----------
Total stockholders' equity (447,825) (376,751)
----------- -----------
Total liabilities and equity $ 145,799 $ 276,163
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 5
SPORTSNUTS.COM, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
REVENUE FROM SALES $ 535,634 $ 539,189
OPERATING EXPENSES:
Cost of sales 707,256 445,442
General and administrative 601,648 280,375
Selling and marketing 566,541 171,433
Research and development 163,633 58,317
----------- -----------
Total operating expenses 2,039,078 955,507
----------- -----------
Loss from operations (1,503,444) (416,318)
OTHER INCOME AND EXPENSE:
Interest expense (59,563) (38,721)
Gain on disposal of property and equipment 4,168 --
----------- -----------
Total other income and expenses (55,395) (38,721)
Loss before income tax benefit (1,558,839) (455,039)
INCOME TAX BENEFIT
Current income tax expense -- 100
Deferred income tax expense (benefit) 39,701 (38,443)
----------- -----------
Net income tax benefit 39,701 (38,343)
----------- -----------
Net Loss $(1,598,540) $ (416,696)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 6
SPORTSNUTS.COM, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock Additional Stock
-------------------------- Paid-in Accumulated Subscription
Shares Amount Capital Deficit Receivable Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1,
1997 -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock for
subscription 3,860,000 386 1,544 -- (1,930) --
receivable
Issuance of common
stock for cash 3,926,000 393 39,552 -- -- 39,945
Net loss (416,696) (416,696)
--------------------------------------------------------------------------------------
Balances at December 31,
1997 7,786,000 779 41,096 (416,696) (1,930) (376,751)
Issuance of common
stock for cash and
subscription 1,983,000 215 991,285 -- (85,000) 906,500
receivable
Conversion of
long-term debt and
accrued interest to
common stock 1,178,000 118 553,918 -- -- 554,306
Issuance of common
stock for services 130,000 13 64,987 -- -- 65,000
Receipt of cash for
subscription -- -- -- -- 1,930 1,930
receivable
Net loss -- -- -- (1,598,540) -- (1,598,540)
--------------------------------------------------------------------------------------
Balances at December 31,
1998 11,077,000 $1,125 $ 1,651,235 $(2,015,236) $(85,000) $ (447,825)
======================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 7
SPORTSNUTS.COM, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,598,540) $ (416,696)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 18,459 14,292
Non-cash operating activities 83,369 --
Deferred income taxes 39,701 (38,443)
Gain on disposal of fixed assets (4,168) --
(Increase) decrease in inventories 68,344 (84,928)
(Increase) in prepaid expenses (37,645) --
Increase in accounts payable 86,154 109,046
Increase in accrued liabilities 45,034 2,311
----------- -----------
Total adjustments 299,248 2,278
----------- -----------
Net cash flows used by operating activities (1,299,292) (414,418)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of fixed assets (46,283) (164,814)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in cash overdraft 45,897 2,306
Proceeds from issuance of long-term debt 797,950 536,981
Proceeds from issuance of common stock 706,500 31,875
Principal payments on long-term debt (404,772) --
----------- -----------
Net cash flows provided by financing activities 1,345,575 571,162
----------- -----------
Net Increase in Cash and Equivalents -- --
Cash and Equivalents - Beginning of Year -- --
----------- -----------
Cash and Equivalents - End of Year $ -- $ --
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 8
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of SPORTSNUTS.COM,
Inc. (the Company) is presented to assist in understanding the
Company's financial statements. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
Business Depreciation - The Company was incorporated in the state of
Utah on November 13, 1996 for the purpose of, but not limited to,
sales and distribution of sporting goods and health food supplies
through a network marketing strategy. The Company began operations as
a Corporation on January 1, 1997. During 1998 the Company
reincorporated into the State of Delaware.
Sales Policy - Substantially all of the Company's sales are on a
cash-for-service basis. Occasionally, sales are made on account for
large-dollar service rendered.
Inventory - Inventory consists of sporting goods and health food
products. Inventory is stated at the lower of cost (first-in,
first-out) or market value.
