The Unabridged History of Winners and Losers

[Tatari Gami]

10SB12G Filing Date: 12/23/1999

http://www.freeedgar.com/search/ViewFilings.asp?CIK=1045181&...


Securities and Exchange Commission
Washington, D. C. 20549

_______________

Form 10-SB

______________


GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities and Exchange Act of 1934


WINNERS INTERNET NETWORK, INC.
(Name of registrant in its charter)


NEVADA 91-1844567
(State of incorporation) (I.R.S. Employer Identification No.)


145 Oviedo Street
St. Augustine, Florida 32084
[phone]
(Address and telephone number of principal executive offices and principal
place of business)


________________

Securities registered pursuant to Section 12(b) of the Act:

None
________________

Securities registered pursuant to Section 12(g) of the Act:


Common Stock, par value $.001

(Title of each class)

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Table of Contents

PART I

Item 1: Description of Business..........................................3
Item 2: Management's Discussion and Analysis or Plan of Operation........8
Item 3: Description of Properties........................................12
Item 4: Security Ownership of Certain Beneficial Owners and Management...12
Item 5: Directors, Executive Officers, Promoters and Control Persons.....14
Item 6: Executive Compensation...........................................15
Item 7: Certain Relationships and Related Transactions...................15
Item 8: Description of Securities.......................................15

PART II

Item 1: Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters...................................16
Item 2: Legal Proceedings...............................................16
Item 3: Changes in and Disagreements with Accountants...................16
Item 4: Recent Sales of Unregistered Securities ........................16
Item 5: Indemnification of Directors and Officer........................18

PART F/S

Index to Financial Statements..........................................18

PART III

Item 1: Index to and Description of Exhibits ....................... ..19


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FORWARD LOOKING STATEMENTS

In this registration statement references to "Winners Internet" "we,"
"us," and "our" refer to Winners Internet Network., Inc.

This Form 10-SB contains certain forward-looking statements. For this
purpose any statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Winners Internet's control. These factors include but are not limited to
economic conditions generally and in the industries in which Winners Internet
may participate; competition within Winners Internet's chosen industry,
including competition from much larger competitors; technological advances and
failure by Winners Internet to successfully develop business relationships.

PART I

ITEM 1: DESCRIPTION OF BUSINESS

Business Development

Winners Internet was incorporated in the state of Washington on May 23,
1967 as Empire Exploration, Inc. Empire Exploration was involved in the
business of purchasing and exploring mining properties but ceased such
operations in 1992. In July of 1988 Empire Exploration, Inc. changed its name
to Comstock-Empire International, Inc. ("Comstock-Empire"). Winners Internet
Network, Inc. was incorporated in the state of Nevada on July 16, 1997. On
July 21, 1997, Comstock-Empire merged with Winners Internet for the sole
purpose of changing its domicile from Washington to Nevada. Winners Internet
is a Nevada corporation authorized to do business in the state of Florida and
the countries of Austria and Liechtenstein.

On July 31, 1997 Winners Internet acquired Davki Agency LTD, a Delaware
corporation ("Davki Agency"). Davki Agency was incorporated on June 16, 1997
and held the license to the test prototype of proprietary software we
currently use. Pursuant to the terms of the acquisition Winners Internet
issued 8,000,000 common shares for 100% of the 1,500 common shares of Davki
Agency and Davki Agency became a wholly owned subsidiary of Winners Internet.
Davki Agency was later dissolved in December of 1997.

Winners Internet has recorded revenues for the ten month period ended
October 31, 1999, however, we recorded losses for the past two fiscal years.
Based on our short operating history and past losses, our independent
auditors, Michael Johnson & Co, LLC, express doubts regarding our ability to
continue as a going concern. An investment in our stock is very risky.
Potential investors should carefully consider the factors discussed in this
registration statement before purchasing our common stock.

