WHITNEY INFORMATION NETWORK INC
Filing Type: 10QSB/A
Description: Amended Quarterly Report
Filing Date: Dec 28, 2000
Period End: Jun 30, 2000
Primary Exchange: Over the Counter Includes OTC and OTCBB
Ticker: RUSS
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
[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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:
----------------------------------
Commission file number 0-27403
----------------------------------
WHITNEY INFORMATION NETWORK, INC.
(Exact name of Registrant as specified in its charter.)
COLORADO 84-1475486
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4818 Coronado Parkway
Cape Coral, Florida 33904
(Address of principal executive offices, including zip code.)
(941) 542-8999
Registrant's telephone number, including area code.
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the securities 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 the registrant's Common Stock,
no par value per share, at June 30, 2000 was 7,528,047 shares.
WHITNEY INFORMATION NETWORK, INC.
FORM 10QSB/A
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
TABLE OF CONTENTS
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet.......................1-2
Consolidated Statement of Operations
And Retained Earnings.......................... 3
Consolidated Statement of Cash Flows.............4-5
Consolidated Statement of Changes in
Shareholders' Equity........................... 6
Comparative Consolidated Statement of
Operations and Retained Earnings............... 7
Notes to the Consolidated Financial
Statements................................... 8-17
PART II OTHER INFORMATION 17
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 18-19
ITEM 3. CHANGES IN SECURITIES AND USE OF
PROCEEDS 19
ITEM 4. DEFAULTS UPON SENIOR SECURITIES 19
ITEM 5. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 19
ITEM 6. NONE 20
ITEM 7. EXHIBITS AND REPORTS ON FORM 8-K 20
SIGNATURE PAGE 20
WHITNEY INFORMATION NETWORK, INC.
Consolidated Balance Sheet
As of June 30, 2000 and 1999
ASSETS
Restated Restated
June 30 June 30
2000 1999
----- -----
CURRENT ASSETS:
Cash $ 2,827,553 $ 1,512,455
Accounts Receivable 2,615,931 1,730,688
Prepaid Advertising,
and Other 744,103 531,949
Income Taxes Receivable 1,663,632 313,132
Due From Affiliates 183,297 114,015
Deferred Seminar
Costs 2,579,813 1,160,653
Other Current Assets 355,996 70,344
------- ------
Total Current Assets 10,970,325 5,433,236
__________ _________
Property and Equipment at Cost
Less accumulated depreciation
of $62,000 in 2000 and
$22,568 in 1999 451,816 127,444
__________ _________
OTHER ASSETS:
Contract Rights (net of
amortization of $1,634) 48,683 49,500
__________ __________
TOTAL ASSETS $11,470,823 $ 5,610,180
========== ==========
The accompanying notes are an integral part of the
consolidated financial statements
F1
WHITNEY INFORMATION NETWORK, INC.
Consolidated Balance Sheet
As of June 30, 2000 and 1999
LIABILITIES AND SHAREHOLDERS' EQUITY
Restated Restated
June 30 June 30
2000 1999
---- ----
LIABILITIES
CURRENT LIABILITIES:
Accounts Payable $ 679,326 $ 666,667
Deferred Educational
Revenues 17,752,891 8,357,501
Other Accrued Liabilities 761,910 74,199
---------- ---------
TOTAL CURRENT LIABILITIES $ 19,194,127 $ 9,365,367
---------- ---------
OTHER LIABILITIES
Loans from Shareholder 19,979
------
TOTAL OTHER LIABILITIES 19,979
---------- ---------
TOTAL LIABILITIES $ 19,194,127 $ 9,385,346
---------- ---------
SHAREHOLDERS' EQUITY
Common Shares, no par value,
25,000,000 shares authorized
7,500,047 shares
issued and outstanding $ 67,102 $ 60,352
Paid In Capital 900 900
Retained Earnings (Deficit) (7,791,305) (3,836,418)
--------- ---------
Total Shareholders' Equity
(Deficit) $ (7,723,303) $ (3,775,186)
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 11,470,824 $ 5,610,180
========== ==========
The accompanying notes are an integral part of the
consolidated financial statements
F2
WHITNEY INFORMATION NETWORK, INC.
