<PAGE> 1
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2000.
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ ------------
Commission File No. 0-26665
WINNERS INTERNET NETWORK, INC.
(Name of registrant in its charter)
NEVADA 91-1844567
(State of incorporation) (I. R. S. Employer Identification No.)
145 OVIEDO STREET
ST. AUGUSTINE, FLORIDA 32084
(Address of principal executive offices) (zip code)
(904)824-7447
(Registrant's telephone number including area code)
GLENNAIRE FINANCIAL SERVICES, INC.
(Former name of registrant, if changed since last report)
3158 REDHILL AVE., SUITE 240
COSTA MESA, CALIFORNIA 92626
(Former address of registrant, if changed since last report)
Indicate by check mark whether the Registrant (1) had 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 X No
--- ---
The number of shares outstanding of Registrant's common stock, par value $.001
per share, as of June 30, 2000 were 20,684,339 common shares.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM I. Financial Statements
WINNERS INTERNET NETWORK, INC.
FINANCIAL STATEMENTS
FOR THE SIX-MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<PAGE> 3
WINNERS INTERNET NETWORK, INC.
Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
Six-Months Year
Ended Ended
June 30, 2000 Dec. 31, 1999
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<S> <C> <C>
ASSETS:
Current Assets:
Cash in Bank $ 84,016 32,961
Accounts Receivable 357,000 548,912
----------- -----------
Total current assets 441,016 581,873
Fixed Assets:
Software 4,300,000 516,138
SupraNet AG 116,250 --
Glennaire Financial Services 157,864 --
Equipment 84,289 84,289
Furniture & Fixtures 4,489 4,489
Vehicle 44,500 44,500
----------- -----------
Less Depreciation (491,563) (100,276)
----------- -----------
Total fixed assets 4,215,829 549,140
Total assets $ 4,656,845 $ 1,131,013
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable & Accrued Payables $ 11,544 $ 174,507
Loan Payable 69,000 --
Note Payable - Ford Credit 10,090 10,788
----------- -----------
Total current liabilities 90,634 185,295
Stockholders' equity
Common Stock, par value $0.001: 50,000,000 shares
authorized; 20,684,339 shares issued and
outstanding for 2000, and 15,116,355 shares issued 20,684 15,991
and outstanding for 1999
Additional Paid-In Capital 5,600,270 2,948,093
Accumulated Deficit (1,054,743) (2,018,366)
----------- -----------
Total stockholders' equity 4,566,211 945,718
Total liabilities & stock equity $ 4,656,845 $ 1,131,013
=========== ===========
</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 4
WINNERS INTERNET NETWORK, INC.
Statement of Operations
For the Six-Months Ended June 30
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
REVENUE:
Processing Income $ 160,613 $ 804,265
Other Income 10,901 --
Lease of Software 3,000,000 5,000
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TOTAL REVENUE 3,171,514 809,265
EXPENSES:
Bank Charges $ 4,538 $ 187
Commission 26,000 12,500
Consulting Fees 61,887 9,600
Contract Services 35,565 16,200
Depreciation Expense 430,000 --
Dues & Subscriptions -- 60
Insurance 23,331 2,761
Internet 1,931 16,300
Marketing 1,269,467 --
Meals & Entertainment -- --
Miscellaneous Expense 6,037
Office Expenses 3,008 420
Postage & Freight 1,686 494
Professional & Legal Fees 44,230 21,316
Rent 36,889 18,838
Rent of Equipment 9,696 426
Repairs 938 --
Security 222 111
Taxes & Payroll Taxes 17,680 9,823
Telephone 19,556 11,516
Travel 3,651 32,581
Utilities 1,258 6,353
Wages 210,321 111,823
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TOTAL EXPENSES 2,207,891 271,309
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NET PROFIT $ 963,623 $ 537,956
=========== ===========
NET PROFIT PER COMMON STOCK $ 0.06 $ 0.04
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WEIGHTED AVERAGE SHARES OUTSTANDING 16,644,626 14,898,551
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</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 5
WINNERS INTERNET NETWORK, INC.
