SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED March 31, 2003 Commission file number: 0-29751 WINMAX TRADING GROUP, INC. (Exact name of small business issuer as specified in its charter) FLORIDA 65-070-2554 State or other jurisdiction I.R.S. Employer Identification No. of incorporation or organization 5920 Macleod Trail, Suite 208 Calgary, Alberta Canada T2H 0K2 (Address of principal executive office) (877) 693-3130 (Issuer's telephone number including area code) 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS As of May 29, 2003 we had 10,788,090 shares of our common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] PART I-FINANCIAL INFORMATION Item 1. Financial Statements. Winmax Trading Group, Inc. Consolidated Balance Sheet March 31, 2003 (Unaudited) Assets Current assets Cash $ 6,743 Accounts receivable, net 9,814 Other current assets 24,754 ------------ Total current assets 41,311 ------------ Property and equipment, net 84,619 ------------ Other assets 68,159 ------------ $ 194,089 ============ Liabilities and Stockholders' (Deficit) Current liabilities Due to shareholders $ 260,572 Accrued expenses 320,002 Accounts payable 112,881 ------------ Total current liabilities 693,455 ------------ Stockholders' (equity) Preferred stock, $1.00 par value, 1,000,000 shares authorized, no shares issued or outstanding - Common stock, $.001 par value, 750,000,000 shares authorized, 10,438,090 shares issued and outstanding 10,438 Additional paid-in capital 11,073,766 Accumulated (deficit) (11,571,218) ------------ (487,014) ------------ Other comprehensive (loss): Currency translation adjustment (12,352) ------------ (499,366) ------------ $ 194,089 ============ See the accompanying notes to the consolidated financial statements. Winmax Trading Group, Inc. Consolidated Statements of Operations Three Months Ended March 31, (Unaudited) 2002 2003 ----------- ----------- Revenue: Sales $ - $ 38,650 Sales to affiliate 168,000 - ----------- ----------- 168,000 38,650 ----------- ----------- Operating Costs and Expenses: Cost of sales 33,600 8,000 Non cash stock compensation 3,954,700 10,000 Amortization 54,000 - General and administrative 124,665 89,846 ----------- ----------- 4,166,965 107,846 ----------- ----------- (Loss) from operations (3,998,965) (69,196) Other income (expense): Other income 3,220 - ----------- ----------- Net (loss) (3,995,745) (69,196) Other comprehensive income: Foreign currency translation adjustment 183 (5,634) ----------- ----------- Comprehensive (loss) $(3,995,562) $ (74,830) =========== ========== Per Share Information - basic and fully diluted: Weighted average common shares outstanding 1,285,508 10,358,090 =========== ========== (Loss) per share $ (3.11) $ (0.01) =========== ========== See the accompanying notes to the consolidated financial statements. Winmax Trading Group, Inc. Consolidated Statements of Cash Flows Three Months Ended March 31, (Unaudited) 2002 2003 -------- -------- Cash flows from operating activities: Net cash provided by operating activities $ 24,854 $ 6,700 -------- -------- Cash flows from investing activities: Net cash (used in) investing activities (24,854) - -------- -------- Cash flows from financing activities: Net cash provided by financing activities - - -------- -------- Increase in cash and cash equivalents - 6,700 Cash and cash equivalents, beginning of period - 43 -------- -------- Cash and cash equivalents, end of period $ - $ 6,743 ======== ======== See the accompanying notes to the consolidated financial statements. WINMAX TRADING GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 (UNAUDITED) (1) Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and Item 310(b) of Regulation SB. They do not include all of the information and footnotes for complete financial statements as required by GAAP. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the Company's financial statements as of December 31, 2002 and for the two years then ended, including notes thereto included in the Company's Form 10-KSB. (2) Earnings Per Share The Company calculates net income (loss) per share as required by SFAS 128, "Earnings per Share." Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. (3) Stockholders' (Deficit) During the period ended March 31, 2003 the Company issued 120,000 shares of common stock for services. The shares were valued at their fair market value on the dates it was agreed they would be issued of $10,000, which has been recorded as non-cash stock compensation. (4) Other-Various Lawsuits and Claims During July 1999 the Company entered into a lease agreement for office facilities for a five-year term commencing during December 1999. The lease provided for an initial base rent of approximately $4,020 per month plus the Company's proportionate share of operating expenses. In addition, the lease provided for annual adjustments to the base rent. During December 1999 the Company elected not to honor the terms of the new lease and the lessor retained a $5,000 deposit as liquidated damages and the Company charged the $5,000 to rent expense during 1999. During 2001 the lessor filed suit against the Company and a former officer "ELO Associates II Ltd. V. Winmax Trading Group, Inc. et al" (Case No. CA-CE-02-004868(14))(17th Judicial District, Broward County Florida). A motion for default judgment was filed seeking damages of $222,324. During August 2002 a final judgment was entered in favor of the plaintiff in the approximate amount of $313,000. This amount is included in accrued expenses at March 31, 2003. On May 2, 2003 the Company settled the litigation in Note 8 for a payment of $30,000 and the action against the Company was dismissed. (5) Related Party Transactions During the period ended March 31, 2003 affiliates of the Company provided working capital aggregating approximately $150,000 by direct payment of certain obligations of the Company. All of the Company's revenue for the period ended March 31, 2002 was generated from the sale of web sites to an