SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
April 30, 1998 0-5304
CUSTOMER SPORTS, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0282745
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1023 Reliance Way Del Mar, California 92014
(Address of Principal Executive Offices)
Registrant's telephone number including area code: (619) 481-2400
Former name, former address, and former fiscal 455 Marine View Avenue,
year end, if changed since last report. Suite 260, Del Mar, California 92014
Indicate by checkmark whether the registrant (1) has 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 in the past 90 days:
Yes X No
------ -----
Indicate the number of shares outstanding for each of the issuer's classes
of Common Stock as of the last practical date:
Common Stock, Par Value $.01 Per Share, 17,984,290 Shares Outstanding at
April 30, 1998.
<PAGE>
CUSTOMER SPORTS, INC.
TABLE OF CONTENTS
PART I FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Balance Sheets. . . . . . . . . . . . . . . . . . . . . . .3
Statement of Operations . . . . . . . . . . . . . . . . . .4
Statement of Cash Flows . . . . . . . . . . . . . . . . . .5
Note to Financial Statements. . . . . . . . . . . . . . . .6
ITEM 2 MANAGEMENT DISCUSSION AND FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . .7
SIGNATURES . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
Customer Sports, Inc.
Balance Sheet
April 30, 1998 Unaudited and July 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
------
Current Assets
- --------------
Cash $ 15,587 $ 234
Receivables 3,213 3,213
Inventory 7,218 23,218
------------ ------------
Total Current Assets 26,018 26,665
Other Assets
- ------------
Refundable Deposit 3,000 3,000
Equipment - Net 3,755 8,213
Oil & Gas Properties
(Successful Efforts Method) 757,901 832,901
Less Accumulated Depreciation ( 713,287) ( 697,450)
License 10,000 -0-
Prepaid Advertising & Promotional 201,500 -0-
------------ ------------
Total Other Assets 262,869 146,664
------------ ------------
TOTAL ASSETS $ 288,887 $ 173,329
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
- -------------------
Accounts Payable & Accrued Expenses $ 186,326 $ 133,415
Notes Payable 178,965 178,965
------------ ------------
Total Current Liabilities 365,291 312,380
Long Term Liabilities
- ---------------------
Notes Payable 280,175 214,925
Stockholders' Equity
- --------------------
Capital Stock, 50,000,000 Shares at $0.01
Par Value; 17,984,290 & 13,766,790
Shares Issued & Outstanding Restated 179,843 137,668
Paid In Capital 6,615,019 6,404,319
Deficit in Retained Earnings ( 7,151,441) ( 6,895,963)
------------ ------------
Total Stockholders' Equity ( 356,579) ( 353,976)
------------ ------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 288,887 $ 173,329
============ ============
</TABLE>
See Accompanying Note
<PAGE>
Customer Sports, Inc.
Statements of Operations (Unaudited)
For the Three Months Period Ended April 30, 1998 & 1997
& the Nine Months Ended April 30, 1998 & 1997
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April April April April
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
- --------
Golf Sales & Fees $ 3,798 ($ 4,223) $ 28,115 $ 23,770
---------- ---------- ---------- ----------
Total Revenues 3,798 ( 4,223) 28,115 23,770
Cost of Expenses
- ----------------
Cost of Golf Sales 22,049 ( 739) 24,514 13,223
---------- ---------- ---------- ----------
Gross Profit ( 18,251) ( 3,484) 3,601 10,547
Operating Expenses
- ------------------
General & Administrative
Expenses 93,157 99,441 186,771 265,915
Depreciation & Amortization 4,576 9,727 17,652 19,770
Prior Years Adjustment -0- ( 182,133) -0- ( 182,133)
---------- ---------- ---------- ----------
Total Cost & Expenses 97,733 ( 72,965) 204,423 103,552
Profit or (Loss) from Operations ( 115,984) 69,481 ( 200,822) ( 93,005)
Other Income (Expenses)
- -----------------------
Oil & Gas Revenues 7,090 16,302 28,281 33,355
Lease Operating Expenses
Delayed Rentals, Royalties,
& Taxes - Oil Well ( 1,302) ( 3,625) ( 10,488) ( 9,333)
Oil Well Improvement ( 25,000) ( 25,000) ( 75,000) ( 75,000)
Gain on Sale of Asset -0- 6,500 2,550 6,500
---------- ---------- ---------- ----------
Total Other Income (Loss) ( 19,212) ( 5,823) ( 54,657) ( 44,478)
---------- ---------- ---------- ----------
Net Loss ($135,196) $ 63,658 ($255,479) ($137,483)
Net Loss Per Share of
Common Stock ($ .01) $ .01 ($ .02) ($ .01)
Weighted Average Number
Of Shares Outstanding
During Period 16,250,956 13,776,790 16,250,956 13,776,790
</TABLE>
See Accompanying Note
<PAGE>
Customer Sports, Inc.