Statement of Cash Flow
For the Six-Months Ended June 30
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 963,623 $ 537,956
Depreciation 430,000 (43,713)
CHANGES IN ASSETS & LIABILITIES:
GGLS Payable -- (250,000)
Accounts Payable 162,963 313,273
Accounts Receivable (68,637)
Accrued Expenses -- (27)
Notes Payable - Ford Credit -- 1,210
Prepaid Expenses -- (3,700)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 1,487,949 554,999
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Capital Expenditure (4,057,976) (1,512)
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NET CASH USED FOR INVESTING ACTIVITIES (4,057,976) (1,512)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loan 69,000 --
Issuance of Ordinary Shares 2,652,177 (311,645)
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NET CASH PROVIDED BY FINANCING 2,652,177 (311,645)
NET CASH IN CASH & CASH EQUIVALENTS 82,150 241,842
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,866 28,857
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CASH & CASH EQUIVALENTS AT END OF PERIOD $ 84,016 $ 270,699
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest -- --
Income Taxes -- --
</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 6
<TABLE>
<CAPTION>
Additional Accumulated Total
COMMON STOCKS Paid-In Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
------ ------ --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Davki Agency Ltd., Inc. Merger 8,000,000 8,000 359,287 (367,287) --
Comstock/Empire International, Inc. Merger 294,944 295 703,373 (703,668) --
Issuance of Stock for Cash & Services 2,539,912 2,540 110,160 -- 112,700
Net Deficit 12/31/97 -- -- -- (111,918) (111,918)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1997 10,834,856 10,835 1,172,820 (1,182,873) 782
========== ========== ========== ========== ==========
Issuance of Stock for Services 500,000 500 49,500 -- 50,000
Issuance of Stock for Cash 1,000,000 1,000 299,000 -- 300,000
Issuance of Stock for Cash 500,000 500 199,500 -- 200,000
Issuance of Stock for Services 500,000 500 24,500 -- 25,000
Issuance of Stock for Cash 550,000 550 219,450 -- 220,000
Issuance of Stock for Cash 285,000 285 99,465 -- 99,750
Issuance of Stock for Services 21,358 21 10,658 -- 10,679
Issuance of Stock for Services 500,000 500 24,500 -- 25,000
Issuance of Stock for Cash 100,000 100 99,900 -- 100,000
Issuance Correction (Comstock Merger) 141 -- -- -- --
Net Deficit 12/31/98 -- -- -- (840,560) (840,560)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1998 14,791,355 14,791 2,199,293 (2,023,433) 190,651
========== ========== ========== ========== ==========
Issuance of Stock for Cash 100,000 100 99,900 -- 100,000
Issuance of Stock for Cash 225,000 225 202,275 -- 202,500
Issuance of Stock for Services 10,000 10 7,488 -- 7,498
Issuance Correction (Comstock Merger) 1,350 2 -- -- 2
Issuance of Stock for Cash 400,000 400 219,600 -- 220,000
Issuance of Stock for Cash 315,789 316 149,684 -- 150,000
Issuance of Stock for Cash 147369 147 69,853 -- 70,000
Net Profit 12/31/99 -- -- -- 5,067 5,067
---------- ---------- ---------- ---------- ----------
Balance December 31, 1999 15,990,863 15,991 2,948,093 (2,018,366) 945,718
========== ========== ========== ========== ==========
Issuance of Stock for Services 1,632,500 1,632 965,326 -- 966,958
Issuance of Stock for Cash 100,000 100 299,900 -- 300,000
Issuance of Stock for Cash 27,000 27 13,473 -- 13,500
Issuance of Stock for Services 28,600 29 21,518 -- 21,547
Issuance of Stock for Services 10,000 10 2,990 -- 3,000
Issuance of Stock for Services 300,000 300 83,700 -- 84,000
Issuance of Stock for Asset 1,523,926 1,524 998,476 -- 1,000,000
Issuance of Stock for Cash 375,000 375 259,625 -- 260,000
Issuance of Stock for Acquisition 686,480 686 6,179 -- 6,865
Issuance of Stock for Acquisition 10,000 10 990 -- 1,000
Net Profit 6/30/2000 -- -- -- 963,623 963,623
---------- ---------- ---------- ------------ ----------
Balance June 30, 2000 20,684,369 $ 20,684 $5,600,270 $ (1,054,743) $4,566,211
========== ========== ========== ============ ==========
</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 7
WINNERS INTERNET NETWORK, INC.
