UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2000
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the Transition Period from _______________ TO ____________.
333-89941
(Commission File Numbers)
FUSION FUND, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 6799
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
1 World Trade Center, Suite 7967
New York, New York 10048
(Address of principal executive offices)
(212) 775-7020
(Registrants' telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES [ X ] NO [ ]
As of April 30, 2000, 5,702,131 shares of Common Stock, par value $.01 per
share, of Fusion Fund, Inc. were issued and outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
BALANCE SHEET
APRIL 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
Current Assets:
<S> <C>
Cash and cash equivalents ................................... $ 801,486
Accounts receivable (net of allowance for doubtful accounts
of $275,206) .............................................. --
Inventories (net of allowance of $116,000) .................. --
Marketable securities ....................................... 100,000
------------
Total current assets ................................. 901,486
Security deposits ............................................. 4,058
------------
$ 905,544
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable ............................................ $ 1,535,819
Accrued expenses ............................................ 986,900
Accrued wages and related expenses .......................... 670,493
Accrued interest payable .................................... 70,796
Notes payable ............................................... 399,984
Notes payable - stockholders - current portion .............. 452,796
------------
Total current liabilities ............................ 4,116,788
Notes payable - stockholders - long-term ...................... 190,000
------------
4,306,788
------------
Commitments and contingencies
Shareholders' Deficit:
Preferred stock; $.01 par value, 5,000,000 shares authorized,
none issued and outstanding ............................... --
Common stock; Class A, $.01 par value, 15,000,000
shares authorized; 5,877,131 shares issued ................ 58,771
Common stock; Class B, $.01 par value, 5,000,000 shares
authorized; no shares issued and outstanding .............. --
Treasury stock; 175,000 Class A shares at cost .............. ( 50,550)
Additional paid-in capital .................................. 19,432,414
Accumulated deficit ......................................... (22,841,879)
------------
Total shareholders' deficit .......................... ( 3,401,244)
------------
$ 905,544
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
April 30,
2000 1999
<S> <C> <C>
Revenues ..................................... $ -- $ --
----------- -----------
Costs and expenses:
Selling, general and administrative expenses 4,121,883 --
----------- -----------
Total costs and expenses ............ 4,121,883 --
----------- -----------
Loss from operations ......................... (4,121,883) --
----------- -----------
Other income (expense):
Interest expense ........................... ( 8,125) ( 24,777)
Interest Income ............................ 183 --
----------- -----------
Total other income (expense) ........ ( 7,942) ( 24,777)
----------- -----------
Loss before loss from discontinued operations (4,129,825) ( 24,777)
Discontinued operations:
Loss from operations of abandoned business . -- (1,085,766)
----------- -----------
Net loss ..................................... $(4,129,825) $(1,110,543)
=========== ===========
Weighted average common shares outstanding ... 5,592,219 3,952,259
=========== ===========
Net loss per common share - basic:
Operations ................................. $ (.74) $ (.01)
Discontinued operations .................... -- (.27)
----------- -----------
Net loss .................................. $ (.74) $ (.28)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
2000 1999
----------- -----------
Operating activities:
<S> <C> <C>
Loss from continuing operations ......................... $(4,129,825) $ (24,777)
----------- -----------
Adjustments to reconcile loss from continuing operations
to net cash used in operating activities:
Depreciation and amortization ....................... -- 109,443
Stock issued for services and other ................. 4,008,063 --
Changes in operating assets and liabilities:
(Increase) in inventories ......................... -- ( 132,993)
(Increase) in marketable securities ............... ( 100,000) --
Decrease in prepaid expenses ...................... -- 14,747
(Increase) in security deposits ................... ( 4,058) --
(Decrease) in accounts payable and accrued expenses ( 216,080) ( 582,382)
----------- -----------
Total adjustments ................................ 3,687,925 ( 591,185)
----------- -----------
Loss from discontinued operations ................... -- (1,085,766)
----------- -----------
Net cash (used) in operating activities ................... ( 441,900) (1,701,728)
----------- -----------
Investing activities:
Capital expenditures .................................... -- (3,933)
----------- -----------
Net cash (used) in investing activities ................... -- (3,933)
----------- -----------
Financing activities:
Proceeds from line of credit ............................ -- 1,969
Payments of advances from officers ...................... -- ( 25,000)
Proceeds from issuance of unsecured notes payable ....... -- 325,000
Proceeds from issuance of notes payable - related parties -- 250,000
Repayment of unsecured notes payable .................... -- ( 675,000)
Proceeds from sale of common stock pursuant
to initial public offering ............................ -- 2,543,300
Expenses of initial public offering and private offerings ( 160,407) ( 604,784)
Proceeds from sale of common stock ...................... 1,220,164 --
Purchase of treasury stock .............................. -- (25,000)
----------- -----------
Net cash provided by financing activities ................. 1,059,757 1,790,485
----------- -----------
Net increase in cash and cash equivalents ................. 617,857 84,824
Cash and cash equivalents, beginning of period ............ 183,629 --
----------- -----------
Cash and cash equivalents, end of period .................. $ 801,486 $ 84,824
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
2000 1999
Supplemental disclosure of cash flow information:
<S> <C> <C>
Cash paid for interest .............................................. $ -- $ 1,969
============= =======
Supplemental disclosure of non-cash investing and financing activities:
Issuance of 10,000 shares of Class A common stock
as debt issuance expense ............................................ $ -- $50,000
============= =======
Cashless exercise of 151,793 common stock purchase
warrants ............................................................ $ 1,106,377 $ --
============= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000
(Unaudited)
NOTE 1 - Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented.
