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, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission File number 0-22954
SEALANT SOLUTIONS, INC.
-----------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 65-0952186
------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
29 ABBEY LANE, MIDDLEBORO, MASSACHUSETTS 02346
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(Address of principal executive office and zip code)
(508) 880-6969
--------------
(Issuer's telephone number)
N/A
---
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act of 1934 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 at least the past 90
days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
On March 31, 2003, there were 1,074,155 shares of the Registrant's
Common Stock, par value $.01 per share, issued and outstanding.
SEALANT SOLUTIONS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.......................................3
Balance Sheet -
March 31, 2003 (Unaudited) and December 31, 2002...........3
Statement of Operations -
Three months ended March 31, 2003 and 2002 (Unaudited)
and July 8, 1998 to March 31, 2003.........................4
Statement of Deficiency in Assets -
Three months ended March 31, 2003..........................5
Statement of Cash Flows -
Three months ended March 31, 2003 and 2002 (Unaudited).....6
Notes to Financial Statements..............................7
Item 2. Management's Discussion and Analysis of
Financial Condition or Plan of Operation...................8
Item 3. Controls and Procedures...................................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.........................................11
Item 2. Changes in Securities.....................................11
Item 3. Defaults Upon Senior Securities...........................11
Item 4. Submission of Matters to a Vote of Security-Holders.......11
Item 5. Other Information.........................................11
Item 6. Exhibits and Reports on Form 8-K..........................11
SIGNATURES...................................................................12
CERTIFICATIONS...............................................................13
2
SEALANT SOLUTIONS, INC.
(A Development Stage Enterprise)
BALANCE SHEET
March 31, December 31,
2003 2002
----------- -----------
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................. $ 1,446 $ 2,338
Prepaid Expenses ........................... - 2,576
----------- -----------
TOTAL CURRENT ASSETS .... 1,446 4,914
EQUIPMENT, net ................................... 555 885
OTHER ASSETS
Intangible asset, net ...................... - -
Security deposits .......................... - -
----------- -----------
TOTAL OTHER ASSETS .... - -
----------- -----------
$ 2,001 $ 5,799
=========== ===========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES:
Account payable and accrued liabilities .... $ 11,307 $ 24,089
Due to related parties ..................... 110,893 72,217
----------- -----------
TOTAL CURRENT LIABILITIES .... 122,199 96,306
DEFICIENCY IN ASSETS:
Common stock, $.01 par value,
20,000,000 shares authorized,
1,074,155 issued and outstanding ......... 10,742 10,742
Additional paid in capital ................. 1,301,327 1,301,327
Accumulated deficit ........................ (1,432,266) (1,402,576)
----------- -----------
TOTAL DEFICIENCY IN ASSETS .... (120,198) (90,507)
----------- -----------
$ 2,001 $ 5,799
=========== ===========
See accompanying notes to financial statements.
3
SEALANT SOLUTIONS, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For the
Period
Three Months Three Months July 8, 1998
Ended Ended (inception)
March 31, March 31, to March 31,
2003 2002 2003
----------- ----------- -----------
SALES ................................ $ - $ 3,646 $ 54,484
----------- ----------- -----------
EXPENSES:
Selling general and administrative . 29,690 59,076 910,028
Write-down of equipment ............ - - 95,000
Stock-based compensation ........... - - 165,500
Loss on Investment in franchise .... - 21,000 29,799
Loss on impairment of investment ... - - 250,000
Advertising ........................ - - 47,680
----------- ----------- -----------
TOTAL EXPENSES . 29,690 80,076 1,498,007
OTHER INCOME/(EXPENSE)
Interest Income .................... - - 541
Other Income - Legal Opinions ...... - - 20,942
Loss on Securities ................. - - (10,226)
----------- ----------- -----------
- - 11,257
----------- ----------- -----------
NET LOSS BEFORE INCOME TAXES ......... (29,690) $ (76,430) $(1,432,266)
----------- ----------- -----------
Income taxes ....................... - - -
NET LOSS ............................. $ (29,690) (76,430) (1,432,266)
=========== =========== ===========
NET LOSS PER SHARE: .................. $ (0.03) $ (0.11)
=========== ===========
Number of shares used in computation . 1,074,155 696,419 *
=========== ===========
* Adjusted for 50 to 1 reverse stock split on 12/13/2002
See accompanying notes to financial statements.
