- - -----------------------------------------------------------------------------
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 September 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 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
incorporation or organization) identification no.)
4100 North Powerline Road, Suite F-1, Pompano Beach, Florida 33073
-------------------------------------------------------------------
(Address of principal executive offices)
(954) 977-5428
--------------------------------------------------
(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 [ ]
--- ---
The number of shares of common Stock, par value $.01 per share,
outstanding as of November 11, 1998 was 53,427,117 shares.
- - ------------------------------------------------------------------------------
<PAGE>
WINNERS ALL INTERNATIONAL, INC.
FORM 10-QSB
SEPTEMBER 30, 1998
INDEX
-----
PAGE
------
PART I - FINANCIAL INFORMATION
- - ------------------------------
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of September 30, 1998
and December 31, 1997 ............................................... 3-4
Condensed Consolidated Statements of Operations for the three months
and nine months ended September 30, 1998 and 1997 ................... 5-6
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and 1997 ................................... 7-8
Notes to Condensed Consolidated Financial Statements................. 9-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ........................ 11
PART II - OTHER INFORMATION
- - ---------------------------
ITEM 1. LEGAL PROCEEDINGS ......................................... 12-13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ................. 13-14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .......................... 14
Page 2
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- - -----------------------------
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
------
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash $ 526 $ 1,079
Loans Receivable 17,422 -0-
Prepaid Expenses 102,358 33,525
------------------ -----------------
Total Current Assets 120,306 34,604
------------------ -----------------
Property and Equipment, Net 166,717 56,997
------------------ -----------------
Other Assets:
Deposits 32,375 10,096
Intangibles, Net 2,645,823 4,242,266
------------------ -----------------
Total Other Assets 2,678,198 4,252,362
------------------ -----------------
Total Assets $ 2,965,221 $ 4,343,963
================== =================
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
Page 3
<PAGE>
<TABLE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Current Liabilities:
Notes Payable $ 50,000 $ 85,000
Accounts Payable and
Accrued Expense 1,011,881 790,231
Loans Payable 34,963 897,743
Due to Related Parties 87,857 35,329
------------------ -----------------
Total Current Liabilities 1,184,701 1,808,303
------------------ -----------------
Commitments and Contingencies 757,021 783,021
------------------ -----------------
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;
52,838,284 Shares Issued &
Outstanding, September 30, 1998;
30,034,679 Shares Issued &
Outstanding, December 31, 1997. 528,383 300,347
Additional Paid-In-Capital 15,365,100 12,963,253
Accumulated (Deficit) -
Discontinued Operations (9,095,944) (9,095,944)
Accumulated (Deficit) -
Development Stage Operations (5,829,075) (2,470,052)
------------------ -----------------
Total Stockholders' Equity 1,023,499 1,752,639
------------------ -----------------
Total Liabilities and
Stockholders' Equity $ 2,965,221 $ 4,343,963
================== =================
<FN>
See Accompanying Notes To Condensed Consolidated Financial Statements
</TABLE>
Page 4
<PAGE>
<TABLE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
Revenues $ 3,291 $ -0-
----------------- -----------------
Costs and Expenses:
Research and Development 144,600 45,362
General and Administrative 266,238 350,572
Depreciation and Amortization 10,546 9,984
----------------- -----------------
Total Costs and Expenses 421,384 405,918
----------------- -----------------
Net (Loss) from Operations (418,093) (405,918)
----------------- -----------------
Extraordinary Income (Expense):
Write Down of Intangibles (1,643,635) -0-
----------------- -----------------
Net (Loss) $ (2,061,728) $ (405,918)
----------------- -----------------
Net (Loss) Per Common Share $ (0.042) $ (0.017)
----------------- -----------------
Weighted Average Shares Outstanding 49,607,451 24,487,716
----------------- -----------------
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
Page 5
<PAGE>
<TABLE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
Revenues $ 3,291 $ -0-
----------------- -----------------
Costs and Expenses:
Research and Development 304,290 373,112
General and Administrative 1,385,073 958,118
Depreciation and Amortization 29,316 10,075
----------------- -----------------
Total Costs and Expenses 1,718,679 1,341,305
----------------- -----------------
Net (Loss) from Operations (1,715,388) (1,341,305)
----------------- -----------------
Extraordinary Income (Expense):
Write Down of Intangibles (1,643,635) -0-
----------------- -----------------
Net (Loss) $ (3,359,023) $ (1,341,305)
----------------- -----------------