The results for interim periods are not necessarily indicative of the
results to be obtained for a full fiscal year.
NOTE 2 - Organization and Basis of Presentation
Fusion Fund, Inc. (the "Company") was originally incorporated in the State
of Delaware as Outlook Sports Technology, Inc. on February 8, 1996. Outlook
Sports Technology, Inc. was a designer and marketer and, through the use of
contracted parties, a manufacturer of golf equipment, apparel and accessories
under the TEGRA(TM)brand name. During March 2000, Outlook Sports Technology,
Inc. formed a wholly owned Delaware subsidiary, Fusion Fund, Inc., which it
merged with and into for the sole purpose of changing its name to Fusion Fund,
Inc.
During January 2000, Outlook Sports Technology, Inc. formally abandoned the
golf business and during March 2000 launched its redefined business mission as
an Internet technology and e-commerce incubator. Accordingly, the accompanying
financial statements reflect the results of discontinued operations of the
abandoned golf business for the quarter ended April 30, 1999.
NOTE 3 - Marketable Securities
The Company accounts for its investments in marketable securities in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
Management determines the appropriate classification of all securities at
the time of purchase and re-evaluates such designation as of each balance sheet
date. The Company classifies its marketable equity securities as trading
securities. The Company's trading securities are classified as current assets
and are recorded at fair value. Unrealized holding gains and losses are included
in earnings.
NOTE 4 - Shareholders' Deficit
Effective February 1, 2000, the Company entered into a one year consulting
agreement. As provided for in the consulting agreement, the consultant was paid
compensation of 162,500 shares of the Company's common stock, such shares having
been registered using Form S-8. The Company recognized a charge of $1,828,125 in
the current period in connection with the issuance of these shares.
<PAGE>
FUSION FUND, INC.
(F/K/A OUTLOOK SPORTS TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000
(Unaudited)
NOTE 4 - Shareholders' Deficit
Effective March 28, 2000, the Company entered into a one year consulting
agreement with an investment banker. As provided for in the consulting
agreement, the investment banker was paid compensation of 50,000 shares of the
Company's common stock. The Company recognized a charge of $525,000 in the
current period in connection with the issuance of these shares.
During the quarter ended April 30, 2000, the Company issued 150,500 shares
for services and other compensation. The Company recognized a charge of
$1,654,938 in the current period in connection with the issuance of these
shares.
During the quarter ended April 30, 2000, the Company privately sold an
aggregate of 184,241 shares of common stock for gross proceeds of $1,220,164.
The Company netted $1,059,757 after offering expenses of $160,407.
During the quarter ended April 30, 2000, the Company issued an aggregate of
151,793 shares of common stock in connection with the exercise of common stock
purchase warrants.
NOTE 5 - Subsequent Events
On May 1, 2000 the Company privately sold 10,494 shares of common stock for
gross proceeds of $69,995. The Company netted $52,501 after offering expenses of
$17,494.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
General
The statements contained in this report that are not historical are forward
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, including statements regarding the Company's
expectations, intentions, beliefs or strategies regarding the future. All
forward looking statements include the Company's statements regarding liquidity,
anticipated cash needs and availability and anticipated expense levels. All
forward looking statements included in this report are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward looking statement. It is important to note
that the Company's actual results could differ materially from those in such
forward looking statements.
The following analysis of the Company's financial condition as of and for
the three months ended April 30, 2000, and April 30, 1999, should be read in
conjunction with the Company's financial statements and notes thereto included
elsewhere in this report.
<PAGE>
Overview
In the first three months of the year 2000, the Company underwent
significant management changes and redirected its business mission. On January
11, 2000, Paul H. Berger resigned from his positions as Chairman of the
Company's Board of Directors and Treasurer and Jim Dodrill resigned from his
positions as President, General Counsel, and Director of the Company. After a
brief restructuring period, Mae Davis Group, an investment banking firm whose
clients hold a majority interest in the Company, approached several of their
business associates to redirect and manage the Company. In February 2000, the
Company appointed Adam Goldberg as it's President and Chairman of the Board of
Directors, and Steven Angel as its Secretary and Executive Vice President.
