This paper document is being submitted pursuant to Rule 901(d) of
Regulation S-T
FORM 10-QSB
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 fiscal quarter ended
June 30, 1996 or
{ } Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
________________________
Commission file number 0-11345
FANATICS ONLY, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-1320541
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
7730 East Belleview, Suite 305, Englewood, CO 80111
(Address of principal executive offices) (Zip Code)
Former address 7340 East Caley Avenue, Suite 215,
Englewood, CO 80110
(Former name, former address and former fiscal year, if changed since
last report)
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
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_____ NO X
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
Common stock, no par value 8,926,876 Shares
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Report on Unaudited Financial Statements
Balance Sheets as of December 31, 1995 and June 30, 1996
Statement of Operations for Six Months Ended June 30,
1996 and from Inception (October 10, 1995) to June 30, 1996
Statement of operations for Three Months Ended June
30, 1996
Statement of Cash Flows for Six Months Ended June 30,
1996 and from Inception (October 10, 1995) to June 30, 1996
REPORT ON UNAUDITED FINANCIAL STATEMENTS
To the Board of Directors
Fanatics Only, Inc.
Denver, Colorado
The accompanying balance sheet of Fanatics Only, LLC as of June 30,
1996, and the related statements of operations and cash flows for the
three month period ended and the period from October 10, 1995
(inception) to June 30, 1996 were not audited by me and, accordingly,
I do not express an opinion on them.
/s/ Nicollette D. Rounds
Nicollette D. Rounds
August 9, 1996
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
Assets
<S> <C> <C>
Current assets
Cash $ 34,343 $ 407,892
Restricted cash - 672,505
Accounts receivable 221,185 -
Inventory 336,000 -
Deferred participating kit costs 60,187 120,375
Prepaid expenses and other 3,983 52,725
Total current assets 655,698 1,253,497
Property and equipment, net 22,785 14,531
Other asset
Licensing rights, net 211,713 220,803
Goodwill, net 260,896 271,474
Organizational costs 10,834 12,084
Deferred offering costs - 74,785
Total other asset 483,443 579,146
Total assets $ 1,161,926 $ 1,847,174
Liabilities and Stockholders' Deficit
Current liabilities
Notes payable $ 505,000 $ -
Accounts payable and accrued expenses 618,145 71,703
Revenue participation contracts 3,075,000 3,075,000
Deferred revenue 109,453 -
Due to stockholder 8,303 8,303
Total current liabilities 4,315,901 3,155,006
Stockholders' deficit
Preferred stock; no par value; 5,000,000
shares authorized, no shares issued - -
Common stock; no par value; 50,000,000
shares authorized; 8,926,870 shares 3,526,069 551,884
issued and outstanding
Deficit accumulated during the (6,680,044) (1,859,716)
development stage
Total stockholders' deficit (3,153,975) (1,307,832)
Total liabilities and stockholders' $ 1,161,926 $ 1,847,174
deficit
</TABLE>
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
October
For the 10, 1995
Six Months (Inception)
Ended June to June
30, 30,
1996 1996
<S> <C> <C>
Revenues $ 109,454 $ 109,454
Costs and expenses
Costs of participation kits 1,400,859 1,400,859
General and administrative 1,439,701 2,309,549
Advertising and promotional expenses 2,089,221 3,079,090
Net loss $ (4,820,327) $ (6,680,044)
Net loss per common share $ (.57) $ (.80)
Weighted average shares outstanding 8,514,138 8,366,556
</TABLE>
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the
Three
Months
Ended June
30,
1996
<S> <C>
Revenues $ 109,454
Costs and expenses
Costs of participation kits 381,257
General and administrative 489,336
Advertising and promotional expenses 225,305
Net loss $ (986,444)
Net loss per common share $ (.11)
Weighted average shares outstanding 8,956,876
</TABLE>
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
October
For the 10, 1995
Six Months (Inception
Ended June ) to June
30, 30,
1996 1996
<S> <C> <C>
Cash flows from operating activities
Net loss $(4,820,327) $ (6,680,044)
Adjustments to reconcile net loss to net
cash used by operating activities -
Depreciation and amortization 24,048 32,325
Aborted offering costs 54,785 -
Changes in assets and liabilities -
Accounts receivable (221,185) (221,185)
Inventory (336,000) (336,000)
Prepaid expenses and other 48,742 (3,983)
Deferred participation kit costs 60,188 (60,187)
Accounts payable and accrued 546,442 618,145
expenses
Deferred revenue 109,453 109,453
Due to stockholder - 8,303
286,473 146,871
Net cash used by operating (4,533,854) (6,533,173)
activities
Cash flows from investing activities
Purchase of property and equipment (11,385) (27,220)
Organizational costs - (12,500)