4
SEALANT SOLUTIONS, INC.
(A Development Stage Enterprise)
STATEMENTS OF DEFICIENCY IN ASSETS
Common Stock Additional Other
------------------- Paid-in Accumulated Comprehensive
Shares Amount Capital Deficit Income(loss)* Total
--------- ------- ---------- ----------- ------------- ---------
BALANCE AT
DECEMBER 31, 2002.. 1,074,155 $10,742 $1,301,328 $(1,402,576) $ - $ (90,506)
Net loss ..... - - - (29,690) - -
--------- ------- ---------- ----------- ----------- ---------
BALANCE AT
MARCH 31, 2003
(unaudited)........ 1,074,155 10,742 1,301,328 (1,432,266) - $(120,196)
========= ======= ========== =========== =========== =========
See accompanying notes to financial statements.
5
SEALANT SOLUTIONS, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(Unaudited)
Period
Three Months Three Months July 8, 1998
Ended Ended (inception)
March 31, March 31, to March 31,
2003 2002 2003
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .............................................. $ (29,690) $ (8,087) $(1,430,592)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ..................... 330 2,113 41,317
Write-down of equipment ........................... - - 95,000
Loss on impaired royalty agreement ................ - - (250,000)
Loss on investment in franchise ................... - - 29,799
Stock based on compensation ....................... - - 221,366
Changes in assets and liabilities:
Prepaid Expenses .................................. 2,576 - (899)
Accounts payable and accrued liabilities .......... (12,783) 873 11,305
Due to officers and employees ..................... 38,676 - 339,778
----------- ----------- -----------
Net cash (used in) provided by operating activities ... (892) (5,101) (942,925)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities available for sale .............. - - 250,000
Intangible asset purchase ............................. - - (4,500)
Equipment purchases ................................... - - (137,271)
----------- ----------- -----------
Net cash used in investing activities ................. - - 108,229
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt converted to equity .............................. - - 82,344
Common stock .......................................... - - 753,798
----------- ----------- -----------
Net cash provided by financing activities ............. - - 836,142
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH .......................... (892) (5,101) 1,446
CASH AT BEGINNING OF THE YEAR ............................ 2,338 5,658 -
----------- ----------- -----------
CASH AT THE END OF THE YEAR .............................. $ 1,446 $ 557 $ 1,446
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest .............................................. $ - $ - $ -
=========== =========== ===========
Taxes ................................................. $ - $ - $ -
=========== =========== ===========
NON -CASH FINANCING ACTIVITIES:
Common stock issued for debt .......................... $ - $ 13,815 $ 358,741
=========== =========== ===========
Common stock issued for services ...................... $ - $ - $ 180,116
=========== =========== ===========
Common stock issued for acquisition of intangible assets $ - $ - $ 30,000
=========== =========== ===========
See accompanying notes to financial statements.
6
SEALANT SOLUTIONS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 expected for the three months ended March 31, 2003
are not necessarily indicative of the results that may be expected for
the year ending December 31, 2002. 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,
2002. 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. 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 $1,432,266, 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.
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FORWARD-LOOKING STATEMENTS
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward-looking statements" as
defined in the Securities Act of 1933 and the Securities Exchange Act of 1934,
as amended. These forward-looking statements rely on a number of assumptions
concerning future events, and are subject to a number of risks and uncertainties
and other factors, many of which are outside the control of the Company, that
could cause actual results to differ materially from such statements.