Our Business

Winners Internet developed and owns proprietary software and technology
which processes financial data on the Internet and is linked to established
banking structures. Currently, the software and processing system are used
for Internet gaming pay outs for legally licensed Internet casinos and
sportsbooks. We have an administrative office located in St. Augustine,
Florida which manages our overall operations, including licensing agreements,
corporate accounting and communications with the public. Our European
Division, located in Ruggell, Liechtenstein, maintains, monitors and manages
our technical operations and accounting records. The European Division
programs software, creates upgrades as needed, monitors our bank processing,
and prepares graphics for our web site and for other publications. Our
multi-lingual programmers monitor the functions performed by this division.

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Winners Secure Online Financial Processing System ("Winners Processing
System").

Global Gaming Link Systems, Inc., a Liechtenstein company ("GGLS"),
developed the initial test prototype software which established an initial
database for Internet financial transactions. In 1997 Davki Agency signed an
exclusive ten (10) year agreement with GGLS for the rights to use this test
proprietary software. In 1998 Winners Internet secured exclusive use of this
technology and further developed the software from its initial test stage to
the completed and functioning system as we offer today. We call this software
our Winners Secure Online Financial Processing System ("Winners Processing
System"). Our software currently utilizes only upgraded technology that was
exclusively developed by Winners Internet. The previous test software is not
a functioning component of the technical and processing software technology
currently known as the Winners Processing System.

Our Winners Processing System provides a comprehensive system for the
management of financial accounts, accounting services and financial
transactions for Internet commerce. Our system allows an Internet transaction
to be completed totally on the Internet without requiring the transaction to
be processed through non-Internet banks. The Winners Processing System relies
on proprietary security protocols and we have purchased encryption software to
maintain the integrity of the transactions. Our system allows a vendor to
receive transactions from customers by Visa, Master Card, American Express,
Western Union, bank transfers and checks. It also has the capability to
identify stolen credit cards, process transactions in twelve major currencies
and allows the vendor to convert transactions into a currency requested by the
vendor. Currently, we accept financial transactions from sixteen (16)
countries and our Winners Processing System accepts U.S. dollars, Canadian
dollars, British pound, French franc, Swiss franc, Austrian schilling, German
Deutsche mark, Italian lira, Dutch guilder, Japanese yen, Belgium franc and
Australian dollar.

Internet industries are subject to rapid technological change and our
ability to successfully market our products, improve our products and to
respond effectively to new technological changes or new product announcements
will affect our results of operations. Other companies may develop new
technology and systems similar to ours which could materially affect our
results in operation. Our European Division continues to monitor our system
to ensure that we upgrade any part of our system where needed to maintain the
integrity and technological advance of all software and to enhance total
operations. We have not had major problems with our software, but we have
experienced minor "bugs" in the software and they have been remedied through
updates. We have experienced problems with our Internet service provider
which resulted in our Web site temporarily shutting down. In these instances
we have been non-operational for a few minutes up to a couple of hours. Since
we rely on third parties for Internet service we cannot assure the integrity
of our system at all times. However, we have now changed our Internet service
provider from Austria to Liechtenstein and have located our processing and
technical software in the same facility with out Internet service provider in
Liechtenstein.

CyberLink Monetary System

We rely on the CyberLink Monetary System to complete the processing of
Internet transactions using our Winners Processing System. The CyberLink
Monetary System is a data processing center based in Vaduz, Liechtenstein and
is the entity that provides the link between customers, products and services
and licensed banking. The CyberLink Monetary System is managed by
Intertreuhand Aktiengesellschaft with DDr. Reinhard Proksch serving as
Managing Director on their behalf. DDr. Proksch, a Fullbright Scholar, holds
dual doctorates in law and information systems.

Winners Internet became a member of the CyberLink Monetary System in July
1998 when CyberLink Monetary Systems agreed to exclusively license Winners
Internet as the sole provider of Internet gaming for its data processing
operations. Our Winners Processing System interfaces with the CyberLink
Monetary System's data processing and the financial transactions processed by
the CyberLink Monetary System are then interfaced with the bank accounts
managed by the CyberLink Monetary System.

The financial structure and established links we have with foreign banks
through the CyberLink Monetary System are a material aspect of our operations.
Should the CyberLink Monetary System falter or fail to perform its functions,
we could be severely affected.

