U.S. SECURITIES 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
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number:
March 31, 2002 0-22954
SEALANT SOLUTIONS, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 65-0952186
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(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
29 Abbey Lane, Middleboro, MA 02346
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(Address of Principal Executive Offices) (Zip Code)
(508) 880-6969
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(Registrant'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___
The number of shares of Common Stock, par value $ .01 per share, outstanding
as of March 31, 2002 is 51,264,058.
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THE WINNER'S EDGE.COM, INC
INDEX TO FORM 10-QSB
March 31, 2002
PART I. Financial Information Page #
Item 1. Financial Statements -
Balance Sheet
March 31, 2002
December 31, 2001 3
Statements of Operations
Three months ended March 31, 2002
Three months ended March 31, 2001
Period July 8, 1998 to March 31, 2002 4
Statement of Deficiency in Assets
Three months ended March 31, 2002 5
Statements of Cash Flows
Three months ended March 31, 2002
Three months ended March 31, 2001
Period July 8, 1998 to March 31, 2002 6
Notes to Financial Statements 7
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
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SEALANT SOLUTIONS, INC.
f/k/a THE WINNERS EDGE.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
March 31, December 31,
2002 2001
------------- -------------
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 559 $ 1,706
Marketable securities available for sale 6,900 21,400
Inventory 1,300 -
---------- ----------
TOTAL CURRENT ASSETS 8,759 23,106
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EQUIPMENT, net 2,251 3,617
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OTHER ASSETS
Intangible asset, net 260,050 32,775
Security deposits 899 899
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TOTAL OTHER ASSETS 260,949 33,674
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$ 271,959 $ 60,397
========== ==========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES:
Account payable and accrued liabilities $ 47,446 $ 26,517
Due to related parties 9,343 70,991
---------- ----------
TOTAL CURRENT LIABILITIES 56,789 97,508
DEFICIENCY IN ASSETS:
Common stock, $.01 par value, 60,000,000 shares
authorized, 51,264,058 issued and outstanding 512,642 343,038
Additional paid in capital 762,972 589,367
Accumulated deficit (1,054,184) (977,756)
Other comprehensive income(loss) (6,260) 8,240
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TOTAL DEFICIENCY IN ASSETS 215,170 (37,111)
---------- ----------
271,959 60,397
========== ==========
See accompanying notes to financial statements.
3
SEALANT SOLUTIONS, INC.
f/k/a THE WINNERS EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
Three Months Three Months July 8, 1998
Ended Ended (inception) to
March 31, March 31, March 31,
2002 2001 2002
------------ ------------ ------------
SALES $ 3,646 $ - $ 54,484
------------ ------------ ------------
EXPENSES:
Selling general and administrative 59,076 8,087 806,177
Write-down of long-lived assets 21,000 - 116,000
Stock-based compensation - - 162,500
Advertising - - 44,680
------------ ------------ ------------
TOTAL EXPENSES 80,076 8,087 1,129,357
------------ ------------ ------------
NET LOSS $ (76,430) $ (8,087) $ (1,074,873)
============ ============ ============
NET LOSS PER SHARE: $ (0.00) $ (0.00)
============ ============
Number of shares used in computation 34,820,936 29,545,325
============ ============
See accompanying notes to financial statements.
4
SEALANT SOLUTIONS, INC.
f/k/a THE WINNERS EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF DEFICEINCY IN ASSETS
Common Stock Additional Other
------------------------- Paid-in Accumulated Comprehensive
Shares Amount Capital Deficit Income(loss) * Total
---------- ----------- ----------- ----------- -------------- ------------
BALANCE AT DECEMBER 31, 2001 (audited) 34,303,591 $ 343,038 $ 589,367 $ (977,754) $ 8,240 $ (37,109)
Stock issued for services 100,000 $ 1,000 $ 5,000 $ 6,000
Stock issued for debt 4,360,467 $ 43,604 $ 43,605 $ 87,209
Sale of common stock 12,500,000 $ 125,000 $ 125,000 $ 250,000
Unrealized gain(loss) on marketable
securities available for sale $ (14,500) $ (14,500)
Net loss $ (76,430) $ (76,430)
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BALANCE AT MARCH 31, 2002 (unaudited) 51,264,058 512,642 762,972 (1,054,184) (6,260) $ 215,170
==================================================================================
* Comprehensive income, i.e., net income (loss), plus, or less, other
comprehensive income, totaled $ (82,430) for the three months ended
March 31, 2002.
