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, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ______________
Commission File No. 000-29662
RollerBall International Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 95-4478767
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9255 Doheny Road, Suite 2705 Los Angeles, CA 90069
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 275-5313
_________________________________________________________________
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the issuer (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 _____
6,384,474 shares of Common Stock, par value $.001 per share, were
outstanding at November 17, 2000.
Page 1 of 12
RollerBall International Inc.
FORM 10-QSB
INDEX
Page No.
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Balance Sheets -
September 30, 2000 and December 31, 1999 (Audited) 3
Statements of Operations -
Three Months and Nine Months
ended September 30, 2000 and 1999 4
Statements of Cash Flows -
Nine Months ended September 30, 2000 and 1999 5
Notes to Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Part II - Other Information
Item 1 - Exhibits and reports on Form 8-K 11
Signatures 12
Page 2 of 12
ROLLERBALL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
1. Organization
RollerBall International Inc. (the "Company") develops,
manufacturers, distributes and markets inline skates, and related
accessories under the RollerBall trademark in the United States and
throughout Europe, Asia and North America through independent sales
representatives and distributors. The Company was incorporated in
Delaware on March 7, 1994. The Company's fiscal year ends on December
31st.
On March 31, 1998, the Company's Registration Statement on Form
SB-2 was deemed effective and on April 8, 1998, the offering closed and
the Company received $5.0 million in proceeds, net of underwriting
discounts and commissions and offering expenses.
2. Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. 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 (consisting of normal recurring accruals)
considered necessary for a fair presentation of the results of operations for
the periods presented have been included.
The financial data at December 31, 1999 is derived from audited
financial statements which are included in the Company's Form 10-KSB
and should be read in conjunction with the audited financial statements
and notes thereto. Interim results are not necessarily indicative of results
for the full year.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Page 6 of 12
3. Going Concern Uncertainty
The Company since its inception has incurred net losses of
$11,120,740 through September 30, 2000. The Company has relied on the
proceeds from the sale of common stock through an initial public offering
and the sale of common stock in private placements to fund its activities.
The Company may be unable to continue in existence unless it is able to
arrange additional financing. (See the "Liquidity and Capital Resources"
section on page 10 of this document for further discussion.) The financial
statements do not include any adjustments relating to the recoverability of
assets that might be necessary in the event the Company cannot continue
in existence.
4. Net Loss Per Common Share
Net Loss per Common Share is calculated in accordance with SFAS
No. 128, "Earnings Per Share," which requires presentation of basic loss
per share ("BLPS") and diluted loss per share ("DLPS"). The computation
of BLPS is computed by dividing loss available to common stockholders
by the weighted average number of outstanding common shares during
the period. DLPS gives effect to all diluted potential common shares
outstanding during the period. The computation of DLPS does not assume
conversion, exercise or contingent exercise of securities that would have
an antidilutive effect on earnings. As of September 30, 2000 the Company
had no potentially dilutive securities.
Page 7 of 12
Management's Discussion and Analysis of Financial Condition and
Results of Operations
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set
forth under Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 (the Act). The Company desires to avail itself of certain "safe
harbor" provisions of the Act and is therefore including this special note
to enable the Company to do so. Forward-looking statements in this Form
10-QSB or hereafter included in other publicly available documents filed
with the Securities and Exchange Commission, reports to the Company's
stockholders and other publicly available statements issued or released by
the Company involve known and unknown risks, uncertainties and other
factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ from the future results,
performance (financial or operating) or achievements expressed or
implied by such forward-looking statements. Such future results are
based upon management's best estimates based upon current conditions
and the most recent results of operations.
Three Months and Nine Months Ended September 30, 2000 Compared
to Three Months and Nine Months Ended September 30, 1999
Net sales for the three months ended September 30, 2000 and 1999
were $517,764 and $432,590, respectively, which is a increase of $85,174 or
approximately 19.7%. Net sales for the nine months ended September 30,
2000 and 1999 were $902,971 and $1,582,922, respectively, which is a
decrease of $679,951 or approximately 43.0%. The increase in sales for the
three month period ending September 30, 2000 as compared to the three
month period ending September 30, 1999 is a direct result of the
Company's sales efforts in selling existing inventory. The decrease,
however, in net sales for the nine month period ended September 30, 2000
as compared to the net sales for the nine month period ended September
30, 1999 are a direct result of the inability to secure the funds on a timely
basis that were necessary to purchase new inventory for the year 2000 for
sale during the nine months ended September 30, 2000 and to complete
tooling for the Company's mass market line of products. The Company's
new year 2000 skate models consist primarily of soft boot skate models as
well as an innovative line of skates for the Company's mass
merchandiser/market accounts. The Company is continuing to work
with several funding sources to provide the needed capital for new
inventory, completion of tooling and marketing support funding.