Depreciation - Provisions for depreciation of equipment is computed on
a straight-line method for financial reporting purposes. Depreciation
for equipment is based upon estimated useful lives of five to ten
years. Depreciation charged to operations were $18,459 and $14,292 for
the years ended December 31, 1998 and 1997, respectively.
Maintenance, repairs, and renewals which neither materially add to the
value of the equipment nor appreciably prolong its life are charged to
expense as incurred.
Cash and Cash Equivalents - For the purpose of the statement of cash
flows, cash and cash equivalents are defined as demand deposits at
banks.
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 disclosed. Accordingly, actual results could differ from those
estimates.
7
<PAGE> 9
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Stock Options - The Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and related Interpretations in accounting for its
employee stock options rather than adopting the alternative fair value
accounting provided for under FASB Statement No. 123, Accounting for
Stock-based Compensation. Under APB 25, because the exercise price of
the Company's stock options equals the fair value of the underlying
stock on the date of grant, no compensation expense is recognized.
Advertising Costs - Advertising costs are expensed during the year in
which they are incurred. Advertising expenses were none and $35,332,
respectively for the years ended December 31, 1998 and 1997.
Comprehensive Income - In 1998, the Company adopted SFAS No. 130,
Reporting Comprehensive Income, which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 130 requires that all
items that are recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The
items of other comprehensive income that are typically required to be
displayed are foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in
debt and equity securities. There were no items of other comprehensive
income in 1998 or prior.
NOTE 2. STOCK SUBSCRIPTIONS RECEIVABLE
The Company issued in advance of receiving payment 170,000 shares of
common stock with a value of $85,000 and 386,000 shares of common
stock with the value of $1,930 receivable at December 31, 1998 and
1997, respectively. These amounts are classified as a contra equity
since the stock subscription receivables mature in a reasonably short
period of time.
NOTE 3. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
1998 1997
-------------------
<S> <C> <C>
Accrued payroll and related taxes
and benefits $41,392 $ 2,311
Accrued interest 5,953 --
------- -------
Total accrued liabilities $47,345 $ 2,311
======= =======
</TABLE>
8
<PAGE> 10
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4. DEFERRED TAXES
The Company files its income tax returns on a calendar year end using
an accrual basis method of accounting. The principal timing difference
result from differences in depreciation according to generally
accepted accounting principles and depreciation allowed by tax law.
Further differences are created by the treatment of corporate tax net
operating loss carry-forward provisions. The net deferred tax asset as
of December 31, 1998 was $373,990. A valuation allowance of $373,990
was established to account for the probability that the total deferred
tax asset will not be realized in the future. As a result of the
valuation allowance, the deferred tax asset as of December 31, 1998
was $0. The deferred tax liability at December 31, 1998 totaled
$1,258.
The net deferred tax asset as of December 31, 1997 was $79,129. A
valuation allowance of $40,686 was established to account for the
possibility that the total deferred tax asset will not be realized in
the future. As a result of the valuation allowance, the net deferred
tax asset as of December 31,1997 was $38,443.
The Corporation's deductible temporary timing differences consist of
the following:
<TABLE>
<S> <C>
Net operating loss carryforward $1,875,296
Accumulated depreciation on property 25,163
</TABLE>
The Company has net operating losses to offset future income tax. If
not used, these credits will expire as follows:
<TABLE>
<CAPTION>
Expires Amounts
--------- ----------
<S> <C> <C>
Federal net operating loss 2012 $ 406,778
Federal net operating loss 2013 1,468,518
State net operating loss 2002 406,678
State net operating loss 2003 1,468,518
</TABLE>
Deferred income tax expense for 1998 is the result of valuation
allowances established for current year and prior year deferred tax
assets.
