U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number
September 30, 1997 0-20101
WINNERS ALL INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3545304
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3475 Sheridan Street, Suite #301, Hollywood, Florida 33021
---------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(954)964-5553
(Registrant's telephone number, including area code)
Indicate by check mark whether 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 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 of common Stock, par value $.01 per share,
outstanding as of September 30, 1997 is 29,003,675 shares.
========================================================================
WINNERS ALL INTERNATIONAL, INC.
INDEX TO FORM 10-QSB
SEPTEMBER 30, 1997
PART 1 - FINANCIAL INFORMATION
PAGE #
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Operations -
Three Months Ended September 30, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations 9
Financial Conditions 9-10
Signatures 11
2
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(DEVELOPMENT-STAGE COMPANIES)
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS
September 30, December 31,
1997 1996
(Unaudited)
Current Assets:
Cash $ 1,966 $ -
Expense Advances 44,852 -
Stock Subscriptions Receivable 70,000 -
Notes and Loans Receivable 292,717 -
Inventory 3,582 -
Prepaid Expenses 22,367 -
--------------- ---------------
Total Current Assets 435,484 -
--------------- ---------------
Property and Equipment, Net 48,315 -
--------------- ---------------
Other Assets:
Deposits 13,880 -
Investment in Subsidiaries 3,559,980 -
Loans Payable 325,801 -
Investment - License and Option 1,000 -
Deferred Charges, Net 72,823 -
---------------- ----------------
Total Other Assets 3,973,484 -
---------------- ----------------
$ 4,457,283 -
================ ================
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable
and Accrued Liabilities $ 1,018,594 $ 870,078
Loans Payable 308,468 -
------------------ -----------------
Total Current Liabilities 1,327,062 870,078
------------------ -----------------
Commitments and Contingencies - -
Stockholders' (Deficit) Equity:
Preferred stock, $1.00 par value,
2,000,000 Shares Authorized;
Series A Convertible, 750,000
Shares Authorized; Issued; and
Outstanding, 62,500 Shares
Unconverted September 30, 1997,
62,500 Shares Unconverted at
December 31, 1996. 55,035 55,035
Common Stock $.01 Par Value, 60,000,000
Shares Authorized; 29,003,675 Shares
Issued and Outstanding September 30,
1997; 14,471,756 Shares Issued &
Outstanding December 31, 1996 290,036 144,717
Additional Paid-in-Capital 13,479,899 8,026,114
Accumulated(Deficit) (10,694,749) (9,095,944)
------------- -------------
Total Stockholder' (Deficit)Equity 3,130,221 (870,078)
------------- -------------
$ 4,457,283 $ -
============= =============
SEE NOTES TO FINANCIAL STATEMENTS
3
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(DEVELOPMENT-STAGE COMPANIES)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Nine months ended September 30,
1997 1996
REVENUES $ - $ -
----------- ----------
COST AND EXPENSES
Cost of Product Development
and Demonstrations 45,362 -
Royalty Expense 2,500 -
General and Administrative 1,484,868 26,175
Depreciation and Amortization 10,075 -
----------- ----------
1,542,805 26,175
----------- ----------
OPERATING (LOSS) (1,542,805) (26,175)
OTHER INCOME (EXPENSE) (56,000) -
----------- ----------
NET (LOSS) $(1,598,805) $ (26,175)
------------ ----------
NET (LOSS) PER COMMON SHARE $ ( 0.074) $ (0.002)
----------- ----------
AVERAGE SHARES OUTSTANDING 21,737,716 14,471,756
============ ==========
SEE NOTES TO FINANCIAL STATEMENTS
4
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(DEVELOPMENT-STAGE COMPANIES)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three months ended September 30,
1997 1996
REVENUES $ - $ -
----------- ----------
COST AND EXPENSES
Cost of Product Development
and Demonstrations 45,362 -
Royalty Expense 2,500 -
General and Administrative 874,503 26,175
Depreciation and Amortization 9,984 -
----------- ----------
932,349 26,175
----------- ----------
OPERATING (LOSS) (932,349) (26,175)
OTHER INCOME (EXPENSE) - -
----------- ----------
NET (LOSS) $ (932,349) $ (26,175)
----------- ----------
NET (LOSS) PER COMMON SHARE $ ( 0.038) $ (0.002)
----------- ----------
AVERAGE SHARES OUTSTANDING 24,487,716 14,471,756
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
5
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(DEVELOPMENT-STAGE COMPANIES)
CONDENSED CONSOLIDATED CASH FLOWS
(Unaudited)
Nine months ended September 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(1,598,805) $ (26,175)
Adjustments to Reconcile Net Loss to
Net Cash Provided (Used) by Operating
