U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission File number 0-22954
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THE WINNER'S EDGE.COM, INC.
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(Name of Small Business Issuer in its Charter)
Delaware 65-0952186
--------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1900 Corporate Boulevard, Suite 400 East, Boca Raton, FL 33431
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(Address of principal executive offices, including zip code)
(561) 988-3333
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(Issuer's telephone number)
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(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
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock, par value $ .01 per share, issued and
outstanding as of October 31, 2000 is 28,509,200
<PAGE>
THE WINNER'S EDGE.COM, INC
INDEX TO FORM 10-QSB
June 30, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - Nine months ended September 30,
2000 (Unaudited) and December 31, 1999 (Audited).
Statement of Operations - Three months and nine
months ended September 30, 2000 and 1999
(Unaudited) and July 8, 1998 (inception) to
September 30, 2000.
Statement of Cash Flows - Nine months ended
September 30, 2000 and 1999 (Unaudited) and July 8,
1998 (inception) to September 30, 2000.
Statement of Deficiency in Assets - Nine Months
ended September 30, 2000.
Notes to Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 2
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE> 3
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,332 $ 2,873
Prepaid expenses
and other current assets 17,500 -
---------- ----------
TOTAL CURRENT ASSETS 18,832 2,873
PROPERTY AND EQUIPMENT, Net 17,535 82,519
---------- ----------
TOTAL ASSETS $ 36,367 $ 85,392
========== ==========
LIABILITIES AND DEFICIENCY IN ASSETS
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 167,099 $ 71,917
Due to related parties 142,573 188,597
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TOTAL CURRENT LIABILITIES 309,672 260,514
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COMMITMENTS AND CONTINGENCIES - -
DEFICIENCY IN ASSETS:
Common stock $.01 par value;
authorized 60,000,000 shares;
28,509,200 shares issued
and outstanding at September 30,
2000 and 26,955,900 issued and
outstanding at December 31, 1999 285,093 269,559
Additional paid-in capital 159,119 38,500
Accumulated deficit (717,517) (483,181)
---------- ----------
TOTAL DEFICIENCY IN ASSETS (273,305) (175,122)
TOTAL LIABILITIES AND
DEFICIENCY IN ASSETS $ 36,367 $ 85,392
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
July 8, 1998
Three Months Ended Nine Months Ended (Inception) to
September 30, September 30, September 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
NET REVENUES $ 3,220 $ 8,577 $ 9,328 $ 11,869 $ 24,674
EXPENSES:
Sales and marketing 885 - 885 - 17,991
General and administrative (98,896) 105,051 190,279 320,481 633,774
Stock based compensation 17,500 - 52,500 35,000 88,750
TOTAL OPERATING EXPENSES (80,511) 105,051 243,664 355,481 740,515
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 83,731 $ (96,474) $ (234,336) $ (343,612) $ (715,841)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
SHARE OUTSTANDING 28,120,071 14,528,629 28,120,071 14,528,629
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ - $ (.01) $ (.01) $ (.02)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 5
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
$.0001 Par Value Paid-In Accumulated
Shares Amount Capital (Deficit) Total
---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1999 26,955,941 $ 269,559 $ 38,500 $ (483,181) $ (175,122)
Stock issued for services 775,000 7,750 62,250 - 70,000
Debt converted to equity 778,259 7,784 58,369 - 66,153
Net income for period - - - (234,336) (234,336)
---------- --------- ---------- ---------- ----------
Balance - September 30, 2000 28,509,200 $ 285,093 $ 159,119 $ (717,517) $ (273,305)
========== ========= ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
July 8, 1998
Nine Months Ended (Inception) to
September 30, September 30,
2000 1999 2000
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (234,336) $ (343,612) $ (715,841)
Adjustments to reconcile net income
(loss) to net cash used
in operating activities:
Depreciation and amortization 94,995 22,011 119,731
Stock based on compensation 52,500 35,000 88,750
Changes in assets and liabilities:
Accounts payable and accrued liabilities 95,183 267,944 167,105
Due to related parties (46,024) 17,573 142,573
---------- ---------- ----------
Cash flow provided by (used in)
operating activities (37,682) (1,084) (197,682)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (30,011) - (137,271)
