U.S. 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 QUARTERLY PERIOD ENDED JUNE 30, 2000
[ ] Transition report under section 13 or 15(d)
of the Exchange Act.
COMMISSION FILE NUMBER 0-27153
SQUARE SHOOTER INTERNATIONAL LIMITED
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4695878
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
918 ENGLAND DRIVE, KNOXVILLE, TN 37920
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(877) 340-0837
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(ISSUER'S TELEPHONE NUMBER)
1130 FIRETHORN WAY, KNOXVILLE, TN 37923 (423) 531-5620
(Former address and phone number if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
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As of June 30, 2000, there were 16,836,928 shares of Common Stock, $0.001
par value, of the issuer outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
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<PAGE>
SQUARE SHOOTER INTERNATIONAL, LIMITED
(A DEVELOPMENT STAGE COMPANY)
10-QSB Quarterly Report
INDEX
PART I. FINANCIAL INFORMATION Page Numbers
Item 1. Financial Statements
BALANCE SHEETS AT JUNE 30, 2000 (UNAUDITED)
AND SEPTEMBER 30, 1999 2
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
AND NINE MONTHS ENDED JUNE 30, 2000 AND
JUNE 30, 1999 AND FROM JUNE 1, 1998 (INCEPTION)
TO JUNE 30, 2000 (UNAUDITED) 3
STATEMENTS OF CASH FLOW FOR THE NINE MONTHS
ENDED JUNE 30, 2000 AND JUNE 30, 1999
AND FROM JUNE 1, 1998 (INCEPTION) TO
JUNE 30, 2000 (UNAUDITED) 4
NOTES TO FINANCIAL STATEMENTS 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 8
Item 6. Exhibits and Reports filed on Form 8-K 8
Signatures 9
1
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
SQUARE SHOOTER INTERNATIONAL, LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 2000 September 30,
(Unaudited) 1999
---------------- --------------
ASSETS
CURRENT ASSETS
Cash $ 8,761 $ 9,646
Accounts receivable 18,086 -
Inventories 175,039 -
Loan receivables 38,000 -
---------------- --------------
Total Current Assets 239,886 9,646
---------------- --------------
PROPERTY & EQUIPMENT - NET 102,938 64,270
---------------- --------------
TOTAL ASSETS $ 342,824 $ 73,916
------------ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $ 92,990 $ 85,672
---------------- --------------
Total Current Liabilities 92,990 85,672
---------------- --------------
TOTAL LIABILITIES 92,990 85,672
---------------- --------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $0.001 par value,
100,000,000 shares authorized,
16,836,928 and 14,500,000 shares
issued and outstanding 16,837 14,500
Additional paid-in capital 2,505,488 205,590
Accumulated deficit during
development stage (2,272,491) (231,846)
---------------- --------------
Total Stockholders' Equity (Deficiency) 249,834 (11,756)
---------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
----------------------------------
EQUITY (DEFICIENCY) $ 342,824 $ 73,916
------------------- ================ ===============
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
SQUARE SHOOTER INTERNATIONAL, LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the
For the For the For the For the Period From
Three Three Nine Months Nine Months June 1, 1998
Months Months Ended Ended (Inception)
Ended June Ended June June 30, June 30, to
30, 2000 30, 1999 2000 1999 June 30, 2000
------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
SALES $ 20,728 $ - $ 20,728 $ 357,029 $ 377,757
COST OF GOODS SOLD 17,163 - 17,163 294,660 311,823
------------ ------------ ------------- ------------ --------------
GROSS PROFIT 3,565 - 3,565 62,369 65,934
------------ ------------ ------------- ------------ --------------
OPERATING EXPENSES
Depreciation 4,408 - 4,408 - 4,408
Advertising 112,083 8,428 140,987 8,428 154,228
Contract services 81,088 17,826 1,757,182 17,826 1,826,980
Royalty expense 843 - 7,843 43,000 50,843
Travel expense 10,032 4,878 47,942 6,963 80,229
Research and development - - - 26,554 100,835
Selling, general and
administrative 50,415 6,831 86,198 9,087 121,467
------------ ------------ ------------- ------------ --------------
Total Operating Expenses 258,869 37,963 2,044,560 111,858 2,338,990
------------ ------------ ------------- ------------ --------------
LOSS FROM OPERATIONS (255,304) (37,963) (2,040,995) (49,489) (2,273,056)
------------ ------------ ------------- ------------ --------------
OTHER INCOME - 38 350 38 565
------------ ------------ ------------- ------------ --------------
LOSS BEFORE PROVISION FOR
INCOME TAX (255,304) (37,925) (2,040,645) (49,451) (2,272,491)
------------ ------------ ------------- ------------ --------------
PROVISION FOR INCOME TAXES - - - - -
------------ ------------ ------------- ------------ --------------
NET LOSS $ (255,304) $ (37,925) $(2,040,645) $ (49,451) $ (2,272,491)
--------