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Global Gaming Link System ("Gaming System")

Our Winners Processing System and the CyberLink Monetary System provide
the technology and financial transaction structure for our Gaming System. Our
Gaming System provides a structure that ensures compliance with all existing
gaming laws, provides an audit mechanism for the host governments and players,
and provides a method for a player's funds to be processed through the
CyberLink Monetary System. Each casino or sportsbook must first apply for a
license with Winners Internet and then we recommend the licensee as a member
to the CyberLink Monetary System. The acceptance of each license remains
with the CyberLink Monetary System, who may not accept an application. All
licenses that have been submitted to the CyberLink Monetary System up to the
present time have been approved. As of December 1, 1999 we have 9 casinos, 7
sportsbooks, 1 cardroom, 1 lottery and 1 raffle which are licensed with
Winners Internet and have been approved by CyberLink Monetary Systems.

We believe our Gaming System provides credibility, uniformity, and
legality to Internet gaming. Currently, an Internet player goes to an
Internet gaming site and enters a charge card number or wires funds to the
site operator. If the player wins, he must wait for the casino to send him a
check, usually from a foreign jurisdiction. Then when he deposits the check
in his own account, he generally must wait 7-10 days for the check to be
processed. Meanwhile the casino may wait 30-45 days before the check is
cashed by the player. Using our Gaming System, the disbursements are made
daily with the player receiving payment which is immediately redeemable at a
local bank because the funds are in that jurisdiction's currency.

Once a casino becomes licensed with us, we require the casino to use our
system for all transactions. We must be able to maintain control of all
transactions in order to track all data and monitor all transactions to ensure
all processing adheres to existing laws and regulations. This requirement of
total control has caused potential client casinos and sportsbooks to decline
our services. Our Gaming System not only processes all incoming and outgoing
transmissions but also includes an entire accounting of the succession of each
entry which gives both the casino and the player a record of winnings and
losses. The player can access a separate accounting which provides account
information for all casinos that he has played which are using our Gaming
System. This also provides a means for the player to insure that records are
being maintained by the casino.

Our Gaming System uses the same method of payout for all of our licensed
Internet casinos regardless of the host site location. Daily currency
conversions are available, allowing players to be aware of the dollar or other
currency rates for play and payment.

Finally, our Gaming System is programmed to monitor transactions to
detect money laundering, violations of gaming laws and regulations and it
prevents payouts to a player located in any jurisdiction in which Internet
gaming is illegal.

Product Development

In July of 1998 CyberLink Monetary System began the development of the
CMS Debit Card. We anticipate that CyberLink Monetary System will provide the
CMS Debit Card for use in our Gaming System and other e-commerce operations.
This card will function like other bank cards, allowing the user to conduct
financial transactions on the Internet. We anticipate that it will provide a
means for complete accounting of all transactions for either our Internet
gaming or other e-commerce transactions. We anticipate that the CMS Debit
Card will provide recognition of parity of the Eurodollar and all foreign
currencies for Internet commerce. However, CyberLink Monetary System has
delayed the launching of the CMS Debit Card pending Internet gaming
legislation before the United States Congress. Any regulation changes would
require the CMS Debit Card to be redesigned with the necessary restrictions on
transactions programmed into the system or the card. As of the date of this
filing Congress has failed to make a definitive decision. Additionally, we
cannot assure that the CMS Debit Card will interface with our customers or
other vendors, nor that our CMS Debit Card can compete with debit cards now
available through other banks.

In February 1999 we entered into a licensing agreement with iChargeit,
located in Huntington Beach, California. iChargeit intends to create global
shopping cybermalls and has agreed that Winners Internet will have


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the exclusive right to process charge card activity for its cybermalls. We
anticipate iChargeit will provide a means for merchants to open an Internet
storefront using the iChargeit Global Storesonline suite of services.
Merchants will open a debit account with the CyberLink Monetary System and
receive payments for their stores e-sales in the currency of their choice and
accept payments in other currencies through the CMS Debit Card, when
functional.

iChargeit completed Phase I of its development plan when it established
the iChargeit Global Storesonline website in March of 1999. We currently are
in the process of opening an Internet portal between Winners Internet and
iChargeit which will allow us to process the financial transactions for
Shopping Downtown and a yet unnamed online auction site. We remain committed
to the iChargeit venture, however, Internet enterprises are being developed
daily and we cannot assure that iChargeit's cybermall will be able to compete
with other cybermalls or that the CMS Debit Card will be functional for use in
its cybermalls.

