UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[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
For the transition period from ________________ to _______________
000-30949
(Commission file number)
THOROUGHBRED INTERESTS, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 61-1342734
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
127 SOUTH 6TH STREET, LOUISVILLE, KENTUCKY 40202
(Address of principal executive offices)
(502) 584-4434
(Issuer's telephone number)
(Former name, former address and former fiscal year, 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 [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity. As of June 30, 2000 - 26,386,000 shares of Common Stock
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
THOROUGHBRED INTERESTS, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 2000 2
Statements of Income
Three months ended June 30, 2000 and 1999 3
Six months ended June 30, 2000 and the period
commencing March 25, 1999 (Inception) to June 30, 2000 4
Statement of Changes in Stockholders' Equity 5
Statements of Cash Flows
Six months ended June 30, 2000 and period commencing
from March 25, 1999 (Inception) to June 30, 2000 6
Notes to Financial Statements 7-9
Item 2. Management's Plan of Operation 10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Change in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Part III. EXHIBITS
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current Assets
Cash in bank $ 215,127 $ 11,348
Accounts Receivable 112,580 - 0 -
Investment in thoroughbred horses (note 1) 152,866 441,107
--------- ---------
480,573 452,455
Other assets
Deferred registration costs (note 1) 7,497 5,385
--------- ---------
Total assets $ 488,070 $ 438,754
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable (note 5) $ 400,000 $ 350,000
Accounts payable and accrued expenses 131,997 102,235
--------- ---------
Total current liabilities 531,997 452,235
Other liabilities
Loan payable-stockholder (note 2) 53,511 113,511
--------- ---------
Total liabilities 585,508 565,746
--------- ---------
Stockholders equity
Preferred stock, par value $ .001, 10,000
shares authorized; no shares issued
Common stock, par value $.001,
100,000,000 shares authorized;
26,386,000 shares issued and outstanding 26,386 26,386
Deficit accumulated during Development Stage (123,699) (134,167)
Less: subscription receivable (125) (125)
--------- ---------
(97,438) (107,906)
--------- ---------
Total liabilities & stockholders equity $ 488,070 $ 457,840
========= =========
</TABLE>
See accompanying notes to the financial statements.
2
<PAGE>
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenue from Horse Sales $ 372,475 $ - 0 -
Cost of Horses Sold 229,661 - 0 -
----------- -----------
Gross Profit 142,814 - 0 -
Operating Expenses
Operational costs 38,157 - 0 -
General & administrative 47,223 10,209
----------- -----------
Total operating expenses 85,380 10,209
----------- -----------
Net income (loss) before other income and expense 57,434 (10,209)
Other income and expense
Interest expense (net) (1,876) - 0 -
----------- -----------
Net income before provision for income taxes 55,558 (10,209)
Provision of income taxes - 0 - - 0 -
----------- -----------
Net income (loss) $ 55,558 $ (10,209)
=========== ===========
Net (loss) per common share-development stage $ .002 $ (0.00)
=========== ===========
Weighted average number of common shares outstanding 26,386,000 26,386,000
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE PERIOD
COMMENCING MARCH 25, 1999 (INCEPTION) TO JUNE 30, 1999
<TABLE>
<CAPTION>
MARCH 25, 1999
(INCEPTION) TO
2000 1999 JUNE 30, 2000
---- ---- --------------
<S> <C> <C> <C>
Revenue from Horse Sales $ 669,975 $ - 0 - $ 669,975
Cost of Horses Sold 455,258 - 0 - 455,258
----------- ----------- ---------
Gross Profit 214,717 - 0 - 214,717
Operating Expenses
Operational costs 84,598 - 0 - 140,318
General & administrative 78,025 10,209 116,972
----------- ----------- ---------
Total operating expenses 162,623 10,209 257,290
----------- ----------- ---------
Net income (loss) before other income and expense 52,094 (10,209) (42,573)
