-----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, JonXP9f+ZiC7hRSFR4TpxgUyKxS79dBuOyGVZQIYwy4b+0EP+pKeP8rPUb+jil16 SPD8x+dpkywWuCnU2OaKMg== 0001144204-05-008100.txt : 20050318 0001144204-05-008100.hdr.sgml : 20050318 20050318151003 ACCESSION NUMBER: 0001144204-05-008100 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20050318 DATE AS OF CHANGE: 20050318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINMAX TRADING GROUP INC CENTRAL INDEX KEY: 0001035517 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 650702554 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29751 FILM NUMBER: 05691498 BUSINESS ADDRESS: STREET 1: 5920 MACLEOD TRAIL STREET 2: SUITE 800 CITY: CALGARY STATE: A0 ZIP: T2H OK2 BUSINESS PHONE: 8776933130 MAIL ADDRESS: STREET 1: 5920 MACLEOD TRAIL STREET 2: SUITE 800 CITY: CALGARY STATE: A0 ZIP: T2H OK2 10QSB 1 v014627_10qsb.txt FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2004 Commission file number: 0-29751 WINMAX TRADING GROUP, INC. (Exact name of small business issuer as specified in its charter) FLORIDA State or other jurisdiction 65-0702554 of incorporation or I.R.S. Employer Identification organization No. 5920 MacLeod Trail, Suite 800 algary, Alberta Canada T2H 0K2 CAddress of principal executive (offices) (877) 693-3130 (Issuer'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 [ ] No [X] APPLICABLE ONLY TO CORPORATE ISSUERS As of March 18, 2005, we had 22,641,162 shares of our common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 1 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Winmax Trading Group, Inc. and Subsidiaries Consolidated Balance Sheet September 30, 2004 (Unaudited) Assets Current assets Cash $ 23,800 Inventory 138,614 Prepaid expenses and other assets 52,751 ------------ Total current assets 215,165 ------------ Property and equipment, net 306,244 ------------ Total Assets $ 521,409 ============ Liabilities and Stockholders' Deficiency Current liabilities Accounts payable & accrued expenses $ 313,050 Loan Payable - stockholder 2,741,431 ------------ Total Liabilities 3,054,481 ------------ Stockholders' Deficiency Common stock; Authorized, no par value; 750,000,000 shares Issued and outstanding 18,706,736 shares $ 18,706 Additional paid-in capital 12,828,145 Accumulated other comprehensive loss (189,119) Accumulated deficit (15,190,804) ------------ Stockholders' deficiency (2,533,072) ------------ Total Liabilities & Stockholders' Deficiency $ 521,409 ============ See the accompanying notes to the consolidated financial statements. 2 Winmax Trading Group, Inc. and Subsidiaries Consolidated Statements of Operations Three and Nine Months Ended September 30, 2004 and 2003 (Unaudited)
Three Months Nine Months 2004 2003 2004 2003 ------------ ----------- ------------ ----------- Revenue: Sales - Retail $ 39,336 0 $ 121,448 0 Sales - Web 5,999 338,827 171,584 377,477 Cost of sales - Retail 11,300 0 25,131 0 ------------ ----------- ------------ ----------- Gross Profit 34,035 338,827 267,901 377,477 ------------ ----------- ------------ ----------- Operating Costs and Expenses: General and administrative 1,016,729 632,246 3,061,163 1,212,339 ------------ ----------- ------------ ----------- Loss from operations (980,694) (293,419) (2,793,262) (834,862) Other Income - Gain on Settlement of Debt 0 0 0 263,000 ------------ ----------- ------------ ----------- Net Loss (980,694) (293,419) (2,793,262) (571,862) Foreign currency translation adjustment (131,539) (47,773) (90,230) (54,212) ------------ ----------- ------------ ----------- Comprehensive loss $ (1,112,233) (341,192) $ (2,883,492) (626,074) ============ =========== ============ =========== Weighted-average number of common shares outstanding - basic and diluted 18,645,867 10,257,289 17,761,682 10,684,779 ============ =========== ============ =========== Net loss per common share -basic & diluted $ (0.05) (0.03) $ (0.16) (0.06) ============ =========== ============ ===========
See the accompanying notes to the consolidated financial statements. 3 Winmax Trading Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows Nine Months Ended September 30, 2004 and 2003 (Unaudited) 2004 2003 ----------- --------- Cash flows from operating activities: Net cash provided by operating activities $(1,782,113) $(802,400) ----------- --------- Cash flows from investing activities: Net cash (used in) investing activities (224,206) (55,829) ----------- --------- Cash flows from financing activities: Net cash provided by financing activities 2,115,529 930,419 ----------- --------- Effect of exchange rate changes on cash (90,230) (5,434) ----------- --------- Net increase in cash and cash equivalents 18,980 66,756 Cash at beginning of period 4,820 43 ----------- --------- Cash at end of period $ 23,800 $ 66,799 =========== ========= See the accompanying notes to the consolidated financial statements. 4 WINMAX TRADING GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2004 (UNAUDITED) (1) Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and Item 310(b) of Regulation SB. They do not include all of the information and footnotes for complete financial statements as required by GAAP. In management's option, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the Company's financial statements as of December 31, 2003 and for the two years then ended, including notes thereto included in the Company's Form 10-KSB. (2) Earnings Per Share The Company calculates net income (loss) per share as required by SFAS 128, "Earnings per Share." Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. (3) Related Party Transactions During the period ended September 30, 2004 a stockholder of the Company provided working capital aggregating approximately $2,115,529 by direct cash advances to the Company. These advances are recorded as Loan Payable - Stockholder. (4) Stockholder's Equity On April 2,2004, 2,350,000 shares were issued for consulting service to a number of consultants and one employee. The shares constitute validly issued shares of Winmax Trading Group, Inc. and are issued as restricted 144 shares under section 4(2) of the Securities and Exchange act of 1933 and 1934. Shares were valued at $0.31 which was market value on April 2, 2004 for a total value of $728,500 with $2,350 being allocated to common stock and the balance of $726,150 being allocated to additional paid in capital. On July 28,2004, 200,000 shares were issued for consulting service to one consultant. The shares constitute validly issued shares of Winmax Trading Group, Inc. and are issued as restricted 144 shares under section 4(2) of the Securities and Exchange act of 1933 and 1934. Shares were valued at $0.85 which was market value on July 28, 2004 for a total value of $170,000 with $200 being allocated to common stock and the balance of $169,800 being allocated to additional paid in capital. 5 (5) Subsequent Events - Stockholder's Equity Additional restricted 144 shares under section 4(2) of the Securities and Exchange Act of 1933 and 1934 were issued on December 22, 2004. A total of 3,934,426 shares were issued to the majority shareholder and CEO of the company valued at $0.61 per share for a total value of $2,400,000. The shares issued were issued at market value and repaid a portion of the Loan Payable - Stockholder due to the majority shareholder. Item 2. Management's Discussion and Analysis. Forward-Looking Statements The following discussion and analysis of our operations should be read in conjunction with our financial statement for the period ending September 30, 2004 and notes thereto. This quarterly report on Form 10-QSB for the period ending September 30, 2004 contains "forward-looking statements", within the meaning of such term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual financial or operating results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Winmax Trading Group, Inc. is referred to herein as "we", "our", "us.", "the company" or "Winmax". The words or phrases "would be", "may allow," "intends to", "may likely", "are expected to", "may continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements". Such statements include those concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including: (a) intense competition in the web development design, web casting, Internet solutions, e-commerce, and retail business; (b) whether we are able to manage our planned growth efficiently, including whether our management will be able to identify, hire, train, retrain, motivate, and manage required personnel or that management will be able to manage and exploit existing and potential market opportunities successfully, and (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations. We are in the early stage of building and expanding the company and have not generated sufficient revenues to maintain day to day operations. Statements made herein are as of the date of the filing of this Form 10-QSB with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrence, developments, unanticipated events or circumstances after the date of such statement. 6 Overview of Operations This discussion relates to Winmax Trading Group (Winmax), Inc. and its divisions "Winmax Media, WinmaxIS, theGemstore and theGemstore.com". The Management Discussion and Analysis (MD&A), for the nine month ended September 30, 2004, should be read in conjunction with our financial statements and with our 2003 10K-SB filed November 3, 2004. For the nine month period ended September 30, 2004, Winmax's management continued their efforts to expand Winmax Media's, WinmaxIS's, theGemstore Inc.'s and theGemstore.com's operations. We have been successful in utilizing the talents in each of our divisions to build the technical infrastructure needed to support our planned growth. Winmax Media and WinmaxIS have been instrumental in building Winmax Trading Group, Inc.'s accounting system, computer network, theGemstore's Point of Sale system and the building and maintaining of our e-commerce site. Through theGemstore and theGemstore.com, we continue to expand our platform for marketing gemstone, gemstone jewelry and accessories. For the quarter ended September 30, 2004 we opened two retail merchant units (RMU's) and closed one RMU in Canada. Management stays committed to refining our business strategy as we analysis and identify key trends to capitalize in our various test markets. As of September 30, 2004 we had 11 RMU's including our first inline store in NY. Subsequent Events Subsequent to the nine month period ended September 30, 2004, management continues to assess our test markets and has eliminated certain kiosk based on their passed performance and expectation for profitability. As the date hereof Winmax is operating one inline RMU store and six kiosks. Management is currently in negotiation for several other possible inline stores. Risks and Uncertainties For the nine months ended September 30, 2004 we incurred a net loss of $2,793,262 compared to a net loss of $571,862 for the same period in 2003. We expect to continue to generate losses until our revenues increase. Our revenue and total operating expenses for the nine months ended September 30, 2004 was $293,032 and $3,061,163 respectively, compared to revenue of $377,477 and total operating expenses of $1,212,339 for the same period in 2003. Year to year comparisons may not be indicative of future performance due to the change in revenue sources and sporadic sales from our Media and IT divisions. As of September 30, 2004, we had $23,800 in cash, which is insufficient to meet our operational goals and business plan. We have required, and continue to require, substantial capital to fund our business operations. We have no commitments, agreements or understandings regarding additional financing and we may be unable to obtain additional financing either on satisfactory terms or at all. We expect to pursue additional financing through debt or equity financing. If additional funds are raised or acquisitions are made by issuing our equity securities there will be dilution to our existing shareholders. We may also incur debt or assume substantial indebtedness. If we are unable to obtain financing, such inability could have a material adverse effect on our business, financial condition and results of operations. 