Distribution

We market our services and products through software licensing agreements
with distributors and casinos and sportbooks. We currently have four software
license agreements and two distributor agreements. Our license agreement
allows the licensee the non-exclusive right to process data by using our
software and, to load, use, and copy our software. The license may allow
single or multiple processor, single or multiple site, or a national license
which is a licensed domicile. The licensing agreement requires that the
licensee not have a criminal record, that the software be regarded as secret
and confidential and shall remain in the licensee's effective control. The
licensee is required to sign a confidentiality agreement as well. However,
these agreements may not effectively prevent copying and disclosure of our
technology and may not provide us with an adequate remedy if unauthorized
disclosure occurs.

These agreements may be terminated for failure to perform consistent with
its provisions, bankruptcy by the licensee or if the licensee conducts
business in an illegal territory. The license fee is a one-time fee of
$50,000. There is a yearly renewal fee for a license at $20,000 for
maintenance of the license which includes all upgrades and/or new versions of
our software to meet industry technical and graphic advances.

We offer two types of programs to our licensees, the full program and the
wager-in-only program. The full program assesses a 5.5% fee for
processing-in, which is the transfer of money from a player's debit account to
the licensee's gaming site. The full program also includes a 2.5% fee or a
$5.00 fee for withdrawals from the licensee's gaming site back to the player's
debit account, including payouts to winners. The wager-in-only program
assesses a 6.5% fee for the transfer of money from a player's debit account to
the licensee's gaming site. During 1999 we have generated $1,744,878 in
revenues from the processing fees for our licensing agreements.

We currently have two software distributor agreements. Our distributor
agreement grants the distributor the right to distribute the Gaming System in
a specific territory. We must approve all licenses and the distributor agrees
to promote our product and our good reputation. The distributor is not our
agent and the license cannot be assigned. The commission structure is 25% of
the paid and collected licensing fees and net processing fees.

Prior to August of 1999 we had executed a software distributor agreement
with Access World, Inc. Access World agreed to sell a minimum of 21 licenses
per year and it sold two licenses in 1998. Unfortunately we terminated our
agreement with Access World in August of 1999 due to a breach of the
contractual terms of that agreement.

We have negotiated contracts separate and apart from Access World, Inc.
We currently have two distributors who own the territorial marketing rights
for our software license in Australia and New Zealand and one for the
Caribbean. In December of 1998 Vaudeville Holding, Inc. became a licensed
distributor with the rights to sell the Gaming System in the assigned
territory of the Caribbean meaning, but not limited to, Antigua-Barbuda,
Aruba, the Bahamas, Belize, Costa Rica, Dominica, Dominican Republic, Granada
and St. Kitts. Vaudeville Holdings began its second year of on-line
processing with us and currently manages seven gaming web sites. In December
of 1998 we entered into a software distributor's licensing agreement with
Kenneth Hense, granting Mr.

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Hense the exclusive right to sell the Gaming System in the countries of
Australia and New Zealand. Neither Vaudeville Holding nor Kenneth Hense have
sold licenses in 1999.

Competition

Presently, there is no known direct competition to our Gaming System.
However, the Internet is a rapidly evolving market and there is always a
possibility that another company(ies) could develop a similar or superior
product, which may impede our growth and operations.

Additionally, we have upheld a rigorous standard for integrity and the
legality in processing Internet gaming transactions. This standard, which
management believed insured safe, legal and secure play, was not accepted by
most Internet casinos. We also endorsed further Internet gaming regulation
which was viewed unfavorably by Internet casinos. Management estimates that
there are over 350 Internet casinos in existence. We currently serve only 19
of those sites. As a result we have experienced lower than anticipated
revenues in the first months of our operations. This response from our
intended market prompted management to search out other uses for our
technology. Management believes our software's ability to track Internet
fraud and stolen credit cards improves the likelihood of our success in the
e-commerce market because management believes such security measures are
desired by this potential market.