Statement of Cash Flows Unaudited
April 30, 1998 & 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash Flows from Operating Expenses
- ----------------------------------
Net (Loss) from Operations ($ 255,479) ($ 137,483)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities
Write Off Oil Wells 75,000 75,000
Depreciation 17,652 19,770
Non Cash Expenses 53,894 370
Adjustment of Prior Year Accounts Payable -0- ( 182,133)
Changes in Operating Assets & Liabilities
(Increase) Decrease in Inventory -0- ( 4,147)
(Increase) Decrease in Accounts Receivable -0- 763
(Increase) Decrease in Refundable Deposits -0- ( 3,000)
Increase (Decrease) in Accounts Payable 52,911 23,261
------------ ------------
Net Cash Provided (Used) by
Operating Expenses ( 56,022) ( 207,599)
Cash Flows from Investing Activities
- ------------------------------------
Purchase of Equipment -0- ( 1,036)
Proceeds from Sale of Wells Rights -0- 750 ------------ ------------
Net Cash Provided (Used) by
Investing Activities -0- ( 286)
Cash Flows from Financing Activities
- ------------------------------------
Sale of Common Shares 6,375 105,000
Payment on Notes Payable ( 12,000) -0-
Increase in Notes Payable 76,500 108,113
Contributed Capital 500 -0-
------------ ------------
Net Cash Provided (Used) by
Financing Activities 71,375 213,113
------------ ------------
Increase (Decrease) in Cash 15,353 5,228
Cash at Beginning of Period 234 3,248
------------ ------------
Cash at End of Period $ 15,587 $ 8,476
============ ============
</TABLE>
See Accompanying Note
<PAGE>
Customer Sports, Inc.
Note to Financial Statements (Unaudited)
ITEM I
NOTE #1 - Basis of Presentation
- -------------------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ending April 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
July 31, 1998. For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended July 31, 1997.
ITEM II
Management's Discussion and Analysis of Financial Condition and Results of
Operation
For the nine months period August 1, 1997 to April 30, 1998, operating revenues
from golf sales were $28,115 compared to $23,770, for the corresponding period
ending April 30, 1997. Total operating expenses for the quarter ended April 30,
1998, were $97,733 compared to ($72,965) for the quarter ended April 30, 1997.
Total operating revenues from golf sales for the quarter ended April 30, 1998
were $3,798 compared to $3,798 for the quarter ended April 30, 1997. Operating
cost August 31, 1997 to April 30, 1998, period were $204,423 compared to
$103,552 for the same fiscal period of the preceding year.
In February, Registrant abandoned its lease at the Supersports Mall of Orange
driving range. At the time of its departure, the General Partner of the
facility claimed Registrant owed $18,000 for rent and utilities. Registrant,
based upon documentation and representations of the General Partner believes
that the General Partner owes Registrant amounts exceeding that amount.
Registrant has elected arbitration proceedings against General Partner of the
facility and intends to pursue the matter vigorously.
Because of this cessation of business, sales of golf merchandise have ceased
until another facility is opened.
<PAGE>
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
The Registrant has initiated an arbitration proceeding against the Lessor of its
facility in Orange County, California. The Registrant believes it will prevail
in this matter.
Item 2 Changes in the Rights of the Company's Security Holders. . . . . . .None
Item 3 Defaults by the Company on its Senior Securities
The Company entered into negotiation with holders of $75,000 fully amortizing
notes regarding re-structuring of the notes and was successful in procuring
agreement just prior to the end of the quarter. Under the terms of the
agreement, all past payments to the debt holders were re-classified as interest,
the notes were brought current and the three year amortization schedule
commenced May 1, 1998 with a balloon payment due on November 1, 2000. In
addition, the Registrant issued 150,000 shares of common stock in conjunction
with this settlement.
Item 4 Results of Votes of Security Holders . . . . . . . . . . . . . . . .None
Item 5 Other Information
During the period, Registrant purchased from BioCon Microbes, Inc., a license to
distribute microbial products to golf courses and driving ranges throughout the
United States. The Registrant has a non-compete during the first year of the
license but is required to purchase $100,000 annual of microbes for the license
to become and to remain exclusive. Registrant issued 1,000,000 shares of its
common stock for the license and valued the asset on its books at $10,000 or the
par value of the securities.
Registrant has reason to believe that the market for the microbial products
which purport to save considerable amounts of irrigation water is considerable
and valuable.
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .None
<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.
Customer Sports, Inc. (Registrant)
/S/ Edmund J. Irvine
Date: --------------- By: ------------------------
June 15, 1998 Edmund J. Irvine, Jr.
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000051853
<NAME> CUSTOMER SPORTS, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1998
<CASH> 15,587
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<RECEIVABLES> 3,213
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0
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<SALES> 28,115
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