10QSB 1 dec.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 333-51302 STAMPEDE WORLDWIDE, INC. (Exact name of registrant as specified in its charter) FLORIDA (State or other jurisdiction of incorporation or organization) 58-2235301 (I.R.S. Employer Identification No.) 3910 Riga Boulevard, Tampa, Florida 33619 (Address of principal executive offices) (Zip Code) (813) 630-2762 (Registrant's telephone number, including area code) Not applicable (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 such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each of the issuer's classes of common stock, was 6,213,594* shares at February 12, 2002 *Adjusted for the share combination and share distribution to creditors pursuant to a court order under the plan of reorganization. Transitional Small Business Disclosure Format (check one); Yes ___ No X PART I--FINANCIAL INFORMATION Item 1. Financial Statements. STAMPEDE WORLDWIDE, INC. AND SUBSIDIARIES Balance Sheets (Unaudited) Assets As of December 31,2001 ---------------- Current Assets: Cash $ 76 Accounts Receivable, Net of Allowance Of $30,000 87,012 Inventory 54,166 Other Current Assets 88,105 ----------- Total Current Assets 229,359 Property and Equipment, Net of Accumulated Depreciation of $461,434 3,377,413 Other Assets: Investments, at Equity 113,182 Intangible Assets, Net 41,062 Deposits 166,168 Other Assets 13,000 ---------- Total Other Assets 333,412 ---------- Total Assets $ 3,940,184 ========== Liabilities and Stockholders' Equity Current Liabilities: Bank Overdraft $ 9,981 Short-Term Notes 168,357 Current Maturities of Long-Term Debt 852,022 Accounts Payable 393,889 Accrued Payroll Liabilities 157,776 Other Accrued Liabilities 473,399 ---------- Total Current Liabilities 2,055,424 Long-Term Liabilities 1,292,978 Stockholders' Equity: Common Stock, $.001 par value, 300,000,000 Shares Authorized, 6,213,594 Shares Issued and Outstanding at December 31, 2001 6,214 Additional Paid in Capital 19,044,093 Accumulated Deficit (18,458,525) ---------- Total Stockholders' Equity 591,782 ---------- Total Liabilities and Stockholders' Equity $ 3,940,184 ========== See accompanying notes to financial statements STAMPEDE WORLDWIDE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) For the three months ended December 31, 2001 2000 (Reorganized (Predecessor Entity) (Entity) ---------- ---------- Sales $ 440,328 $ 562,957 Cost of Sales 262,516 519,139 ---------- ---------- Gross Profit 177,812 43,818 ---------- ---------- Operating Expenses: General and Administrative 522,826 708,473 Interest 50,000 51,839 ---------- ---------- Total Operating expenses 572,826 760,312 ---------- ---------- Net Loss From Operations (395,014) (716,494) Other Income 44,153 ---------- ---------- Net Loss Before Extraordinary Item (350,861) (716,494) Extraordinary Item: Gain on Forgiveness of Debt 902,893 ---------- ---------- Net Income (Loss) 552,032 (716,494) ========== ========== Net Loss per Share $ 0.12 $ (0.84) ========== ========== Weighted Average Shares Outstanding 4,598,209 859,118 ========== ========== See accompanying notes to financial statements STAMPEDE WORLDWIDE, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) For the three months ended December 31, 2001 2000 (Reorganized (Predecessor Entity) (Entity) ---------- ---------- Cash Flows from Operating Activities Net Income (Loss) $ 552,032 $ (716,494) Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Extraordinary Item - Gain on Forgiveness of Debt (902,893) Depreciation and Amortization 106,000 105,535 Provision for Losses on Receivables 12,000 (10,500) Common Stock Issued for Operations 262,997 Changes in Operating Assets and Liabilities: Accounts Receivable 8,011 (94,909) Inventory (1,236) Other Current Assets (26,250) 100,575 Other Assets 563 Accounts Payable 78,963 698,863 Accrued Liabilities 156,012 (1,240,535) ---------- ---------- Net Cash Used in Operating Activities (15,562) (895,704) Cash Flows from Investing Activities Capital Expenditures (149,866) ---------- ---------- Net Cash Used in Investing Activities (149,866) ---------- ---------- Cash Flows from Financing Activities Bank Overdraft 9,981 Principal Payments on Debt (4,823) (30,000) Stockholders Advances (38,279) Proceeds from Issuance of Preferred Stock 310.000 Proceeds from Issuance of Common Stock 765,750 ---------- ---------- Net Cash Provided by Financing Activities 5,158 1,007,471 ---------- ---------- Net increase (decrease) in cash (10,404) (28,099) Cash at Beginning of Period 10,480 53,746 ---------- ---------- Cash at End of Period $ 76 $ 25,647 ========== ========== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Period for Interest $ - $ 14,109 ========== ========== Supplemental Schedule of Noncash Investing and Financing Activities: Stock Issued for Debt Repayment $ 912,669 $ 163,210 ========== ========== See accompanying notes to financial statements STAMPEDE WORLDWIDE, INC., AND SUBSIDIARIES Notes to Financial Statements (Unaudited) Note 1, Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the results of operations for the periods presented have been included. Operating results for the interim period shown in this report are not necessarily indicative of the results that may be expected for the year ending September 30, 2002. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-KSB. Note 2, Reorganization Under Chapter 11 On April 6, 2001, Stampede Worldwide, the parent corporation, filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court. The subsidiaries of the Company have not filed for bankruptcy protection. Since the filing of the petition for relief under Chapter 11, the Company has applied the provisions of Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Consequently, transactions and events that are directly associated with the reorganization are separately presented from the normal operations of the business in the consolidated financial statements. To meet the requirements of the Securities and Exchange Commission, statements of operations and cash flows of the Predecessor Entity at December for the period ended December 31, 2000 are presented as well as the statements of operations and cash flows of the Reorganized Entity for the period ended December 31, 2001. Because these financial statements are those of different reporting entities and are prepared using a different basis of accounting, these financial statements are not comparable. On November 9, 2001, the Bankruptcy Court entered its order confirming the Company's plan of reorganization. The plan provides for full payment to secured creditors. Unsecured creditors are issued 3,000,000 shares of common stock of the reorganized corporation on a pro rata basis in satisfaction of their claims. Preferred stockholders are issued 500,000 shares of common stock to be divided on a pro rata basis in satisfaction of their claims as preferred stockholders. The plan approved a thirty-to-one reverse stock split and cancellation of the shares of holders of less than 100 shares after the split. In addition, a dividend of 2,500,000 shares of Specialized Solutions, Inc. common stock is to be distributed to Stampede Worldwide, Inc. common stockholders, after the creditor and preferred shareholder distributions. Liabilities compromised by the plan are stated at present values of amounts to be paid at December 31, 2001. The gain on the associated forgiveness of debt is presented as an extraordinary item in the statement of operations Note 3, Going Concern The Company has incurred substantial operating losses since inception. Current liabilities exceed current assets by $1,826,065 at December 31, 2001. These factors, combined with the fact that the Company has not generated positive cash flows from operating activities since inception, raise substantial doubt about the Company's ability to continue as a going concern. The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets of the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. Note 4, Commitments and Contingencies On October 11, 2001, the Company modified the terms of its $2,125,000 mortgage note pursuant to an agreement approved by the Bankruptcy Court. The modification increased the interest rate from 6.51% to 10.51%. The agreement requires a payment of $1,000,000 on December 20, 2001 and monthly payments of $25,000 commencing January 1, 2002. The Company has not made any of the required payments and is in default of the modified agreement. In June 2001, the Company modified the terms of its 11%, $556,000 capital lease pursuant to an agreement approved by the Bankruptcy Court. The amended lease agreement does not meet the criteria to be recorded as a capital lease, therefore a loss of $107,788 has been recognized on the conversion. The modified agreement, an operating lease, requires five monthly payments at $7,500, then five monthly payments at $10,000 commencing on August 1, 2001. The Company has failed to make the required payments and the Court has granted the lessor relief from stay under the Chapter 11 filing. Item 2. Management's Discussion and Analysis This quarterly report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and is subject to the safe harbors created by those sections. These forward-looking statements are subject to significant risks and uncertainties, including information included under Parts I and II of this annual report, which may cause actual results to differ materially from those discussed in such forward-looking statements. The forward-looking statements within this annual report are identified by words such as "believes", "anticipates", "expects", "intends", "may", "will" and other similar expressions regarding the Company's intent, belief and expectations. However, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances and statements made in the future tense are forward-looking statements. Readers are cautioned that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, many of which are beyond the control of the Company. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances occurring subsequent to the filing of this quarterly report with the SEC. Readers are urged to carefully review and consider the various disclosures made by the Company in this quarterly report. Background: During the three months period ended December 31, 2001 and 2000, the Company's activities were conducted primarily in its subsidiaries. During the three months period ended December 31, 2001, the Company's subsidiaries and their respective businesses were as follows: Chronicle Commercial Printing, Inc. - commercial web offset printing, which is continuing Stampede Network.com, Inc. - web design and hosting, and proprietary database programming, which has been terminated. During the three months period ended December 31, 2000, the Company's subsidiaries and their respective businesses were as follows: Chronicle Commercial Printing, Inc. - commercial web offset printing Stampede Network.com, Inc. - web design and hosting, and proprietary database programming Spiderscape.com, Inc. - Internet and catalog based computer hardware and software retailing i-Academy, Inc. - technical computer and software training facilities and Stampede Quest, a technology employment placement agency which also operates under the i-Academy subsidiary. Financial Condition: ------------------- The Company's financial position, as of December 31, 2001 in contrast to its financial position at December 31,2000, has worsened. The Company's current assets for the three months ended December 31, 2001 decreased by $323,586 and current liabilities decreased by $1,336,630 as compared to the same three-month period ended December 31, 1999. The cash