9
<PAGE> 11
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5. NOTES PAYABLE
The company owed a total of $301,618 and $536,981 on notes payable as
of December 31, 1998 and 1997, respectively. A summary of the
outstanding balances on notes payable as of December 31, 1998 is as
follows:
<TABLE>
<S> <C>
Investor loan, 12% interest, secured $ 122,036
by shareholder's personal guarantee,
matures December, 1999
Investor loan, 18% interest, secured 25,000
by shareholder's personal guarantee,
matures April, 1999
Investor loan, 15% interest, secured 27,582
by shareholder's personal guarantee,
matures February, 1999
Investor loan, 10% interest, secured 10,000
by shareholder's personal guarantee,
matures December, 1999
Investor loan, 0% interest, secured 100,000
by shareholder's personal guarantee,
matures January, 1999
Investor loan, 0% interest, secured 10,000
by shareholder's personal guarantee,
matures January, 1999
Note payable, 0% interest, secured 7,000
by shareholder's personal guarantee,
matures January, 1999
---------
Total notes payable 301,618
Less current portion (301,618)
---------
Long term portion $ --
=========
</TABLE>
An officer and director of the Company, has personally guaranteed the
total amount of the indicated notes payable.
10
<PAGE> 12
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6. RELATED PARTY TRANSACTIONS
As of December 31, 1998, $294,618 of the notes payable reported in
note 5 are debt agreements entered into with stockholders of the
Company.
NOTE 7. COMMON STOCK
The Company issued 3,291,000 shares of $.0001 par value common stock
during the year ending December 31, 1998. The issuance of these shares
resulted in $906,500 in cash inflows and $619,306 in either debt
reduction through convertible debentures or stock for services.
NOTE 8. ADDITIONAL CASH FLOW STATEMENT DISCLOSURES
The Company paid $47,078 and $38,721 of interest for notes payable and
other miscellaneous debts, and $0 and $100 for taxes for the years
ended December 31, 1998 and 1997, respectively.
Non-cash transaction for the year ended December 31, 1998 included the
following:
$87,041 of debt was eliminated from the records of the company in
exchange for certain fixed assets.
$541,500 of debt was converted to common stock along with $12,536
of interest payable by issuing 1,348,000 shares of common stock.
$65,000 of expenses were recorded on the records of the Company
through the issuance of 130,000 shares of common stock.
No non-cash transactions occurred during the year ended December
31, 1997.
11
<PAGE> 13
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9. STOCK OPTIONS AND WARRANTS
The Company adopted a stock option plan in 1998. In accordance with
plan provisions, the Company may grant options to officers, directors,
employees, and consultants of the Company for up to 20,000,000 shares
of common stock. The original exercise price for options granted under
the plan was $.50 with negotiated vesting periods. Options granted
during the current year had market values equal to the option price at
the date of the grant; therefore, no compensation expense was charged
to operations. The options expire five years after date of grant.
A summary of stock option activity, and related information for the
year ended December 31, 1998 follows:
<TABLE>
<CAPTION>
Outstanding Stock Options Weighted-
Shares ------------------------------ Average
Available Number of Price Exercise
for Grant shares Per Share Price
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 1,
1998 -- -- -- --
Plan authorization 20,000,000 -- -- --
Options granted (9,420,000) 9,420,000 $.50 $.50
----------- ----------- ----- ----
Balance at
December 31, 1998 10,580,000 9,420,000 $.50 $.50
=====================================================================
Exercisable at
December 31, 1998 2,348,000 $.50 $.50
=================================================
</TABLE>
The weighted average fair value of options granted in the year ended
December 31, 1998, was $.13. The weighted average remaining
contractual life of the options outstanding and options exercisable at
December 31, 1998 were 5 years, respectively.
12
<PAGE> 14
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Pro forma information regarding the effect of issuing stock options
during the year on net income (loss) is required by Statement No. 123,
and has been determined as if the Company had accounted for its
employee stock options under the fair value method. The fair value of
these options was estimated at the date of grant using a Minimum Value
option pricing model with the following weighted average assumptions
for 1998: risk-free interest rates of 5.63%; dividend yield of 0%; and
a weighted-average expected life of the option of 5 years.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options' vesting period. Because the
effect of SFAS No. 123 is prospective, the initial impact on pro forma
net income (loss) may not be representative of compensation expense in
future years. Pro forma net loss for fiscal year 1998 was $1,852,339.