Net (Loss) Per Common Share $ (0.081) $ (0.062)
----------------- -----------------
Weighted Average Shares Outstanding 41,436,482 21,737,716
----------------- -----------------
<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
Page 6
<PAGE>
<TABLE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (3,359,023) $ (1,341,305)
Adjustments to Reconcile Net (Loss)
to Net Cash (Required) by
Operating Activities:
Depreciation and Amortization 29,316 10,075
Changes in Assets and Liabilities:
Loans Receivable and Expense
Advances (17,422) (111,166)
Prepaid Expenses (68,833) (8,345)
Deposits (22,279) -0-
Stock Subscriptions Receivable -0- (70,000)
Accounts, Accrued Expenses and
Payroll Taxes Payable 195,650 66,217
Due to Related Parties 52,528 -0-
Deferred Charges -0- (16,000)
----------------- -----------------
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES (3,190,063) (1,470,524)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Note Receivable:
Terminated Stock Purchase Agreement -0- (250,000)
Acquisition of Property & Equipment (127,849) (25,626)
Organization Costs -0- (208)
License and Option Agreement -0- (1,000)
Loans to Company being Acquired -0- (136,268)
Acquisition of Intangibles 1,585,256 (3,413,100)
Deposits -0- (13,880)
----------------- -----------------
NET CASH (USED) BY INVESTING ACTIVITIES 1,457,407 (3,840,082)
----------------- -----------------
</TABLE>
Page 7
<PAGE>
<TABLE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of
Common Stock 2,629,883 5,110,004
Repayments of Loans (897,780) 192,753
----------------- -----------------
CASH FLOWS PROVIDED FROM FINANCING
ACTIVITIES 1,732,103 5,303,757
----------------- -----------------
NET INCREASE (DECREASE) IN CASH (553) (6,849)
----------------- -----------------
CASH AT BEGINNING OF PERIOD 1,079 8,815
----------------- -----------------
CASH AT END OF PERIOD $ 526 $ 1,966
================= =================
SUPPLEMENTAL CASH FLOW DATA:
Non-Cash Financing Activities
Legal Fees 145,250 -0-
Acquisition of Intangibles 55,000 3,413,100
Consultants Fees 507,725 308,400
Repayment of Debts 1,023,358 22,500
Employee Compensation 1,000 -0-
----------------- -----------------
Total Non-cash Financing Activities $ 1,732,233 $ 3,744,000
================= =================
<FN>
See Accompanying Condensed Consolidated Financial Statements
</TABLE>
Page 8
<PAGE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The accompanying unaudited condensed consolidated financial statements
as of September 30, 1998, and for the three month and nine month periods ended
September 30, 1998 and 1997, have been prepared in conformity with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. The financial information as
of December 31, 1997, is derived from the registrant's Form 10-KSB for the
year ended December 31, 1997. Certain information or footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission.
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. In the opinion of management, the accompanying financial
statements include all adjustments necessary (which are of a normal and
recurring nature) for the fair presentation of the results of the interim
periods presented. While the registrant believes that the disclosures
presented are adequate to keep the information from being misleading, it is
suggested that these accompanying financial statements be read in conjunction
with the registrant's audited consolidated financial statements and notes for
the year ended December 31, 1997, included in the registrant's Form 10-KSB for
the year ended December 31, 1997.
Operating results for the three month and nine month periods ended
September 30, 1998, are not necessarily indicative of the results that may be
expected for the remainder of the fiscal year ending December 31, 1998.
The accompanying unaudited condensed consolidated financial statements:
include the accounts of the registrant and its wholly-owned subsidiaries,
Urecoats International, Inc. ("Urecoats") and Designer Wear, Inc.
("Designer Wear"), for the nine months ended September 30, 1998; include the
accounts of the registrant and Urecoats for the nine months ended September 30,
1997; and include the accounts of the registrant and Designer Wear for the three
months ended September 30, 1997. All significant inter-company accounts and
transactions have been eliminated in consolidation.
The unaudited condensed consolidated financial statements for the three
months and nine months ended September 30, 1997, have been restated to conform
with the results indicated on the December 31, 1997 Form 10-KSB.
Page 9
<PAGE>
WINNERS ALL INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - INTANGIBLES
- - --------------------
The registrant, on behalf of Designer Wear and ROK International, Inc.
("ROK"), has filed a lawsuit, in the United States District Court for the
Southern District of Florida, against the Smith and Wesson Corporation
("Smith & Wesson") and its Director of Licensing and Merchandising, for:
Breach of a Trademark Licensing Agreement and the Implied Covenant of Good
Faith and Fair Dealing; Promissory Estoppel; Tortious Interference with the
Contractual Relationship between ROK and Designer Wear. The lawsuit seeks
damages in the amount of $50,000,000 plus declaratory and injunctive relief.
