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 March 31, 2001
Commission File number 0-22954
-------
THE WINNER'S EDGE.COM, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
Delaware 65-0952186
- ---------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
29 Abbey Lane, Middleboro, Massachusett 02346
----------------------------------------------------
(Address of principal executive offices, including zip code)
(508) 880-6969
---------------------------
(Issuer's telephone number)
----------------------------------------------------
(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 March 31, 2001 is 29,890,700.
1
THE WINNER'S EDGE.COM, INC
INDEX TO FORM 10-QSB
March 31, 2001
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - March 31, 2001 (unaudited) and December
31, 2000
Statement of Operations - Three months ended March
31, 2001 and 2000 (Unaudited) and July 8, 1998 (inception)
to March 31, 2001.
Statement of Cash Flows - Three months ended March 31,
2001 and 2000 (Unaudited) and July 8, 1998 (inception)
to March 31, 2001.
Statement of Deficiency in Assets - Three Months ended
March 31, 2001.
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
2
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
3
THE WINNER'S EDGE. COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
March 31, December 31,
2001 2000
------------ ------------
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 557 $ 5,658
------------ ------------
TOTAL CURRENT ASSETS 557 5,658
EQUIPMENT, net of accumulated depreciation
of $35,297 and $33,184, respectively 6,969 9,082
------------ ------------
$ 7,526 $ 14,740
============ ============
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES:
Account payable and accrued liabilities $ 77,453 $ 76,580
Due to related parties 235,614 249,429
------------ ------------
TOTAL CURRENT LIABILITIES 313,067 326,009
DEFICIENCY IN ASSETS:
Common shares, $.01 par value, 60,000,000
shares authorized, 29,890,700 and
outstanding, respectively 298,908 285,093
Additional paid in capital 164,119 164,119
Accumulated deficit (768,568) (760,481)
------------ ------------
TOTAL DEFICIENCY IN ASSETS (305,541) (311,269)
------------ ------------
$ 7,526 $ 14,740
============ ============
See accompanying notes to financial statements.
4
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
For the Period
Three Months Three Months July 8, 1998
Ended Ended (inception) to
March 31, March 31, March 31,
2001 2000 2001
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
SALES $ - $3,753 $ 30,248
EXPENSES:
Selling general and administrative 8,087 235,552 578,784
Write-down of equipment - - 95,000
Stock based compensation - 17,500 106,250
Advertising - - 17,106
----------- ---------- ----------
TOTAL EXPENSES 8,087 253,052 797,140
NET LOSS $ (8,087) $ (249,299) $ (766,892)
=========== ========== ==========
NET LOSS PER SHARE: $ (.00) $ (.01)
=========== ==========
Number of shares used in computation 29,545,325 27,080,941
=========== ==========
See accompanying notes to financial statements.
5
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
For the Period
Three Months Three Months July 8, 1998
Ended Ended (inception) to
March 31, March 31, March 31,
2001 2000 2001
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (8,087) $ (249,299) $ (766,892)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 2,113 5,000 35,302
Write-down of equipment - - 95,000
Stock based on compensation 17,500 111,250
Changes in assets and liabilities:
Accounts payable and accrued liabilities 873 169,033 77,453
Due to officers and employees - 85,681 249,429
Other current assets - - -
----------- ---------- ----------
Net cash (used in) provided by operating activites (5,101) 27,915 (198,458)
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchases - (28,039) (137,271)
----------- ---------- ----------
Net cash used in investing activies - (28,039) (137,271)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt converted to equity - - 66,153
Common stock - - 270,133
----------- ---------- ----------
Net cash provided by financing activies - - 336,286
NET (DECREASE) INCREASE IN CASH (5,101) (124) 557
----------- ---------- ----------
CASH AT BEGINNING OF THE YEAR 5,658 2,873 -
----------- ---------- ----------
CASH AT THE END OF THE YEAR $ 557 $ 2,749 $ 557
=========== =========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ - $ - $ -
Taxes - - -
NON -CASH FINANCING ACTIVITIES:
Common stock issued for debt $ 13,815
Common stock issued for services $ - $ 70,000 $ 70,000
=========== =========== ==========
See accompanying notes to financial statements.
6
THE WINNER'S EDGE. COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF DEFICIENCY IN ASSETS
Common Stock Additional
Par Value Paid-in Accumulated
Shares $0.01 Capital Deficit Total
---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 2000 28,509,200 $ 285,093 $ 159,119 $(755,481) $ (311,269)
STOCK ISSUED FOR DEBT 1,381,500 13,815 13,815
NET LOSS (8,087) (8,087)
---------- ---------- ---------- --------- ----------
BALANCE AT MARCH 31, 2001 (Unaudited) 29,890,700 $298,908 $ 159,119 $(763,568) $ (305,541)
========== ========== ========== ========= ==========
See accompanying notes to financial statements.