During 1998, 9,420,000 stock options were granted at the exercise
price of $.50. All options were outstanding and have a remaining
contractual life of five years. At December 31, 1998, 2,348,000
options were exercisable.
During 1998, 2,940,000 stock warrants were granted with some loans.
The market price of the warrants was equal to the exercise price of
$.50; therefore, no commission expense was deemed necessary. All
warrants were outstanding at December 31, 1998.
NOTE 10. RETAINED DEFICIT AND NET OPERATING LOSS
As shown in the accompanying financial statements, the Corporation
incurred a net loss of $1,598,540 and $416,696 during the years ended
December 31, 1998 and 1997, respectively. At December 31, 1998 and
1997, the Company's current liabilities exceeded its current assets by
$539,395 and $348,891, respectively. The ability of the Company to
continue as a going concern is dependent on increasing sales and
obtaining additional capital and/or financing. The financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
The Company intends to obtain both debt and equity financing to
sustain operations until sales can be increased enough to achieve
profitability.
13
<PAGE> 15
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 11. SUBSEQUENT EVENTS
In January 1999, the Company paid off the following notes payable
outstanding at December 31, 1998:
<TABLE>
<S> <C>
Investor loan, 18% interest, secured $ 25,000
by shareholder's personal guarantee,
Matures April, 1999
Investor loan, 12% interest, secured 122,036
by shareholder's personal guarantee,
Matures December, 1999
Investor loan, 15% interest, secured 27,582
by shareholder's personal guarantee,
Matures February, 1999
Investor loan, 0% interest, secured 100,000
by shareholder's personal guarantee,
Matures January, 1999
Investors loan, 0% interest, secured 10,000
by shareholder's personal guarantee,
Matures January, 1999
Note payable, 0% interest, secured 7,000
by shareholder's personal guarantee,
Matures January, 1999
--------
Total notes paid $291,618
========
</TABLE>
On January 15, 1999, the board of directors of the Company voted
unanimously to approve a 2 for 1 stock split. The stock split
increased the number of shares issued and outstanding as of that date.
The Company issued 3,119,000 shares (post-split) of no-par common
stock for $1,535,500 during January and February 1999. The effect of
the stock split has been retroactively reflected in the accompanying
financial statements.
14
<PAGE> 16
SPORTSNUTS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 12. RESTATEMENT OF FINANCIAL STATEMENTS
Subsequent to the issuance of the audit report dated March 10, 1999,
certain reclassifications were made on the balance sheets and
statements of operations. These reclassifications consisted primarily
of expensing certain costs associated with website development
previously capitalized. These financial statements have been restated
as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------
<S> <C> <C>
Decrease in assets $(233,601) $ (50,291)
Decrease in stockholders' equity (233,601) (50,291)
Increase in operating expenses 100,240 48,361
</TABLE>
This restatement results in an increase in net loss of $100,240 and
$48,261 for the years ending December 31, 1998 and 1997, respectively.
15
<PAGE> 17
Item 7. Financial Statements and Exhibits
(b) Unaudited Condensed Financial Statements as of and for the three months
ended March 31, 1999
16
<PAGE> 18
SPORTSNUTS.COM, Inc.
Unaudited Condensed Balance Sheet
March 31, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 247,929
Inventories 20,987
Prepaid expenses 60,020
-----------
Total current assets 328,936
Property and equipment, net 371,882
-----------
$ 700,818
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 217,731
Accrued liabilities 48,603
-----------
Total current liabilities 266,334
Commitments and contingencies
Stockholders' equity:
Common stock, $.0001 par value: 50,000,000 shares authorized;
14,315,000 shares issued and outstanding 1,432
Additional paid-in capital 3,269,979
Accumulated deficit (2,836,927)
-----------
Total stockholders' equity 434,484
-----------
$ 700,818
===========
</TABLE>
See accompanying notes.
17
<PAGE> 19
SPORTSNUTS.COM, Inc.