Activities:
Depreciation and Amortization 10,075 -
Changes in Assets and Liabilities:
(Increase) in Prepaid Expenses (8,345) -
(Increase) in Stock Subscriptions
Receivable (70,000)
(Increase) in Loans and Expense Advances (111,166) -
Increase in Accounts Payable, Accrued
Expenses and Payroll Taxes Payable 66,217 26,175
(Increase) in Deferred Charges (16,000) -
---------- ---------
Total Adjustments (130,219) 26,175
---------- ---------
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES (1,728,024) -
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Note Receivable
(Terminated Stock Purchase Agreement) (250,000) -
Purchase of Equipment (25,626) -
Organization Costs Paid (208)
License and Option Agreement (1,000) -
Loans to Company being Acquired (136,268) -
Investment in Subsidiaries (3,643,710) -
Deposits (13,880) -
----------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES: (4,070,692) -
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Stock 5,599,114 -
Proceeds from Loans 192,753 -
----------- ---------
CASH FLOWS PROVIDED FROM FINANCING
ACTIVITIES 5,791,867 -
----------- ---------
NET INCREASE (DECREASE) IN CASH (6,849) -
CASH AT THE BEGINNING OF YEAR 8,815 -
----------- ---------
CASH - SEPTEMBER 30, 1997 $ 1,966 $ -
========== =========
Supplemental Cash Flow Data:
Non-cash Financing Activities
Acquisition of Subsidiaries 3,643,710 -
Consulting Fees 565,900 -
Debt Reduction 22,500 -
---------- ----------
Total Non-cash Financing Activities $ 4,232,110 $ -
=========== ==========
CASH PAID DURING THE YEAR FOR:
Interest $ 1,254 -
Income Taxes - -
----------- ----------
$ 1,254 -
=========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(DEVELOPMENT-STAGE COMPANIES)
(UNAUDITED)
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of the
Registrant have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered
necessary for a fair presentation, (consisting of normal recurring
accruals) have been included. Operating results for the nine months
ended September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997.
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
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
While the Registrant believes that the disclosures presented are
adequate to keep the information from being misleading, it is suggested
that these condensed, consolidated financial statements be read in
conjunction with the consolidated financial statements and notes
included in the Company's annual report on Form 10-K for the five months
ended December 31, 1996.
The accompanying unaudited, consolidated financial statements include
the accounts of Urecoats International for the nine months ended
September 30, 1997 and Designer Wear for the three months ended
September 30, 1997, which represents the period subsequent to the
acquisition of Designer Wear by the Registrant. All significant
inter-company accounts and transactions have been eliminated in
consolidation.
Investments in subsidiaries are accounted for on the equity method.
(See Note 2)
7
NOTE 2 - ACQUISITION OF DESIGNER WEAR, INC.
On July 1, 1997, the Registrant closed its Acquisition Agreement dated
May 27, 1997 for Designer Wear, Inc., in which the Registrant acquired
99.95% of the issued and outstanding capital stock of Designer Wear,
consisting of 2,149,000 shares at $ .01 par value, of common stock, from
the Designer Wear shareholders solely in exchange for 5,370,000 shares
of the Registrant's restricted common stock. Accordingly, Designer Wear
is a majority-owned subsidiary of the Registrant. The net assets
acquired by the Registrant include (a) a worldwide license for use of
the name, likeness and image of the late American actor "James Dean" on
socks; and (b) a 49% interest in a joint venture with ROK International,
for the worldwide promotion, development and marketing of the trademark
"Smith and Wesson" on apparel and accessories. Advance Royalties under
the license are being amortized. Refer to the Form 8-K filed with the
Securities and Exchange Commission dated July 16, 1997, which is
incorporated herein by this reference.
On July 18, 1997, Designer Wear entered into an Acquisition Agreement
with ROK International, Inc. The Acquisition Agreement was closed on
October 7, 1997. The results of this acquisition have not been included
in this quarter due to the Acquisition Agreement closing after September
30, 1997. Refer to the Form 8-K filed with the Securities and Exchange
Commission dated October 23, 1997, which is incorporated herein by this
reference.
The value of the acquisition of Designer Wear was determined by the
number of shares issued, times the average bid and asked prices, at the
time of issuance of the shares. For accounting purposes, the Registrant
has recorded the acquisition as a purchase.
