UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 0-20101
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WINNERS ALL INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3545304
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
3475 Sheridan Street, Suite 301, Hollywood, Florida 33021
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(Address of principal executive offices)
(954) 964-5553
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(registrant's telephone number, including area code)
Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
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The number of shares of common Stock, par value $.01 per share,
outstanding as of April 30, 1998, was 38,699,952 shares.
WINNERS ALL INTERNATIONAL, INC.
INDEX TO FORM 10-QSB
MARCH 31, 1998
PAGE
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 .................. 3-4
Condensed Consolidated Statements of Operations -
March 31, 1998 and 1997 ............................... 5
Condensed Consolidated Statements of Cash Flows -
March 31, 1998 and 1997 ............................... 6-7
Notes to Condensed Consolidated Financial Statements..... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................... 9
PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS ...................................... 10
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS .............. 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ........................ 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS ................................................ 10
ITEM 5. OTHER INFORMATION ...................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ....................... 11
SIGNATURES ...................................................... 12
Page 2
PART 1 - FINANCIAL INFORMATION
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ITEM 1 - FINANCIAL STATEMENTS
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WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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MARCH 31, 1998 DECEMBER 31, 1997
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(UNAUDITED)
Current Assets:
Cash $ 2,792 $ 1,079
Prepaid Expenses 32,736 33,525
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Total Current Assets 35,528 34,604
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Property and Equipment, Net 72,346 56,997
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Other Assets:
Deposits 19,691 10,096
Intangibles, Net 4,238,538 4,242,266
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Total Other Assets 4,258,229 4,252,362
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Total Assets $ 4,366,103 $ 4,343,963
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 3
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
MARCH 31, 1998 DECEMBER 31, 1997
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(UNAUDITED)
Current Liabilities:
Notes Payable $ 85,000 $ 85,000
Accounts Payable and
Accrued Expense 865,150 790,231
Loans Payable 870,472 897,743
Due to Related Parties 41,078 35,329
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Total Current Liabilities 1,861,700 1,808,303
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Commitments and Contingencies 783,021 783,021
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Stockholders' Equity:
Preferred Stock, $1.00 Par
Value, 2,000,000 Shares
Authorized; Series A
Convertible, 750,000 Shares
Authorized; Issued &
Outstanding, 62,500 Shares
Unconverted (Less Offering
Costs of $7,465) 55,035 55,035
Common Stock $.01 Par Value,
60,000,000 shares Authorized;
35,765,540 Shares Issued &
Outstanding, March 31, 1998;
30,034,679 Shares Issued &
Outstanding, December 31, 1997. 357,655 300,347
Additional Paid-In-Capital 13,462,760 12,963,253
Accumulated (Deficit) -
Discontinued Operations (9,095,944) (9,095,944)
Accumulated (Deficit) -
Development Stage Operations (3,058,124) (2,470,052)
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Total Stockholders' Equity 1,721,382 1,752,639
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Total Liabilities and
Stockholders' Equity $ 4,366,103 $ 4,343,963
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 4
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
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MARCH 31,1998 MARCH 31, 1997
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Revenues $ -0- $ -0-
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Costs and Expenses:
Research and Development 66,506 327,750
General and Administrative 512,682 140,127
Depreciation and Amortization 8,884 -0-
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Total Costs and Expenses (588,072) (467,877)
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Net (Loss) $ (588,072) $ (467,877)
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Net (Loss) Per Common Share $ (0.018) $ (0.029)
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Weighted Average Shares Outstanding 32,900,109 15,875,756
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 5
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
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MARCH 31,1998 MARCH 31, 1997
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Cash Flows from Operating Activities:
Net(Loss) $ (588,072) $ (467,877)
Adjustments to Reconcile Net (Loss)
to Net Cash (Required) by
Operating Activities:
Depreciation and Amortization 8,884 (21,650)
Changes in Assets and Liabilities:
Prepaid Expenses 789 -0-
Deposits (9,595) -0-
Accounts Payable and
Accrued Expenses 74,919 -0-
Due to Related Parties 5,749 -0-
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Net Cash (Required) by
Operating Activities (507,326) (489,527)
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Cash Flows from Investing Activities:
Acquisition of Property & Equipment (20,505) -0-
Acquisition of Intangibles -0- (913,500)
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Net Cash (Required) by
Investing Activities (20,505) (913,500)
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Page 6
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
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(CONTINUED)
MARCH 31,1998 MARCH 31, 1997
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Cash Flows from Financing Activities:
Proceeds from Issuance of
Common Stock 556,815 1,403,500
Repayment of Loans (27,271) -0-
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Net Cash Provided by
Financing Activities 529,554 1,403,500
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Net Increase in Cash 1,713 473
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Cash at Beginning of Period 1,079 -0-
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Cash at End of Period $ 2,792 $ 473
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Supplemental Disclosure of
Cash Flow Information:
Non-Cash Financing Activities:
Acquisition of Intangibles -0- 913,500
Retainment of Consultants 204,500 -0-
Repayment of Debt 5,000 -0-
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Totals $ 209,500 $ 913,500
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SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 7
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
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The accompanying unaudited condensed 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 Regulation S-B. 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 three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1998.
