FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
--------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Commission file number 0-24829
-----------------
FULL TILT SPORTS, INC.
----------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1416864
- ------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918
- ---------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(719) 535-0260
-----------------------------------
(Registrant's telephone number, including area code)
5525 Erindale Drive, Suite 201, Colorado Springs, Colorado
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(Former name, former address and former fiscal year, 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. Yes XX No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class of Stock Amount Outstanding
------------------ ----------------------------
$.001 par value 3,690,779 shares outstanding
Common Stock at May 17, 1999
<PAGE>
FULL TILT SPORTS, INC.
Index
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements...........................1-5
Item 2. Management's Discussion and Analysis Or
Plan of Operation..............................6-7
Part II - OTHER INFORMATION.....................................7
SIGNATURES......................................................9
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Balance Sheets
- ------------------------------------------------------------------------
Unaudited Audited
March December
30, 1999 31, 1998
-------- --------
ASSETS
Current Assets
Cash $355,636 $101,716
Accounts Receivable (Less an Allowance of $-0-) 2,702 10,303
Inventory 3,247 8,573
Prepaid Supplies 968 1,464
Prepaid Personal Services 179,062 0
Prepaid Trade Agreements 42,900 0
Prepaid Salaries 75,000 0
Prepaid Other 947 0
--- -
Total Current Assets 660,462 122,056
------- -------
Property, Plant, and Equipment
Furniture and Equipment 20,278 6,845
------ -----
Total Property, Plant, and Equipment 20,278 6,845
Less Accumulated Depreciation (3,296) (2,311)
----- -----
Net Property, Plant, and Equipment 16,982 4,534
------ -----
Other Assets
Deposits 2,000 50
Prepaid Personal Services 49,271 0
Organizational Costs (Less amortization
of $266 and $228) 495 533
--- ---
Total Other Assets 51,766 583
------ ---
TOTAL ASSETS 729,210 127,173
======= =======
LIABILITIES
Current Liabilities
Accounts Payable 19,463 18,600
Accrued Salaries 4,500 2,500
Preferred Dividends Payable 3,589 3,589
Deferred Income - Trade Agreements 42,900 0
Other Accrued Expenses 4,457 2,218
----- -----
Total Current Liabilities 74,909 26,907
------ ------
STOCKHOLDERS' EQUITY
Preferred Stock [Authorized 5,000,000 Shares,
Par Value $.01; 50,000 Shares Issued And
Outstanding (Unaudited); 50,000 Shares Issued
and Outstanding (Audited) 500 500
Common Stock [Authorized 25,000,000 Shares,
Par Value $.001; 3,680,779 Shares Issued and
Outstanding (Unaudited); 3,126,261 Shares
Issued and Outstanding (Audited) 3,681 3,136
Additional Paid In Capital 1,031,707 335,697
Retained Deficit (381,587) (239,067)
------- -------
Total Stockholders' Equity 654,301 100,266
------- -------
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $729,210 $127,173
======== ========
The Accompanying Notes Are An Integral Part Of These Financial Statements.
1
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Income Statements
- -------------------------------------------------------------------------------
Unaudited Unaudited Unaudited
Three Month Three Month June 30, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
March March March
31, 1999 31, 1998 31, 1999
-------- -------- --------
INCOME FROM OPERATIONS
Sales of Merchandise $845 $0 $19,851
Trade Agreements Income 3,900 0 3,900
Miscellaneous Income 1,517 0 1,517
----- - -----
Total Income From Operations 6,262 0 25,268
----- - ------
COST OF GOODS SOLD 486 0 16,108
--- - ------
GROSS PROFIT 5,776 0 9,160
----- - -----
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative Services 7,500 7,500 40,000
Advertising 51,817 9,428 78,089
Amortization 38 38 266
Contract Labor 1,025 0 1,025
Depreciation 986 200 3,297
Design Expense 0 730 2,540
Education/Reference 418 0 418
Entertainment 1,381 210 2,592
Filing and Recording Fees 339 0 339
Insurance 250 0 250
Offering Expense 0 5,445 14,877
Office and Miscellaneous Expenses 2,749 355 9,584
Payroll Tax 2,530 1,294 9,378
Professional Fees 30,216 1,445 63,134
Promotion and Public Relations 8,329 6,276 28,965
Rent 4,000 0 4,000
Salary 31,477 15,000 111,477
Samples Expense 352 140 1,900
Sponsorships 0 0 5,287
Telephone 5,048 835 11,157
Travel 2,154 1,113 3,953
----- ----- -----
Total General and Administrative Expense 150,609 50,009 392,528
------- ------ -------
INCOME (LOSS) FROM OPERATIONS (144,833) (50,009) (383,368)
------- ------ -------
OTHER INCOME (EXPENSE)
Interest Income 2,313 0 5,598
Interest (Expense) 0 (20) (228)
- -- ---
Total Other Income (Expense) 2,313 (20) 5,370
----- -- -----
INCOME (LOSS) BEFORE TAXES (142,520) (50,029) (377,998)
------- ------ -------
Provision for Income Taxes 0 0 0
- - -
NET (LOSS) ($142,520) ($50,029) ($377,998)
-------- ------- --------
Preferred Stock Dividends Applicable
to the Period 0 0 (3,589)
Net (Loss) Applicable to
Common Stockholders ($142,520) ($50,029) ($381,587)
======== ======= ========
Basic (Loss) Per Common Share ($0.04) ($0.01)
Weighted Average Shares Outstanding 3,467,828 3,500,000
========= =========
The Accompanying Notes Are An Integral Part Of These Financial Statements.