Notes to Financial Statements
June 30, 2000
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
On July 14, 1997, Winners Internet Network, Inc. (WIN) was incorporated under
the laws of Nevada. The Company's fiscal year end is December 31. On July 15,
1997 Winners Internet Network, Inc. and Comstock-Empire International, Inc., a
Washington Corporation merged pursuant to 368(a)(1)(A) and 368(a)(1)(F) of the
Internal Revenue Code of 1986 as amended. Comstock-Empire merged into WIN,
acquiring all issued and outstanding shares of Comstock-Empire for and in
exchange for 294,944 shares of WIN common stock. On July 31, 1997 Winners
Internet Network, Inc. and Davki Agency LTD, Inc., a Delaware Corporation,
merged in a plan of reorganization. WIN acquired all issued and outstanding
shares of Davki Agency LTD, Inc. for and in exchange of 8,000,000 shares of WIN
common stock. This stock transfer is pursuant to 368(a)(1)(B) of Internal
Revenue code of 1986 as amended, as a tax-free exchange. The Davki Agency LTD,
Inc. became a wholly owned subsidiary of WIN. Both entities were acquired by the
purchase method and all inter-company transactions were eliminated in the
acquisition. The impact of these acquisitions was not material in relation to
the Company's results of operations. The company is primarily engaged in the
operation of an Internet E-Commerce enterprise. The Company made an Agreement
and Plan to Reorganization with Glennaire Financial Services, Inc. as of May 9,
2000. This is to be an acquisition by the Purchase Method of Accounting. The
agreement is for the exchange of 1,000,000 common shares, which represents all
of Glennaire's outstanding shares of common stock, for 10,000 shares of Winners
Internet Network.
CAPITAL STOCK TRANSACTIONS:
The authorized capital stock of the corporation is 20,000,000 shares of common
stock with a par value of $.001. On March 17, 1998 the authorized capital stock
of the corporation was increased to 50,000,000 shares of common stock.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three-months, to be cash equivalents.
<PAGE> 8
WINNERS INTERNET NETWORK, INC.
Notes to Financial Statements
June 30, 2000
(Unaudited)
PROPERTY AND EQUIPMENT:
Property and equipment is stated at cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is figured on a straight-line basis as follows:
<TABLE>
<S> <C>
Computer Software 5 years
Equipment 5 years
Furniture & Fixtures 10 years
Vehicle 7 years
</TABLE>
REVENUE RECOGNITION:
Revenue is recognized when earned and expenses are recognized when they occur.
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 and disclosures. Accordingly, actual results
could differ from those estimates.
NOTE 2 - FEDERAL INCOME TAXES:
Significant components of the Company's deferred tax liabilities and assets are
as follows:
<TABLE>
<S> <C>
Deferred Tax Liability $ 0
===========
Deferred Tax Assets
Net Operating Loss Carryforwards $ 624,743
Book/Tax Differences in Bases of Assets 491,563
Less Valuation Allowance (1,116,306)
-----------
Total Deferred Tax Assets $ 0
===========
Net Deferred Tax Liability $ 0
===========
</TABLE>
As of June 30, 2000, the Company had a net operating loss carryforward for
federal tax purposes approximately equal to the accumulated deficit recognized
for book purposes, which will be available to reduce future taxable income. The
full realization of the tax benefit associated with the carryforward depends
predominantly upon the Company's ability to generate taxable income during the
carryforward period. Because the current uncertainty of realizing such tax
assets in the future, a valuation allowance has been recorded equal to the
amount of the net deferred tax asset, which caused the Company's effective tax
rate to differ from the statutory income tax rate. The net operating loss
carryforward, if not utilized, will begin to expire in the year 2010.
