FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-27828
WANDERLUST INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3779546
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
462 Broadway, New York, NY 10013
(Address of principal executive offices)
(Zip Code)
(212) 966-8887
(Registrant's telephone number, including area code)
598 Broadway, New York, NY 10012
(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 and 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 such filing
requirements for the past 90 days.
Yes No X
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of February 10, 1997
4,563,719 shares of common stock, par value $.01 per share.
Page 1 of 10
There is no Exhibit Index.
WANDERLUST INTERACTIVE, INC.
INDEX
Part I. Financial Information Page No.
Item 1. Financial Statements
Balance Sheet - 3
December 31, 1996
Statements of Operations- 4
Six Months Ended December
31, 1996 and December 31,
1995, Three Months Ended
December 31, 1996 and
December 31, 1995, and July
2, 1994 (inception) to December
31, 1996 (cumulative)
Statements of Cash Flows - Six 5
Months Ended December 31, 1996,
and December 31, 1995, and
July 2, 1994 (inception) to
December 31, 1996 (cumulative)
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 8
of Financial Condition and
Results of Operations
Part II. Other Information
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
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<TABLE>
<CAPTION>
<PAGE>
Wanderlust Interactive, Inc.
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1996
<S> <C>
Current assets:
Cash and cash equivalents $2,281,672
Accounts receivable 56,351
Merchandise inventory 47,090
Prepaid expenses 24,000
----------
Total current assets $2,409,113
----------
Fixed assets, net 452,499
----------
Other assets:
License rights, advance royalty 293,998
Organization costs, net of amortization 3,710
Deferred loan costs, net of amortization 4,790
Security deposits 31,694
Noncurrent receivable 230,000
Other assets 6,000
----------
$ 570,192
----------
$3,431,804
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
and accrued liabilities $ 123,555
Convertible debentures 507,500
----------
Total current liabilities 631,055
----------
Commitments and contingency
Shareholders' equity:
Preferred stock, $.01 par value;
authorized, 100,000 shares;
issued and outstanding, none -
Common stock, $.01 par value;
authorized, 10,000,000 shares;
issued and outstanding, 3,763,719 shares 37,637
Additional paid-in capital 7,216,348
Deficit accumulated during the
development stage (4,453,236)
----------
2,800,749
----------
$3,431,804
==========
See notes to financial statements.
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<CAPTION>
Wanderlust Interactive, Inc.
(A Development Stage Company)
Statements of Operations
Six Months Six Months Three Months Three Months July 1, 1994
Ended Ended Ended Ended (inception) to
December 31, December 31, December 31, December 31, December 31, 1996
1996 1995 1996 1995 (cumulative)
<S> <C> <C> <C> <C> <C>
Sales:
Product $ 38,000 $ - $ 38,000 $ - $ 38,000
Foreign royalty
rights 256,387 - 138,087 - 306,387
------- -------- ------- -------- --------
294,387 - 176,087 - 344,387
------- -------- ------- -------- --------
Expenses:
Cost of product
sales 50,042 - 50,042 - 50,042
Research and
development 1,524,720 415,324 785,326 242,850 2,927,191
Selling, general
and administrative 855,002 208,283 462,363 97,609 1,887,211
Interest expense
(income), net (38,965) 11,948 (4,153) 8,524 (66,821)
--------- -------- --------- --------- ---------
2,390,799 635,555 1,293,578 348,983 4,797,623
--------- -------- --------- --------- ---------
Net loss $2,096,412 $ 635,555 $1,117,491 $ 348,983 $4,453,236
========= ======== ========= ========= =========
Net loss per
common stock share $ .56 $ .27 $ .30 $ .15 $ 1.59
========= ======== ========= ========= =========
Weighted average
shares outstanding 3,763,719 2,368,719 3,763,719 2,368,719 2,794,872
========= ========= ========= ========= ==========
See notes to financial statements.
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<PAGE>
<CAPTION>
Wanderlust Interactive, Inc.
(A Development Stage Company)
Statements of Cash Flows
July 1, 1994
Six Months Six Months (inception) to
ended ended December 31, 1996
December 31, 1996 December 31, 1995 (cumulative)
<S> <C> <C> <C>
Cash flows from
operating
activities:
Net loss $(2,096,412) $(635,555) $(4,453,236)
Adjustments to
reconcile net loss
to net cash used
in operating
activities:
Amortization
and depreciation 159,510 38,728 279,388
Common stock
issued for bonus - - 25,000
Common stock
issued for service - - 14,310
Common stock issued
for interest - - 19,610
Change in:
Accounts receivable (56,351) - (56,351)
Prepaid expenses - - (24,000)
Organization costs - - (7,420)
Inventory (47,090) - (47,090)
Security deposit (7,250) (6,500) (64,494)
Accounts payable and
accrued liabilities 784 65,203 123,556
Other assets 26,800 - 26,800
--------- ------- --------
Net cash used in
operating activities (2,020,009) (538,124) (4,163,927)
--------- -------- --------
Cash flows from
investing activities:
Purchase of license - - (300,000)
Purchase of fixed
assets (361,977) (179,109) (705,074)
Noncurrent receivable (230,000) - (230,000)
-------- -------- --------
Net cash used in
investing activities (591,977) (179,109) (1,235,074)
-------- -------- ---------
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<CAPTION>
<PAGE>
Wanderlust Interactive, Inc.