2
<PAGE>
<TABLE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Statement of Shareholders Equity
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION> Preferred Stock Common Stock
Number of Number of Capital Paid Capital Paid
Common Preferred Preferred Common In Excess Of In Excess Of Accumulated
Shares Shares Stock Stock Par Value Par Value (Deficit) Total
------ ------ ----- ----- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 0 0 $0 $0 $0 $0 $0 $0
Issuance Of Common Stock
July 5, 1997 For Cash @
$.0071 Per Share 2,800,000 0 2,800 17,200 20,000
July 7, 1997 For Cash @
$.02 Per Share 500,000 0 500 9,500 10,000
December 1997 For Cash @
$.20 Per Share 200,000 200 39,800 40,000
Net (Loss) December 31, 1997 (52,612) (52,612)
--------- ------ --- ----- ------ ------ ------ ------
Balance At December 31, 1997 3,500,000 0 0 3,500 0 66,500 (52,612) 17,388
April 14, 1998 For Cash @
$1 Per Share 50,000 500 0 49,500 50,000
Private Stock Offering:
June 30, 1998 For Cash @
$1 Per Share 211,400 211 211,189 211,400
(Less Deferred Offering Costs) (11,928) (11,928)
June 30, 1998 Services Valued
@ $1 Period 14,861 15 14,846 14,861
August 1, 1998 Cancelled Shares
@ $.001 Per Share (600,000) (600) 600 0
November 3, 1998 Services
Valued @ $.50 Per Share 10,000 10 4,990 5,000
Preferred Dividends Declared (3,589) (3,589)
Net (Loss) December 31, 1998 (182,866) (182,866)
--------- ------ --- ----- ------ ------- ------- -------
Balance at December 31, 1998 3,136,261 50,000 500 3,136 49,500 286,197 (239,067) 100,266
January 2, 1999 Personal Service
Contracts @ $1 Per Share 150,000 150 149,850 150,000
January 2, 1999 Employment
Contract @ $1 Per Share 80,000 80 79,920 80,000
February 8, 1999 Trade Agreement
@ $1.50 Per Share 10,000 10 14,990 15,000
March 1, 1999 Trade Agreement
@ $1.50 Per Share 15,000 15 22,485 22,500
March 2, 1999 Personal Service
Contract @ $1.50 Per Share 50,000 50 74,950 75,000
Stock Offering:
March 20, 1999 For Cash @
$1.50 Per Share 239,518 240 359,037 359,277
(Less Deferred Offering Costs) (5,222) (5,222)
Net (Loss) March 31, 1999 (142,520) (142,520)
Unaudited Balance at --------- ------ ---- ------ ------- -------- -------- --------
March 31, 1999 3,680,779 50,000 $500 $3,681 $49,500 $982,207 ($381,587) $654,301
========= ====== ==== ====== ======= ======== ======== ========
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Statements of Cash Flows
- --------------------------------------------------------------------------------------
<CAPTION>
Unaudited Unaudited Unaudited
Three Month Three Month June 30, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
March March March
31, 1999 31, 1998 31, 1999
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) ($142,520) ($50,029) ($381,587)
Adjustments to Reconcile Net Loss to Net
Cash Provided By Operating Activities
Items Not Affecting Cash Flows:
Depreciation Expense 986 200 3,296
Amortization Expense 38 38 266
Stock Issued for Services, Contracts &
Trade Agreements 342,500 0 362,361
(Increase) Decrease In Accounts Receivable 7,601 0 (2,702)
(Increase) Decrease In Inventory 5,326 0 (3,247)
(Increase) Decrease In Stock Subscriptions
Receivable 0 10,000 0
(Increase) In Other Assets (348,634) 0 (350,909)
Increase (Decrease) In Accounts Payable 862 18,374 19,463
Increase (Decrease) In Accrued Salaries 2,000 2,500 4,500
Increase (Decrease) In Other
Accrued Expenses 45,139 (517) 50,946
Net Cash Used By Operating Activities (86,702) (19,434) (297,613)
------ ------ -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (13,433) 0 (20,278)
------ - ------
Net Cash Used By Investing Activities (13,433) 0 (20,278)
------ - ------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock 354,055 0 623,527
Issuance of Preferred Stock 0 0 50,000
- - ------
Net Cash Provided By Financing Activities 354,055 0 673,527
------- - -------
Net Increase In Cash 354,055 (19,434) 673,527
Cash At Beginning Of Year 101,716 26,291 0
------- ------ -
Cash At End Of Period $355,636 $6,857 $355,636
======== ====== ========
Non-Cash Activities:
Common Stock Issued For Services $0 $0 $19,860
