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.
October 31, 1998 0-5304
CUSTOMER SPORTS, INC.
----------------------
(Exact name of Registrant)
UTAH 87-0282745
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
455 Marine View Avenue, Suite 260, 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
year end, if changed since last report.
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, 19,866,253 Shares Outstanding
at October 31, 1998.
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. . . . . . . . . . . . . . . . . . . . . . . .8
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . .9
Customer Sports, Inc.
Balance Sheets (Unaudited)
October 31, 1998 & July 31, 1998
<TABLE>
<CAPTION>
October July
31, 1998 31, 1998
------------ ------------
<S> <C> <C>
Assets
Current Assets
- --------------
Cash $ 2,375 $ 20,927
Receivables 2,732 2,732
Inventory 7,218 7,218
------------ ------------
Total Current Assets 12,325 30,877
Other Assets
- ------------
License -0- 10,000
Refundable Deposit 3,000 3,000
Equipment - Net 2,545 3,150
Oil & Gas Properties
(Successful Efforts Method) 732,901 732,901
Less Accumulated Depreciation ( 721,209) ( 719,102)
------------ ------------
Total Other Assets 17,237 29,949
------------ ------------
Total Assets $ 29,562 $ 60,826
============ ============
Liabilities & Stockholders' Equity
----------------------------------
Current Liabilities
- -------------------
Accounts Payable & Accrued Expenses $ 121,116 $ 117,920
Note Payable 237,513 237,513
------------ ------------
Total Current Liabilities 358,629 355,433
Long Term Liabilities
- ---------------------
Notes Payable 163,377 157,377
Stockholders' Equity
- --------------------
Capital Stock 50,000,000 Shares at
$0.01 Par Value; 19,866,253
& 20,866,253 Shares Issued
& Outstanding Respectively 198,663 208,660
Paid In Capital 6,750,380 6,750,383
Deficit in Retained Earnings (7,441,487) ( 7,411,027)
------------ ------------
Total Stockholders' Equity ( 492,444) ( 451,984)
------------ ------------
Total Liabilities & Stockholders' Equity $ 29,562 $ 60,826
============ ============
</TABLE>
See Accompanying Notes
3
Customer Sports, Inc.
Statements of Operations (Unaudited)
For the Periods August 1, 1998 to October 31, 1998
and August 1, 1997 to October 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Revenues
- --------
Golf Sales & Fees $ 39,103 $ 15,492
------------ ------------
Total Revenues 39,103 15,492
Cost of Sales
- -------------
Cost of Golf Sales 3,782 1,415
------------ ------------
Gross Profit 35,321 14,077
Operating Expenses
- ------------------
Consulting Fees 5,000 25,975
General & Administrative Expenses 53,865 21,619
Interest Expenses 9,196 11,637
Depreciation & Amortization 2,712 5,489
------------ ------------
Total Costs & Expenses 70,773 64,720
------------ ------------
Loss from Operations ( 35,452) ( 50,643)
Other Income (Expenses)
- -----------------------
Gain on Sale of Assets -0- 2,550
Oil & Gas Revenues 4,993 8,721
Write Off Impaired Oil Wells -0- ( 25,000)
Lease Operating Expenses,
Delayed Rentals, Royalties,
& Taxes Oil Wells -0- ( 3,672)
------------ ------------
Total Other Income (Expenses) 4,993 ( 17,401)
------------ ------------
Net Loss ($ 30,459) ($ 68,044)
============ ============
Net Loss Per Share
Of Common Stock ( .00) ( .00)
Weighted Average Number Of
Shares Outstanding During Period 19,866,253 13,875,540
</TABLE>
See Accompanying Notes
4
Customer Sports, Inc.
Statement of Cash Flows (Unaudited)
For the Periods August 1, 1998 to October 31, 1998
& August 1, 1997 to October 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities
- ------------------------------------
Net (Loss) from Operations ($ 30,459) ($ 68,044)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities
Rounding ( 1) -0-
Non Cash Consulting Fees -0- 16,750
Depreciation 2,712 5,489
Write Off Impaired Assets -0- 25,000
Changes in Operating Assets & Liabilities
Increase (Decrease) in Accounts Payable 3,196 11,637
------------ ------------
Net Cash Provided (Used) by
Operating Activities ( 24,552) ( 9,168)
Cash Flows from Investing Activities -0- -0-
- ------------------------------------ ------------ ------------
Net Cash Provided (Used) by
Investing Activities -0- -0-
Cash Flows from Financing Activities
- ------------------------------------
Sale of Common Shares -0- 6,375
Increase in Notes Payable 6,000 4,250
------------ ------------
Net Cash Provided (Used) by
Financing Activities 6,000 10,625
------------ ------------
Increase (Decrease) in Cash ( 18,552) 1,457
Cash at Beginning of Period 20,927 234
Cash at End of Period $ 2,375 $ 1,691
Disclosures from Operating Activities
- -------------------------------------
Interest $ 9,196 $ 11,637
Taxes -0- -0-
</TABLE>
See Accompanying Notes
5
Customer Sports, Inc.