Acquisition of licensing rights and - (498,833)
goodwill
Net cash used by investing (11,385) (538,553)
activities
Cash flows from financing activities
Proceeds from notes payable 505,000 505,000
Revenue participation contracts - 3,075,000
Payment of offering costs - (20,000)
Proceeds from common stock and 2,994,185 3,546,069
subscription
Net cash provided by financing 3,499,185 7,106,069
activities
Net (decrease) increase in cash (1,046,054) 34,343
Cash - beginning of period 1,080,397 -
Cash - end of period $ 34,343 $ 34,343
</TABLE>
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Financial Resources - December 31, 1995 Compared to
June 30, 1996
At December 31, 1995, the registrant had current assets (mostly cash
and restricted cash) of $1,253,497. Subsequent to such date and
before June 30, 1996, the registrant took in $2,974,185 net proceeds
from a private placement of shares and warrants. By June 30, 1996,
substantial amounts of such cash had been expended on advertising and
other marketing costs for the Company's Baseball 1996 Fantasy Game
and Football 96. At June 30, 1996, the Company's current assets were
$655,698 but current liabilities were $4,315,901. Subsequent to
March 31, 1996, the registrant has started a private placement
offering of its common stock. The terms of the offering will raise
$1,625,400 net of offering costs on a minimum efforts basis and
$2,051,700 net of offering costs, on a maximum efforts basis. There
is no guarantee the Company will be successful in completing the
private placement offering. Additional financing from equity sales
or additional short-term loans will be necessary for the Company to
liquidate its accounts payable and short-term debt and fund ongoing
operations, including funding for general and administrative expense
and Football 1996. Absent such additional capital infusions, the
Company will not be able to sustain operations.
As of June 30, 1996, the Company has one half of the $220,890
deferred revenue representing sales receipts from the Baseball 1996
Fantasy Game selling effort. The remaining approximately $110,000
will be recognized throughout the second half of the baseball game.
Results of Operations-Inception (October 10, 1995) to June 30, 1996
Compared to the Six Months Ended June 30, 1996
Costs and expenses from inception (the date when the startup Fanatics
Only LLC business was acquired by the registrant) to June 30, 1996
totaled $6,789,498, of which $4,929,781 was incurred in the six
months ended June 30, 1996. All such expenses were either general
and administrative costs, or Fantasy Game inventory and advertising
and promotional expense incurred for the Baseball 1996 Fantasy Game
selling effort.
As of June 30, 1996, $109,454 of revenues have been recognized by the
registrant for the period from inception which relates to one-half
the revenues related to Baseball/96 which runs from April 1, 1996 to
approximately the end of September 1996. As noted above, prize
expense for such game are expected to offset such revenues. The
registrant had expended over $3,000,000 for advertising and
promotional expense for the Baseball 1996 Fantasy Game, expecting
sales of 10,000 or more units. Only approximately 4,000 have been
sold.
Subsequent to June 30, 1996, the registrant has significantly reduced
general and administrative expense and refined its business plan to
emphasize (for Football 1996 and future Fantasy Game) direct selling
methods instead of national media campaigns funded by the registrant,
and also the sale of sponsorship contracts to major corporations
wherein such sponsors would fund advertising expenses.
PART II OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable
Item 3. Defaults on Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not
applicable.
Item 5. Other information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K: Not applicable
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.
Fanatics Only, Inc.
(Registrant)
Jeff Gehl, President and Chief
Financial Officer
Date: June 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 34,343 34,343
<SECURITIES> 0 0
<RECEIVABLES> 221,185 221,185
<ALLOWANCES> 0 0
<INVENTORY> 336,000 336,000
<CURRENT-ASSETS> 655,698 655,698
<PP&E> 25,916 25,916
<DEPRECIATION> 3,131 3,131
<TOTAL-ASSETS> 1,161,926 1,161,926
<CURRENT-LIABILITIES> 4,315,901 4,315,901
<BONDS> 0 0
0 0
0 0
<COMMON> 3,526,069 3,526,069
<OTHER-SE> (6,680,044) (6,680,044)
<TOTAL-LIABILITY-AND-EQUITY> 1,161,926 1,161,926
<SALES> 109,454 109,454
<TOTAL-REVENUES> 109,454 109,454
<CGS> 1,400,859 381,257
<TOTAL-COSTS> 4,929,781 1,095,898
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (4,820,327) (986,444)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (4,820,327) (986,444)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (4,820,327) (986,444)
<EPS-PRIMARY> (.57) (.11)
<EPS-DILUTED> (.57) (.11)
</TABLE>