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Cash flow provided by (used in)
investing activities (30,011) - (137,271)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 66,152 - 336,285
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Cash flow provided by (used in)
financing activities 66,152 - 336,285
NET INCREASE (DECREASE) IN CASH (1,541) (1,084) 1,332
---------- ---------- ----------
CASH AT BEGINNING OF PERIOD 2,873 1,084 -
---------- ---------- ----------
CASH AT END OF PERIOD $ 1,332 $ - $ 1,332
========== ========== ==========
</TABLE>
<PAGE> 7
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION> July 8, 1998
Nine Months Ended (Inception) to
September 30, September 30,
2000 1999 2000
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ --------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ - $ -
Taxes - -
NON-CASH FINANCING ACTIVITIES:
Conversion of debt to equity $ 66,152 $ -
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 8
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial
statements of The Winner's Edge.com, Inc. (the "Company")
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 of the
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. 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 and disclosure of
contingent 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. Operating results for
expected for the nine months period ended September 30,
2000 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000.
For further information, refer to the financial
statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999. Per share data for the periods are
based upon the weighted average number of shares of
common stock outstanding during such periods, plus net
additional shares issued upon exercise of options and
warrants.
NOTE 2 - EQUITY TRANSACTIONS
-------------------
The Company issued 700,000 shares of common stock for
legal services to be rendered for the year 2000. The
legal services have been valued at $70,000 and the pro-
rated portion of $35,000 has been expensed. Also included
in the shares issued is a 75,000 share reduction due to
a reclassification error from 1999.
In August 2000, the Company issued 778,259 shares of
common stock for conversion of $66,152 of indebtedness
owed to an officer and shareholder of the Company for
advances to the Company in the past year.
<PAGE> 9
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - DISPUTED PAYABLES
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The Company reversed accounts payable of approximately
$215,000 due to a consultant in the third quarter. The
Company originally recorded such disputed payables since
the consultant was requesting payment even though the
Company believed such monies were not due pursuant to the
terms of the contract signed with the consultant. The
$215,000 reversal has created a negative G & A for the
quarter.
NOTE 4 - NEW ACCOUNTING PRONOUNCEMENTS
---------------------------------------
In March 2000, the Company adopted EITF 00-2, "Accounting
for Web-Site Development Costs". The EITF 00-2 requires
certain web-site development costs to be expensed and
others to be capitalized. During the nine months ended
September 30, 2000, no web-site development costs were
incurred, which would be capitalized pursuant to the
EITF. All such web-site costs were expensed as incurred.
NOTE 5 - GOING CONCERN
-----------------------
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern.
The Company has suffered recurring losses amounting to
approximately $664,000, since inception. The Company
intends to raise additional debt or equity financing to
continue its operations. If they are unsuccessful they
may be required to cease operations and/or file for
bankruptcy. The Company has ceased operations effective
October 2000 and is in search of an entity to merge or
acquire through equity financing.
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
Plan of Operation
-----------------
The Registrant is presently a development stage company
conducting minimal business operations. The Company is attempting
to effect a merger, exchange of capital stock, asset acquisition or
other similar business combination (a "Business Combination") with
an operating or development stage business which the Registrant may
consider to have significant growth potential within the
thoroughbred horseracing or a related industry.
As indicated above, management has determined that the
Company's business plan during the next twelve (12) months is
primarily to seek one or more potential businesses which may, in
the opinion of management, warrant the Company's involvement. The
Company recognizes that as a result of its limited financial,
managerial or other resources, the number of suitable potential
businesses which may be available to it will be extremely limited.
