<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended: June 30, 2000
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from _____________ to ____________
Commission File Number 0-25873
-------
POWERBALL INTERNATIONAL, INC.
----------------------------------------------
(Name of Small Business Issuer in its charter)
Utah 84-1431425
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
7430 South Wasatch Blvd., No. A-2, Salt Lake City, Utah 84121
---------------------------------------------------------------
(Address of principal executive offices and Zip Code)
(801) 947-1455
----------------------------------------------------
(Registrant's telephone number, including area code)
NATEX CORPORATION
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, Par Value $0.001 3,039,000
-------------------------------- ----------------------------
Title of Class Number of Shares Outstanding
as of June 30, 2000
<PAGE>
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATEX CORPORATION
FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
financial statements should be read in conjunction with the accompanying
notes, and with the historical financial information of the Company.
<PAGE>
<PAGE> 3
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2000 1999
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 44,215 $ 79,190
Accounts receivable-stockholder 6,294 -
Inventory 972 -
Stock subscription receivable -
related party - 50,000
----------- -----------
TOTAL CURRENT ASSETS 51,481 129,190
----------- -----------
Fixed assets net of depreciation 21,827 -
Patents and license agreements
net of amortization 16,588 -
Receivable - related party - 472,000
----------- -----------
TOTAL OTHER ASSETS 38,415 472,000
----------- -----------
TOTAL ASSETS $ 89,896 $ 601,190
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Account payable $ $ 807
Accrued liabilities 404 -
Deferred equity on stock sale 20,000 10,000
----------- -----------
TOTAL CURRENT LIABILITIES 20,404 10,807
----------- -----------
NONCURRENT LIABILITIES
Investment in LLC at cost less
share of losses - 140,165
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $ .001 par value;
authorized 25,000,000 shares
Issued and outstanding 3,039,000
and 1,399,000 shares in
2000 and 1999, respectively 3,039 1,399
Additional paid in capital 769,665 988,963
(Deficit) accumulated during
the development stage (703,212) (540,144)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 69,492 450,218
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 89,896 $ 601,190
=========== ===========
See accompanying notes
<PAGE> 4
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
Three months and six months ended June 30, 2000 and June 30, 1999
and the Period from
July 9, 1997 (Date of Inception) to June 30, 2000
<TABLE>
<CAPTION>
Three months Six months Three months Six months July, 1997
ended ended ended ended (Inception)
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999 June 30, 2000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
Equity in loss from LLC - 56,384 18,336 36,938 446,549
General and administrative 20,355 21,443 4,906 6,077 33,726
Professional fees 19,516 22,916 2,480 2,480 120,271
Filing Fees - 2,975 2,515 2,515 17,966
Research and development 62,477 62,477 - - 62,477
------------ ---------- --------- ----------- -----------
TOTAL OPERATING EXPENSES 102,348 166,195 28,237 48,010 680,989
------------ ---------- --------- ----------- -----------
OPERATING (LOSS) (102,348) (166,195) (28,237) (48,010) (680,989)
Other income and expense
Interest income 83 273 177 636 2,349
Limited sales of tanks net
of direct production costs
of $1,046 2,954 2,954 - - 2,954
------------ ---------- --------- ----------- -----------
(Loss) before provision
for income taxes (99,311) (162,968) (28,060) (47,374) (675,686)
Provision for
income taxes 100 100 - 100 300
------------ ---------- --------- ----------- -----------
NET (LOSS)BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (99,411) (163,068) (28,060) (47,474) (675,986)
Cumulative effect of
accounting change for
organization costs - - - - (27,226)
------------ ---------- --------- ----------- -----------
NET (LOSS) $ (99,411) $ (163,068) $ (28,060) $ (47,474) $ (703,212)
============ ========== ========= =========== ===========
NET (LOSS) PER COMMON
SHARE BEFORE ACCOUNTING
CHANGE $ (0.05) $ (0.10) $ (0.03) $ (0.06) $ (0.68)
============ ========== ========= =========== ===========
CUMULATED EFFECT OF
ACCOUNTING CHANGE $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.03)