affiliate/consultant who contracted with the Company to design the sites for his third party clients. (6) Reclassifications Certain amounts included in the previous periods' financial statements have been reclassified to conform to current year presentation. (7) Going Concern The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced significant losses from operations. For the period ended March 31, 2003 the Company incurred a net loss of $69,196. In addition, the Company has an accumulated deficit of $11,571,218 and a working capital deficit of $652,144 at March 31, 2003. The Company's ability to continue as a going concern is contingent upon its ability to expand its service operations, generate revenues from the sales of gemstones and secure additional financing. The Company is pursuing financing for its operations and seeking to expand its operations. Failure to secure such financing or expand its operations may result in the Company not being able to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Item 2. Management's Discussion and Analysis. Forward-Looking Statements The following discussion and analysis of our operations should be read in conjunction with our audited financial statements and notes thereto. This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis or Plan of Operations" included in the Company's Form 10-KSB for the year ended December 31, 2002. This quarterly report on Form 10-QSB for the period ending March 31, 2003 contains forward-looking statements. Winmax Trading Group, Inc. is referred to herein as "we" or "our." The words or phrases "would be," "may allow," "intends to," "may likely result," "are expected to," "may continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements". Such statements include those concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including: (a) intense competition in the web development design, web casting, Internet solutions and e-commerce business, as well as the gemstone business; (b) whether we are able to manage our planned growth efficiently, including whether our management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to manage and exploit existing and potential market opportunities successfully; (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, including the ability to support any possible future exploration activities; and (d) should we engage in testing and exploration activities, we will be subject to regulatory concerns, including those regulations pertaining to environmental permitting of operations, air quality, water quality and wildlife monitoring, safety regulations, claim filings and maintenance inspection and monitoring, all of which would subject us to substantial costs (See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other documents we have filed with the Securities and Exchange Commission.) Statements made herein are as of the date of the filing of this Form 10-QSB with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. A. Overview of Operations. In June of 2001, in conjunction with the appointment of a new board of directors and management, we adopted a new corporate strategy to engage in: (a) a web development and Internet services business; and (b) the production, processing and Internet marketing of precious and semi-precious gemstones and jewelry, particularly in the colored gemstone and jewelry industry. Our business plan also contemplates conducting testing and exploration activities. We remain dependent upon our ability to expand our web development and Internet services and secure additional financing. Three Months Ended March 31, 2003 and 2002 Consolidated Statement of Operations During 2001 and 2002 and for the three months ended March 21, 2003, our primary business focus has been directed to our website services. Revenues. Revenues for the three months ended March 31, 2003 decreased by 77% to $38,650 from $168,000 for the same period in 2002. The decrease in revenues is attributed mainly to competitive business decisions. Cost of Sales. Cost of sales consists primarily of supplies. Cost of sales decreased by 76% to $8,000 from $33,600 for the same period in 2002, representing 21% and 20% of the total revenues for the three months ended March 31, 2003 and March 31, 2002, respectively. The decrease in cost of sales is attributable to decreases in business. Net Loss. Net Loss is total revenues less operating costs and expenses plus other income. For the three months ended March 31, 2003 and 2002, respectively, net loss was $69,196 and $3,995,745, which represents a 98% decrease. The decrease in the net loss is primarily attributable to the decrease in non-cash stock compensation from $3,954,700 for the period ending March 31, 2003 to $10,000 for the same period in 2002. General and Administrative Expenses. General and administrative expenses decreased to $89,846 for the three months ended March 31, 2003, from $124,665 for the three months ended March 31,2002. As a percentage of revenues general and administrative expenses were 232% for the three months ended March 31, 2003 and 74% for the three months ended March 31, 2002. Loss per share The loss per share for the three months ended March 31, 2003 was $(0.01) compared with the loss per share of $(3.11) for the three months ended March 31, 2002. The $3.10 decrease in our loss is primarily due to the decrease in non-cash stock compensation from $3,954,700 for the period ending March 31, 2003 to $10,000 for the same period in 2002. Consolidated Balance Sheet Current Assets. Current Assets amounted to $41,311 as of March 31, 2003, compared to $166,995 as of March 31, 2002. This decrease in our current assets is mainly attributable to: (a) an $88,209 reduction in our accounts receivable from the three months ended March 31, 2003 to the same period in 2002; and (b) no inventory for the period ended March 31, 2003 compared to $68,972 of inventory for the same period in 2002. Property and equipment, net. Property and equipment amounted to $84,619 as of March 