NOTE 3 - CONSULTANTS
The Registrant entered into consulting arrangements and agreements with
several consultants for assisting it in financial matters, public
relations, marketing, and developing its subsidiaries' business
operations. Each of the respective consultants were issued restrictive
common stock and/or cash for their consulting services. The value of
the consulting services, where restricted common stock of the registrant
was issued, was determined by the number of shares issued, times the
average bid and asked prices, at the time of issuance of the shares.
NOTE 4 - PRIVATE PLACEMENT
The Registrant offered a Private Placement for 3,000,000 shares of its
restricted common stock pursuant to Rule 505 under the Securities Act of
1933, as amended, on August 1, 1997. The stock sold was to "accredited
investors", as defined in Section 501(a) of Regulation D under the
Securities Act of 1933. The Private Placement was closed on September
30, 1997 with 2,211,919 shares being sold. The net proceeds received
from the private placement amounted to $180,894.00. The net proceeds
received on or before September 30, 1997, amounted to $87,494.00. The
remaining Net Proceeds amounting to $ 70,000.00 are reflected as
Subscriptions Receivable. The shares of restricted common stock have
been recorded at a price per share equal to the greater of (i) thirty
percent (30%) of the highest average bid price for the three (3)
business days prior to the date the fully executed Subscription
Agreement was received; or (ii) $.075 per share, whichever was greater.
8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION
AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
Quarter ended September 30, 1997 as compared to the Quarter Ended
September 30, 1996:
The Registrant was operationally inactive from August 1, 1995 through
January 26, 1997. On January 29, 1997, a Special Meeting of the Board
of Directors was held. Discussions centered on reorganizing the affairs
of the Registrant, transacting business in an effort to rebuild
shareholder value, settle all outstanding matters, and bring the
business records up to date. During that same meeting, the Board of
Directors recognized and resolved that, as a result of the permanent
impairment of former operational assets, a measurement date of January
29, 1997, was established to abandon former operations effective for
the year ended July 31, 1995.
The Registrant incurred significant expenses for the quarter ended
September 30, 1997. These expenses arose from the Registrant's
continued efforts in beginning its new business operations. Expenses
incurred for the quarter ended March 31, 1997, are attributed to the
costs of winding down former operations.
As stated elsewhere in this report, the Registrant's subsidiary entered
into a Purchase and Sale Agreement for the purchase of two new,
unlicensed, proprietary products, which utilize recycled crumb rubber
from used tires, and their related technologies. The costs of the new
Product will be reflected in the next quarter.
Urecoats International stopped delivery of its licensed product under
its purchase order to Ipseal de Mexico, S.A. de C.V. ("Ipseal"), in
Mexico, due to problems found with the licensed product formula after
it was applied. Ipseal was not charged for the initial delivery. The
costs and expenses relating to this delivery are reflected under Cost of
Product Development and Demonstrations.
Urecoats International performed product demonstrations. The costs and
expenses relating to these events are reflected under Cost of Product
Development and Demonstrations.
Urecoats International purchased a trailer, equipment, accessories, and
supplies, for the application of the licensed product. These
expenditures are reflected under Property and Equipment, Net, on the
Balance Sheet.
Designer Wear did not have any revenues from the sale of its licensed
socks using the name, image and likeness of "James Dean" during the
quarter.
FINANCIAL CONDITIONS
The Registrant suffered recurring losses from former operations and
incurred new operational expenses and losses resulting in an
accumulated deficit of ($10,694,749). Management of the Registrant
established a "measurement date" of January 29, 1997, to abandon
9
former operations effective for the year ended July 31, 1995.
Management believed that the abandonment of former operations was the
first step necessary in restructuring the Registrant towards future
profitable activities.
The Registrant currently does not have the liquidity or capital
resources to fund its subsidiaries' business operations without
raising capital, either from borrowing or from the sale of additional
shares of stock. In 1997, the Registrant has raised approximately
$1,180,000.00 through the registration and sale of additional shares
of common stock. The Registrant is raising further financing through
the sale of additional shares of stock. The Registrant has also
borrowed approximately $300,000 for its new operations. Management is
continuing to negotiate with vendors to resolve all claims resulting
from former operations.
The Registrant continues to anticipates further sources of financing
from letters of credit for orders of Urecoats International's sealant
and coating products.
10
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the
Registrant caused this Quarter Ended September 30, 1997 Form 10-QSB/A
Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hollywood, and State of Florida on December
10, 1997.
WINNERS ALL INTERNATIONAL, INC.
(Registrant)
By: /s/ Howard Weiser
-------------------------
Howard Weiser
President, Chief Executive Officer
and Chairman of the Board
By: /s/ Edgar M. Reynolds
-------------------------
Edgar M. Reynolds
Vice President, Treasurer
and Director
11