============ ========== ========= =========== ===========
NET (LOSS) PER COMMON
SHARE $ (0.05) $ (0.10) $ (0.03) $ (0.06) $ (0.71)
============ ========== ========= =========== ===========
Weighted average
number of common shares 1,844,165 1,642,352 941,538 771,713 990,739
============ ========== ========= =========== ===========
</TABLE>
See accompanying notes
<PAGE>
<PAGE> 5
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months ended June 30, 2000 and June 30, 1999
and the Period from
July 9, 1997 (Date of Inception) to June 30, 2000
<TABLE>
<CAPTION>
Six months Six months July 9, 1997
ended ended (inception) to
June 30,2000 June 30,1999 June 30,2000
------------ ------------ --------------
(unaudited) (Unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOW FROM
OPERATING ACTIVITIES
Net (loss) $ (163,068) $ (47,474) $ (703,212)
Adjustments to reconcile
net (loss) to net cash
provided by operating activities
Cumulative change in accounting
principle - - 27,226
Stock issued for services - - 75,000
Decrease in investment in LLC 56,384 36,938 446,549
Amortization prior to change in
accounting principle - 1,857 1,239
Depreciation and amortization from
acquired business 1,204 - 1,204
Changes in assets and liabilities
Increase in accounts receivable-stockholder (6,294) - (6,294)
Increase in inventory (972) - (972)
(Decrease)increase in accounts
payable (807) - -
Increase in accrued liabilities 404 - 404
Increase in
organization costs - 10,882 (28,465)
----------- ---------- -----------
Net cash (used) by
operating activities (113,149) 2,203 (187,321)
CASH FLOW FROM
INVESTING ACTIVITIES
Related party loans 10,000 (231,000) 20,000
Purchase of business, net
of cash acquired and equity adjustment
from related party transactions
due to merger (71,826) - (706,826)
----------- ---------- -----------
Net cash provided (used)
by investing activities (61,826) (231,000) (686,826)
CASH FLOW FROM
FINANCING ACTIVITIES
Proceeds from issuance
of common stock 140,000 240,000 960,000
Direct costs of stock sale - - (41,638)
----------- --------- -----------
Net cash provided by
financing activities 140,000 240,000 918,362
----------- --------- -----------
(Decrease) increase in cash (34,975) (11,203) 44,215
Cash and cash equivalents
beginning of period 79,190 65,664 -
----------- --------- -----------
Cash and cash equivalents
end of period $ 44,215 $ 54,461 $ 44,215
=========== ========= ===========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid during
the period $ - $ - $ -
========== ========= ==========
Income taxes paid during
the period $ 100 $ 100 $ 300
========== ========= ==========
Stock issued to pay royalties
and expenses of related entity $ - $ - $ 97,000
========== ========= ==========
</TABLE>
See accompanying notes
<PAGE>
<PAGE> 6
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
From Inception on July 9, 1997 to June 30, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
----------------
The Company was incorporated on July 9, 1997 under the laws of the State of
Utah. At the present time, the Company is in the development stage. The
Company was formed for the purpose of raising capital to invest in a joint
venture which will acquire a license for certain technology relating to the
production of hydrogen, to generate hydrogen for sale, and to market hydrogen
generating equipment and products. The Company, through its investment in a
joint venture, is involved in research and development efforts of
commercializing the technology. During the beginning of the second quarter
ended June 30, 2000, the Company acquired the remaining 50% interest in
Powerball Technologies, LLC, for 1,500,000 shares of the Company's common
stock.
b. Investment in Limited Liability Company
-------------------------------------------
Prior to the acquisition, the Company accounted for its investment in the
Limited Liability Company using the equity method. The acquisition has been
accounted for using the purchase method of accounting. The consolidated
balance sheet at June 30, 2000 includes the accounts of Powerball
International, Inc. (the Company) and its wholly-owned operating subsidiary,
Powerball Technologies, LLC. The consolidated balance sheet at December 31,
1999 and consolidated statement of operations for 1999 excludes the Powerball
Technologies, LLC, because the acquisition was consummated in the second
quarter of 2000. All significant intercompany balances and transactions have
been eliminated in consolidation.