Page 8 of 12
Gross margin for the three months ended September 30, 2000 was
44.4% which represents an increase of 11.4% in the gross margin
percentage as compared to the three months ended September 30, 1999.
Gross margin for the nine months ended September 30, 2000 was 39.8%
which represents an increase of 5.0% in the gross margin percentage as
compared to the nine months ended September 30, 1999. These increases
relate primarily to increased sales of the Company's higher margin
inventory for the three month period ended September 30, 2000.
Selling and marketing expenses for the three months ended
September 30, 2000 and 1999 were $34,465 and $187,916, respectively,
which represents a decrease of $153,451, or 81.7%. Selling and marketing
expenses for the nine months ended September 30, 2000 and 1999 were
$205,561 and $630,619, respectively, which represents a decrease of
$425,058, or 67.4%. These decreases primarily relate to the Company's
continued efforts in reducing the amount of corporate travel and
consulting expense as well as the in an attempt to reduce the cash
requirements of the Company and therefore the overall net loss for the
Company. Also, the Company's participation in industry trade shows has
been curtailed. The Company will continue to be as efficient and
productive in the sales and marketing arena in the future.
General and administrative expenses for the three months ended
September 30, 2000 and 1999 were $287,627 and $438,884, respectively,
which represents a decrease of $151,257, or 34.5%. General and
administrative expenses for the nine months ended September 30, 2000
and 1999 were $821,920 and $1,347,478, respectively, which represents a
decrease of $525,558, or 39.0%. These decreases were primarily due to the
Company's attempt to reduce overall general and administrative
expenditures by reducing salaries and professional fees in an attempt to
reduce the overall net loss for the Company for the nine months ended
September 30, 2000 as opposed to the same period ending September 30,
1999. The Company will continue to attempt to reduce general and
administrative expenses in the future in an attempt to reduce the cash
requirements of the Company and therefore the overall net loss for the
Company.
The Company's interest expense for the three months ended
September 30, 2000 and 1999 was $4,308 and $14,391, respectively, which
represents a decrease of $10,083. The Company's interest expense for the
nine months ended September 30, 2000 and 1999 was $19,900 and $42,410,
respectively, which represents a decrease of $22,510. This decrease was
primarily attributable to the Company's decrease in debt issuance costs.
Page 9 of 12
Net loss for the three months ended September 30, 2000 and 1999
was $96,384 and $498,371, respectively, which represents a decrease of
$401,987, or 80.7%. Net loss for the nine months ended September 30,
2000 and 1999 was $687,766 and $1,470,031, respectively, which represents
a decrease of $782,265, or 53.2%. This decrease in net loss for this period is
primarily attributable to the Company's attempt to reduce overall
expenditures for the nine months ended September 30, 2000 as opposed to
the same period ending September 30, 1999. The Company will continue
to reduce costs as necessary in order to reduce the overall losses over the
next several quarters as compared to the previous year's quarters.
Liquidity and Capital Resources
Due to the continued depressed state of the inline skate market and
lack of sales, the Company will require additional capital to continue
operations. The Company is currently in negotiations with several
potential investors to raise additional equity and or debt capital
components for the purchase of new inventory, completion of tooling and
marketing support funding. The Company expects to have a capital
funding agreement in place by the end of the fourth quarter. There can
be no assurances that the Company will be successful in these efforts.
The company is also in negotiation with a major third party
licensor for a product license to introduce a line of skates on a worldwide
basis under the umbrella License of this third party licensor. The
acquisition of this major license could provide a marketing platform for
increased sales, profits and marketability of the Company's products.
There can be no assurances that the Company will be successful in these
efforts.
Net cash used in operating activities for the nine months ended
September 30, 2000 and 1999 was $9,183 and $677,427, respectively. The
decrease was attributable to the Company's attempts to reduce
expenditures for the nine months ended September 30, 2000 as compared
to the same period in the prior year.
Page 10 of 12
Part II - Other Information
Item 1. Exhibits and reports on Form 8-K
(a). Exhibits - None.
(b). Reports on Form 8-K - None.
Page 11 of 12
SIGNATURE
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.