Other income and expense
Interest expense (net) (41,626) - 0 - (81,126)
----------- ----------- ---------
Net income (loss) before provision for income taxes 10,468 (10,209) (123,699)
Provision for income taxes - 0 - - 0 - - 0 -
----------- ----------- ---------
Net income (loss) $ 10,468 $ (10,209) $(123,699)
=========== =========== =========
Net (loss) per common share-development stage $ 0.00 $ 0.00
=========== ===========
Weighted average number of common shares outstanding 26,386,000 26,386,000
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Accumulated
Common stock Deficit During
------------ Additional paid Development
Shares Amount in Capital Stage
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Balance - inception (March 25, 1999) - 0 - - 0 - - 0 - - 0 -
Common stock issued to founder and
others for services rendered in 1999 13,150,000 13,150 - 0 - - 0 -
Sale of common stock in 1999 43,000 43 - 0 - - 0 -
Stock split two for one - July 23, 1999 13,193,000 13,193 - 0 - - 0 -
Net (loss) from inception to
December 31, 1999 - 0 - - 0 - - 0 - (134,167)
---------- ------- ----- ---------
Balance - December 31, 1999 26,386,000 26,386 - 0 - (134,167)
Net income - Six months ended 6/30/00 - 0 - - 0 - - 0 - 10,468
---------- ------- ----- ---------
Balance - June 30, 2000 26,386,000 $26,386 - 0 - $(123,699)
========== ======= ===== =========
</TABLE>
See accompanying notes to the financial statements
5
<PAGE>
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE PERIOD
COMMENCING MARCH 25, 1999 (INCEPTION) TO JUNE 30, 1999
<TABLE>
<CAPTION>
MARCH 25, 1999
(INCEPTION) TO
2000 1999 JUNE 30, 2000
---- ---- --------------
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ 10,468 $(10,209) $(123,699)
Adjustments to reconciliate net income (loss) to net
cash provided by operating activities:
Common stock issued for services - 0 - 18,775 18,775
Changes in operating assets and liabilities:
(Increase) in accounts receivable - trade (112,580) - 0 - (112,580)
(Decrease) in investment in thoroughbred horses 288,241 - 0 - (152,866)
(Decrease) in accounts payable and accrued expenses 29,762 3,835 131,997
--------- -------- ---------
Net cash provided from operations 215,891 12,401 (238,373)
--------- -------- ---------
Cash flows from financing activities:
Proceeds of common stock issued - 0 - 4,300 7,611
(Increase) in deferred registration costs (2,112) (4,000) (7,497)
Increase (decrease) in stockholder loan (60,000) - 0 - 53,511
Proceeds of note payable 50,000 - 0 - 400,000
(Increase) in subscriptions receivable - 0 - (12,040) (125)
--------- -------- ---------
Net cash provided (used) from financing activities (12,112) (11,740) 453,500
--------- -------- ---------
Net increase in cash 203,779 661 215,127
Cash - beginning 11,348 - 0 - - 0 -
--------- -------- ---------
Cash - ending $ 215,127 $ 661 $ 215,127
========= ======== =========
Supplemental disclosures:
Interest expense $ 42,750 $ - 0 - $ 82,250
========= ======== =========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE>
THOROUGHBRED INTERESTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND ORGANIZATION
The Company was organized under the laws of Nevada on March
25, 1999. The Company's business consists of purchasing,
training and sales of thoroughbred horses. The Company is in
its development stage.
INTERIM FINANCIAL INFORMATION
The financial information contained herein is unaudited but
includes all normal and recurring adjustments which in the
opinion of management are necessary to present fairly the
information set forth. The Company's results for interim
periods are not necessarily indicative of the results to be
expected for the fiscal year of the Company ending December
31, 2000.
ORGANIZATION COSTS
The Company has incurred various expenditures in the formation
of its corporate and organizational structure. In accordance
with SOP 98-5 these costs will be expensed as incurred.
DEFERRED REGISTRATION COSTS
The Company has incurred various costs to prepare and file the
required documents for any future stock offering. These costs
will be offset against the proceeds of a successful offering,
or expensed if unsuccessful.