c. Amortization of Organization Costs
--------------------------------------
The Company was amortizing the organization cost over a 60 month period using
the straight-line method. In 1998, the Accounting Standards Executive
Committee of the American Institute of Certifies Public Accountants issued
Statement of Position (SOP) 98-5. The SOP requires the start-up cost to be
expensed as incurred. During 1999, the Company adopted the SOP and recognized
a charge for the cumulative effect of the accounting change of $27,226.
d. Income Taxes
----------------
The Company provides for income taxes based on the liability method, which
requires recognition of deferred tax assets and liabilities based on
differences between financial reporting and tax bases of assets and
liabilities measured using enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse.
e. Use of Estimates
--------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
f. Cash and Cash Equivalent
----------------------------
For purposes of the statement of cash flows, the Company considers all
investment instruments purchased with a maturity of three months or less to be
cash equivalents.
<PAGE> 7
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
From Inception on July 9, 1997 to June 30, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Net Income (Loss) Per Common Share
--------------------------------------
Primary earnings (loss) per common share is calculated by dividing net income
(loss) for the period by the weighted average number of the Company's common
shares outstanding and dilutive common equivalent shares from stock options
and warrants, as calculated using the treasury stock method.
Fully diluted earnings (loss) per common share reflect the calculation of the
number of common equivalent shares based on the stock price at the end of the
period. Fully diluted per common share amounts are not reported due to
negative dilution.
h. New Accounting Pronouncements
---------------------------------
In 1997 the FASB issued SFAS No. 128, Earnings Per Share, SFAS No. 130,
Reporting Comprehensive Income, and SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. The Company believes the new
standards will not have a material impact on the Company's financial
statements presented herein or in the future.
(2) EXECUTIVE STOCK OPTION PLAN
The Company's president has agreed to perform services on behalf of the
Company for no compensation through December 31, 1998. To provide incentive
for such services, the Board of Directors agreed on August 1, 1997 to grant an
option to purchase 100,000 shares of the Company's common stock at $1 per
share. No options have been exercised as of June 30, 2000.
(3) RECEIVABLE - RELATED PARTY
The receivable from related entity was an unsecured non-interest bearing loan
which has no repayment terms. The Company now accounts for the related party
loan as an intercompany transfer and is eliminated in consolidation.
The receivable was due from Powerball Technologies, LLC (A Development Stage
Company). Natex Corporation was a 50% owner of Powerball Technologies, LLC,
until the second quarter 2000 merger.
(4) INVESTMENT IN LIMITED LIABILITY COMPANY
The Company and Powerball Industries, Inc. had agreed to form a limited
liability company (the "Joint Venture") to license the Technology; to further
develop the Technology; to build a sodium hydride pellet recycling plant; to
manufacture tanks in which hydrogen is generated; to demonstrate the
commercial viability of the Technology; and to commercialize the Technology.
Powerball Industries, Inc., sub-licensed the Technology to the Joint Venture
for a 50% ownership interest in the Joint Venture. The Company invested
$250,000 in the Joint Venture for a 50% ownership interest in the Limited
Liability Company Powerball Technologies, LLC (A Developmental Stage Company).
The Company completed its plan of merger with Powerball Industries, Inc. in
the second quarter ended June 30, 2000. The Company acquired the remaining
50% interest in Powerball Technologies, LLC for 1,500,000 shares of the
Company's common stock.
<PAGE>
<PAGE> 8
POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Formerly NATEX CORPORATION)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
From Inception on July 9, 1997 to June 30, 2000
(5) STOCK OFFERING
On December 31, 1997, the Company successfully completed a public offering of
400,000 shares of its $.001 par value common stock for $400,000 less offering
costs of $40,000. In April 1999, the Company successfully completed a private
placement offering of 400,000 shares of its $.001 par value common stock for
$200,000, also in June 1999, the Company exchanged services for 10,000 shares
of the its $.001 par value stock of which was valued at $40,000. In December
1999, the Company successfully completed a private placement offering of
120,000 shares of its $.001 par value common stock for $120,000.