Consolidated Statement of Operations and Retained Earnings
As of and For the Six Months Ended June 30, 2000 and 1999
Restated Restated
June 30 June 30
2000 1999
---- ----
SALES $ 17,418,022 $10,286,320
COST OF SALES 7,024,545 4,340,090
--------- ---------
GROSS PROFIT 10,393,477 5,946,230
--------- ---------
EXPENSES
Advertising and Sales Expense 10,813,021 5,441,025
General and Administrative
Expense 3,069,914 2,002,042
--------- ---------
Total Expenses $ 13,882,936 $ 7,443,067
--------- ---------
Income (Loss) Before Taxes (3,489,458) (1,496,387)
Less: Income Taxes(see note) - -
------- -------
NET (LOSS) $ (3,489,458) $(1,496,387)
========= =========
Retained Earnings (Deficit),
Beginning of Period (4,301,847) (2,339,581)
--------- -------
Retained Earnings (Deficit),
End of Period $ (7,791,305) $(3,836,418)
========= =========
Basic and Fully Diluted
Loss Per Share** $ -0.46 $ -0.20
======== ========
Weighted average number of
shares outstanding during
the period 7,520,953 7,513,859
========= =========
**Prior periods have been restated to
reflect the merger as if it took place
at the beginning of the period.
The accompanying notes are an integral part of the
consolidated financial statements.
F3
WHITNEY INFORMATION NETWORK, INC.
Consolidated Statement of Cash Flows
As of and For the Six Months Ended June 30, 2000 and 1999
Restated Restated
June 30 June 30
2000 1999
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss From Operations $(3,489,458) $(1,496,837)
Add Back Depreciation and
Amortization 62,000 8,476
------ -----
$(3,427,458) $(1,488,361)
--------- ---------
Changes in Operating Assets
and Liabilities
(Increase) in Accounts Receivable (1,220,372) (750,425)
Decrease in Notes Receivable - 10,558
(Increase) in Prepaid and
Other Assets ( 907,205) (436,633)
(Increase) in Other Receivables (256,261) (40,137)
(Increase) in Deferred Expenses (1,218,487) (473,754)
Increase (Decrease) in Accounts
Payable (364,997) 101,959
Increase in Deferred Revenues 8,441,317 4,399,257
Increase in Other Liabilities 469,268 11,211
--------- ---------
Net Cash Flow From Operations $ 1,782,805 $1,323,675
--------- ---------
The accompanying notes are an integral part of the
consolidated financial statements
F4
WHITNEY INFORMATION NETWORK, INC.
Consolidated Statement of Cash Flows (continued)
As of and For the Six Months Ended June 30, 2000 and 1999
Restated Restated
June 30 June 30
2000 1999
---- ----
CASH USED IN INVESTING ACTIVITIES
Purchase of Property and
Equipment $ (235,277) $ (135,103)
Acquisition of Contract Rights 317 (50,317)
Loans Made to Affiliates (7,336) 3,307
Real Estate Sold 12,336 -
------ -----
Net Cash Used in Investing
Activities $ (229,960) $ (182,113)
------- -------
CASH FROM FINANCING ACTIVITIES
Issuance of Common Stock - 57,750
Loans From Affiliates (57,428)
------- ------
Net Cash provided by Financing
Activities - $ 322
------- ---
Increase in Cash $1,552,845 $1,141,884
Cash at Beginning of Period 1,274,708 370,571
--------- ---------
Cash at End of Period $ 2,827,553 $1,512,455
========= =========
The accompanying notes are an integral part of the
consolidated financial statements
F5
WHITNEY INFORMATION NETWORK, INC.
Consolidated Statements of Changes in Shareholders' Equity
As of and For the Six Months Ended June 30, 2000 and 1999
Restated Restated
Common Stock Paid Retained Total
Number of In Earnings Shareholders'
Shares Value Capital (Deficit) Equity
(Deficit)
Balance
December 31,
1997 976,200 $2,602 $ 0 $ (2,564) $ 38
Reverse Split (226,153)
Merger with Win
Systems, Inc./
Exchange Stock 6,750,000 $ 900 $ (98,710) $ (97,810)
Net (Loss) for the
Year Ended
December 31, 1998 (2,238,307) (2,238,307)
--------- ----- ---- --------- ---------
Balance
December 31,
1998 7,500,047 $2,602 $ 900 $(2,339,581) $(2,336,079)
Net (Loss) for
the Year Ended
December 31, 1999 (1,962,226) (1,962,226)
Issuance of Shares
for Acquisitions 20,000 50,000
Issuance of Shares
for Services 8,000 14,500
---------- ------ ---- --------- ---------
Balance
December,
1999 7,528,047 $67,102 $ 900 $(4,301,807) $(4,233,805)
Net (Loss) for
the Six Months Ended
June 30, 2000 (3,489,458) (3,489,458)
--------- ---------
Balance
June 30,
2000 7,528,047 $67,102 $ 900 $(7,791,265) $(7,723,263)
========= ====== === ========= =========
The accompanying notes are an integral part of the
consolidated financial statements
F6
WHITNEY INFORMATION NETWORK, INC.
