-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L/X/Uz3gFyGohHtMxedUBQF9kjd66nMhXJ0rtLXR69paczK4TYxylKSjbYKlusoC oNcSEkyezoV1EPiLOsDUmg== 0000948830-98-000293.txt : 19981016 0000948830-98-000293.hdr.sgml : 19981016 ACCESSION NUMBER: 0000948830-98-000293 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: US AMATEUR SPORTS INC CENTRAL INDEX KEY: 0001000459 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 650538051 STATE OF INCORPORATION: FL FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23617 FILM NUMBER: 98726106 BUSINESS ADDRESS: STREET 1: 3790 RCA BLVD STREET 2: SUITE 7010 CITY: PALM BEACH GARDENS STATE: FL ZIP: 33410 BUSINESS PHONE: 4076224395 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended August 31, 1998 Commission File Number 33-96638-A U S Amateur Sports, Inc. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Florida 65-0538051 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8125 Monetary Drive, Suite H4, Riviera Beach, Florida 33404 ----------------------------------------------------------- (Address of principal executive offices) (561) 622-4395 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 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__ As of August 31, 1998, the issuer had 11,932,600 shares of common stock, $.0001 Par Value, outstanding. Transitional Small Business Disclosure format: Yes _ No -X- U S AMATEUR SPORTS, INC. Form 10-QSB August 31, 1998 INDEX PART I FINANCIAL INFORMATION Page No. ITEM 1 FINANCIAL STATEMENTS Consolidated Balance Sheets: August 31, 1998 and May 31, 1998 3 Consolidated Statements of Operations: Three-month Periods Ended August 31, 1998 and 1997 4 Consolidated Statements of Cash Flows: Three-month Periods Ended August 31, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10 PART II OTHER INFORMATION Items 1-6 13 2 U S AMATEUR SPORTS, INC. CONSOLIDATED BALANCE SHEETS AUGUST 31, 1998 AND MAY 31, 1998 AUGUST 31, MAY 31, 1998 1998 --------- -------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 81,692 $ 89,542 Accounts and advances receivable 16,146 7,315 Inventories 89,336 85,155 Prepaid expense 26,257 34,580 -------- -------- Total current assets 213,431 216,592 Property and equipment 69,800 70,980 Rights to technology and associated trademarks 29,616 25,309 Deferred charges 2,168 2,818 Other assets 8,442 7,862 -------- -------- TOTAL ASSETS $323,457 $323,561 ======== ======== LIABILITIES Current Liabilities Accounts payable $135,368 $131,704 Current portion of notes payable 125,897 130,214 Current portion of accrued interest 14,255 10,600 -------- -------- Total current liabilities 275,520 272,518 Loans from stockholders 133,800 101,600 Notes payable, less current portion 13,500 13,500 Accrued interest, less current portion 1,731 1,314 -------- -------- TOTAL LIABILITIES 424,551 388,932 -------- -------- STOCKHOLDERS' EQUITY Common stock, $.0001 par value: Authorized - 50,000,000 shares; Issued 11,934,600 shares at August 31, 1998 and 11,894,600 shares at May 31, 1998 1,193 1,189 Additional paid-in capital 518,354 484,361 Accumulated deficit (615,641) (545,921) Less treasury stock - At cost: 2,000 shares (5,000) (5,000) -------- -------- TOTAL STOCKHOLDERS' EQUITY (101,094) (65,371) -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $323,457 $323,561 ======== ======== See notes to financial statements. 3 U S AMATEUR SPORTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Three-Month Periods Ended August 31, 1998 and 1997 (Unaudited) Three Months Ended August 31, 1998 1997 REVENUES -------- -------- Net sales $ 22,967 $ 21,338 Other income 0 3,259 -------- -------- TOTAL REVENUES 22,967 24,597 COSTS AND EXPENSES Cost of products sold 9,121 3,351 Cost of event production and promotion 0 71,662 Freight 830 2,843 Professional fees 17,770 14,750 Advertising and promotion 28,072 0 Travel 0 4,603 Rent 6,993 5,904 Office, telephone and other operating expenses 17,223 12,810 Interest 4,072 1,736 Depreciation 5,583 3,940 Amortization 3,023 3,023 -------- -------- TOTAL COSTS AND EXPENSES 92,687 124,548 -------- -------- NET LOSS $(69,720) $(99,951) ======== ======== NET LOSS PER COMMON SHARE $ (.006) $ (.017) ======== ======== See notes to financial statements. 4 U S AMATEUR SPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three-Month Periods Ended August 31, 1998 and 1997 (Unaudited) Three Months Ended August 31, 1998 1997 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (69,720) $ (99,951) Reconciling adjustments: Amortization 3,023 3,023 Depreciation 5,583 3,940 Decrease (increase) in receivables (8,831) 2,791 Decrease (increase) in inventories (4,181) (3,318) Decrease (increase) in prepaid expenses 8,323 (2,944) (Increase) in other assets (7,260) 0 Increase in accounts payable 3,664 70,263 Increase (decrease) in accrued expenses 0 (40,000) Increase (decrease) in accrued interest 4,072 (6,509) ---------- ---------- NET CASH USED BY OPERATING ACTIVITIES (65,327) (72,705) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (4,403) 0 ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (4,403) 0 CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 33,997 0 Notes payable (4,317) 126,387 Loans from stockholders 32,300 (47,400) ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 61,880 79,987 ---------- ---------- NET INCREASE (DECREASE) IN CASH (7,850) (6,282) CASH AT BEGINNING OF PERIOD 89,542 810 ---------- ---------- CASH AT END OF PERIOD $ 81,692 $ 7,092 ========== ========== See notes to financial statements. 