(6) INCOME TAXES
At December 31, 1999, the Company has a net operating loss carryforward of
approximately $552,700 which will begin to expire between the year 2012 and
2019.
(7) PROFORMA CONSOLIDATED REVENUE, EARNINGS, AND EARNINGS PER SHARE
The following table sets for revenue, earnings and earnings per share as if
the Company had operated Powerball Technology, LLC. as a wholly owned
subsidiary from the beginning of the periods presented.
<TABLE>
<CAPTION>
Three months Six months Three months Six months July, 1997
ended ended ended ended (Inception)
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999 June 30, 2000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
============ ========== ========= =========== ===========
NET (LOSS) $ (99,412) $ (219,451) $ (319,474) $ (641,615) $ (1,149,760)
============ ========== ========= =========== ===========
NET (LOSS) PER COMMON
SHARE $ (0.03) $ (0.07) $ (0.13) $ (0.28) $ (0.44)
============ ========== ========= =========== ===========
</TABLE>
See accompanying notes
<PAGE>
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
---------------------------------------------------------
This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of the Company or its management or Board of Directors; (c) statements of
future economic performance; (d) statements of assumptions underlying other
statements and statements about the Company and its business relating to the
future; and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend" or similar expressions.
Year 2000 Disclosure
--------------------
The Company did not experience any Year 2000 problems and does not anticipate
any problems at this time.
General
-------
During the beginning of the second quarter ended June 30, 2000, the Company's
shareholders approved an Agreement and Plan of Merger in with which the
Company acquired all of the issued and outstanding shares of Powerball
Industries, Inc. ("PIC"), a privately-held Utah corporation. Under the
Agreement and Plan of Merger, the Company acquired all the issued and
outstanding stock of PIC in exchange for the issuance of one million five
hundred thousand (1,500,000) shares of the Company's common stock. In
connection with the acquisition, the Company's shareholders elected new
directors and voted in favor of a proposal to change the Company's name to
Powerball International, Inc.
PIC was the owner of all rights, title and interest in certain technology
relating to a Hydrogen Generation System and Fuel Pellet for a Hydrogen
Generation System and all present and future patents and patent applications
as are or later filed relating to the above invention in the United States,
and any and all foreign countries, if any (hereinafter the "Technology"). PIC
was the Company's joint venture partner in Powerball Technologies, LLC ("PT").
PT holds an Assignment for the Technology subject to certain royalty payments
to Jed Checketts, the inventor of the Technology. The Technology forms the
basis for the operations of PT, and is the essential reason the Company was
invested in PT.
By effecting the merger, the Company and its shareholders obtained direct
ownership of the Technology. The merger also consolidated ownership of PT,
with PT becoming a wholly-owned subsidiary of the Company.
The terms of the transaction and the complete Agreement and Plan of Merger is
included as an exhibit to the Definitive Information Statement filed with the
Securities and Exchange Commission on April 24, 2000.
Results of Operations
---------------------
Three and Six Months Ended June 30, 2000 compared with June 30, 1999
--------------------------------------------------------------------
Revenues. The Company's expects that initial revenues will be generated
primarily through its wholly-owned operating subsidiary, Powerball
Technologies, LLC ("PT"), and those profits, if any that will be derived
through the licensing of the PT's technology and/or manufacturing and sale of
hydrogen generation systems by PT. The Company had no revenues for the three
and six month periods ended June 30, 2000 and 1999, respectively, and has had
no revenues since July 9, 1997 ("Inception").