Unaudited Condensed Statement of Operations
For the three months ended March 31, 1999
<TABLE>
<S> <C>
Revenues $ 141,304
Operating expenses:
Cost of sales 123,613
General and administrative 354,307
Selling and marketing 387,349
Research and development 94,629
---------
959,898
---------
Operating income (818,594)
Other income (expense):
Interest expense (4,355)
---------
Loss before income taxes (822,949)
Income tax benefit 1,258
---------
Net loss $(821,691)
=========
</TABLE>
See accompanying notes.
18
<PAGE> 20
SPORTSNUTS.COM, Inc.
Unaudited Condensed Statement of Cash Flows
For the three months ended March 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (821,691)
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation and amortization 56,100
Deferred income taxes (1,258)
Changes in operating assets and liabilities:
Increase in inventories (4,403)
Increase in prepaid expenses (22,375)
Increase in accounts payable 22,531
Increase in accrued liabilities 1,258
-----------
Net cash flows used in operating activities (769,838)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (336,412)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of cash overdraft (48,203)
Principal payments on notes payable (301,618)
Proceeds from issuance of common stock 1,619,000
Proceeds from stock subscription receivable 85,000
-----------
Net cash flows provided by financing activities 1,354,179
-----------
Net increase in cash 247,929
Cash at beginning of period --
-----------
Cash at end of period $ 247,929
===========
</TABLE>
See accompanying notes.
19
<PAGE> 21
SPORTSNUTS.COM, Inc.
Notes to Financial Statements
March 31, 1999
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF ORGANIZATION AND BUSINESS
The Company was incorporated under the laws of the State of Utah on November 13,
1996. During 1998 the Company reincorporated in the State of Delaware. The
Company is engaged in the sale and distribution of sporting goods and health
food supplies via the internet and network marketing channels.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
Regulation S-X. Accordingly, certain information and footnote disclosures have
been condensed or omitted. These financial statements should be read in
conjunction with the financial statements and footnotes included herein this
Form 8-K/A.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not indicative of
the results of operations to be expected for a full year.
2. RETAINED DEFICIT AND NET OPERATING LOSS
As shown in the accompanying financial statements, the Corporation incurred a
net loss of $1,598,540 and $416,696 during the years ended December 31, 1998 and
1997, respectively. At December 31, 1998 and 1997, the Company's current
liabilities exceeded its current assets by $539,395 and $348,891, respectively.
The ability of the Company to continue as a going concern is dependent on
increasing sales and obtaining additional capital and/or financing. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
The Company intends to obtain both debt and equity financing to sustain
operations until sales can be increased enough to achieve profitability.
20
<PAGE> 22
SPORTSNUTS.COM, Inc.
Notes to Financial Statements
3. DEBT
For the three months ended March 31, 1999, the Company paid off $301,618 in
notes payable that were outstanding at December 31, 1998.
4. STOCKHOLDERS' EQUITY
ISSUANCES OF COMMON STOCK
For the three months ended March 31, 1999, the Company issued 3,238,000 shares
of common stock for net proceeds of $1,619,000.
STOCK SUBSCRIPTIONS RECEIVABLE
The Company issued in advance of receiving payment 170,000 shares of common
stock with a value of $85,000 for the year ended December 31, 1998 and 386,000
shares of common stock with a value of $1,930 receivable for the year ended
December 31, 1997. As of March 31, 1999, no amounts were outstanding.
5. SUBSEQUENT EVENT
MERGERS AND ACQUISITIONS
On April 6, 1999, the Registrant acquired (the "Acquisition") approximately
eighty one percent (81%) of the outstanding capital stock from accredited
investors (the "Participating Shareholders") in SportsNuts.com, Inc., a Delaware
corporation ("SportsNuts"). Additionally, the Registrant changed its name to
SportsNuts.com International, Inc. Prior to the Acquisition of SportsNuts, the
Registrant conducted no active business. SportsNuts is an internet based, "on
line" sports club and retail distributor of sports, outdoor, and fitness related
products, services, and information.