(A Development Stage Company)
Statements of Cash Flows (continued)
July 1, 1994
Six Months Six Months (inception) to
ended ended December 31,1996
December 31, 1996 December 31, 1995 (cumulative)
<S> <C> <C> <C>
Cash flows from
financing activities:
Issuance of common
stock and warrants,
net of costs of
issuance - 271,387 7,195,065
Proceeds,
notes payable - - 507,500
Deferred stock
offering costs - (150,190) -
Debt acquisition
costs - (1,847) (21,892)
--------- -------- ---------
Net cash provided by
financing activities - 119,350 7,680,673
--------- -------- ---------
Increase (decrease) in
cash and cash
equivalents (2,611,986) (597,883) 2,281,672
Cash and cash
equivalents, beginning 4,893,658 721,968 -
--------- -------- ---------
Cash and cash
equivalents, ending $2,281,672 $124,085 $2,281,672
========= ======= =========
See notes to financial statements.
</TABLE>
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<PAGE>
Wanderlust Interactive, Inc.
(A Development Stage Company)
Notes to Financial Statements
1. The financial statements as of December 31, 1996 and for the
six and three month periods ending December 31 1996 and 1995
are unaudited and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The
financial statements should be read in conjunction with the
financial statements and notes thereto, together with
management's discussion and analysis of financial condition
and results of operations contained in the Company's Annual
Report to Stockholders incorporated by reference in the
Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1996. The results of operations for the six
and three months ended December 31, 1996 are not necessarily
indicative of the results for the entire fiscal year ending
June 30, 1997. Refer to Part II, Item 5 for additional
information with respect to a contingency.
2. In November, 1996, the Company and another entity commenced
negotiations for the Company to acquire the net assets and
stock of such other entity in exchange for shares of the
Company's stock. The Company advanced $230,000 to such entity
as of December 31, 1996.
-7-
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The Company had revenues of $294,387 and $0 for the six months
ended December 31, 1996 and 1995, respectively. The Company
incurred a net loss of $2,096,412, or $.56 per share, for the six
month period ended December 31, 1996 as compared to $635,555, or
$.27 for the year earlier period.
The Company had revenues of $176,087 and 0 for the three
months ended December 31, 1996 and 1995, respectively. The Company
incurred a net loss of $1,117,491, or $.30 per share, for the three
months ended December 31, 1996 as compared to $348,983, or $.15 per
share, for the year earlier period. The largest portions of
revenues during the current three and six month periods were
derived from foreign sublicensing fees.
For the six month periods ended December 31, 1996 and 1995,
research and development expenses totalled $1,524,720 and $415,324,
respectively. Selling, general and administrative expenses were
$855,002 and $208,283 for the six month periods ended December 31,
1996 and 1995, respectively. During the current six month period,
the Company completed development of its first CD-ROM product and
commenced marketing this product.
During the six months ended December 31, 1996, the Company
incurred a loss of $2,096,412, or $.56 per share, as compared to a
loss of $635,555, or $.27 per share. During the three months ended
December 31, 1996, the Company incurred a loss of $1,117,491, or
$.30 per share, and $348,983, or $.15 per share. The increase in
losses in the current periods were largely due to completion of the
Company's first product and introduction of this product to the
marketplace.
Financial Condition
The Company's working capital at December 31, 1996 was
$1,778,058. It was $4,287,387 at June 30, 1996. The Company's
current ratio was 3.82 to 1 at December 31, 1996 as compared to
7.80 to 1 at June 30, 1996.
The Company used cash for operating activities in the amount
of $2,020,009 during the six months ended December 31, 1996, as
compared to using $538,124 in the year earlier period. The
increase was largely due to the net loss incurred during the
current period. The Company used cash for investing activities of
$591,977. during the six months ended December 31, 1996, as
compared to $179,109 a year ago. The Company increased its
purchase of equipment and lent $230,000 to a company it purchased
in February 1997 during the current period. The Company had no
-8-
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition (Continued)
cash flows from financing activities during the six months ended
December 31, 1996 as compared to generation of cash of $119,350
during the prior six month period. The Company's cash and cash
equivalents decreased from $4,893,658 at June 30, 1996 to
$2,281,672 at December 31, 1996.
The Company continues to have significant obligations for
expenditures. Its revenues are uncertain due to the relatively new
status of its business. As a result, unless revenues from
operations increase, expenditures decrease or the Company is unable
to raise additional equity or debt, the Company could deplete its
capital resources. This could result in a material adverse effect
on the Company's activities.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on From 8-K
(b) During the quarter ended December 31, 1996, the
registrant did not file any reports on Form 8-K.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange At of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WANDERLUST INTERACTIVE, INC.
Dated: February 14, 1997 s/Catherine Winchester
Catherine Winchester
President (Principal Financial
Officer)
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WP51\CDKIDZ\10Qsb96.dec
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 2,281,672
<SECURITIES> 0
<RECEIVABLES> 56,351
<ALLOWANCES> 0
<INVENTORY> 47,090
<CURRENT-ASSETS> 2,409,113
<PP&E> 452,499
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,431,804
<CURRENT-LIABILITIES> 631,055
<BONDS> 507,500
0
0
<COMMON> 37,637
<OTHER-SE> 2,763,112
<TOTAL-LIABILITY-AND-EQUITY> 3,431,804
<SALES> 38,000
<TOTAL-REVENUES> 176,087
<CGS> 50,042
<TOTAL-COSTS> 1,247,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,153)
<INCOME-PRETAX> (1,117,491)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,117,491)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,117,491)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
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