<PAGE> 9
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion contains forward-looking statements regarding
our Company, its business, prospects and results of operations that are subject
to certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Results of Operations
Our revenues increased from $809,265 for the six months ended June 30,
1999 to $3,171,514 for the six months ended June 30, 2000. The increase was
primarily the result of continuing revenues from our lease of software to
Intertreuhand, AB. Our transaction processing revenue decreased during this
period.
Expenses include all direct and indirect costs incurred in our
business. The difference between our gross revenues and expenses is our net
profit.
Our expenses were $2,207,891 for the six months ended June 30, 2000
compared to $537,956 for the six months ended June 30, 1999. The major
components of expenses are
<PAGE> 10
marketing, office salaries and associated payroll costs, general and health
insurance costs, rent and telephone expenses.
Our expenses included extraordinary marketing expenses of $1,269,467,
which represent payments of restricted common stock to entities who are
developing a marketing campaign in the European and South American marketplaces.
The goal of this marketing campaign is to increase our client base.
We had a net profit from operations of $963,623 for the six months
ended June 30, 2000, or $0.06 per shares, compared to a net profit of $537,956,
or $0.04 per share, for the six months ended June 30, 1999. This profit comes as
a result of additional income from the lease of software.
While our revenues were significantly higher for the first half of 2000
as compared to the first half of 1999, our expenses, particularly our marketing
expenses, continue to be much higher. We believe that we will continue to see an
increase in revenue as the fiscal year progresses, primarily from this lease of
software. However, we do not expect to have the same level of marketing expenses
for the next fiscal quarter. Although we are profitable, it is too early to know
whether or not we will be profitable this year.
Liquidity and Capital Resources
Cash at the end of the period decreased to $84,016 for the six months
ended June 30, 2000, compared to $270,699 for the six months ended June 30,
1999.
Accounts receivable decreased for the six months ended June 30, 2000 to
$357,000 compared to $921,718 change for the six months ended June 30, 1999.
Prepaid Expenses went to zero for the six months ended June 30, 2000,
compared to negative $3,700 for the six months ended June 30, 1999.
Accounts payable increased for the six months ended June 30, 2000 to
$11,544, compared to $313,273 for the six months ended June 30, 1999.
We had capital expenditures of $4,057,976 for the six months ended June
30, 2000, which involved upgrading our internet capabilities to service our
increased client base and the purchase of The Plus Network. We expect to have
continuing expenditures for upgrading our capabilities for the remainder of this
fiscal year.
We were profitable for the first half of 1999 and 2000. We feel that we
are more solid financially as a company this year compared to last year. Our
primary activity will be to seek to expand our client base and, consequently,
our revenues.
<PAGE> 11
PART II- OTHER INFORMATION
ITEM 1. Legal Proceedings
No legal proceedings of a material nature to which we are a party were
pending during the reporting period, and we know of no legal proceedings of a
material nature pending or threatened or judgments entered against any of our
directors or officers in his capacity as such.
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.
Exhibit No. 27.1- Financial Data Schedule
No reports on Form 8-K were filed as of the fiscal quarter.
<PAGE> 12
SIGNATURES
In accordance with 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.
WINNERS INTERNET NETWORK, INC.
Dated: August 17, 2000 By: /s/ David C. Skinner, Jr.
President and Chief Financial Officer
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27.1 Financial Data Schedule
</TABLE>
