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
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For the quarterly period ended: June 30, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from _______________ to ______________
Commission File No. 000-29662
RollerBall International Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 95-4478767
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
9255 Doheny Road, Suite 2705 Los Angeles, CA 90069
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 275-5313
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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
August 16, 2000.
Page 1 of 11
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ROLLERBALL INTERNATIONAL INC.
FORM 10-QSB
INDEX
Page No.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
Balance Sheets -
June 30, 2000 and December 31, 1999 (Audited) 3
Statements of Operations -
Three Months and Six Months
ended June 30, 2000 and 1999 4
Statements of Cash Flows -
Six Months ended June 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 8-9
PART II - OTHER INFORMATION
Item 1 - Exhibits and reports on Form 8-K 10
Signatures 11
Page 2 of 11
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PART I - FINANCIAL INFORMATION
ROLLERBALL INTERNATIONAL INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ----------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 1,619 $ 10,029
Accounts receivable, net of allowance for doubtful
accounts of $50,000 for June 30, 2000
and December 31, 1999, respectively 100,598 272,849
Inventory 949,064 1,165,588
Prepaid expenses and other 143,930 177,399
----------- -----------
Total Current Assets 1,195,211 1,625,865
Property and equipment, net 209,138 265,536
Intangible assets, net of accumulated amortization
of $169,120 (2000) and $147,304 (1999) 488,985 510,162
----------- -----------
Total Assets $ 1,893,334 $ 2,401,563
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilites:
Accounts payable and accrued expenses $ 1,497,479 $ 1,449,949
Due to factor 16,353 2,491
Notes payable to stockholders 57,000 57,000
Advances from stockholders 42,833 21,072
Debt 90,000 90,000
----------- -----------
Total Current Liabilities 1,703,665 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 (11,024,356) (10,432,974)
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Total Stockholders' Equity 189,669 781,051
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,893,334 $ 2,401,563
=========== ===========
</TABLE>
See accompanying notes
Page 3 of 11
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ROLLERBALL INTERNATIONAL INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
------------------------- ---------------------------
2000 1999 2000 1999
-------- --------- ----------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 385,207 $1,150,332 $ 163,694 $ 559,574
Cost of sales 255,408 742,476 111,536 352,921
---------- ---------- ---------- ----------
Gross profit 129,799 407,856 52,158 206,653
Operating expenses:
Selling and marketing 171,096 442,703 68,449 273,125
General and administrative 534,293 908,594 243,421 494,116
---------- ---------- ---------- ----------
Total operating expenses 705,389 1,351,297 311,870 767,241
---------- ---------- ---------- ----------
Loss from operations (575,590) (943,441) (259,712) (560,588)
Interest expense 15,592 28,019 6,814 12,762
---------- ---------- ---------- ----------
Loss before provision for income taxes (591,182) (971,460) (266,526) (573,350)
Provision for income taxes 200 200 - -
---------- ---------- ---------- ----------
Net loss $ (591,382) $ (971,660) $ (266,526) $ (573,350)
========== ========== ========== ==========
Net loss per common share
Basic ($0.09) ($0.20) ($0.04) ($0.11)
========== ========== ========== ==========
Diluted ($0.09) ($0.20) ($0.04) ($0.11)
========== ========== ========== ==========
Weighted average common shares
outstanding
Basic 6,384,474 4,898,360 6,384,474 5,040,026
========== ========== ========== ==========
Diluted 6,384,474 4,898,360 6,384,474 5,040,026
========== ========== ========== ==========
</TABLE>
See accompanying notes
Page 4 of 11
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ROLLERBALL INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------
2000 1999
-------- --------
<S> <C> <C>
Operating Activities
Net loss $(591,382) $(971,660)
Adjustments to reconcile net loss to net cash used in
operating activities:
Allowance for doubtful accounts - -
Depreciation and amortization 78,214 92,406
Amortization of debt issuance costs - 3,125
Change in operating assets and liabilities:
Accounts receivable 172,251 (154,026)
Due to factor 13,862 (26,584)
Inventory 216,523 377,649
Prepaid expenses 33,469 36,852
Accounts payable (4,661) (3,410)
Accrued expenses 52,190 139,857
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Net cash used in operating activities (29,534) (505,791)
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
Deferred stock offering costs - -
Net proceeds from issuance of common stock - 505,431
Advances from Stockholders 21,762 -
Payments of notes payable - -
Payments on loans to stockholders (28,057)
Exercise of warrants - -
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Net cash provided by financing activities 21,762 477,374
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Net (decrease) increase in cash (8,410) (54,741)
Cash at beginning of period 10,029 132,099
--------- ---------
Cash at end of period $ 1,619 $ 77,358
========= =========
</TABLE>
See accompanying notes
Page 5 of 11
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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 11
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3. Going Concern Uncertainty
The Company since its inception has incurred net losses of $11,024,356
through June 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 June 30,
2000 the Company had no potentially dilutive securities.