5 U S AMATEUR SPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 1998 and 1997 (Unaudited) NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - --------------------- 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-Q and Article 10 of Regulation S-X. 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 (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended August 31, 1998 are not necessarily indicative of the results that may be expected for the year ending May 31, 1999. For further information, refer to the financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended May 31, 1998. Consolidation - ------------- The consolidated financial statements of the Company include the accounts of USA Performance Products, Inc. USA Performance Products, Inc. is a wholly-owned subsidiary responsible for the manufacture and sale of the Viper M1 paintball marker and accessories. Depreciation - ------------ The cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed using the straight-line method for financial reporting purposes and an accelerated method for tax purposes. Amortization - ------------ Rights to technology and associated trademarks are amortized using the straight-line method over five years. Deferred charges are amortized using the straight-line method over five years. Inventories - ----------- Inventories are stated at the lower of cost or market. See note C. 6 NOTE B: CASH EQUIVALENTS Cash equivalents consist of cash credits received in connection with the sale of advertising to Itex Corporation. These cash credits will be used for the purchase of products and services provided by other Itex clients. NOTE C: INVENTORIES Inventories consist of merchandise acquired for sale by the Company's USA SportsNet business unit in addition to paintball markers and accessories. Inventories are carried at cost which is considered to be less than market value. NOTE D: PREPAID EXPENSE Prepaid expense includes amounts paid for rent, commercial insurance and advertising which will benefit the Company during the fiscal year ending May 31, 1999. NOTE E: PROPERTY AND EQUIPMENT The following is a summary of property and equipment recorded in the financial statements at cost less depreciation as of August 31, 1998 and 1997: August 31, 1998 August 31, 1997 --------------- --------------- Computer hardware $ 34,104 $ 10,542 Computer software 1O,564 1O,564 Furniture, fixtures and equipment 21,072 10,572 Tools, dies and fixtures 54,761 50,140 -------- -------- Total cost 120,501 81,818 Less: accumulated depreciation (50,701) (32,864) -------- -------- Total net property and equipment $ 69,800 $ 48,954 ======== ======== The useful lives assigned to property and equipment to compute depreciation are: Computer hardware 5 years Computer software 5 years Furniture, fixtures and equipment 7 years Tools, dies and fixtures 5 years 7 NOTE F: RIGHTS TO TECHNOLOGY AND ASSOCIATED TRADEMARKS During the year ended May 31, 1996, the Company acquired the assets of Performance Paintball Products, Inc. Included in the purchase were exclusive rights to use of the Viper name and related technology used in the manufacture of the Viper M1 paintball marker. The cost assigned to these rights increased by $6,679 as a result of payment for certain design improvements and drawing updates during the three months ended August 31, 1998. The rights are valued at $54,134 less accumulated amortization of $24,518 at August 31, 1998, and $47,455 less accumulated amortization of $15,028 at August 31, 1997. NOTE G: DEFERRED CHARGES Deferred charges consist of organization costs in the amount of $13,004 less accumulated amortization of $10,836 and $8,235, at August 31, 1998 and 1997, respectively. NOTE H: OTHER ASSETS Other assets include deposits and an advance to an officer of the Company. NOTE I: ACCOUNTS PAYABLE Accounts payable consist of professional fees, trade payables and costs associated with event production and promotion. NOTE J: NOTES PAYABLE AND LOANS FROM STOCKHOLDERS Notes payable include balances remaining under a note agreement with Stratex Corporation and a note recorded in connection with the purchase of certain assets of Performance Paintball Products. The remaining balances of notes payable and loans from stockholders consist of miscellaneous amounts borrowed to finance the Company's operations. NOTE K: SUBSEQUENT EVENT On September 23, 1998, the Company entered into an agreement with the North American Youth Sport Institute (NAYSI) and NAYSI's founder and director, Dr. Jack Hutslar. In return for 100,000 shares of the Company's restricted common stock, the Company receives exclusive rights to present the NAYSI Course on Coaching on the Company's Internet Amateur Sports Network. In connection with a profit-sharing arrangement, NAYSI and Dr. Hutslar will provide consulting services to ensure that the content of the course and its related text is adequate and current. 