Comparative Consolidated Statement of Operations
And Retained Earnings For the Three Months and
Six Months Ended June 30, 2000 and 1999
Restated Restated Restated Restated
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2000 1999 2000 1999
---- ---- ---- ----
Sales $8,778,005 $5,631,788 $17,418,022 $10,286,320
Cost of Sales 3,538,886 2,139,434 7,024,545 4,340,090
--------- --------- --------- ---------
Gross Profit $5,239,119 $3,492,354 $10,393,477 $ 5,946,230
--------- --------- ---------- ---------
Expenses
Advertising and
Sales Expense $6,307,002 $3,645,311 $10,813,012 $ 5,441,025
General and
Administrative
Expense 1,716,749 964,452 3,069,914 2,002,042
--------- --------- --------- ---------
Total Expenses $8,023,751 $4,609,763 $13,882,926 $7,443,067
--------- --------- --------- ---------
Income (Loss)
Before Taxes $(2,784,632) $(1,117,409) $(3,489,449) $(1,496,837)
Income Taxes
(see note) - - - -
------- --------- --------- ---------
NET INCOME (LOSS) $(2,784,632) $(1,117,409) $(3,489,449) $(1,496,837)
Retained Earnings
(Deficit), Beginning
of period $(5,006,664) (2,719,009) (4,301,847) (2,339,581)
--------- --------- --------- ---------
Retained Earnings
(Deficit), End of
period $(7,791,296) $(3,836,418) $(7,791,296) $(3,836,418)
========= ========= ========= =========
Basic and Fully Diluted
Earnings (Loss)
Per Share** $ -0.37 $ -0.15 $ -0.46 $ -0.20
==== ==== ==== ====
Weighted average
Number of shares
Outstanding during
the Period 7,528,047 7,513,859 7,520,953 7,513,859
========= ========= ========= =========
**Prior periods have been restated
to reflect the merger as if it took
place at the beginning of the period.
The accompanying notes are an integral part of the
consolidated financial statement.
F7
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
HISTORY OF THE CORPORATION
Whitney Information Network, Inc., formerly known as Win Systems
International, Inc., incorporated in Colorado on February 23, 1996 under
the name of Gimmel Enterprises, Inc.
Whitney Education Group, Inc., formerly known as Win Systems, Inc.,
incorporated in Florida on November 12, 1992. An exchange of shares was
completed between the shareholders of Win Systems, Inc. and Gimmel
Enterprises, Inc. on August 18, 1998. Subsequently, the name of Gimmel
Enterprises, Inc. was changed to Win Systems International, Inc. on
August 25, 1998 and that name was changed to Whitney Information Network,
Inc. on February 11, 1999. The name of Win Systems, Inc. was changed to
Whitney Education Group, Inc. on September 10, 1999.
Win Systems Inc. has been operating in the Educational Seminars Industry
since 1992 and expanded its operations in the industry subsequent to the
aforesaid exchange of shares and name change to Whitney Education Group, Inc.
Whitney Education Group, Inc. is accredited by the State of Texas as a
Certified Proprietary School.
During 1998 Win Systems International, Inc. expanded its educational
seminars business into Canada through the opening of a wholly owned
subsidiary, 1311448 Ontario, Inc. The Canadian operations continued to
expand and at the end of 1999 the operations were transferred to
Whitney Canada, Inc. through an amalgamation of two wholly owned
Canadian subsidiaries.
Whitney Canada, Inc. was incorporated in Canada on October 5, 1998 and
is the surviving corporation of an amalgamation with 3667057 Canada, Inc.
3667057 Canada, Inc. was incorporated in Ontario, Canada on August 21, 1998
under the name of 1311448 Ontario, Inc. The name was changed to 3667057
Canada, Inc. on October 5, 1999 as a preliminary requirement of
federalization of that corporation, which had been an Ontario
corporation, but in order to qualify for the amalgamation with Whitney
Canada, Inc., had to be reregistered as a Canadian corporation. The
amalgamation with 1311448 Ontario, Inc. was completed January 6, 2000.
Whitney Internet Services, Inc. incorporated in Wyoming on
June 8, 1999, is located in Cape Coral, Florida, and is an operating
subsidiary, marketing internet training seminars throughout the United
States. Whitney Internet Services, Inc. is expanding its operations into
marketing web sites and participations in networks of residual internet
connections fees.