============ ============ ============= ============ ==============
Net loss per share $ (0.02) $ (0.01) $ (0.13) $ (0.01) $ (0.15)
============ ============ ============= ============ ==============
Weighted average number of
shares outstanding - basic
and diluted 16,773,226 14,500,000 16,243,378 14,500,000 15,125,868
============ ============ ============= ============ ==============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
SQUARE SHOOTER INTERNATIONAL, LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the period
For the nine For the nine from June 1,
month period month period 1998
ended ended (inception) to
June 30, 2000 June 30, 1999 June 30, 2000
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (2,040,645) $ (49,451) $ (2,272,491)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Stock issued to consultants 1,500,000 - 1,500,000
Depreciation 4,408 - 4,408
Changes in assets and liabilities:
Accounts receivable (18,086) - (18,086)
Inventories (175,039) - (175,039)
Accounts payable 7,318 63,134 92,990
-------------- -------------- --------------
Net Cash Provided By (Used In)
Operating Activities (722,044) 13,683 (868,218)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (43,076) - (107,346)
Loan receivable (38,000) - (38,000)
-------------- -------------- --------------
Net cash used in investing
activities (81,076) - (145,346)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement,
net of offering cost 802,235 - 1,022,325
-------------- -------------- --------------
Net cash provided by financing
activities 802,235 - 1,022,325
-------------- -------------- --------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (885) 13,683 8,761
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD 9,646 - -
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS - END OF
-----------------------------------
PERIOD $ 8,761 $ 13,683 $ 8,761
------ ============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SQUARE SHOOTER INTERNATIONAL, LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2000
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting
principles and the rules and regulations of the Securities and
Exchange Commission for interim financial information.
Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial
position and results of operations.
It is management's opinion, however, that all adjustments
(consisting of normal recurring adjustments) have been made which
are necessary for a fair financial statements presentation. The
results for the interim period are not necessarily indicative of
the results to be expected for the year.
For further information, refer to the financial statements and
footnotes included in the Company's Form 8-K/A filed on November
8, 1999.
NOTE 2 INVENTORIES
Inventories consist of finished goods purchased from the
Company's manufacturer. Inventories are stated at the lower of
cost or market value, as determined using the first in, first out
method.
NOTE 3 STOCKHOLDERS' EQUITY
(A) Issuance of Common Stock for Cash
During the three months ended June 30, 2000, the Company issued
292,692 shares of common stock for proceeds of $371,940.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion relates to the results of our operations for the
period, and our financial condition:
General
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Square Shooter's business is the development, manufacture and marketing
through wholesale and retail outlets, of a line of water and organic-based
fertilizer delivery systems for the lawn and garden markets. The Company has
been a development-stage company with its activities consisting primarily of
continued research and development, test marketing of products and raising of
funds. The Company's primary products are skid-mount, movable square sprinklers
and canister square sprinklers for in-ground system installation.
RESULTS OF OPERATIONS
---------------------
The following discussion and analysis below should be read in conjunction
with the financial statements, including the notes thereto, appearing elsewhere
in this report.
For the period since inception (June 1, 1998) through June 30, 2000,
during the Company's development stage, the Company has total current assets of
$239,886, consisting of $8,761 cash, $56,000 in receivables and $175,000 in
inventory. Inventory is comprised of product in the Company's warehouse and
product awaiting shipment to the U.S. from Taiwan. Since inception the Company
has accumulated net losses of $(2,272,491).
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO JUNE 30, 1999
------------------------------------------------------------
The Company had revenues of $20,728 during the current period from the sale
of its skid-mount sprinklers to a major retail chain in a test marketing
program. This compares to no revenues for the comparable period a year ago.