7
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 three months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2001. 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, 2000. 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.
--------------------
In January 2001, the Company issued 1,381,500 shares of common stock to
the sole officer of the Company in exchange for $13,815 of indebtedness.
NOTE 3. 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 $768,000, 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.
8
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The analysis of the Company's financial condition, liquidity, capital
resources and results of operations should be viewed in conjunction with the
accompanying financial statements including the notes thereto.
General
The Company was incorporated in Delaware in 1995 under the name UC'NWIN
Systems, Inc. In August, 1999 the Company changed its name to The Winners
Edge.com, Inc. During 1999, as a result of a Chapter 11 Bankruptcy Plan of
Reorganization, the Company acquired the assets of The Winners Edge Licensing
Corporation. In addition to the assets, the Company also acquired a ten-year
exclusive right to market the Winners Edge handicapping product renewable for
a second ten years. The Company did not acquire the ownership of the
handicapping program. In September, 2000 the Company stopped marketing the
Winners Edge handicapping product due to insufficient income. The Company
may reintroduce the Winners Edge product at some time in the future once
another revenue stream has been secured that will provide sufficient
resources for the proper marketing of the product. The Company is currently
attempting to effect a merger, exchange of capital stock, asset acquisition
or other similar business combination with an operating or development stage
business that the Company may consider to have significant growth potential.
The Company is not restricting its search to any particular industry. In
March of 2001 the Company entered into an agreement whereby it agreed to
purchase the assets of Universal Sealant, Ltd. A copy of the agreement was
included in the Form 10-K for 2000. The transaction closed in a timely
manner on April 30, 2001. At present, the sales and marketing of the
Universal Sealant product line is the only business in the Company is
actively engaged in.
Financial Condition
At March 31, 2001, the Company had total assets of $ 7,526 as compared
to total assets of $ 14,740 at December 31, 2000; total liabilities of
$313,067, as compared to total liabilities of $326,009 at December 31, 2000;
and a deficiency of assets of $305,541, as compared to a deficiency of assets
of $311,269 at December 31, 2000.
Liquidity and Capital Resources
As of March 31, 2001, the Company's cash totaled $557 as compared to
$5,658 at December 31, 2000, a decrease of $5,101. Net cash used in
operations for the quarter ended March 31, 2001 was $ 8,087 compared to
$ 253,052 used by operations for the quarter ended March 31, 2000. The
decrease in cash used is primarily due to the Company reducing its expenses
to be more in line with income. At the current time the Company has no
9
sales, and has been dependent on contributions by its officers as well
as private placements of its common stock to generate the required cash
flows to remain solvent. The Company's current cash requirements exceed
its income and no assurances can be made that it will remain a going
concern. However, the Company anticipates the commencement of a revenue
stream in conjunction with its acquisition of certain products of
Universal Sealants, Ltd.
Results of Operations
Revenues - Sales for the quarter ended March 31, 2001, were $-0-
compared to sales of $3,753 in the year earlier quarter.
Net Operating Loss - The net operating loss for the quarter ended
March 31, 2001 was $8,087 compared to net loss of $249,299 in the year
earlier quarter. The decrease in the net operating loss is due to the
Company reducing its expenditures to be more in line with income.
Depreciation and Amortization - Depreciation for the quarter ending
March 31, 2001 was $2,113 as compared to $ 5,000 in the year earlier quarter.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses were $8,087 for the quarter ending March 31, 2001,
as compared to $ 253,052 for the year earlier quarter.
10
PART II - OTHER INFORMATION
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
In connection with the Company's acquisition of the assets of
Universal Sealant, Ltd. in April, 2001, the Company sold
2,625,000 of its common stock at $.04 per share to accredited
investors for aggregate gross proceeds of $105,000 pursuant
to an exemption from registration under the Securities Act
of 1933, as amended.
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)(i) On or about April 2, 2001, the Company filed a
Report on Form 8-K announcing the Agreement for
the Sale and Purchase of Certain Assets of
Universal Sealant, Ltd., a Bahamian corporation
("USL"). The Company purchased all proprietary
and other rights to produce, manufacture,
distribute, and sell a roofing sealant known as
Universal Roof Shield (the "Product").
11
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.
THE WINNER'S EDGE.COM, INC.
Dated: May 14, 2001 By:/s/ Michael E. Fasci
---------------------
Michael E. Fasci, President and CEO
12