Readers are cautioned not to put undue reliance on such forward-looking
statements, each of which speaks only as of the date hereof. Factors and
uncertainties that could affect the outcome of such forward-looking statements
include, among others, market and industry conditions, increased competition,
changes in governmental regulations, general economic conditions, pricing
pressures, and the Company's ability to continue its growth and expand
successfully into new markets and services. The Company disclaims any intention
or obligation to update publicly or revise any forward-looking statements,
whether as a result of new information, future events or otherwise
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
license with the 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. 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
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the entitlement to a royalty payment based upon the sale of certain concrete
products. In April 2002, the Company sold its rights to the Lady Ole line of
cosmetic products and is no longer in that business. In November 2002, the
Company agreed to terminate and cancel the remaining term of it's licensing
agreement with the Winners Edge Licensing Corporation and will no longer attempt
to market that 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.
FINANCIAL CONDITION
At March 31, 2003, the Company had total assets of $2,001 as compared
to total assets of $5,799 at December 31, 2002; total liabilities of $122,199,
as compared to total liabilities of $96,306 at December 31, 2002; and a
deficiency in assets of ($120,198), as compared to ($90,507) at December 31,
2002.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2003, the Company's cash totaled $1,446 as compared to
$2,338 at December 31, 2002, a decrease of $892. Net cash used in operations for
the quarter ended March 31, 2003 was $892 compared to $5,101 used by operations
for the quarter ended March 31, 2002. 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.
RESULTS OF OPERATIONS
REVENUES - Sales for the quarter ended March 31, 2003, were $-0-
compared to sales of $3,646 in the quarter ended March 31, 2002.
NET OPERATING LOSS - The net operating loss for the quarter ended March
31, 2003 was $29,690 compared to net loss of $76,430 in the quarter ended March
31, 2002. The decrease in the net operating loss is due to the Company
continuing it's efforts to reduce administrative expenditures and create
shareholder value.
DEPRECIATION AND AMORTIZATION - Depreciation for the quarter ending
March 31, 2003 was $330 as compared to $2,113 in the quarter ended March 31,
2002.
9
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses were $29,690 for the quarter ending March 31, 2003, as
compared to $59,076 for the year earlier quarter. The decrease in selling,
general and administrative expenses was due to the Company continuing its
efforts to reduce administrative expenditures and create shareholder value.
ITEM 3. CONTROL AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Within the 90 days prior to the date of this report, Sealant Solutions,
Inc. ("the Company") carried out an evaluation, under the supervision and with
the participation of the Company's management, including the Company's President
and Secretary/Treasury, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the President and Secretary/Treasurer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting the Company to material information required to be included in
the Company's periodic SEC filings relating to the Company (including its
consolidated subsidiaries).
(B) CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these internal controls
subsequent to the date of our most recent evaluation.
10
SEALANT SOLUTIONS, INC.
PART II
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
On April 8, 2003, a majority of shareholders of Sealant Solutions, Inc.
(the "Corporation"), ratified certain resolutions adopted by the
Corporation's Board of Directors on December 7, 2002, and the taking of
corporate action pursuant thereto.
Item 5. OTHER INFORMATION
On February 27, 2003, Michael E. Fasci, Chairman and CEO of the
Company, acquired 255,000 shares of the Company's common stock via two
(2) private transactions increasing his percentage of ownership in the
Company to 52.2%
On or about March 14, 2003, the Company filed a Preliminary Information
Statement on Form 14C with the Securities and Exchange Commission in
the connection with the Company's one-for-fifty reverse split in
December 2002, and an increase in the Company's authorized number of
common shares.
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) There are no reports required to be filed on Form 8-K for the
period covered by this Report.
11
SIGNATURES
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.
SEALANT SOLUTIONS, INC.
Date: April 22, 2003 By: /s/ Michael E. Fasci
-----------------------------------
Michael E. Fasci, Chairman and CEO
12
CERTIFICATIONS
I, Michael E. Fasci, Chairman and CEO of Sealant Solutions, Inc., hereby
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Sealant Solutions,
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 the registrant 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 the
registrant and I have:
(a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant'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 my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and to the audit committee of registrant's board of directors (or
persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant'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
13
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: April 22, 2003 By: /s/ Michael E. Fasci
-----------------------------------
Michael E. Fasci, Chairman and CEO
14