<PAGE>
<PAGE> 10
Operating Expenses. For the three and six month period ended June 30, 2000,
the Company had total operating expenses of $102,348 and $166,195, compared to
$28,237 and $48,010 for the same periods ending June 30, 1999. The increase
in operating expenses is attributable primarily to an increase in research and
development costs related to PT of $62,477, an increase in equity loss from PT
of $19,446, and increases of $20,436 and $15,366 in professional fees and
general and administrative expenses, respectively, for the six month period.
Other Income. Other income for the three and six month period ended June 30,
2000 consisted of $83 and $273 of interest income and $2,954 and $2,954
(net)from limited sales of tanks, compared with $177 and $636 of interest
income for the six month period ended June 30, 1999.
The Company experienced a net loss of $99,411 and $163,068 for the three and
six month period ended June 30, 2000 compared with a net loss of $28,060 and
$47,474 for the three and six month period ended June 30, 1999. The Company's
net loss since inception has been $703,212. The net loss per share for the
three and six month period ended June 30, 2000 was $0.05 and $0.10, based on
the weighted average number of shares outstanding of 1,844,165 and 1,642,352
shares, compared to $0.03 and $0.06 based on weighted average number of shares
outstanding of 941,538 and 771,713 at June 30, 1999. The net loss per share
since Inception has been $0.71, based on the weighted average number of shares
outstanding of 990,739.
Liquidity and Capital Resources
-------------------------------
In connection with the Company's organization the founding shareholders
acquired 200,000 shares of the Company's common stock for $40,000 cash.
Thereafter, in December 1997, the Company completed a public offering of
400,000 shares of common stock at a price of $1.00 per share for aggregate
offering proceeds of $400,000. In April 1999, the Company successfully
completed a private placement offering of 400,000 shares of its $.001 par
value common stock for $200,000. In December 1999, the Company successfully
completed a private placement offering of 120,000 shares of its $.001 par
value common stock for $120,000.
The issuances of common stock have been utilized for working capital, payment
of professional services, the initial capital investment in PT; the loan of
additional working capital to PT, and for the continued development activities
of the Company.
In December 1997, the Company entered into the joint venture (PT) with
Powerball Industries wherein the Company contributed $250,000 cash. In
addition to the original $250,000 capital contribution to PT made by the
Company, the Company agreed to loan additional capital to PT for the purpose
of (i) further development of the Technology; (ii) construction of the Plant;
(iii) the manufacture of Tanks; (iv) demonstrating the commercial viability of
the Technology; (v) developing commercial markets for the Technology; and(vi)
meeting PT's ongoing working capital requirements. Because of PT's working
capital needs, the Company agreed to loan additional monies to PT up to
$650,000. Because of the merger with PIC, the Company's balance sheet at June
30, 2000 no longer reflects the loans to PT as a receivable because the loans
are now treated as an intercompany transaction and consolidated. The balance
sheet at June 20, 2000 shows a reduction in total assets to $89,896 from
$601,190 at December 31, 1999 as a result of the consolidation. All funds
loaned to PT were obtained by the Company through the sale of its equity
securities.
At June 30, 2000, the Company had current assets of $51,481 and current
liabilities of $20,404 for working capital of $31,077. At June 30, 2000, the
Company had other assets of $38,415, consisting of fixed assets of $21,827 and
patents and license agreements of $16,588.
Cash used in operations for the six month period ended June 30, 2000 was
$113,149 compared to cash increase of $2,203 for the period ended June 30,
<PAGE>
<PAGE> 11
1999. Since inception the Company's operations been funded primarily by cash
received from capital contributions and the issuance of common stock for cash.
As a result of the merger, PT is the wholly-owned subsidiary of the Company,
and all the expenses of PT will be consolidated with those expenses of the
Company. The Company expects that it will continue to incur operational
losses for the balance of its fiscal year, primarily as a result of
expenditures related to the operation of the Plant and the general overhead
thereto. Although the Plant is completed, because of the consolidation of
operations such operating expenses are expected to increase. The Company
hopes that the Plant may begin to generate some operating revenues during the
balance of the Company's fiscal year, but cannot determine when it will
receive revenues or the amount of such potential revenues, if any, at this
time.