SUBSCRIPTION RECEIVABLE
Sales of common stock have occurred whereby the proceeds have
not been received, thus the balances have been reflected as an
offset to stockholders equity.
INVESTMENT IN THOROUGHBRED HORSES
The Company's investment in thoroughbred horses are stated at
the lower of cost or market plus applicable carrying costs.
MANAGEMENT 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 of assets and liabilities and revenues and expenses.
The actual outcome of the estimates could differ from the
estimates made in the preparation of the financial statements
NET LOSS PER COMMON SHARE
Basic loss per weighted average common share is computed by
dividing the net loss by the weighted average number of common
shares outstanding during the period.
7
<PAGE>
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company has issued 13,150,000 shares of common stock to
its founder and various other individuals at a par value of $
.001 for their time and effort in establishing the Company. An
substantial amount of these shares will be subject to a
restriction against transfer for a period of at least one year
pursuant to SEC rule 144.
The founder of the Company has assumed the role of CEO and
Chairman of the Board of Directors at a salary and a stock
option plan subject to the approval by the Board of Directors.
The financial statements reflect $45,000 of accrued
compensation in accordance with the agreement to be paid upon
sufficient cash flow. The employment agreement commenced on
January 3, 2000 for a three year period ending December 31,
2002. The agreement in addition to scheduled salary increases
also provides for incentive bonuses in accordance with
prescribed performance levels of the Company. In addition the
CEO has received a grant of incentive stock options pursuant
to Company's Millennium Stock Option Plan of three million
shares of common stock.
The CEO has advanced funds as a interest free, unsecured loan
to the Company.
The Company commenced in April 2000 utilizing an office
facility leased by the CEO on a informal agreement at $1,352
per month to conduct its business operations.
NOTE 3 - CAPITAL TRANSACTIONS
a.) The Company at its inception issued 13,150,000 shares of
common stock to various related parties.
b.) The Company issued 43,000 shares of common stock during
March and April 1999 for $4,300 pursuant to Section 4(2)
of the Securities Act of 1933, as amended.
c.) The Company by an unanimous consent in lieu of a special
meeting of Directors approved a two (2) for one (1)
forward stock split for all shares issued and outstanding
effective July 23, 1999. The authorized shares of common
stock increased from 10,000,000 to 100,000,000 and the par
value remained at $ .001 per share.
NOTE 4 - STOCK OPTION PLAN
The Board of Directors has approved The Millennium Stock
Option Plan effective as of January 3, 2000 to compensate
executives, key management personnel and consultants of the
Company. The plan document has authorized a maximum of
10,000,000 shares of common stock to be optioned at an
exercise price to be determined by the Company. In the case of
the incentive stock option the exercise price shall not be
less than 100% of the fair market value of the shares on the
date the option is granted. The stock options are exercisable
no sooner than six months nor more than ten years from the
date it is granted. The fair market value of common stock
options granted will be reflected as compensation issued.
8
<PAGE>
NOTE 5 - NOTES PAYABLE
On September 30, 1999 pursuant to a written promissory note
the Company was loaned $300,000 from Augustine Fund, L.P. The
note has no stated interest but calls for the payment of
$375,000 in (180) one hundred eighty days from September 30,
1999. The Augustine Fund L.P. has the right to convert all or
any portion of the $375,000 into shares of common stock (the
"Converted Shares") at $.10 per share and warrants exercisable
into one-half the number of Converted Shares at $.15 per
share. As security for this loan, the President of the Company
has placed in escrow 6,000,000 restricted shares of common
stock. The Augustine Fund, L.P. granted the Company an
extension to March 31, 2001 for satisfaction of the note.