During this period, cost of goods sold was $17,163, for a gross profit of $3,565
for the three months ended June 30, 2000. During the current period, the Company
had total operating expenses of $258,869, including $81,088 for Contract
services, $112,083 for advertising and$50,415 for selling, general and
administrative expenses ("SG&A"), compared to total operating expenses of
$37,963 for the prior fiscal period ended June 30, 1999, including $17,826 for
contract services and $6,831 for SG&A for the three month period ending June 30,
1999.
Although expenses exceeded income, the company used these sales of skid-mount
sprinkler products to a large retailer to test the reliability of this
manufactured product. Contracting services for this period were proportionately
high; more independent contractor services were required in order to educate the
store personnel where the product was offered. Additionally, more money was
spent on advertising materials to be placed in the store as Point of Sale
displays to attract buyers. For sales to large retailers in the future, the
Company plans to use the services of independent sales agents who typically
absorb the cost of point of sales materials, rather than the manufacturer.
6
<PAGE>
NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO JUNE 30, 1999
----------------------------------------------------------
In this current period, the Company completed a test marketing program for
its canister lawn sprinkling products at a major home improvement retail chain.
The Company was also successful in qualifying the sale of its skid-mount lawn
sprinkling products at the largest retail chain in the United States and
realized revenues in the third quarter for sales to this customer. Revenues for
the nine months ended June 30, 2000 were $20,728, compared to $357,029 in sales
recorded in the nine month period a year ago. The Company had total operating
expenses of $2,044,560, comprised primarily of $1,757,182 for contract services,
including consulting expense from the issuance of the Company's common stock
valued at $1,500,000. Other operating expenses for the period were $140,987 for
advertising, $7,843 for royalty expense, $47,942 for travel expense and $86,198
for SG&A. Total operating expenses for the comparable period a year ago totaled
$111,858, including $43,000 for royalty expense, $26,554 for research and
development, $17,826 for contract services and $9,087 for SG&A.
Following the completion of the original testing program (of the canister units)
with a large retailer in December 1999, management evaluated the reliability of
the product and as a result instituted changes in component parts to improve the
product. Another test with an irrigation contractor has been initiated to
evaluate our changes and is now underway. No significant sales of canister units
have been recorded during the current period while testing is in progress.
Expenses for marketing and securing large retailers were more than expected
during this period, but other expenditures were in line with manufacturing
costs.
Royalty expenses were usual and ordinary, and will decrease as production
numbers go up. Royalty payments are based on a sliding scale and per unit
expense is reduced as manufacturing numbers increase.
Marketing was still active during this period and talks with another large
retailer was intiated and a commitment secured on our residential skid package.
This is another test market using our residential skid unit and was limited to a
small area of the Sun Belt in the United States with no anticipation of further
sales this year. This is only to test our skid unit. No revenues from this
customer for this product were recognized during this period.
7
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
The Company has an ongoing need to finance its activities. To date, the
Company has funded these cash requirements by offering and selling its Common
Stock through private placements of its securities. For the current three month
period, the Company received $371,940 in cash proceeds from the sale of its
common stock, for a total of $802,235 for the nine months ended June 30, 2000.
The Company intends to seek financing in the current year from continued sales
of its securities through private placements, issuance of debt securities, bank
borrowings and may offer its securities in a public offering.
The company has expended much time and money in testing the various products and
believes that we are close to a very good final product. However, there is still
need for additional changes in some of the products which will require large
amounts of capital and further testing combined with travel and independent
contractor services. Our marketing efforts have produced excellent prospects for
additional sales with some very large companies as soon as our product is ready.
The company has an agreement to co-venture with a large well-established
manufacturer as a result of our conservation of water and installation.
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
During the three months ended June 30, 2000, the Company made the
following issuances and sales of securities in reliance upon the exemption
provided by Section 4(2) of the Securities Act of 1933.
The Company sold 292,692 shares of common stock to accredited investors for
cash proceeds of $371,940.
Item 6. Exhibits and Reports filed on Form 8-K
(a) Exhibits
Exhibit No. Description
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27 Financial Data Schedule
(b) Reports on Form 8-K
None.
8
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SQUARE SHOOTER INTERNATIONAL LIMITED
------------------------------------
Registrant
September 20, 2000 By: /s/ Edgar O. Harman
------------------ --------------------------------
Edgar O. Harman
Chief Financial Officer
(Principal Financial Officer)
9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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27 Financial Data Schedule
10