Wealth Intelligence Network, Inc. incorporated in Florida
on May 26, 1996 under the name of Real Estate Link, Inc.
The name was changed to Wealth Intelligence Network, Inc. on September 20,
1998. Win Systems International, Inc. acquired the shares of Wealth
Intelligence Network, Inc. on November 18, 1998. Wealth Intelligence
Network, Inc. is an operating subsidiary marketing financial training
seminars, which represents an expansion from the real estate investment
training seminar business.
F8
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
HISTORY OF THE CORPORATION (continued)
Whitney Mortgage.com, Inc. incorporated in Florida on September 30, 1999
and operates as a full service internet mortgage broker affiliated with a
national internet mortgage provider. Whitney Mortgage.com, Inc.
represents an expansion from educational seminars into the mortgage
brokerage industry.
Russ Whitneys Wealth Education Centers, Inc. incorporated in Wyoming on
June 8, 1999 as a wholly owned subsidiary of Whitney Information Network, Inc.
and the subsidiary is itself the parent corporation of two wholly owned
subsidiaries formed to operate permanent learning centers in Jackson, MS.
and Atlanta, GA. Russ Whitney's Wealth Education Center of Jackson, MS, Inc.
incorporated in Wyoming on June 8, 1999 and a school was opened in November,
1999. Russ Whitneys Wealth Education Center of Atlanta, GA, Inc. incorporated
in Wyoming on July 22, 1999 and a school was opened in July, 2000. The
Wealth Education Centers are the first two of many regional centers being
planned throughout the United States and represents an expansion from the
educational seminars industry into regional permanent schools for teaching
classes in how to build and maintain wealth.
Whitney Consulting Services, Inc. incorporated in Wyoming on July 28, 1998
under the name of Financial Consulting Services, Inc. and the name was
changed to Whitney Consulting Group, Inc. on April 28, 1999 when that
corporation was acquired by Win Systems International, Inc. The name was
again changed to Whitney Consulting Services, Inc. on March 21, 2000.
Whitney Consulting Services, Inc. is located in Salt Lake City, Utah and
is an operating subsidiary telemarketing real estate investments and
financial training seminars and an individual one-on-one coaching program.
F9
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principals requires
management to make estimates and assumptions that effect
the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL STATEMENTS
The Company's financial instruments consist principally of
cash, accounts receivable and deferred seminar expense,
accounts payable, accrued expenses and deferred revenues.
The carrying amounts of such financial instruments as
reflected in the balance sheet approximate the estimated
fair value of the accounts as of June 30, 2000 and 1999.
The estimated fair value is not necessarily indicative
of the amounts the Company could realize in a current
market exchange or of future earnings or cash flows.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements
include the accounts of WHITNEY INFORMATION NETWORK,
INC. (formerly Win Systems International, Inc.); and
its wholly owned subsidiaries; Whitney Education Group,
Inc. (formerly Win Systems, Inc.); Whitney Canada, Inc.;
1311448 Ontario, Inc.; Wealth Intelligence Network, Inc.;
Whitney Consulting Services, Inc.; Russ Whitney's Wealth
Centers, Inc.; Whitney Mortgage.com, Inc.; and Whitney
Internet Services, Inc. Russ Whitneys Wealth Centers, Inc.
is the parent corporation of Russ Whitneys Wealth Center
of Jackson, MS, Inc. and Russ Whitneys Wealth Center of
Atlanta, GA, Inc. All significant inter-company accounts
and transactions have been eliminated. For more
information see note, History of the Corporation.
F10
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
REVENUE RECOGNITION
Revenue from product sales is recognized at the time the sale is made.
Revenue from educational seminars is recorded (1) when the non refundable
deposit is received for the seminars and the seminar has taken place; (2)
when it is reasonably certain that the balance of the option to purchase
additional educational programs will be exercised and paid and the
seminar has taken place and (3) revenues are deferred when the seminar
proceeds are received in full in the current period and the seminar takes
place in a subsequent period. See liability for Deferred Revenues on the
balance sheet in the amount of $17,752,891 at June 30, 2000 and
$8,357,501 at June 30, 1999.
DEFERRED EDUCATIONAL EXPENSE
When a student signs up to attend a future educational seminar with the
Company, the tuition that was collected or recorded a receivable is deferred.
The expenses directly related to the deferred tuition are also deferred.