In seeking to attain its business objective, the Company will focus
on the thoroughbred horseracing industry, but will not restrict its
search to any particular industry. Management's discretion is
unrestricted and it may participate in any business whatsoever
which may, in the opinion of management, meet the business
objectives discussed herein. It is emphasized that the business
objectives discussed herein are extremely general and are not
intended to be restrictive upon the discretion of management. As
of the date of this report, the Company has chosen to focus on the
particular area of thoroughbred horseracing in which its proposes
to engage and has not conducted any market studies with respect to
any other business or industry.
The Company will not restrict its search to any specific
industry, except as set forth above. At this time, it is
impossible to determine the needs of the business in which the
Company may seek to participate, and whether such business may
require additional capital, management, or may be seeking other
advantages which the Company may offer.
Possible business endeavors may involve the acquisition of or
a merger with a company which does not need additional equity, but
seeks to establish a public trading market for its securities.
Businesses which seek the Company's participation in their
operations may desire to do so to avoid what such businesses deem
to be adverse factors related to undertaking a public offering.
Such factors include substantial time requirements and legal costs,
along with other conditions or requirements imposed by Federal and
state securities laws.
The analysis of potential business endeavors will be
undertaken by, or under, the supervision of the Company's
management. Management is comprised of individuals of varying
<PAGE>
business experiences, and management will rely on their own
business judgment in formulating decisions as to the types of
businesses which the Company may acquire or in which the Company
may participate. It is quite possible that management will not
have any business experience or expertise in the type of businesses
engaged in by a potential business which may be investigated by the
Company.
It is anticipated that locating and investigating specific
proposals will take a substantial period of time, although the time
such process will take can by no means be assured. Further, even
after a business is located, the negotiation, drafting and
execution of relevant agreements, disclosure documents and other
instruments may require substantial additional time, effort and
attention on the part of management, as well as substantial costs
for attorneys, accountants and others. If a decision is made not
to participate in a specific business endeavor, the costs
theretofore incurred in the related investigation might not be
recoverable. Furthermore, even if an agreement were reached for
the participation in a specific business, the failure to consummate
that transaction might result in the loss to the Company of the
related costs incurred.
The Company currently does not have the liquidity or capital
resources to fund the Company without raising capital either from
debt or equity funding sources. It is anticipated that the
Company's current management and others will fund the Company's
operations, if required, by loans and/or contributions of capital.
For its operations to date, the Company has borrowed approximately
$150,000 from Drake Alexander and Associates, Inc., a venture
capital firm owned by two of the directors of the Company and has
raised smaller amounts through the private sale of restricted
common stock. The Company has engaged the services of vanAar, Inc.
as a consultant to assist and advise in the management and
organizational development of the Company and to explore interim
financing through short-term lending, private placement with
accredited investors, or both, in the event a business combination
cannot be effectuated.
The Company knows of no unusual or infrequent events or
transactions, nor significant economic changes that could
materially affect the amount of its reported income from continuing
operations for the period ending September 30, 2000.
<PAGE> 12
PART II
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Item 1. LEGAL PROCEEDINGS
-----------------
Not applicable.
Item 2. CHANGE IN SECURITIES
--------------------
Not Applicable
Item 3. DEFAULTS UPON 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
--------------------------------
(a) There are no exhibits required to be filed for the
period covered by this Report.
(b) The Company filed a Report on Form 8-K dated August
9, 2000.
The Company filed a Report on Form 8-K dated August
21, 2000.
The Company filed a Report on Form 8-K dated August
29, 2000.
The Company filed a Report on Form 8-K dated
September 18, 2000.
The Company filed a Report on Form 8-K dated
September 28, 2000.
<PAGE> 13
SIGNATURES
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In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE WINNER'S EDGE.COM, INC.
By: /s/Michael Fasci
-------------------------------
Michael Fasci
Chief Financial Officer
<PAGE> 14