(See Part II - Item 1. Legal Proceedings of this report for more complete
information.)
It is the opinion of the registrant's litigation counsel that the
Agreement between ROK and Smith & Wesson, under which ROK is entitled to a
fifty percent (50%) share in the royalties collected by Smith & Wesson from
Multiplinvest (Multiplinvest is an Italian company which entered into the
Multiplinvest Agreement) ("Multiplinvest Agreement"), after ROK agreed to
surrender its rights to certain territories), survives any termination of the
Trademark Agreement, and will not be effected by the lawsuit. Designer Wear
received notice, through ROK, that Smith & Wesson provided a default notice to
Multiplinvest under the Multiplinvest Agreement. The registrant has not been
notified at this time as to whether or not the default was cured and/or other
curative measures were taken between Smith & Wesson and Multiplinvest to
rectify the default under the Multiplinvest Agreement.
In accordance with Statement of Accounting Standards (SFAS) #121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of", the registrant records impairment losses on Long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the assets carrying amount. Accordingly, as of September 30, 1998, the
registrant has deemed an impairment loss of $1,643,635 from the re-valued
Smith & Wesson Trademark Agreement and Goodwill arising from the acquisition
of Designer Wear and ROK.
Page 10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- - --------------------------------------------------------------------
QUARTER ENDED SEPTEMBER 30, 1998 AS COMPARED TO QUARTER ENDED SEPTEMBER 30, 1997
RESULTS OF OPERATIONS
The registrant's research and development costs increased by $144,600 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 tests will occur in the fourth quarter of 1998. As a result of the 1998
third quarter results, including Designer Wear and its wholly-owned subsidiary,
ROK International, Inc., general and administrative expenses increased $266,238;
consisting of payroll costs of $77,180, royalty expenses of $830, general,
selling and administrative costs of $36,523, consulting fees of $40,025, and
professional fees of $111,680. Depreciation increased by $6,817 and
amortization increased by $3,729.
FINANCIAL CONDITIONS
The registrant has suffered losses from discontinued operations resulting
in an accumulated (deficit) of $(9,095,944); and recurring losses from
development stage operations of $(5,829,075).
The registrant 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
registrant raised approximately $976,815 through the sale of unregistered,
restricted common stock. The registrant 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 registrant also anticipates further sources of financing from
anticipated letters of credit. These letters of credit are related to the
purchase order for delivery of the Urecoats sealant and coating product to
Mexico.
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements. For this
purpose, any statements contained in this Form 10-QSB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or the negative or other variations
thereof or comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties, and actual results may differ materially depending on a variety
of factors.
Page 11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
- - --------------------------
(A) Designer Wear, Inc. and ROK International vs. Smith & Wesson
Corporation and John S. Steele; and third-party defendants
Laurence Sack, Howard Weiser and Winners All International, Inc.
This proceeding is pending in the United States District Court for
the Southern District Of Florida ("District Court"). Designer Wear, Inc.
("Designer Wear"), a wholly-owned subsidiary of the registrant, and ROK
International, Inc. ("ROK"), a wholly-owned subsidiary of Designer Wear,
filed a lawsuit against the Smith & Wesson Corporation ("Smith & Wesson")
and John S. Steele ("Steele"), Smith & Wesson's Director of Licensing and
Merchandising, on June 1, 1998, claiming: I. Breach of a Trademark Licensing
Agreement and Implied Covenant of Good Faith and Fair Dealing; II. Promissory
Estoppel; III. Tortious Interference with the Contractual Relationship
between ROK and Designer Wear; and requesting a IV. Declaratory Judgment
and IV. Permanent Injunction.
Designer Wear received notice from Smith & Wesson, through ROK, of
termination of ROK's License Agreement dated March 1, 1996, as amended
August 23, 1996. Designer Wear and ROK management provided return notice to
Smith & Wesson disagreeing with the termination notice and indicated the
termination was not valid. The registrant's legal counsel and Smith & Wesson
management attempted a resolution of the matter, however, a settlement was
not reached as expected.
Smith & Wesson filed an "Answer and Affirmative Defenses of Defendant
Smith & Wesson to Plaintiffs' Complaint, Counterclaim and Jury Demand"
("Smith & Wesson Answer, Defenses and Counterclaims"), on July 13, 1998,
alleging, among other things, unclean hands, reformation of the license,
proper termination, defensive estoppel, and defensive waiver. The
counterclaims were brought against Designer Wear, ROK, and third-party
defendants Laurence Sack, Howard Weiser and the registrant (hereinafter
collectively referred to as ("Registrant et. al."). The counterclaims are
as follows: I. Federal trademark infringement; II. False description, false
advertising, tarnishment and dilution; III. Common law trademark infringement;
IV. Common law unfair competition; V. Breach of contract; VI. Breach of
implied covenant of good faith and fair dealings; VII. Duty to indemnify is
valid and enforceable; VIII. Fraud; and IX. Conspiracy to commit fraud.