See accompanying notes to financial statements.
5
SEALANT SOLUTIONS, INC.
f/k/a THE WINNERS EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(Unaudited)
Period
Three Months Three Months July 8, 1998
Ended Ended (inception) to
March 31, March 31, March 31,
2002 2001 2002
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (76,430) $ (8,087) $ (1,052,510)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,093 2,113 43,472
Write-down of assets 21,000 - 116,000
Forgiveness of debt 87,209 - 99,400
Stock based on compensation 6,000 - 209,366
Changes in assets and liabilities:
Security deposits - - (899)
Inventory (1,300) - (1,300)
Accounts payable and accrued liabilities 20,929 873 47,446
Due to officers and employees (61,648) - 238,229
------------- ------------ ------------
Net cash (used in) provided by operating activites (1,147) (5,101) (300,796)
------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities available for sale 14,500 - (6,900)
Unrealized gain/(loss) on securities (14,500) - (6,260)
Intangible asset purchase (250,000) - (254,500)
Equipment purchases - - (137,271)
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Net cash used in investing activies (250,000) - (404,931)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Debt converted to equity - - 66,153
Common stock 250,000 - 640,133
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Net cash provided by financing activies 250,000 - 706,286
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NET (DECREASE) INCREASE IN CASH (1,147) (5,101) 559
CASH AT BEGINNING OF THE YEAR 1,706 5,658 -
------------- ------------ ------------
CASH AT THE END OF THE YEAR $ 559 $ 557 $ 559
============= ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ - $ - $ -
============= ============ ============
Taxes $ - $ - $ -
============= ============ ============
NON -CASH FINANCING ACTIVITIES:
Common stock issued for debt $ - $ 13,815 $ 241,076
============= ============ ============
Common stock issued for services $ - $ - $ 162,116
============= ============ ============
Common stock issued for acquistion
of intangible assets $ - $ - $ 30,000
============= ============ ============
See accompanying notes to financial statements.
6
SEALANT SOLUTIONS, INC.
f/k/a THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NOTE 1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial statements of Sealant
Solutions, 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, 2002 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,
2001. 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. INVESTMENT
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In February 2002, the Company used $250,000 to enter into a territorial
agreement with IFG Goldstar Cement Company whereby the Company would
receive a royalty from the import of concrete estimated to start in
July of 2002.
NOTE 3. IMPAIRMENT
In March 2002, based on the Company's review, the Company reduced
$21,000 from the carrying value of long-lived assets to adjust to
its fair market value.
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SEALANT SOLUTIONS, INC.
f/k/a THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4. EQUITY TRANSACTIONS
In January 2002, the Company issued 100,000 shares of common stock at
$.02 per share for services rendered.
In February 2002, the Company issued 4,360,467 shares of common stock
at $.02 per share to the sole officer of the Company in exchange for $87,209
of indebtedness.
In February 2002, the Company issued 12,500,000 shares of common stock
for $250,000 pursuant to a private placement memorandum.
In April 2002, the Company issued 50,000 shares of common stock at $.02
per share for services rendered.
NOTE 5. GOING CONCERN
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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 $1,100,000, 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.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
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.
On March 30, 2001, the Company acquired a roofing sealant product, Roof
Shield , which the Company intends to market worldwide. In July 2001, the
Company changed its name to Sealant Solutions, Inc. In September, 2001, the
Company acquired the rights to sell and distribute in the United States the
Lady Ole line of cosmetics products. In February 2002, the Company entered
into a joint venture agreement with IFG Goldstar Cement Company for the
entitlement to a royalty payment based upon the sale of certain concrete
products. 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.Financial Condition
At March 31, 2002, the Company had total assets of $271,959 as compared
to total assets of $ 60,397 at December 31, 2001; total liabilities of
$56,789, as compared to total liabilities of $97,508 at December 31, 2001;
and stockholder equity of $215,170, as compared to a deficiency of assets
of ($37,111) at December 31, 2001.
Liquidity and Capital Resources
As of March 31, 2002, the Company's cash totaled $559 as compared to
$1,706 at December 31, 2001, a decrease of $1,147. Net cash used in
operations for the quarter ended March 31, 2002 was $1,147 compared to
$5,101 used by operations for the quarter ended March 31, 2001. 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 significant sales or sources of revenue, and is 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.