The deferred expenses associated with future educational programs are shown
on the balance sheet as Deferred Educational Expenses in the amount of
$2,579,813 at June 30, 2000 and $1,160,653 at June 30, 1999.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation and amortization
are provided using accelerated and straight-line methods over the following
useful lives:
Office Furniture.............................7 years
Office Equipment.............................5 years
Intangibles(Contract Rights)................15 years
Leasehold Improvements...................... 5 years
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109
(SFAS No. 109), "Accounting for Income Taxes" in 1993. SFAS No. 109 requires
the liability method of accounting for income taxes. Deferred income taxes
result in temporary differences in the recognition of revenue and expenses
for income tax and financial reporting purposes. These differences are
primarily due to the differences in accrual basis reporting for
statement purposes and cash basis reporting for tax purposes.
ACCOUNTS RECEIVABLE
The accounts receivable are trade receivables arising from the sale of
educational products and seminars. The Company believes the allowance for
doubtful accounts is sufficient to cover any uncollectible amounts as of
June 30, 2000 and 1999. The entire amount of the sales related to the
net receivables is deferred.
F11
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NET INCOME PER COMMON SHARE
In 1997 the Company adopted SFAS No. 128 "Earnings Per Share." SFAS No. 128
(the "Statement") establishes standards for computing and presenting earnings
per share ("EPS"). This Statement replaces the presentation of primary EPS
with a presentation of basic EPS and requires dual presentation of basic
and diluted EPS on the face of the statement of operations for all entities
with complex capital structures. This Statement replaces the presentation
of primary EPS with a presentation of basic EPS and requires dual
presentation of basic and diluted EPS on the face of the statement of
operations for all entities with complex capital structures. This
Statement also requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
MERGERS, ACQUISITIONS AND CAPITAL ACCOUNTS
On August 18, 1998, Whitney Education Group, Inc. (formerly Win Systems, Inc.)
was acquired by WHITNEY INFORMATION NETWORK, INC. (formerly Win Systems
International, Inc. and prior to that Gimmel Enterprises, Inc.) in a reverse
merger where by Whitney Education Group, Inc. exchanged 100% of its shares
for 90% of Gimmels shares bringing the total shares of WHITNEY INFORMATION
NETWORK, INC., issued and outstanding at August 18, 1998, to
7,500,047. Whitney Education Group, Inc. became a wholly owned subsidiary
of Whitney Information Network, Inc. The financial statements from
January 1, 1998 through June 30, 2000 are based upon the assumption that the
companies were combined for the entire period and all stock splits
have been reflected in the statements as of the beginning of the period.
On August 18, 1998, WHITNEY INFORMATION NETWORK, INC. issued 187,500 Class A
stock purchase warrants and 340,000 Class B stock purchase warrants The
Class A warrants are exercisable at $4.00 per share two years
after the underlying stock is registered. The Class B warrants were
exchanged for employee stock options on May 1, 2000.
The Company also instituted a stock option plan for key personnel. Under
the plan options are to be granted at the fair market value at the date of
the grant and exercisable for a 10 year period after the grant with a
three-year vesting schedule. The Company has reserved 2,000,000 shares
for the stock option plan of which 901,650 option shares have been granted,
at an exercise price of approximately $2.00 per share, as of June 30, 2000
none have been exercised or expired to date.
F12
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
MERGERS, ACQUISITIONS AND CAPITAL ACCOUNTS (continued)
On February 1, 1999 the Company exchanged all of the assets of Wealth
Intelligence Network, Inc. for 20,000 shares of the Company's stock valued at
$2.50 per share. In addition, the Company, during the period from May to
August 1999, issued 8,000 shares of the Company's stock, valued at $1.8125
per share, to a financial public relations firm in lieu of cash for services
valued at $14,500.
RELATED PARTY TRANSACTIONS
The Company has rented its international headquarters premises in Cape Coral,
Florida since 1992 from the Chairman of the Board and pays rent on annual
leases. Rentals under the related party lease were $36,922 and
$22,100 for six months ended June 30, 2000 and 1999, respectively. The
Company leases approximately 8,700 square feet presently. Future minimum
payments, by year and in the aggregate under capital and
noncancellable operating leases with initial or remaining terms of one year
or more are shown in the Commitments footnote.
At June 30, 2000 and June 30, 1999 the related party receivables and
payables on the balance sheet were as follows:
June 30, 2000 June 30, 1999
------------- -------------
Receivables:
Due from Whitney Leadership
Group $ 175,315
Due from MRS Equity Corp. 16,336
Due from RAW, Inc. 964
Due from PSS, Inc. 3,852
-------
Total $ 196,467
=======
Payables:
Short-term: $ 18,821
Long-term:
Loans Payable to the Chairman
of the Board $ 19,979
Those items above that are reasonably expected to be collected within one
year are shown as short-term and those which are not expected to be
collected during the next year are shown as long-term.