Common Stock Issued For Personal
Service Contract 225,000 0 225,000
Common Stock Issued On Employment Contract 80,000 0 80,000
Common Stock Issued for Trade Agreements $37,500 $0 $37,500
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
4
<PAGE>
Full Tilt Sports, Inc.
Notes to the Unaudited Financial Statements
For the Three Month Period Ended March 31, 1999
- -----------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The information furnished herein was taken from the books and records of the
Company without audit and have been prepared in accordance with the
instructions to Form 10-QSB. The Company believes, however, that it has made
all adjustments necessary to reflect properly the results of operations for the
three month interim period ended March 31, 1999. The adjustments consist only
of normal reoccurring accruals. However, the results of operations for the
three month interim period ended March 31, 1999 are not necessarily indicative
of the results to be expected for the fiscal year ending December 31, 1999.
Note 2 - Financial Statements
- -----------------------------
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in this Report. For a
complete set of footnotes, reference is made to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998 as filed with the Securities
and Exchange Commission and the audited financial statements included therein.
Note 3 - Stock Offering
- -----------------------
In January 1999, the Company offered to sell up to 500,000 shares of Common
Stock at $1.50 per share, on a best efforts basis. The shares of Common Stock
were issued pursuant to an exemption from registration under Section 3(b) and
Regulation D, Rule 505, of the Securities Act of 1933, as amended, and to an
exemption to registration provided by state securities law. In March, 1999,
the Company completed the offering and sold 239,518 Common Shares for gross
proceeds of $359,277.
Note 4 - Advertising Expenses & Personal Services
- -------------------------------------------------
Stock was issued to an officer and to various professional athletes in exchange
for services. The shares will be earned over a period of 12 months, and
therefore the total cost has been capitalized and expensed over this time
period to either advertising expenses or services.
Note 5 - Prepaid Services
- -------------------------
Certain agreements were reached with various other businesses where the
Company will trade services for certain advertising and an automobile. The
value has been capitalized and will be written off over the period of time that
the services are received with an offset to revenue for the value of the
services given.
5
<PAGE>
FULL TILT SPORTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Introduction
Certain statements contained herein constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward looking statements include, without limitation,
statements regarding the Company's plan of business operations, potential
contractual arrangements, anticipated revenues and related expenditures.
Factors that could cause actual results to differ materially include, among
others, the following: acceptability of the Company's products in the retail
market place, general economic conditions, and the overall state of the
retail clothing industry. Most of these factors are outside the control of
the Company. Investors are cautioned not to put undue reliance on forward
looking statements. Except as otherwise required by applicable securities
statutes or regulations, the Company disclaims any intent or obligation to
update publicly these forward looking statements, whether as a result of new
information, future events or otherwise.
Liquidity and Capital Resources
Total shareholder's equity increased from $100,266 at fiscal year end
December 31, 1998 to $654,301 as of March 31, 1999 due to a private placement
and shares of Common Stock issued pursuant to employee, consultant, and trade
agreements. In March 1999, the Company completed a private placement to a
small group of investors pursuant to Regulation D, Rule 505 of the 1933 Act.