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-KSB for the year ended December 31, 1997.
The accompanying unaudited condensed consolidated financial statements:
include the accounts of the Company and its wholly-owned subsidiaries,
Urecoats International, Inc. ("Urecoats") and Designer Wear, Inc.
("Designer Wear"), for the three months ended March 31, 1998; include the
accounts of the Company and Urecoats for the three months ended March 31,
1997. All significant intercompany accounts and transactions have been
eliminated in consolidation.
The unaudited condensed consolidated financial statements for the three
months ended March 31, 1997, have been restated to conform with the results
indicated on the December 31, 1997 Form 10-KSB.
Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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QUARTER ENDED MARCH 31, 1998 AS COMPARED TO THE QUARTER ENDED MARCH 31,1997
RESULTS OF OPERATIONS
The Company's research and development costs decreased by $261,244 as
the formula and testing for the Urecoats subsidiary sealant and coating
product comes closer to final field testing. It is anticipated that the
final field test will occur in the second quarter of 1998. As a result of
the 1998 first quarter results, including Designer Wear and its wholly-owned
subsidiary, ROK International, Inc., general and administrative expenses
increased $372,555; consisting of payroll costs of $160,965, professional
fees of $75,180, royalty expenses of $40,000, general, selling and
administrative costs of $127,720, and a reduction of consulting fees of
$31,310. Depreciation and amortization increased by $8,884.
FINANCIAL CONDITIONS
The Company has suffered losses from discontinued operations resulting in
an accumulated (deficit) of $(9,095,944); and recurring losses from development
stage operations of $(3,058,124).
The Company currently does not have the liquidity or capital resources
to fund Urecoats or Designer Wear without raising capital either from
borrowing or from the sale of additional shares of stock. In 1998, the
Company raised approximately $347,315 through the sale of additional
unregistered, restricted common stock. The Company anticipates raising
further financing through the sale of additional unregistered, restricted common
stock. Management is continuing to negotiate with vendors and various legal
counsel to resolve all claims and judgments from former discontinued operations.
The Company also anticipates further sources of financing from minimum
guaranteed royalty payments from the Multiplinvest and Smith & Wesson
License Agreement and financing from anticipated letters of credit. These
letters of credit are related to anticipated purchase orders for the
delivery of Urecoats sealant and coating product to Mexico.
Page 9
PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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No Changes from December 31, 1997 Form 10-KSB
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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The Company is offering 7,000,000 shares of its unregistered,
restricted common stock ("Shares"), in a Private Placement commenced on
January 1, 1998, pursuant to the exemption under Rule 505 of the Securities
Act of 1933, as amended (the "Act"). The Shares were sold to "Accredited
Investors", as defined in Section 501(a) of Regulation D under the Act. The
Shares have been recorded at $.075. As of March 31, 1998, 4,630,865 Shares
were sold, amounting to $ 347,314.88. A breakdown of the proceeds are
described below.
Cash Proceeds $ 342,314.88
Conversion of Debt Proceeds $ 5,000.00
Less: Finder's Fee $ (965.00)
Less: Broker/Dealer Fees $ (8,500.00)
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Total Proceeds $ 337,849.88
============
The Broker/Dealer's Fee of 10% is against the sale of 1,166,667 Shares and
was paid in cash. The Finder's Fee of 10% is against the sale of 128,667 Shares
and was paid in cash.
The Conversion of Debt proceeds were received from the cancellation of
a $5,000 loan payable due and owing by the Company. The loan payable was
satisfied with the issuance of 66,667 Shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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N/A
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None
Page 10
ITEM 5. OTHER INFORMATION
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None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) EXHIBITS - NONE
(b) FORM 8-KS:
(i) Form 8-K filed on May 15, 1998.
Page 11
SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hollywood, and State of Florida on May 27, 1998.
WINNERS ALL INTERNATIONAL, INC.
(Registrant)
/s/ Howard Weiser May 27, 1998
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Howard Weiser Date
President, CEO and Secretary
/s/ Edgar M. Reynolds May 27, 1998
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Edgar M. Reynolds Date
Vice President and Treasurer
Page 12