F13
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
RELATED PARTY TRANSACTIONS (continued)
MRS Equity Corp. provides certain products and services for WHITNEY
INFORMATION NETWORK, INC. and WHITNEY INFORMATION NETWORK, INC. provides
MRS Equity Corp. with payroll services including leased employees. WHITNEY
INFORMATION NETWORK, INC. provided payroll services to
MRS Equity Corp. in the amount of $45,283 for the six months ended
June 30, 2000 and $51,747 for the six months ended June 30, 1999. MRS
Equity Corp. provided WHITNEY INFORMATION NETWORK, INC. with $201,800 and
$148,350 for products for the six months ended June 30, 2000 and 1999,
respectively. MRS Equity Corp. is a wholly owned subsidiary of Equity Corp.
Holdings, Inc. of which the Chairman of the Board of WHITNEY INFORMATION
NETWORK, INC. owns a controlling interest.
Precision Software Services, Inc. (PSS) is a company that develops and
licenses software primarily for the real estate and small business
industries. The Chairman of the Board of Directors of WHITNEY INFORMATION
NETWORK, INC. owns a majority interest in PSS. During the six months
ended June 30, 2000 and 1999 PSS provided WHITNEY INFORMATION NETWORK, INC.
$137,400 and $180,123 in products, respectively. PSS sells products to
WHITNEY INFORMATION NETWORK, INC. at a price less than the
prices offered to third parties. WHITNEY INFORMATION NETWORK, INC. provided
payroll services to Precision Software Services, Inc. in the amount of
$18,334 and $22,367 for the six months ended June 30, 2000 and 1999,
respectively.
WHITNEY INFORMATION NETWORK, INC. provided payroll services to Whitney
Leadership Group, Inc. in the amount of $45,283 for the six months ended
June 30, 2000 and $46,767 for the six months ended June 30, 1999. The
Chairman of the Board of WHITNEY INFORMATION NETWORK, INC. is the
President and Chief Operating Officer of Whitney Leadership Group, Inc.
INCOME TAXES
At June 30, 2000 the Company had Federal net operating loss carry forwards of
approximately $7,800,000 available to offset future profits. The company
had prepaid federal and state taxes in the amount of $1,663,632 as shown on
the balance sheet as Income Taxes Receivable.
INDEBTEDNESS
There were no borrowings from unrelated third parties for the six months
ended June 30, 2000 and 1999. The interest expense was $0 for both the six
months ended June 30, 2000 and 1999. (See Related Party Transactions).
The Company was indebted to its Chairman for short-term non-interest bearing
advances in the amount of $0 at June 30, 2000, and $19,979 at June 30 1999.
F14
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
LITIGATION
The Company is not involved in any asserted or unasserted claims or actions
arising out of the normal course of its business that in the opinion of the
Company, based upon knowledge of facts and advice of counsel, will result
in a material adverse effect on the Company's financial position.
COMMITMENTS AND CONTINGENCIES
The Company carries liability insurance coverage which it considers
sufficient to meet regulatory and consumer requirements and to protect the
Company's employees, assets and operations.
The Company, in the ordinary course of conducting its business, is subject
to various state and federal requirements. In the opinion of management,
the Company is in compliance with these requirements.
The Company's main office is located in Cape Coral, Florida. The Company
has three other offices open. The Company leases the following properties:
(1) Its headquarters building in Cape Coral, Florida at an annual
rental of $73,844; (2) Its telemarketing facility in Draper, Utah at an
annual rental of $46,563; (3) a Wealth Center facility in Jackson, MS for
$42,600 per year; and (4) a Wealth Center in Marietta, GA at an annual
rental of $48,000. Future minimum payments by year and in the
aggregate under capital and noncancellable operation leases with terms of
one year or more are as follows:
2000 $ 133,795
2001 158,820
2002 120,020
2003 39,675
-------
Total $ 452,310
=======
Restatement
At a meeting with the Company and the SEC in late November, 2000,
the Company agreed to change its method of accounting to recognize
advertising and substantially all other related expenses that gave
rise to the deferred revenues as period costs. Therefore, the Company
has restated its financial statements to reflect this change.