The Registrant et. al. filed a "Motion to Dismiss Counterclaims and
Incorporated Memorandum of Law" ("Counterclaim Dismissal Motion"), on or
about August 4, 1998, in response to the Smith & Wesson Answer, Defenses
and Counterclaims, pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure for dismissal of the counterclaims (and third-party claims) brought
against them in I, II, III, IV, VI, VII, VIII, and IX, on the ground that
they were insufficiently pled and should be dismissed for failure to state
any claim upon which relief may be granted. In addition, Steele filed a
motion to dismiss claims against himself and/or to transfer the action
("Steele Dismissal Motion"), on July 13, 1998. Designer Wear and ROK filed
an opposition to the Steele Dismissal Motion, on or about July 27, 1998.
Page 12
<PAGE>
The District Court ruled, on November 2, 1998, on the Counterclaim
Dismissal Motion, to reserve any decision on the sufficiency of the
counterclaims until any subsequent motions for summary judgment are filed or
at time of trial. In addition, the Court, on November 2, 1998, denied the
Steele Dismissal Motion, subject to the issue being revisited on any
subsequent motions for summary judgment or at time of trial. The Registrant
et. al., on or about November 9, 1998, filed their reply to the counterclaims
in the Smith & Wesson Answer, Defenses and Counterclaims. Designer Wear and
ROK are seeking damages of $50,000,000. Smith & Wesson is a subsidiary of
Tompkins PLC in London, England.
(B) Stanley Farber vs. Winners All International, Inc.
This proceeding is pending in the Circuit Court of the Seventeenth
Judicial Circuit in and for Broward County, Florida. Stanley Farber
("Plaintiff"), on or about July 25, 1996, filed a complaint against the
registrant ("Defendant") for Breach of an executive employment contract.
As a result of absence of counsel on behalf of the registrant (and without
prior notice having been received by registrant), an initial default judgment
was granted on or about December 30, 1996 and a final default judgment was
awarded in July 1997. Registrant intends to have independent counsel review
this matter with a view to a possible malpractice action against former
litigation counsel.
In 1997, the registrant retained counsel to appeal the final default
judgment, however, it was affirmed by the Appellate Court. Plaintiff
instituted enforcement proceedings seeking, among other things, a motion for
the appointment of a receiver. The motion was heard and granted by the court,
however, prior to the entry of an order, on November 16, 1998, registrant's
current litigation counsel effectuated a partial settlement of the judgment,
providing for the payment of an aggregate of $57,500 in two installments
over the next two months and pay-out of the balance on mutually agreeable
terms thereafter. In addition, in consideration of the issuance of 50,000
shares of restricted common stock of the registrant to Plaintiff, Plaintiff
has agreed to forbear from taking any further steps with respect to its
motion seeking further enforcement action. Also, the registrant's current
litigation counsel is negotiating a proposed settlement of the alleged legal
fees due Plaintiff's counsel.
Page 13
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- - --------------------------------------------------
(c) During the period from January 1, 1998 through September 30, 1998,
the registrant privately offered and sold an aggregate of 13,024,200 shares of
its restricted common stock ("Shares"), in an amended private placement
offering ("Offering") commenced on January 1, 1998, amended on April 30, 1998
and June 30, 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.
Although the Shares were initially offered at prices varying between $ .075
or a percentage of the current market price in the open market, the Board of
Directors determined, in the best interests of those parties participating in
the Offering during said period, to fix the purchase price of the Shares at
$.075 per share. This decision was made because of the volatility of the
market price during that time period up through September 30, 1998. All of
the Shares sold as of September 30, 1998 have been recorded at $.075.
Accordingly, for the quarterly period ended September 30, 1998, 3,866,666
Shares were sold, amounting to $290,000. A breakdown of the proceeds is
described below:
Cash Proceeds $ 290,000
Less: Commissions and Fees $ (10,000)
------------
Total Net Proceeds $ 280,000
============
Commissions and fees amounting to $10,000 were paid to a consultant in
connection with the sale of 1,333,333 Shares.
During the quarterly period ended September 30, 1998, the registrant
issued restricted common stock, for certain private transactions, in reliance
on Section 4(2) of the Act, as described below:
(a) The registrant issued 200,000 shares of restricted common
stock, pursuant to a consulting arrangement, for the benefit of its Urecoats
subsidiary. This transaction was valued and recorded at $13,000.