8 NOTE L: RECOVERABILITY OF ASSETS AND GOING CONCERN The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's continued existence is dependent upon its ability to secure financing or its ability to generate sufficient cash flows through operations to meet its operating costs and repay current obligations as they come due. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion should be read in conjunction with the accompanying consolidated financial statements for the three month periods ended August 31, 1998 and 1997 and the Form 10-KSB for the fiscal year ended May 31, 1998. Special Note Regarding Forward-Looking Statements - ------------------------------------------------- Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. The Company 's actual results could differ materially from those anticipated in these forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, the growth rate of the paintball industry and electronic commerce, constantly changing technology and market acceptance of the Company 's products and services. The Company undertakes no obligation to publicly release the result of any revisions to these forward- looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Overview - -------- USA Performance Products During the three months ended August 31, 1998, the Company commenced transfer of production of the Viper M1 paintball marker from the Company's subcontractor, Micro Tool Engineering, Inc., to in-house facilities. Having determined that Micro Tool would not be able to boost production of the Viper M1 in quantities sufficient to meet demand, management decided to shift away from reliance on this subcontractor even though the transition to other sources would depress current production even further. On June 15, the Company moved its headquarters from Palm Beach Gardens, Florida to approximately 6,000 square feet of leased commercial space in Riviera Beach, Florida. Management believes that this new facility will allow the Company to conduct its own manufacturing operation, satisfy demand for its paintball products for the foreseeable future and ensure the quality of its products by in-house implementation of a comprehensive quality control program. Management also believes that the resulting control over production will make it possible to cut costs to increase profit margins. In-house production is expected to commence by the end of October. USA SportsNet Work continued on transformation of USA SportsNet from a web site used to market the Viper M1 to being the first amateur sports Internet network ("Amateur Sports Network") serving amateur athletes and their organizations. 10 (The following paragraph addresses a material subsequent event.) On September 23, 1998, the Company entered into an agreement with the North American Youth Sport Institute (NAYSI) and its founder and director, Dr. Jack Hutslar, under which NAYSI granted exclusive rights to the Company to present the NAYSI coaches course on the Amateur Sports Network in return for 100,000 shares of restricted common stock. In connection with a profit-sharing agreement, Dr. Hutslar will provide consultation services to ensure that the content of the course and its related text is kept current. Founded in 1979, NAYSI has developed curricula for national training programs that enroll over one million youngsters annually, and it has trained more than 30,000 coaches and teachers in live training sessions. Management considers the agreement with NAYSI to be an important step to provide the means to identify individuals who are not suited for coaching positions and to strengthen the abilities of those who do coach young athletes. Results of Operations - --------------------- Comparison of the three months ended August 31, 1998 with the three months ended August 31, 1997 ------------------------------------------------------------------- Revenue for the three-month period ended August 31, 1998 was $22,967 compared to $24,597 recorded during the same time period of the prior year. All current period revenue consisted of sales of the Viper M1 paintball marker. The majority of prior period revenues were derived from the sale of