7 There is no assurance we can increase our revenue sources and it is unlikely that we can lower our expenses in our present mode of operations. We may never earn a profit. If we continue to lose money over a protracted period of time we may no longer be able to operate as a going concern. Material Changes in Results of Operations In 2003, we abandoned all plans to acquire, explore, produce or process gems from any property and entered into the business of retailing gemstones, gemstone jewelry and accessories. We have focused our attention on building relationships with our suppliers and plan to continue expanding theGemstore Incs' and theGemstore.coms' operations in 2004. Revenues Revenues for the nine months ended September 30, 2004 decreased to $293,032 from $377,477 for the same period in 2003. Our revenue, as of September 30, 2004, was derived from $171,584 in sales by Winmax Media and $121,448 from sales by theGemstore. WinmaxIS and Winmax Media sales continue to support theGemstore's e-commerce and media needs. Total Operating Expenses Total operating expenses increased to $3,061,163 for the nine months ended September 30, 2004 from $1,212,339 for the same period in 2003. This increase in operational expenses is directly attributed to building the necessary infrastructure to grow theGemstore and theGemstore.com in an orderly fashion. This includes the cost of increasing and training staff, both senior and part-time, and the additional rents being paid for theGemstore locations. Net Operating Loss Net operating loss was $2,793,262 for the nine months ended September 30, 2004 compared to a net operating loss of $834,862 for the same period in 2003. The increase in operations and subsequent costs is responsible for the increase in net loss from 2003. 8 Material Changes in Financial Condition Consolidated Balance Sheet Current assets grew to $215,165 as of September 30, 2004, compared to $45,094 as of December 31, 2003. The increase in our current assets is attributable to an increase in cash and theGemstore's and theGemstore.com's inventory and prepaid expenses. Property and Equipment, Net Property and equipment grew to $306,244 as of September 30, 2004 as compared to $153,758 on December 31, 2003. The increase in property and equipment was a result of expanding theGemstore RMU locations. Liabilities Our accounts payable and accrued expenses increased to $313,050 on September 30, 2004 compared to $121,030 for December 31, 2003. The increase in payables and accrued expenses is related to the increase in operations. Loan Payable to stockholders was $2,741,431 for September 30, 2004, an increase from $625,902 on December 31, 2003. Winmax's operations are primarily being funded by loans from our major shareholder and CEO. The increase in loan payable to stock holder is related to the increase in operational costs. Liquidity and Capital Resources as of September 30, 2004 Net cash provided by all activities (operational, investing and financing cashflow) for the nine months ending September 30, 2004 was $18,980 compared to $66,756 in all activities for the same period in 2003. Cash flow from operations decreased to ($1,782,113) in the first nine months of 2004 from ($802,400) in the first nine months of 2003. We have experienced significant losses from our operations. For the nine months ended September 30, 2004, we incurred a comprehensive net loss of $2,883,492 and we have a accumulated deficit of $15,190,804. Our ability to continue operations is contingent upon our ability to expand our Winmax Media and WinamxIS revenues, increase sale from our retail divisions and to secure financing. Although we are pursuing financing to expand our operations, there are no assurances that we will be successful in obtaining such financing. Our failure to secure financing and/or expand our operations may result in our not being able to continue business. Item 3. Controls and Procedures Our management, with the participation of our principal executive and financial officer, evaluated our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based upon this evaluation, the Chief Executive Officer/Chief Financial Officer/Principal Accounting Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file, or submit under with the Securities Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. 9 During the quarter covered by this report, there were no significant changes in our internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, these controls. PART II - OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submissions of Matters to a Vote of Security Holders Not Applicable. Item 5. Other Information Not Applicable. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1937, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 18, 2005 Winmax Trading Group, Inc. By: /s/ Gerald Sklar -------------------------------- Gerald E. Sklar, President, Chief Executive Officer, Chief Financial Officer And Principal Officer 10 EX-31 2 v014627_ex31.txt Exhibit 31 CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002 I, Gerald E. Sklar, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winmax Trading Group, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to me by others within those entitles, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervising, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 5. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (a) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the small business issuer's internal control over financial reporting; and 6. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: March 18, 2005 /s/ Gerald E. Sklar - ------------------- Gerald E. Sklar Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer EX-32 3 v014627_ex32.txt Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-QSB of Winmax Trading Group, Inc. (the "Company") for the period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: o the Report complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and o the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 18, 2005 By: /s/ Gerald E. Sklar - ----------------------- Gerald E. Sklar, President, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----