Page 7 of 11
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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 SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS AND SIX
MONTHS ENDED JUNE 30, 1999
Net sales for the three months ended June 30, 2000 and 1999 were
$163,694 and $559,574, respectively, which is a decrease of $395,880 or
approximately 70.7%. Net sales for the six months ended June 30, 2000 and 1999
were $385,207 and $1,150,332, respectively, which is a decrease of $765,125 or
approximately 66.5%. These decreases for the sales in the Company 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 six
months ended June 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.
Gross margin for the three months ended June 30, 2000 was 31.9% which
represents a decrease of 5.0% in the gross margin percentage as compared to the
three months ended June 30, 1999. Gross margin for the six months ended June 30,
2000 was 33.7% which represents a decrease of 1.8% in the gross margin
percentage as compared to the six months ended June 30, 1999. These decreases
relate primarily to the sales discounts issued on goods sold on the Company's
Internet web site during this period.
Page 8 of 11
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Selling and marketing expenses for the three months ended June 30, 2000
and 1999 were $68,449 and $273,125, respectively, which represents a decrease of
$204,676, or 74.9%. Selling and marketing expenses for the six months ended June
30, 2000 and 1999 were $171,096 and $442,703, respectively, which represents a
decrease of $271,607, or 61.4%. These decreases primarily relate to the Company'
continued efforts in reducing the amount of corporate travel and consulting
expense in an attempt to reduce the cash requirements of the Company and
therefore the overall net loss for the Company. The Company will continue to
attempt to reduce selling and marketing expenses in the future in an attempt to
reduce the cash requirements of the Company and therefore the overall net loss
for the Company.
General and administrative expenses for the three months ended June 30,
2000 and 1999 were $243,421 and $494,116, respectively, which represents a
decrease of $250,695, or 50.7%. General and administrative expenses for the six
months ended June 30, 2000 and 1999 were $534,293 and $908,594, respectively,
which represents a decrease of $374,301, or 41.2%. 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 six months ended
June 30, 2000 as opposed to the same period ending June 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 June 30, 2000
and 1999 was $6,814 and $12,762, respectively, which represents a decrease of
$5,948. The Company's interest expense for the six months ended June 30, 2000
and 1999 was $15,592 and $28,019, respectively, which represents a decrease of
$12,427. This decrease was primarily attributable to the Company's decrease in
debt issuance costs.
Net loss for the three months ended June 30, 2000 and 1999 was $266,526
and $573,350, respectively, which represents a decrease of $306,824, or 53.5%.
Net loss for the six months ended June 30, 2000 and 1999 was $591,382 and
$971,660, respectively, which represents a decrease of $380,278, or 39.1%. This
decrease in net loss for this period is primarily attributable to the Company's
attempt to reduce overall expenditures for the six months ended June 30, 2000 as
opposed to the same period ending June 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.
Page 9 of 11
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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 year 2000 inventory, completion of tooling and marketing support
funding. The Company expects to have a capital funding agreement in place by the
end of the third 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 six months ended June 30,
2000 and 1999 was $29,534 and $505,791, respectively. The decrease was
attributable to the Company's attempts to reduce expenditures for the six months
ended June 30, 2000 as compared to the same period in the prior year.
PART II - OTHER INFORMATION
Item 1. Exhibits and reports on Form 8-K
(a). Exhibits - None.
(b). Reports on Form 8-K - None.
Page 10 of 11
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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.
August 21, 2000 /s/ Jack Forcelledo
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DATE JACK FORCELLEDO
PRESIDENT & CHIEF EXECUTIVE OFFICER
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