advertising, tickets and memorabilia connected with the All American Bowl. Total costs and expenses declined from $124,548 during the prior period to $92,687 during the current period. This decrease reflected elimination of the prior year cost of producing and promoting the All American Bowl offset by increases in all other expense categories except travel and freight. Relocation of Company headquarters contributed to these increases. However, the most significant increase was $28,072 in advertising related to promotion of the Viper M1 in anticipation of the Company's ability to satisfy greater demand once transfer of production to in-house facilities is complete. The overall expense decrease of $31,861 translated into a reduction of net loss from $99,951 in the prior year period to $69,720 for the three months ended August 31, 1998. Liquidity and Capital Resources - ------------------------------- At August 31, 1998, current assets totaled $213,431 compared to $216,592 at the prior year end. The decrease of $3,161 was the net result of a $7,850 decrease in cash and cash equivalents and an $8,323 decrease in prepaid expense offset by increases of $8,831 in accounts and advances receivable and $4,181 in inventories. Current liabilities increased to $275,520 from $272,518 at the prior year end. Accounts payable grew from $131,704 to $135,368 during the same time period. Remaining current liabilities consist of the current portion of long-term debt discussed below. 11 Net cash used by operating activities during the three months ended August 31, 1998 was $65,327. The principal use of cash was to fund the Company's net loss from operations. Cash used to increase accounts receivable, inventories and other assets was offset by decreases in prepaid expenses and increases in accounts payable and accrued interest. Net cash used by investing activities consisted of $4,403 used for acquisition of tools, dies and fixtures and computer hardware. Net cash provided by financing activities was $61,880 derived from $33,997 in capital contributions and $32,300 in loans from stockholders offset by a $4,317 decrease in notes payable. Of the capital contributions, $19,000 was recorded from a private sale of restricted stock, and the remainder resulted from the exchange of stock for services. Loans from stockholders, which bear no interest, continued to be a significant source of capital to fund the Company's operations during the three-month period ended August 31, 1998. Notes payable included balances remaining under a note agreement with Stratex Corporation and a note recorded in connection with the purchase of certain assets of Performance Paintball Products. Management believes that the combination of revenues, loans from stockholders and capital contributions will be sufficient to fund operations for the remainder of the current fiscal year. To the extent that the Company requires additional funds to support its operations or the expansion of its business, the Company may sell additional equity, issue debt or obtain credit facilities through financial institutions. Any sale of additional equity securities will result in dilution to the Company's shareholders. There can be no assurance that additional financing, if required, will be available to the Company in amounts or on terms acceptable to the Company. Market for Common Equity - ------------------------ The Company's common stock continues to trade on the OTC Bulletin Board under the symbol USSP. Equitrade Securities Corporation of Lake Forest, California continues to serve as the lead market maker for the stock. 12 OTHER INFORMATION PART II ITEM 1. Legal Proceedings. The Company is not involved in any material legal proceedings or litigation, and the officers and directors are aware of no other pending litigation which would have a material, adverse effect on the Company. ITEM 2. Changes in Securities. None ITEM 3. Defaults Upon Senior Securities. None ITEM 4. Submission of Matters to a Vote of Security Holders. None ITEM 5. Other Information. None ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits - None (b) Reports - None 13 SIGNATURE 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 thereunder duly authorized. U S Amateur Sports, Inc. October 14, 1998 By /s/ Guy T. Lindley Guy T. Lindley, Chief Financial Officer (Principal Financial and Accounting Officer) 14 EX-27 2
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations found on pages 3 and 4 of the Company's Form 10-QSB for the quarter ended August 31, 1998, and is qualified in its entirety by reference to such financial statements. 3-MOS MAY-31-1999 AUG-31-1998 81,692 0 16,146 0 89,336 213,431 120,501 50,701 323,457 275,520 0 0 0 1,193 (102,287) 323,457 22,967 22,967 9,121 92,687 0 0 4,072 (69,720) 0 (69,720) 0 0 0 (69,720) (.01) (.01)
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