ITEM 1.
Summarized Financial Information (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER 30, 1998
NOTE #1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10Q 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 or normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and three months periods ending October 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ended July 31, 1999. 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 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operation
Operating revenue for the quarter ended October 31, 1998 were $44,096
compared to $26,763 for the quarter ended October 31, 1997. Total expenses
for the quarter ending October 31, 1998 were $70,773 compared to $164,720
for the same period ended October 31, 1997.
During the period, Registrant entered into two operating leases at the
Double Eagle Golf Center in Temecula, California (8/15/98) and at Rancho
Valley Golf Center in Rancho Cucamonga, California (10/27/98). Under the
terms of the leases, the Company was obligated for three years in Temecula
and ten years in Rancho Cucamonga. Leases included an overage to be paid
to the Lessors depending upon performance. Leases were signed predicated
upon a funding of up to $1.5 million from a European trust.
The trust did not fund the operation and Double Eagle was canceled for lack
of rent. The Company experienced a loss of approximately $30,000 from the
forced cancellation. Revenues suffered as the Company was unable to
implement its membership program.
Oil and gas revenues continued their orderly decline during the period and
Registrant wrote down the value of the oil and gas holdings by an
additional $25,000.
The Company settled its dispute with Peratla Sports via arbitration for
$12,000 vs. $22,000 sought by Peralta. The amount was personally
guaranteed by the President, Mr. Edmund J. Irvine, Jr.
In July, the Registrant canceled its contract with Roy Meadows, Stockbroker
Relations, Inc., and John Vanover. The Board recommended pursuing legal
action against both parties for lack of consideration. The Registrant is
interviewing counsel to pursue this matter.
In October, the board voted to accept a payment of $3,750 and the return of
1,000,000 shares for cancellation of the licensing agreement with U.S.
Microbics (OTCBB:BUGS). The Registrant terminated all activities related
to its GranVerde subsidiary.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . None
Item 2. Changes in the Rights of the
Registrant's Security Holders. . . . . . . . . . . . . . . . None
Item 3. Defaults by the Company on its Senior Securities . . . . . .None
Item 4. Results of Votes of Security Holders . . . . . . . . . . . .None
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . .None
SUBSEQUENT EVENTS
In March 1998, Registrant agreed to purchase a five year license from
Global Ventures, Inc., (OTCBB:BUGS) to distribute proprietary microbial
products to golf courses and driving ranges. The license became exclusive
after $100,000 of products are purchase from the manufacturer. In
terminating this transaction, the Registrant received one million shares of
its common stock for cancellation and a check for $3,750.
In January, the Board reduced the option price of outstanding options to
$.01 to reflect the decline in the price of the shares. Messrs. Irvine and
Sharp used deferred salary payments to pay for the exercise of options.
Sharp exercised options on 2,450,000 shares and Irvine exercised options
for 6,250,000 shares.
After exercise, the Board created a note payable to Irvine for $71,250
payable at 10% annually for the remainder of the unpaid salary.
The Board also voted to offer holder of $110,000 debt the right to exchange
the debt for a like amount of preferred shares. Irvine is to pursue this
course of action with the note-holders.
The Board voted to recommend a 1:10 reverse split at the next shareholders
meeting and to offer Payment in Kind common stock payments to all note-
holders.
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)
October 20, 1999 /S/ Edmund J. Irvine
Date:------------------- By:------------------------------
October 20, 1999 Edmund J. Irvine, Jr.
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000051853
<NAME> CUSTOMER SPORTS, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 2,375
<SECURITIES> 0
<RECEIVABLES> 2,732
<ALLOWANCES> 0
<INVENTORY> 7,218
<CURRENT-ASSETS> 12,325
<PP&E> 750,109
<DEPRECIATION> 735,872
<TOTAL-ASSETS> 29,562
<CURRENT-LIABILITIES> 358,629
<BONDS> 0
0
0
<COMMON> 198,663
<OTHER-SE> (691,107)
<TOTAL-LIABILITY-AND-EQUITY> 29,562
<SALES> 39,103
<TOTAL-REVENUES> 44,096
<CGS> 3,782
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 70,773
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,196
<INCOME-PRETAX> (30,459)
<INCOME-TAX> 0
<INCOME-CONTINUING> (30,459)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,459)
<EPS-BASIC> (.00)
<EPS-DILUTED> 0
</TABLE>