(b) The registrant issued 600,000 shares of restricted common
stock, on behalf of its Designer Wear subsidiary, for the benefit of ROK,
pursuant to a May 14, 1998 amendment to the Acquisition Agreement, in
cancellation of $604,858 of indebtedness owed by ROK, of which payment of
$599,858 was guaranteed by Designer Wear. This transaction was previously
reported in the registrant's Form 10-KSB for the year ended December 31, 1997.
(c) The registrant issued 250,000 shares of restricted common
stock, in payment of accrued consulting fees. This transaction was valued
and recorded at $17,400.
(d) The registrant issued 100,000 shares of restricted common
stock, for consulting services, to Charles Gargano, a Director of the
registrant. This transaction was valued and recorded at $9,000.
Page 14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - -----------------------------------------
(a) EXHIBITS
27.1 RESTATED FINANCIAL DATA SCHEDULE - SEPTEMBER 30, 1997
27.2 FINANCIAL DATA SCHEDULE - SEPTEMBER 30, 1998
(b) REPORTS ON FORM 8-K:
Form 8-K filed on August 7, 1998 - Previously Submitted
Page 15
<PAGE>
SIGNATURES
----------
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 Pompano Beach, and State of Florida on
November 17, 1998.
WINNERS ALL INTERNATIONAL, INC.
(Registrant)
/s/ Howard Weiser November 17, 1998
- - ---------------------------- -----------------
Howard Weiser Date
President and Secretary
/s/ Edgar M. Reynolds November 17, 1998
- - ---------------------------- -----------------
Edgar M. Reynolds Date
Vice President and Treasurer
Page 16
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. EXHIBIT DESCRIPTION
- - ----------- -------------------
27.1 Restated Financial Data Schedule - September 30, 1997.
27.2 Financial Data Schedule - September 30, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
WINNERS ALL INTERNATIONAL, INC.
RESTATED FINANCIAL DATA SCHEDULE
QUARTER ENDED SEPTEMBER 30,1997
10-QSB DATA
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED BALANCE SHEET OF WINNERS ALL INTERNATIONAL,
INC. AND SUBSIDIARIES AS OF SEPTEMBER 30, 1997, AND THE RELATED STATEMENT OF
OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997. THE FINANCIAL
INFORMATION WAS RESTATED TO CONFORM WITH RESULTS OF THE AUDITED FINANCIAL
STATEMENTS OF THE REGISTRANT FOR THE PERIOD FROM JANUARY 1, 1997 TO DECEMBER
31, 1997, WHICH RESULTS ARE INCLUDED IN THE FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1997. THE RESTATED FINANCIAL INFORMATION FOR THE QUARTER ENDED
SEPTEMBER 30, 1997, IS INCLUDED IN THE FORM 10-QSB FOR THE QUARTER ENDED
SEPTEMBER 30, 1998. THIS RESTATED SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,966
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,582
<CURRENT-ASSETS> 435,484
<PP&E> 63,962
<DEPRECIATION> 15,647
<TOTAL-ASSETS> 4,226,673
<CURRENT-LIABILITIES> 1,327,062
<BONDS> 0
0
55,035
<COMMON> 290,036
<OTHER-SE> 2,554,540
<TOTAL-LIABILITY-AND-EQUITY> 4,226,673
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,341,305
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,341,305)
<INCOME-TAX> (1,341,305)
<INCOME-CONTINUING> (1,341,305)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,341,305)
<EPS-PRIMARY> (0.062)
<EPS-DILUTED> (0.062)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
WINNERS ALL INTERNATIONAL, INC.
FINANCIAL DATA SCHEDULE
QUARTER ENDED SEPTEMBER 30, 1998
10-QSB DATA
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET OF WINNERS ALL INTERNATIONAL, INC. AND
SUBSIDIARIES AS OF SEPTEMBER 30, 1998, AND THE RELATED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 526
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 120,306
<PP&E> 195,039
<DEPRECIATION> 28,322
<TOTAL-ASSETS> 2,965,221
<CURRENT-LIABILITIES> 1,184,701
<BONDS> 0
0
55,035
<COMMON> 528,383
<OTHER-SE> 440,081
<TOTAL-LIABILITY-AND-EQUITY> 2,965,221
<SALES> 953
<TOTAL-REVENUES> 3,291
<CGS> 0
<TOTAL-COSTS> 1,718,679
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,715,388)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,715,388)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,643,635)
<CHANGES> 0
<NET-INCOME> (3,359,023)
<EPS-PRIMARY> (0.081)
<EPS-DILUTED> (0.081)
</TABLE>