On December 15, 1999, pursuant to convertible promissory note
the Company was loaned $50,000 from an individual. The note is
unsecured and bears interest at 12% per annum payable
including interest on or before August 13, 2000. On February
10, 2000 the Company received an additional $50,000 under the
same terms. The promissory notes are both convertible into
fifty shares of common stock (the "Converted Shares" ) at $
.10 per share and warrants exercisable into one-half the
number of Converted Shares at $ .15 per share. The due date of
the notes plus accrued interest has been extended to March 31,
2001.
NOTE 6 - INCOME TAXES
The Company in accordance with FASB 109, it has been
determined that a 100 % valuation allowance of the entire net
operating loss is deemed appropriate since future profitable
operations cannot be ascertained at this time.
NOTE 7 - SUBSEQUENT EVENTS
a.) On November 7, 2000, the Company filed a request with the
Securities and Exchange Commission to withdraw its proposed
stock offering pursuant to Regulation A of the Securities and
Exchange Act of 1933, as amended. The Company did not sell any
common stock under its Regulation A filing
b.) The Company entered into an Internet Domain Name Agreement
effective September 30, 2000 to acquire the domain name
Thoroughbredsales.com for 25,000 shares of common stock. The
shares were subsequently issued in November 2000.
9
<PAGE>
Item 2. Management's Plan of Operation
The following discussion and analysis should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.
Plan of Operations for the next 12 months
We have developed a plan of operations reflecting our objectives and anticipated
growth for the next 12 months and beyond. In our plan, we identify our cash
requirements, our anticipated purchases of new horses, and our required staffing
and additional funding requirements to fulfill our business objectives.
Cash Requirements
We estimate that we require a minimum of approximately $400,000 and a maximum of
approximately $1,000,000 to operate for the next 12 months. The minimum of
$400,000 is required for operating expenses. The maximum will be required,
however, if the Augustine Fund and Mr. Andrew Dyer do not convert their
promissory notes into Common Stock of the Company. This estimate of required
funds includes the $375,000 due and payable to the Augustine Fund as of March
31, 2001 and $400,000 in estimated operating expenses including office rent,
boarding, training and/or racing our horses.
Although there can be no assurance, we expect that both the Augustine Fund and
Andrew Dyer will convert their notes payable into our Common Stock pursuant to
their Amended Promissory Notes.
To the extent we are unable to meet our operating expenses or matured notes
payable, we may borrow funds from our President, Mr. Tilton or others, or we may
attempt to raise capital from large institutional investment equity funds. Any
funds generated from sales of horses or from equity investments, if any, in our
Company that exceeds our operating expenses and debt repayments will be used to
purchase additional thoroughbred horses.
Change in Number of Employees
We may hire up to three additional employees in 2001, finances permitted, in the
areas of marketing and sales.
10
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not aware of any legal proceedings pending, threatened or
contemplated, against any of its officers and directors, respectively, in their
capacities.
Item 2. Change in Securities and Use of Proceeds
In connection with the Company's incorporation, the Company issued 12,000,000
shares of its Common Stock to Mr. Tilton at the par value of $.001 per share.
These shares were issued to Mr. Tilton in recognition of his pre-incorporation
services.
Subsequently, due to the Company's 2 for 1 forward stock split, Mr. Tilton's
shares were increased to 24,000,000 shares. 6,000,000 of these shares are being
held in escrow in the name of H. Glen Bagwell as security for the Augustine
Fund, L.P.
In March 1999, the Company issued 2,050,000 shares of its Common Stock to five
investors in exchange for services rendered to the Company. The Company also
issued in March 1999, 43,000 shares of our Common Stock at $.10 per share to 43
investors.
All of the above shares of Common Stock have been issued pursuant to Section
4(2) of the Securities Act of 1933, as amended. The basis for such exemption was
the Company's belief that the investors were either accredited or sophisticated.
For those investors deemed sophisticated, they had access to information on the
Company necessary to make an informed investment decision.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
11
<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.
Thoroughbred Interests, Inc.
By: /s/ James D. Tilton, Jr.
----------------------------
James D. Tilton, Jr.
Chief Executive and Principal
Accounting Officer
Date: January 9, 2001
12