ROLLERBALL INTERNATIONAL INC.
November 20, 2000 /s/ Jack Forcelledo
DATE JACK FORCELLEDO
PRESIDENT & CHIEF EXECUTIVE OFFICER
Page 12 of 12
Part I - Financial Information
RollerBall International Inc.
Balance Sheets
September 30, December 31,
2000 1999
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $1,969 $10,029
Accounts receivable, net of allowance for doubtful
accounts of $50,000 for September 30, 2000
and December 31, 1999, respectively 41,326 272,849
Inventory 661,316 1,165,588
Prepaid expenses and other 591,271 177,399
Total Current Assets 1,295,882 1,625,865
Property and equipment, net 180,939 265,536
Intangible assets, net of accumulated amortization
of $180,028 (2000) and $147,304 (1999) 478,077 510,162
Total Assets $1,954,898 $2,401,563
Liabilities and Stockholders' Equity
Current Liabilites:
Accounts payable and accrued expenses $1,681,780 $1,449,949
Due to factor 10,000 2,491
Notes payable to stockholders 57,000 57,000
Advances from stockholders 22,833 21,072
Debt 90,000 90,000
Total Current Liabilities 1,861,613 1,620,512
Commitments
Stockholders' Equity:
Preferred stock - $.10 par value, 10,000,000 shares - -
authorized; no shares issued or outstanding
Common stock - $.001 par value, 50,000,000 shares
authorized; 6,384,474 issued and outstanding (2000),
6,384,474 (1999) 6,384 6,384
Additional paid in capital 11,222,641 11,222,641
Advances to stockholder (15,000) (15,000)
Accumulated deficit (11,120,740) (10,432,974)
Total Stockholders' Equity 93,285 781,051
Total Liabilities and Stockholders' Equity $1,954,898 $2,401,563
See accompanying notes.
Page 3 of 12
RollerBall International Inc.
Statements of Operations
Nine months ended September 30, Three months ended September 30,
2000 1999 2000 1999
(unaudited) (unaudited)
Net sales $902,971 $1,582,922 $517,764 $432,590
Cost of sales $543,156 1,032,246 287,748 289,770
Gross profit 359,814 550,676 230,015 142,820
Operating expenses:
Selling and marketing 205,561 630,619 34,465 187,916
General and admin. 821,920 1,347,478 287,627 438,884
Total operating expenses 1,027,481 1,978,097 322,092 626,800
Loss from operations (667,667) (1,427,421) (92,077) (483,980)
Interest expense 19,900 42,410 4,308 14,391
Loss before provision for income taxes
(687,566) (1,469,831) (96,384) (498,371)
Provision for income taxes 200 200 - -
Net loss $(687,766) $(1,470,031) $(96,384) $(498,371)
Net loss per common share
Basic ($0.11) ($0.28) ($0.02) ($0.09)
Diluted ($0.11) ($0.28) ($0.02) ($0.09)
Weighted average common shares outstanding
Basic 6,384,474 5,172,017 6,384,474 5,719,332
Diluted 6,384,474 5,172,017 6,384,474 5,719,332
See accompanying notes.
Page 4 of 12
RollerBall International Inc.
Statements of Cash Flows
Nine months ended September 30,
2000 1999
Operating Activities
Net loss $(687,766) $(1,470,031)
Adjustments to reconcile net loss to net cash used in
operating activities:
Allowance for doubtful accounts - -
Depreciation and amortization 117,321 135,404
Amortization of debt issuance costs - 3,125
Change in operating assets and liabilities:
Accounts receivable 231,523 (96,380)
Due from supplier - (141,992)
Due to factor 7,509 -
Inventory 504,272 473,417
Prepaid expenses (413,872) 66,982
Accounts payable 27,679 101,656
Accrued expenses 204,151 250,392
Net cash used in operating activities (9,183) (677,427)
Investing Activities
Purchases of property and equipment - (14,103)
Increase in intangible assets (638) (12,221)
Net cash used in investing activities (638) (26,324)
Financing Activities
Net proceeds from issuance of common stock - 654,215
Payments on debt - (10,000)
Advances from stockholders 1,761 -
Payments of notes payable - -
Payments on loans to stockholders - (28,057)
Exercise of warrants - -
Net cash provided by financing activities 1,761 616,158
Net decrease in cash (8,060) (87,593)
Cash at beginning of period 10,029 132,099
Cash at end of period $1,969 $44,506
See accompanying notes.
Page 5 of 12