The Registrant intends to operate SportsNuts in a manner to continue the
business that SportsNuts engaged in prior to the Acquisition. In connection with
the Acquisition, the Registrant affected a 2.213 for 1 forward stock split (the
"Forward Split") of all then currently outstanding shares of its common stock,
$0.0001 par value (the "Common Stock"). The Forward Split resulted in an
increase in the outstanding shares of the Registrant's Common Stock from
1,103,500 to 2,441,713 shares. Immediately prior to the Acquisition, the
Registrant sold to accredited investors 1,000,000 post Forward Split shares of
Common Stock at $1.00 per share to raise gross proceeds of $1,000,000 (the
"Private Offering"). As part of the Acquisition, the Registrant issued 7,533,370
shares of Common Stock to the Participating Shareholders of SportsNuts in
exchange for their collective 11,589,800 shares of SportsNuts common stock. Each
Participating
21
<PAGE> 23
SPORTSNUTS.COM, Inc.
Notes to Financial Statements
Shareholder of SportsNuts received 0.654904748 shares of the Registrant's Common
Stock in exchange for each share of common stock of SportsNuts. Additionally,
the Registrant issued to holders of warrants in SportsNuts who were also
accredited investors (each a "Participating Warrant Holder") warrants for the
purchase of 3,235,230 shares of the Registrant's Common Stock. Each
Participating Warrant Holder received the right to purchase 0.654904748 shares
of the Registrant's Common Stock in exchange for each share of SportsNuts common
stock it was entitled to purchase pursuant to its SportsNuts warrants. In the
future, the Registrant may issue up to an additional 1,709,432 shares of Common
Stock to acquire the remaining 2,610,200 shares of Common Stock of SportsNuts
that are currently held by the remaining shareholders (other than the
Registrant).
22
<PAGE> 24
Item 7. Financial Statements and Exhibits.
(c) Pro forma financial information.
SPORTSNUTS.COM INTERNATIONAL, INC.
(Formerly Durwood, Inc.)
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS INTRODUCTION
The following Unaudited pro forma condensed combined financial statements have
been prepared from the historical consolidated financial statements of
SPORTSNUTS.COM INTERNATIONAL, Inc. (Formerly Durwood, Inc.) (the "Company"). The
SPORTSNUTS.COM, Inc. (SPORTSNUTS.COM) column in the following Unaudited pro
forma condensed combined financial statements reflect the historical financial
statements of SPORTSNUTS.COM restated to be consistent with the reporting
periods of the Company.
The Unaudited pro forma condensed combined financial statements have been
adjusted to reflect the acquisition of SPORTSNUTS.COM under the terms described
in Item 1 of Form 8-K dated April 20, 1999, previously filed by the Company and
incorporated herein by reference. The Unaudited pro forma condensed combined
financial statements assume that the acquisition of SPORTSNUTS.COM occurred as
of December 31, 1998 for the Unaudited pro forma condensed combined statements
of operations and as of April 6, 1999 for the Unaudited pro forma condensed
combined balance sheet.
The Unaudited pro forma condensed combined financial statements should be read
in conjunction with the Company's historical consolidated financial statements
and related notes to such statements in the December 31, 1998 Annual Report on
Form 10-K filed by the Company; and the acquisition of SPORTSNUTS.COM historical
financial statements and notes thereto included herein. The Unaudited pro forma
condensed combined financial statements are not necessarily indicative of the
financial position or results of operations had the acquisition occurred on the
indicated dates nor do they purport to indicate the results of future operations
of the Company.
The pro forma financial information has been prepared by the Company and all
calculations have been made based upon assumptions deemed appropriate by the
Company. In the opinion of management, all adjustments necessary to present
fairly the Unaudited pro forma condensed combined financial statements have been
made.
The adjustments being made to the following balance sheet and statement of
operations are summarized as follows:
a) An adjustment was made to the balance sheet to reflect the revaluing of
fixed assets and the capitalization of goodwill related to the acquisitions.
The transactions are being accounted for using the Purchase method of
accounting.
b) An adjustment was made to increase expenses related to amortization of
goodwill used in the transaction.
23
<PAGE> 25
SPORTSNUTS.COM INTERNATIONAL, INC.
(Formerly Durwood, Inc.)