In the period ended June 30, 2000, the Company raised a total of $140,000 from
existing shareholders through the exercise of outstanding warrants.
Subsequent to the end of the period, the Company raised an additional $400,000
in a private placement to a single investor.
However, the Company anticipates that within the next year additional funds
may be needed to allow the Company to continue its operations and to enter
into other markets for hydrogen technology. If necessary, the Company will
most likely first seek additional debt and equity funding through its existing
shareholders, but the Company has no agreements for such funding in place and
there can be no assurance that such funding will be available to the Company
on acceptable terms. There can be no assurance that any additional funding,
if required, will be available to the Company.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the beginning of the second quarter ended June 30, 2000, the Company's
shareholders approved an Agreement and Plan of Merger in which the Company
acquired all of the issued and outstanding shares of Powerball Industries,
Inc. ("PIC"), a privately-held Utah corporation. Under the Agreement and Plan
of Merger, the Company acquired all the issued and outstanding stock of PIC
in exchange for the issuance of one million five hundred thousand (1,500,000)
shares of the Company's common stock. As a result of the approval of the
Agreement and Plan of Merger, the 1,469,000 shares of common stock issued and
outstanding prior to the merger was increased to 2,969,000 by the issuance of
the shares. Of the 1,500,000 shares issued in connection with the merger, Jed
Checketts, a former minority shareholder of the Company, was issued a total of
1,078,000 shares. Prior to the merger, Mr. Checketts held 15,000 shares, or
1.02% of the Company's issued and outstanding shares. Following the merger,
Mr. Checketts held 1,093,000 shares, or 36.82% of the Company's issued and
outstanding shares.
During the period ended June 30, 2000, the Company issued 140,000 shares to
existing warrant holders pursuant to the exercise of 140,000 outstanding
warrants at $1.00 per share. In consideration for exercising the first 50,000
of such warrants, the Company agreed to issue the exercising warrant holders
additional warrants for up to 150,000 shares at the then current market price
of $5.00 per share.
<PAGE>
<PAGE> 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the shareholders of the Company was held on May 15, 2000.
Robert Ipson, President of the Company, called the meeting to order and
indicated that there were 67,500 shares present in person and 963,500 shares
represented by proxy and that a quorum of shareholders was present, that the
meeting was duly called and noticed, and was properly convened for the
transaction of business. As evidence of the proper notice of the meeting, it
was indicated that the following documents were being inserted into the minute
book: (1) printed notice of the meeting dated April 24, 2000, (2) a list of
shareholders as of April 24, 2000, the record date, which shows that the
Company had 1,469,000 shares of common stock issued and outstanding; and (3) a
certificate of mailing, stating that the Notice of Special Meeting was sent to
all shareholders on April 25, 2000.
The purpose of the Meeting was for the shareholders to consider and vote
on the following proposals:
1. Elect Robert Ipson, Phillip McStotts and Jed Checketts as directors to
serve until the expiration of their respective terms and until their
respective successors are elected and qualified;
2. Adopt an agreement and plan of merger under which the Company will issue
1,500,000 shares of the Company's common stock in exchange for all of the
issued and outstanding stock of Powerball Industries, Inc., and change the
name of the Company to Powerball International, Inc., appointing Jed Checketts
President of the Company;
3. Approve the Company's 2000 Stock Option and Award Plan; and
4. Consider and act upon the ratification of the appointment of David Thomson,
P.C., as independent public accountants.
The Chairman indicated that the board of directors had unanimously approved
the proposals. The number of shares required to approve the proposals was
734,501 shares with 1,031,000 shares of common stock voted in favor none
against and none withholding authority. The Chairman declared that the
proposals were adopted.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
---------
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
Date of report Items reported
-------------- --------------
June 8, 2000 1,2,and 7
<PAGE>
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POWERBALL INTERNATIONAL, INC.
[Company]
Dated: August 15, 2000 By/S/Robert K. Ipson, Chairman and
Chief Financial Officer