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Results of Operations
REVENUES - Sales for the quarter ended March 31, 2002, were $3,646
compared to sales of $-0- in the quarter ended March 31, 2001.
NET OPERATING LOSS - The net operating loss for the quarter ended
March 31, 2002 was $76,430 compared to net loss of $8,807 in the quarter
ended March 31, 2001. The increase in the net operating loss is due to
the Company continuing its efforts to create shareholder value.
DEPRECIATION AND AMORTIZATION - Depreciation for the quarter ending
March 31, 2002 was $3,093 as compared to $2,113 in the quarter ended
March 31, 2001.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses were $59,076 for the quarter ending March 31, 2002,
as compared to $8,087 for the year earlier quarter. The increase in
selling, general and administrative expenses was due to the Company
continuing its efforts to create shareholder value.
Forward Looking Statements
- --------------------------
In accordance with the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), Sealant Solutions, Inc. is
herein providing precautionary statements identifying factors that may cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made
in this quarterly Report on Form 10-QSB. Any statements that express or
involve discussions of expectations, beliefs, plans, objectives,
assumptions or future events or performance (sometimes but not always
through the use of words such as "likely", "expected", "will",
"anticipated", "estimated", "intends", "plans" and "projection" or any
prefix or suffixes thereof) are not necessarily historical facts and may
be forward-looking statements involving estimates and uncertainties which
may cause actual results to differ materially from those expressed in the
forward-looking statements. Accordingly, any such statements are qualified
in their entirety by reference to, and are accompanied by, the following
key factors that have a direct bearing on the Company's results of
operations: the absence of contracts with customers or suppliers; the
Company's ability to maintain and develop relationships with customers and
suppliers; the Company's ability to successfully integrate acquired
businesses or new brands into the Company; the impact of competitive
products and pricing; supply constraints or difficulties; changes in the
retail industries; the retention and availability of key personnel; and
general economic and business conditions.
The Company cautions the factors described herein may cause actual
results to differ materially from those expressed in any forward-looking
statements of the Company and that investors should not place reliance on
any such forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which such statement is made, and the Company
makes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is made
or to reflect the occurrence of unanticipated events or circumstances.
Unknown factors may emerge from time to time unpredictable by the Company.
Such unknown factors may have an undeterminable amount of impact on the
Company's results of operations, which may cause actual results to differ
materially from those contained in any forward-looking statements.
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PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGE IN SECURITIES
In January 2002, the Company issued 50,000 shares of common
stock $.02 per share for services rendered.
In January 2002, the Company authorized the issuance of
4,360,467 shares of Common Stock at $.02 per share for
conversion of $87,209 of indebtedness owed to an officer of
the Company. The shares were issued in April, 2002.
In February 2002, the Company sold 12,500,000 shares of
restricted common stock at $.02 per share to an accredited
investor pursuant to a private placement. The shares were
issued in April, 2002.
In April 2002, the Company issued 50,000 shares of restricted
common stock to an individual in connection with the Company's
termination of distribution rights to Lady Ole cosmetics.
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 January 2002, Ramiz Chamlati resigned from the Board of
Directors without disagreement.
In February 2002, the Company entered into a royalty agreement
with IFG Goldstar Cement Company ("Goldstar") which provides
for the Company to receive a royalty payment of $.375 per
metric ton from the import of concrete sold by Goldstar and
delivered directly or indirectly through the Goldstar
distribution center in Los Angeles, California which
distribution is expected to commence in or about July 2002.
The Company paid Goldstar $250,000 as consideration for the
entitlement to the royalty payment.
-11-
In May 2002, the Company memorialized and filed with the Form
10-KSB for the period ending December 31, 2001, the First
Modification to Employment Agreement dated September 9, 2001,
of Michael E. Fasci, which modification was effective as of
September 9, 2001.
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 February 7, 2002, the Company filed a
Report on Form 8-K that the Company had raised
$250,000 through the sale of the Company's common
stock via a private placement.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: May 16, 2002 Sealant Solutions, Inc.
By: /s/Michael E. Fasci
------------------------------------
Michael E. Fasci
Chairman and Chief Executive Officer
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