balance decreased by $38,683. Accounts receivable net of allowances decreased by $154,062. This was due primarily to the closure of the technology subsidiaries as operating units. The result was lower sales and receivable amounts. Inventory and other assets deceased by $143,953. Other assets decreased by a total of $532,490, due primarily to the write-off of a shareholder receivable of $635,035. Accounts payable and accrued liabilities balances decreased by $850,593 as a result of the common stock distribution pursuant to a court order under bankruptcy. Total accounts payable and short-term notes paid through issuance of stock totaled $915,193. Furthermore, bank overdrafts increased to $9,981. Long-term debt decreased by $463,881, primarily from a reclassification of a lease the printing press from capital to operating. Stockholders' equity has decreased by $190,636 from a equity of $782,418 at December 31, 2000 to a balance of $591,782 at December 31, 2001. Overall, the balance sheet has decreased by $1,983,737 from total assets of $5,923,921 at December 31, 2000 to $3,940,184 at December 31, 2001. Liquidity and Capital Resources: ------------------------------- Cash and cash equivalents for the period ended December 31, 2001 $76.. The decrease of $10,404 since the year end was due principally to negative operating cash flows. Cash from operating activities Net cash used in operating activities decreased by $870,142 between December 31, 2001 and 2000. The decrease is attributed to an inability to raise equity cash to fund operations, leading to the closure of all subsidiaries except for the commercial printing operation. Cash used in operating activities resulted from an increase in accounts payable and other liabilities of $234,975 and an adjustment to reconcile cash used in operating activities of $902,893 for gain on forgiveness of debt. Cash from investing activities No cash was used in investing activities for December 31, 2001. Cash from financing activities Net cash provided by financing activities increased by $5,158 for December 31, 2001. The increase is attributed to a bank overdraft of $9,981, offset by principal repayments on debt of $4,823. During the quarter ended December 31, 2001, the Company funded all of its working capital needs through operations. For the quarter ended December 31, 2000, the Company funded most of its working capital needs through the sale of common stock. The Company's working capital ratio improved by $429,564 as of December 31, 2001 when compared to December 31, 2000. This improvement is due primarily to the reduction of accounts payable and short-term debt through the issuance of stock resulting from the Company's plan of reorganization. The Company's current ratio at December 31, 2001 is a negative 1.0:7.9 ratio in contrast to the negative current ratio of 1.0:4.1 at December 31, 2000. During the current quarter the Company's management has been seeking qualified candidates for reverse mergers to strengthen shareholder value through stock dividends in viable operating companies. Results of Operations: --------------------- The Company showed a decrease in revenues for the three months ended December 31, 2001 in the amount of $122,629 or a decrease of 21.7% over the same period for 2000. This was due primarily to the closure of the technology subsidiaries as operating units. Cost of sales decreased by $256,623 for the three months period ended December 31, 2001 versus 2000. Management believes the decreases were the results of less costs of labor in the printing operation when compared to the technology companies labor in the prior year. Additionally, the gross profit margin increased to 40.3% for the three months ended December 31, 2001, in contrast to a gross margin of 7.8% for the same period in 2000. Net income per common share increased by $0.96 to $0.12 for the quarter ended December 31, 2001 versus $(0.84), as adjusted, for the same quarter of 2000. PART II--OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities. On November 9, 2001, the Bankruptcy Court entered its order confirming the Company's plan of reorganization. The plan provides for full payment to secured creditors. Unsecured creditors are issued 3,000,000 shares of common stock of the reorganized corporation on a pro rata basis in satisfaction of their claims. Preferred stockholders are issued 500,000 shares of common stock to be divided on a pro rata basis in satisfaction of their claims as preferred stockholders. The plan approved a thirty-to-one reverse stock split and cancellation of the shares of holders of less than 100 shares after the split. In addition, a dividend of 2,500,000 shares of Specialized Solutions, Inc. common stock is to be distributed to Stampede Worldwide, Inc. common stockholders, after the creditor and preferred shareholder distributions. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-KSB, for the year ended September 30, 2000. Item 3. Defaults Upon Senior Securities. On October 11, 2001, the Company modified the terms of its $2,125,000 mortgage note pursuant to an agreement approved by the Bankruptcy Court. The modification increased the interest rate from 6.51% to 10.51%. The agreement requires a payment of $1,000,000 on December 20, 2001 and monthly payments of $25,000 commencing January 1, 2002. The Company has not made any of the required payments and is in default of the modified agreement. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) None b) Item 2. Plan of Reorganization, dated November 16, 2001. 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. Stampede Worldwide, Inc. and Subsidiaries (Registrant) Date: February 19, 2002 /s/ John V. Whitman, Jr. John V. Whitman, Jr., Chairman and Chief Executive Officer Date: February 19, 2002 /s/ Winston D. Carlee, Jr. Winston D. Carlee, Jr., Chief Financial Officer