31, 2003 as compared with $64,502 for the same period in 2002. This $20,117 increase in property and equipment is primarily due to the purchase of additional equipment. Current Liabilities. As of March 31, 2003, Current Liabilities increased by $481,751 to $693,455, compared with $211,704 for the period ended March 31, 2002. Liquidity and Capital Resources March 31 2003. Net cash provided by operating activities for the three months ended March 31, 2003 was $6,700 compared with $24,854 for the same period in 2002. The decrease in net cash provided by operating activities is primarily attributable to a decrease in business. Cash at March 31, 2003 amounted to $6,743, an increase of $6,743 since March 31,2002 when our cash was $0. We have experienced significant losses from our operations. For the period ended March 31, 2003, we incurred a net loss of $69,196. In addition, we had an accumulated deficit of $11,571,218 and a working capital deficit of $652,144 at March 31, 2003. Our ability to continue as a going concern is contingent upon our ability to expand our service operations, generate revenues from the sales of gemstones and secure additional financing. Although we are pursuing financing to expand our operations, there are no assurances that we will be successful in obtaining such financing. Our failure to secure financing or expand our operations may result in our not being able to continue as a going concern. Item 3. Controls and Procedures Our Chief Executive Officer/Chief Financial Officer/Principal Accounting Officer evaluated our disclosure controls and procedures within the 90 days preceding the filing date of this annual report. Based upon this evaluation, the Chief Executive Officer/Chief Financial Officer/Principal Accounting Officer concluded that our disclosure controls and procedures are effective in ensuring that material information required to be disclosed is included in the reports that we file with the Securities and Exchange Commission. There were no significant changes in our internal controls or, to the knowledge of our management, in other factors that could significantly affect these controls subsequent to the evaluation date. PART II-OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submissions 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. EXHIBITS Exhibit No. Description 3.1.1 Articles of Incorporation of Winmax Trading Group, Inc., dated September 26, 1996* 3.1.2 Amendment to the Articles of Incorporation of Winmax Trading Group, Inc. dated January 27, 1997* 3.1.3 Amendment to the Articles of Incorporation of Winmax Trading Group, Inc. dated October 6, 1999* 3.1.4 Amendment to the Articles of Incorporation of Winmax Trading Group, Inc., dated October 18, 2002* 3.2 Bylaws of Winmax Trading Group, Inc. and Amendment* 10.1 Limited Partnership Agreement Between Winmax Trading Group, Inc. as General Partner and the Limited Partners in the Winmax Alpha Fund Limited Partnership* 10.2 Assignment Agreement with Stone and Woods Corporation s.a.r.l.* 10.3 Share Purchase Agreement from Global Gemstone & Jewelry Inc.* 10.4 Agreement with Thomas Meeks* 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 * Denotes previously filed exhibits hereby incorporated by reference. We hereby incorporate the following documents by reference: i) Our Annual Report on Form 10-KSB for the year ended December 31, 2002 which was filed with the Commission on May 8, 2003; ii) Our Annual Report on Form 10-KSB for the year ended December 31, 2001 which was filed with the Commission on May 9, 2002; iii) Our Quarterly Reports on Form 10-QSB, as filed with the Securities and Exchange Commission, for the quarters ended: (a) September 30, 2002, filed on November 19, 2002 and amended on November 25, 2002; (b) June 30, 2002, filed on September 16, 2002 and amended on November 19, 2002 and November 25, 2002; (c) March 31, 2002, filed on May 24, 2002; (d) September 30, 2001, filed on November 20, 2001 and amended on February 28, 2002 and June 18, 2002; (e) June 30, 2001, filed on August 3, 2001 and amended on April 16, 2002; and (f) March 31, 2001, filed on May 17, 2001; iv) Our Report on Form 8-K/A which was filed with the Securities and Exchange Commission on March 12, 2002; v) Our Report on Form 8-K which was filed with the Securities and Exchange Commission on March 11, 2002; vi) Our Report on Form 8-K which was filed with the Securities and Exchange Commission on October 28, 2002; and vii) Our Schedule 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 which was filed with the Securities and Exchange Commission on September 27, 2002. B. REPORTS ON FORM 8-K. Not Applicable. 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. Date: May 29, 2003 By:/s/ Gerald E. Sklar Gerald E. Sklar, President, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Gerald E. Sklar, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winmax Trading Group, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of Winmax Trading Group, Inc. as of, and for, the periods presented in this quarterly report. 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for Winmax Trading Group, Inc. and have: a) designed such disclosure controls and procedures to ensure that material information relating to Winmax Trading Group, Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of Winmax Trading Group, Inc.'s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to Winmax Trading Group, Inc.'s auditors and the audit committee of Winmax Trading Group, Inc., Inc.'s board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect Winmax Trading Group, Inc.'s ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in Winmax Trading Group, Inc.'s internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 29, 2003 /s/ Gerald E. Sklar Gerald E. Sklar Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer
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10QSB Filing
Winmax Trading (WNMX) Inactive 10QSB2003 Q1 Quarterly report (small business)
Filed: 30 May 03, 12:00am