The Company sold an aggregate of 239,518 shares of Common Stock for aggregate
gross proceeds of $359,277. From fiscal year end December 31, 1998 to March
31, 1999, the working capital of the Company increased an aggregate of $490,404
as a result of cash raised in the private placement and prepaid services. At
March 31, 1999, the Company had working capital of $585,553, consisting of
$660,462 of current assets and $74,909 of current liabilities.
The Company's liquidity is high relative to its immediate needs, with
total current assets comprised of $355,636 in cash, $3,247 in inventory,
$179,062 in prepaid personal services, $42,900 in prepaid trade agreements, and
$75,000 in prepaid salaries. The Company had prepaid for services to be
performed for the Company's promotion and marketing of its products. The
Company's expenses are expected to increase as the Company engages in increased
marketing and promotion of its products. It is also anticipated that cash
requirements for inventory will increase as orders for the Company's products
are received. Management believes the Company has sufficient working capital
to last the balance of the current fiscal year.
The Company's operations presently continued to use cash, rather than
provide cash from operations. For the three month period ended March 31, 1999,
the Company used $86,702 in cash for its operating activities. In an effort to
6
<PAGE>
conserve working capital, the Company has issued stock to certain employees,
consultants and vendors for services. In the first quarter of 1999, the
Company issued an aggregate of 315,000 shares of Common Stock valued at
$342,500 to such employees, consultants and vendors as compensation.
Nonetheless, management is of the opinion that the Company has sufficient
working capital to continue for the balance of the year. Thereafter
additional cash may be required. Therefore, the Company will remain
dependent on obtaining additional assets and achieving profitable operations
and/or obtaining additional debt or equity financing to continue as a going
concern.
Results of Operations
During the three month period ended March 31, 1999, the Company realized a
net loss of $142,520 (or $0.04 per share) on revenues of $5,776, compared to a
net loss of $50,024 and no revenue for the three month period ended March 31,
1998. Expenses increased significantly during the first quarter of fiscal 1999
compared to the three month period ended March 31, 1998 due to the Company's
aggressive promotion of its products associated with the initial placement and
sale of the Company's products in retail outlets. Advertising increased from
$9,425 to $51,817 in the first quarter of fiscal 1999.
Professional fees increased to $30,216 from $1,445 during the first
quarter of 1999. These expenses were incurred primarily for legal and
accounting fees associated with the Company's private placement and preparation
and filing of its Annual Report on Form 10-KSB. Salaries increased to $31,477
from $15,000 during the first fiscal quarter as Company officers received
salaries on a full time basis.
These additional expenses in the latter period caused the Company to have
a net loss before taxes of $142,520 for the first fiscal quarter of 1999
compared to net loss of $50,029 for the prior fiscal period, when the Company's
activities were limited.
Management anticipates that the Company will continue losses until such
time, if ever, the Company generates revenues from retail sales in an amount
adequate to cover expenses.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No report required.
Item 2. Changes in Securities.
No report required.
7
<PAGE>
Item 3. Defaults Upon Senior Securities.
No report required.
Item 4. Submission of Matters to a Vote of Security Holders.
No report required.
Item 5. Other Information.
No report required.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits:
None.
B. Reports on Form 8-K:
None.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
FULL TILT SPORTS, INC.
Date: March 17, 1999 By: /s/ Roger K. Burnett
-------------------- --------------------------------------------
Roger K. Burnett, President, Chief Executive
Officer, Chief Financial Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
Date: March 17, 1999 By: /s/ Joseph F. DeBerry
------------------- --------------------------------------------
Joseph F. DeBerry, Vice-President,
Secretary, Treasurer and Director
(Principal Financial Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 3/31/99 FORM
10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<CIK> 0001062663
<NAME> FULL TILT SPORTS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 355,636
<SECURITIES> 0
<RECEIVABLES> 2,702
<ALLOWANCES> 0
<INVENTORY> 3,247
<CURRENT-ASSETS> 660,462
<PP&E> 20,278
<DEPRECIATION> 3,296
<TOTAL-ASSETS> 729,210
<CURRENT-LIABILITIES> 74,909
<BONDS> 0
0
500
<COMMON> 3,681
<OTHER-SE> 650,120
<TOTAL-LIABILITY-AND-EQUITY> 729,210
<SALES> 845
<TOTAL-REVENUES> 6,262
<CGS> 486
<TOTAL-COSTS> 486
<OTHER-EXPENSES> 150,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (140,520)
<INCOME-TAX> 0
<INCOME-CONTINUING> (142,520)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (142,520)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