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF April 6, 1999
<TABLE>
<CAPTION>
Pro Forma
SPORTSNUTS.COM Adjustments
INTERNATIONAL, and
Inc. (Formerly Combined Elimination Pro Forma
Durwood, Inc.) SPORTSNUTS.COM Total Entries Combined
------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,000,330 $ 247,929 $ 1,248,259 $ -- $ 1,248,259
Inventories -- 20,987 20,987 20,987
Prepaid expenses -- 60,020 60,020 60,020
------------------------------------------------------------------------------------
Total current assets 1,000,330 328,936 1,329,266 1,329,266
Property and equipment, net -- 371,882 371,882 371,882
Goodwill -- -- -- 7,181,068 7,181,068
------------------------------------------------------------------------------------
$ 1,000,330 $ 700,818 $ 1,701,148 $ 7,181,068 $ 8,882,216
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 217,731 $ 217,731 $ -- $ 217,731
Accrued liabilities -- 48,603 48,603 48,603
------------------------------------------------------------------------------------
Total current liabilities -- 266,334 266,334 266,334
Commitments and contingencies
Minority interest -- -- -- 82,552 82,552
Stockholders' equity:
Common stock 3,442 1,432 4,874 7,533
(1,432) 10,975
Additional paid-in capital 1,046,196 3,269,979 4,316,175 7,525,467
(3,269,979) 8,571,663
Accumulated deficit (49,308) (2,836,927) (2,886,235) 2,836,927 (49,308)
------------------------------------------------------------------------------------
Total stockholders' equity 1,000,330 434,484 1,434,814 7,098,516 8,533,330
------------------------------------------------------------------------------------
$ 1,000,330 $ 700,818 $ 1,701,148 $ 7,181,068 $ 8,882,216
====================================================================================
</TABLE>
24
<PAGE> 26
SPORTSNUTS.COM INTERNATIONAL, Inc.
(Formerly Durwood, Inc.)
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Pro Forma
SPORTSNUTS.COM Adjustments
INTERNATIONAL, and
Inc. (Formerly SPORTS Combined Elimination Pro Forma
Durwood, Inc.) NUTS.COM Total Entries Combined
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ 535,634 $ 535,634 $ 535,634
Operating expenses:
Cost of sales -- 707,256 707,256 707,256
General and administrative -- 625,680 625,680 625,680
Selling and marketing -- 566,541 566,541 566,541
Research and development -- 40,232 40,232 40,232
Goodwill amortization -- -- -- 1,436,214 1,436,214
----------- ----------- ----------- -----------
-- 1,939,709 1,939,709 3,375,923
----------- ----------- ----------- -----------
Operating income -- (1,404,075) (1,404,075) (2,840,289)
Other income (expense):
Interest expense -- (59,563) (59,563) (59,563)
Gain on disposal of
property and equipment -- 5,040 5,040 5,040
----------- ----------- ----------- -----------
Loss from continuing
operations -- (1,458,598) (1,458,598) (2,894,812)
Loss from discontinued
operations (25,534) -- (25,534) (25,534)
----------- ----------- ----------- -----------
Net loss $ (25,534) $(1,458,598) $(1,484,132) $(2,920,346)
=========== =========== =========== ===========
Basic and diluted net
loss per common share $ (.30)
===========
Weighted-average shares
outstanding 9,696,093
===========
</TABLE>
25
<PAGE> 27
INDEX TO EXHIBITS
NUMBER EXHIBITS FILED WITH THIS REPORT
None
PREVIOUSLY FILED EXHIBITS WITH THE PRIOR FORM 8-K FILED APRIL 20,
1999
NUMBER
2.1 Agreement and Plan of Reorganization dated as of April 6, 1999,
among Durwood, Inc., SportsNuts, and Darren Heiselt, a
shareholder of Durwood, Inc., which includes as an exhibit the
Restated Certificate of Incorporation of the Registrant
26
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPORTSNUTS.COM INTERNATIONAL, INC.
(Formerly Durwood, Inc.)
Date: APRIL 20, 1999 By /s/ KENNETH DENOS
- -------------------- Kenneth Denos, Executive Vice
President
27