In March 2000, the Company set forth to strengthen its financial position
and redefine its business mission. On May 1, 2000, the Company completed a
private placement of approximately $1,284,000 of its common stock to accredited
investors. The proceeds from this private placement are currently being used to
satisfy certain debt, in addition to supplementing the Company's working
capital. While the Company is making every effort to satisfy these obligations,
it may be forced to seek legal protection from its creditors under United States
Bankruptcy Code in the event that these efforts are unsuccessful.
In March 2000, the Company launched its redefined business mission as an
Internet technology and e-commerce incubator. Accordingly, the accompanying
financial statements reflect the results of discontinued operations of the
abandoned golf business for the years ended January 31, 2000 and 1999,
respectively. The Company's new business model provides early stage client
companies with extensive management, marketing, finance and business development
resources in exchange for equity positions in their businesses. In light of this
shift in focus, the Company formed a wholly owned Delaware subsidiary, Fusion
Fund, Inc., which it merged with and into the Company on March 27, 2000, for the
sole purpose of changing its name to Fusion Fund, Inc.
Liquidity and Capital Resources
Our primary source of liquidity has historically consisted of sales of
equity securities and high yield debt. In March 1999, we completed an initial
public offering of our Class A common stock. Through this offering, we sold a
total of $438,500 shares of our Class A common stock. Net proceeds of this
offering, were approximately $1,768,000, inclusive of certain unpaid offering
expenses. Additionally, during the year ended January 31, 2000 we borrowed
approximately $603,000 from two former officers and directors.
From March 2000 through May 1, 2000 we raised approximately $1,290,000
gross proceeds through the sale of 194,735 shares of common stock to private
investors. We netted approximately $1,112,000 from the sale of these securities.
We believe that we will need to raise additional funds from either debt or
equity financings in order to achieve our redefined business mission.
Notwithstanding the funds we raised in the private placement and other
borrowings, we are currently experiencing a severe working capital deficiency
and are incurring significant losses. As of April 30, 2000 our working capital
deficiency was approximately $3,216,000 and for the quarter ended April 30, 2000
we incurred a net loss of approximately $4,130,000. At this time, we are not
generating any revenues but we are incurring substantial costs and expenses in
connection with the launching of our Internet technology and e-commerce
incubator business.
<PAGE>
Results of Operations
Quarter Ended April 30, 2000 Compared To Quarter Ended April 30, 1999
The Company incurred a net loss of approximately $4,130,000 during the
quarter ended April 30,2000 compared to a net loss of approximately $1,111,000
for the quarter ended April 30, 1999.
The Company formally abandoned its golf business in January 2000 and during
March 2000 launched its redefined business mission as an Internet technology and
e-commerce incubator. Accordingly the following discussion reports the results
of discontinued operations of the abandoned golf business for the quarter ended
April 30, 1999.
The net loss of approximately $1,111,000 for the quarter ended April 30,
1999 resulted primarily for the discontinued operations of the abandoned golf
business. Loss from discontinued operations was approximately $1,086,000 during
the quarter ended April 30, 1999.
During the quarter ended April 30, 2000 the Company incurred a net loss of
approximately $4,130,000. The net loss was primarily the result of selling,
general and administrative expenses incurred in the amount of approximately
$4,122,000, of which approximately $4,008,000 was for non-cash issuances of
common stock for services and other compensation. The largest component of
selling, general and administrative expenses consisted of issuances of common
stock in connection with two consulting agreements. The Company issued an
aggregate of 212,500 shares of common stock and recognized a charge to
operations of approximately $2,153,000 in connection with these issuances. In
addition, the Company issued 150,500 shares of common stock for services and
other compensation with a charge of approximately $1,655,000 to operations.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceeding that could
have a material adverse effect on the results of operations or the financial
condition of the Company. From time to time, the Company may become a party to
litigation incidental to its business. There can be no assurance that any future
legal proceedings will not have a material adverse affect on the Company.
Nonetheless, as of April 30, 2000, the Company owed approximately
$4,307,000 to various creditors. As of April 30, 2000, none of the
aforementioned obligations have resulted in any legal proceeding that could have
a material adverse effect on the results of operations or the financial
condition of the Company. Nonetheless, while the Company is actively pursuing
<PAGE>
adequate resolution and satisfaction of these obligations, the failure to reach
an adequate resolution with these creditors may result in litigation that could
have a material adverse effect on the results of operations or the financial
condition of the Company and/or may force the Company to seek legal protection
from its creditors under United States Bankruptcy Code.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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
February 3, 2000 Appointment of new directors and resignation of
officers.
March 9, 2000 Resignation of directors and officers and appointment
of new directors and officers.
May 11, 2000 Change in Company name from Outlook Sports Technology
Inc. to Fusion Fund, Inc.
<PAGE>
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 thereunto duly authorized.
FUSION FUND, INC.
Date: June 14, 2000 By: /s/ Steven Angel
-------------------------------
Steven Angel, Secretary