F15
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Forward-looking Statements
Certain information included in this report contains forward-looking
statements made pursuant to the Private Securities Litigation Reform Act
of 1995 (Reform Act). Such statements are based on current expectations and
involve a number of known and unknown risks and uncertainties that could
cause the actual results and performance of the Company to differ materially
from any expected future results or performance, expressed or implied by the
forward-looking statements. In connection with the safe harbor provisions
of the Reform act, the Company has identified important factors that could
cause actual results to differ materially from such expectations, including
operating uncertainty, acquisition uncertainty, uncertainties relating to
economic and political conditions and uncertainties regarding the impact of
regulations, changes in government policy and competition. Reference
is made to all to the Company's SEC filings, including the Company's Report
on Form 10SB, incorporated herein by reference, for a description of certain
risk factors. The Company assumes no responsibility to update
forward-looking information contained herein.
Y2K MATTERS
During 1998 and 1999 the Securities and Exchange Commission (SEC) had
expressed concern in general over potential Year 2000 problems. As of
June 30, 2000 management is of the opinion that the Company did not and will
not suffer any problems of a material nature as a result of any Y2K problems.
COMMON STOCK OPTIONS
The Company instituted a stock option plan for key personnel on or about
August 18, 1998. Under the plan the options are to be granted at the fair
market value at the date of the grant with a three-year vesting schedule.
The Company had previously reserved 1,200,000 shares for the plan. During
the quarter the Company authorized and additional 800,000 shares for the
plan and authorized the conversion of the Class B warrants to options at an
exercise price of $2.00 per share. The result is as follows:
At 3/31/00 At 6/30/00 Total
Shares Authorized for
Plan 1,200,000 1,200,000
Additional Shares
Authorized 800,000 800,000
Conversion of Class B
Warrants to Options 340,000 340,000
Grants (881,650) (20,000) (901,650)
Terminations 43,500 37,250 80,750
------- ------ -------
Available for future
Grants 361,850 1,157,250 1,519,100
======= ========= =========
F16
WHITNEY INFORMATION NETWORK, INC.
(FORMERLY WIN SYSTEMS INTERNATIONAL, INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
CAPITAL CHANGES
On February 1, 1999 the Company issued 20,000 shares of
its common stock in exchange for all of the outstanding
stock of Wealth Intelligence Network, Inc. The shares were
valued at $2.50 each for a total purchase price of $50,000.
Wealth Intelligence Network, Inc. publishes a monthly
financial newsletter and provides and promotes financial
education and training. In addition, the Company issued
8,000 shares to a financial public relations firm for
financial public relations services in the amount of
$14,500 (2,000 on May 31, 1999 valued at $2.00 per share,
2,000 on June 30, 1999 valued at $1.875 per share, 2,000
on July 31, 1999 valued at $1.750 per share, and 2,000
on August 31, 1999 valued at $1.625 per share).
F17
Part II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company knows of no litigation, present, threatened or contemplated, or
unsatisfied judgment against the Company, its officers or directors, or any
proceedings in which the Company, its officers or directors are a party.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
None of the Company's business is subject to seasonal fluctuations.
Revenues: Total revenue for the six months ended June 30, 2000 was
$17,418,022, an increase of $7,131,702 or 60% compared to the same period in
1999. The combination of the increase in advance training courses
held and the higher registrations contributed to the increase above.
Advertising and Sales Expense: Advertising and sales expense, of which
Advertising represents approximately 50% of the expenses for the six months
ended June 30, 2000, was $10,813,012, an increase of $5,371,897 or 99%,
compared to the same period in 1999. The increase in Advertising and Sales
expense is due to higher volume resulting from increased sales and increased
advertising expense related to Whitney Internet Services Inc. new products
and services
General and Administrative expenses increased to $3,069,914, an increase of
$1,067,872, or 53% over the comparable period in 1999.
Cost of Sales increased proportionately in comparison with the increase in
sales for the six months ended June 30, 2000 to $7,024,545, an increase of
$2,684,455 or 62% over the prior comparable period in 1999.
Net Loss for the six months ended June 30, 2000 was $(3,489,458)
as compared with a net loss of ($1,496,837) for the three months
ended March 31, 1990, an increase of $1,992,627 (134%)or $(.46) per
share as compared to $(.20) per share for the prior period.
The net Loss for the quarter ended June 30, 2000 was $(2,784,632)
as compared with a net loss of ($1,117,406) for the quarter
ended March 31, 1999, an increase of $1,667,226 (149%)or $(.37) per
share as compared to $(.15) per share for the prior period.
