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 September 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
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Commission File No. 0-26665
WINNERS INTERNET NETWORK, INC.
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(Name of registrant in its charter)
NEVADA 91-1844567
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(State of incorporation) (I.R.S.Employer Identification No.)
145 OVIEDO STREET
ST. AUGUSTINE, FLORIDA 32084
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(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
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The number of shares outstanding of Registrant's common stock, par value $.001
per share, as of November 17, 2000 were 20,984,339 common shares.
<PAGE>
Item 1. Financial Statements
WINNERS INTERNET NETWORK INC.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
ASSETS:
Current Assets:
<S> <C> <C>
Cash in Bank $ 43,903 32,961
Accounts Receivable 313,928 548,912
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Total current assets 357,831 581,873
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Fixed Assets:
Software 1,300,000 516,138
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
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1,707,392 649,416
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Less: Depreciation (650,276) (100,276)
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Total fixed assets 1,057,116 549,140
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TOTAL ASSETS $1,414,947 $1,131,013
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable & Accrued Expenses $ 11,544 $ 174,507
Loan Payable 93,300 -
Note Payable - Ford Credit 9,788 10,788
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Total current liabilities 114,632 185,295
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Stockholders' equity:
Common Stock, par value $0.001: 50,000,000 shares
authorized; 20,984,369 shares issued and
outstanding for 2000, and 15,990,863 shares issued 20,984 15,991
and outstanding for 1999.
Additional Paid-In Capital 5,683,970 2,948,093
Accumulated Defict (4,404,639) (2,018,366)
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Total stockholders' equity 1,300,315 945,718
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,414,947 $1,131,013
=============== ===============
</TABLE>
<PAGE>
WINNERS INTERNET NETWORK, INC.
Statements of Cash Flow
For the Nine-Months Ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
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CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (Loss) $(2,386,273) $ 537,956
Adjustments to reconcile net income to cash
used in/provided by operating activities:
Depreciation 650,276 (43,713)
Changes in Assets and Liabilities:
GGLS Payable - (250,000)
Accounts Payable 162,963 313,246
Accounts Receivable (86,828) -
Notes Payable - Ford Credit (302) 1,210
Prepaid Expenses - (3,700)
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Net Cash Provided by Operating Activities (1,660,164) 554,999
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditure (1,057,976) (1,512)
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Net Cash Used In Investing Activities (1,057,976) (1,512)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loan 24,300 -
Issuance of Ordinary Shares 2,735,877 (311,645)
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Net Cash Provided by Financing Activities 2,760,177 (311,645)
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Net Increase in Cash & Cash Equivalents 42,037 241,842
Cash & Cash Equivalents at Beginning of Period 1,866 28,857
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Cash & Cash Equivalents at End of Period $ 43,903 $ 270,699
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ - $ -
============= ============
Income Taxes $ - $ -
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</TABLE>
<PAGE>
WINNERS INTERNET NEWTWORK INC.
Statements of Operations
For the Nine-Months Ended September 30,
(Unaudited)
2000 1999
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REVENUE:
Processing Income $ 326,196 $ 744,878
Other Income 10,901 -
Lease of Software - 5,000
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Total Revenue 337,097 749,878
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EXPENSES:
Advertsing $ - $ 300
Auto Expense 59 332
Bank Charges 20,994 2,112
Commission 26,000 12,500
Consulting Fees 64,887 9,600
Contract Services 35,565 46,547
Depreciation Expense 550,000 29,035
Dues & Subscriptions - 2,395
Insurance 28,899 14,790
Internet 1,931 17,300
Marketing 1,565,845 -
Meals & Entertainment - 45,140
Miscellaneous Expense 6,019 -
Office Expenses 13,736 7,769
Postage & Freight 1,825 776
Professional & Legal Fees 64,230 24,583
Rent 46,330 46,763
Rent of Equipment 262 473
Repairs 938 -
Security 222 222
Taxes & Licenses 22,962 1,676
Telephone 32,101 28,117
Travel 3,788 119,985
Utilities 1,565 11,740
Wages 235,212 227,543
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Total Expenses 2,723,370 649,698
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NET PROFIT(LOSS) $(2,386,273) $ 100,180
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NET PROFIT (LOSS) PER COMMON STOCK $ (0.14) $ 0.04
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WEIGHTED AVERAGE SHARES OUTSTANDING 16,869,626 14,898,551
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<PAGE>
WINNERS INTERNET NETWORK, INC.
Stockholders' Equity
September 30, 2000
(Unaudited)
<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 Loss - (111,918) (111,918)
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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 Loss - - - (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 147.369 147 69,853 - 70,000
Net Loss - - - 5,067 5,067
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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
Issuance of Stock for Services 300,000 300 83,700 - 84,000
Net Loss - - - (2,386,273) (2,386,273)
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Balance - September 30, 2000 20,984,369 $ 20,984 $5,683,970 $(4,404,639) $ 1,300,315
========== ======== ========== ============ ============
</TABLE>
<PAGE>
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.
The amounts presented are rounded to the nearest $1,000 for simplicity of
presentation and comparison. The precise amounts appear in the financial
statements.
Results of Operations
We eliminated the previously reported software license revenue for the nine
month period ended September 30, 2000 of $3,000,000 as a result of an adjustment
to our previously reported accounting treatment of this December 1999 software
exchange with CyberLink wherein we acquired the Plus Network software.
Elimination of this revenue was deemed necessary for our financial statements to
be consistent with all applicable accounting standards. We also eliminated
$3,000,000 of the previously reported asset value of the software for the same
reasons. These transactions were adjusted in accordance with APB 29 in
connection with Securities and Exchange Commission review and request.
The adjustment notwithstanding, our revenues decreased $413,000 from $750,000
for the nine months ended September 30, 1999 to $337,000 for the nine months
ended September 30, 2000. The 180% decrease was primarily the result of one of
our primary vendors ceasing its operations.
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 increased $2,074,000 from $650,000 for the nine months ended
September 30, 1999 to $2,723,000 for the nine months ended September 30, 2000.
The 320% increase of expenses is primarily due to our extraordinary marketing
expenses as are outlined below. The major components of expenses are marketing,
office salaries and associated payroll costs, general and health insurance
costs, rent, telephone and depreciation expenses.
<PAGE>
Our expenses included extraordinary marketing expenses of $1,270,000, which
represent payments of restricted common stock to entities who are developing a
marketing campaign in the American, European and South American marketplaces.
The goal of this marketing campaign is to increase our client base.
We had a net loss from operations of $2,400,000 for the nine months ended
September 30, 2000, or $0.14 per share, compared to a net profit of $100,000, or
$0.04 per share, for the nine months ended September 30, 1999. This loss comes
primarily as a result of our extraordinary marketing expenses as are outlined
above, the $3,000,000 adjustment in connection with the previously reported
software license revenue in accordance with APB 29, and the decrease in our
processing revenues.
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. However, we do not expect to have the same level of marketing
expenses for the next fiscal quarter.
Liquidity and Capital Resources
Cash at the end of the period increased to $44,000 for the nine months
ended September 30, 2000, compared to $33,000 for the nine months ended
September 30, 1999.
Accounts receivable decreased for the nine months ended September 30, 2000 to
$314,000 compared to $550,000 for the nine months ended September 30, 1999. The
57% decrease in accounts receivable is due to one of our primary vendors ceasing
its operations.
Current liabilities decrease for the nine months ended September 30, 2000 to
$115,000 compared to $185,000 for the nine months ended September 30, 1999.
We had capital expenditures of $1,057,976 for the nine months ended September
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.
<PAGE>
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.
In July 2000, the Company issued 300,000 shares of restricted common stock to a
single investor in consideration of a contract for marketing and public
relations.
With respect to the sale, the Company relied on Section 4(2) of the Securities
Act of 1933, as amended. No advertising or general solicitation was employed in
offering the securities. The securities were offered solely to the one investor
who was provided all of the current public information available on the Company.
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 - Financial Data Schedule
An amended report on Form 8-K reporting the change in the Company's auditors was
filed on July 12, 2000.
<PAGE>
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: November 20, 2000 By: /s/ David C. Skinner, Jr.
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President and Chief Financial Officer
<PAGE>