The increase in the loss is directly attributable to increased
deferred revenues in 2000 over the prior period and increased
period costs.
Earnings (Loss)Before Interest, Taxes, Depreciation and
Amortization (EBITDA) for the six months ended June
30, 2000 and 1999 was $(3,427.458) and $(1,488.361),
respectively. EBITDA is defined as net income before
income taxes, interest and other income and expense,
net, plus depreciation and amortization including
amortization of pending real estate sales contracts.
Liquidity and Capital Resources
The Company's capital requirements consist primarily
of working capital, capital expenditures and
acquisitions. Historically, the Company has funded
its working capital and capital expenditures using
cash and cash equivalents on hand. Cash increased by
$1,522,848 to $2,827,553, an increase of 80% over
the previous comparable period in 1999.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
The Company's cash provided by operating activities was
$1,782,805 and $1,323,675 for the six months ended June
30, 2000 and 1999, respectively. In the second quarter
2000, cash flows from advanced training programs were
positively impacted by the increased collection efforts
by the sales associates accompanying the instructors
and trainers at the training locations.
The Company's cash used in investing activities was $229,960 and $182,113
for the six months ended June 30, 2000 and 1999, respectively. The Company's
cash used in investing activities for the six month ended June 30, 2000 and
1999 were primarily attributable to the purchase of office property and
equipment of $235,277 and $135,103, respectively.
Restatement
At a meeting with the Company and the SEC in late November 2000,
the Company agreed to change its method of accounting to recognize
advertising and substantially all other related expenses that gave
rise to the deferred revenues as period costs. Therefore, the Company
has restated its financial statements to reflect this change.
Forward-looking Statements
Certain information included in this report contains forward-looking
statements made pursuant to the Private Securities Litigation Reform Act
of 1995 (Reform Act). Such statements are based on current expectations and
involve a number of known and unknown risks and uncertainties that could
cause the actual results and performance of the Company to differ materially
from any expected future results or performance, expressed or implied, by
the forward-looking statements. In connection with the safe harbor provisions
of the Reform Act, the Company has identified important factors that could
cause actual results to differ materially from such expectations, including
operating uncertainty, acquisition uncertainty, uncertainties relating to
economic and political conditions and uncertainties regarding the impact
of regulations, changes in government policy and competition. Reference
is made to all of the Company's SEC filings, including the Company's report
on form 10SB, incorporated herein by reference, for a description of
certain risk factors. The Company assumes no responsibility to update
forward-looking information contained herein.
ITEM 3. CHANGES IN SECURITIES AND USE OF PROCEEDS.
The rights of the holders of the Company's securities have not been modified
nor have the rights evidenced by the securities been limited or qualified
by the issuance or modification of any other class of securities.
ITEM 4. DEFAULTS UPON SENIOR SECURITIES.
There are no senior securities issued by the Company.
ITEM 5. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters presented to the shareholders
for vote during the six months ended June 30, 2000.
ITEM 6. OTHER INFORMATION.
None.
ITEM 7. REPORTS ON FORM 8-K.
No reports were filed on Form 8-K during the six months ended June 30, 2000.
Subsequent to the reporting period, however, the Company filed a Form 8-K on
August 1, 2000 providing notification of a change in auditors. A copy of that
Form 8-K is attached to that original filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly changed this report to be signed on its behalf by the
undersigned, there unto duly authorized.
Dated this 28th day of December, 2000.
WHITNEY INFORMATION NETWORK, INC.
(The Registrant)
BY: /s/Ronald S. Simon
Ronald S. Simon
Secretary/Treasurer, Chief Financial Officer
And a member of the Board of Directors
Article 5
Period Type 6-MOS
Fiscal Year End DEC-31-2000
Period End JUN-30-2000
Cash 2,827,553
Securities 0
Receivables 2,615,931
Allowances 0
Inventory 0
Current Assets 10,970,325
PP&E 451,816
Depreciation 62,000
Total Assets 11,470,823
Current Liabilities 19,194,127
Bonds 0
Preferred-Mandatory 0
Preferred 0
Common 67,102
Other-SE -7,791,305
Total Liability and Equity 11,470,823
Sales 17,418,022
Total Revenues 17,418,022
CGS 7,024,545
Total Costs 7,024,545
Other-Expenses 13,882,936
Loss Provision 0
Interest Expense 0
Income-Pretax -3,489,458
Income Tax 0
Income Continuing -3,489,458
Discontinued 0
Extraordinary 0
Changes 0
Net Income -3,489,458
EPS-Basic -0.46
EPS-Diluted -0.46