Suppliers

We rely on four suppliers for computer equipment and training.
Computerhaus Gaechter, located in Feldkirch, Austria, supplied 74.7% of our
computer equipment during fiscal year 1998. Data Consultants, located in St.
Augustine, Florida supplied an additional 14.6% of such equipment and CompUSA
located in Jacksonville, Florida supplied 6%. Secure It 5550 located in
Norcross, Georgia, supplied computer secure systems representing 4.6% of our
computer equipment. We have not entered into long term manufacturing
contracts with any of the above suppliers. Management believes the loss of
any one of these suppliers would not have a material adverse effect on our
operations because the supplier could be replaced in 60 days.

Trademarks, License and Intellectual Property

Our proprietary software is a material aspect of our business. We rely
upon a combination of licenses, confidentiality agreements and other
contractual covenants to establish and protect our technology and other
intellectual property rights. If we infringe on the intellectual property of
another party we could be forced to seek a license to those intellectual
property rights of the third party. If we are required to obtain a license to
another party's proprietary rights, that license could be expensive, if we
could obtain it at all. Although we do not believe that our intellectual
property infringes on the rights of any other party, third-parties may assert
claims for infringement which may be successful or require substantial
resources to defend.

Our ability to compete effectively will depend in part on our ability to
maintain the proprietary nature of our technology through a combination of
exclusive licensing and the aggressive continued development of our products.
Competition in the Internet market is intense and there can be no assurance
that our competitors will not independently develop or obtain patents or
technologies that are substantially equivalent or superior to our technology.

Government Regulations

Our focus, from our inception, has been directed to foreign marketplaces
where Internet gaming is legal. Changes in government regulations toward
Internet gaming could affect our operations. United States citizens in
certain state jurisdictions, as well as those in many other countries, are
barred from Internet gaming. We currently do not process transactions for
any state or territory where gaming is illegal for its citizens. Should those
offshore governments that now allow Internet gaming negatively alter their
regulations toward the industry, the market for new customers would be greatly
reduced and could severely change our revenue projections, growth, and

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operations. We are monitoring developments in legislation throughout the
world and will adhere to all legislative decisions or regulations in this
regard.

Employees

We currently have sixteen (16) full time employees and two (2) part-time
employees. The Administration Division includes four employees and one part
time employee which are located in St. Augustine, Florida. Ten employees and
one part-time employee are employed in the European Division and are located
in Ruggell, Liechtenstein. We believe we have good relations with our
employees and none are covered by any collective bargaining agreement. We
anticipate employing two (2) additional employees for the Technical Division
within the next fiscal quarter.

Reports to Security Holders

We have voluntarily elected to file this Form 10-SB registration
statement in order to become a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Following the effective date of
this registration statement, we will be required to comply with the reporting
requirements of the Exchange Act. We will file annual, quarterly and other
reports with the Securities and Exchange Commission ("SEC"). We also will be
subject to the proxy solicitation requirements of the Exchange Act and,
accordingly, will furnish an annual report with audited financial statements
to our stockholders.

Interested persons may visit our web site at www.winr.net. We currently
use an investor relations firm, Columbia Financial Group, and interested
persons may call at [phone]. Columbia Financial provides investor
relations services, public relations services, publishing, advertising
services, fulfillment services as well as Internet related services. Columbia
Financial provides consulting services for a term of 15 months for a set fee,
which has been paid for with common stock and warrants. Either party may
terminate the agreement with 60 days written notice with certain conditional
repayments.

Available Information

Copies of this registration statement may be inspected, without charge,
at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0300. Copies of this material
also should be available through the Internet by using the SEC's EDGAR
Archive, which is located at http://www.sec.gov.



ITEM 2: MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

Winners Internet owns proprietary financial processing software that is
currently being used in Internet gaming payout structures. We commenced
operations in mid-December of 1998 and currently serve ten gaming websites
(See, Item: 1: Description of Business, above). We recognize revenue when
earned and we derive revenues from licensing fees, renewal fees, processing
fees and interest on our depository bank accounts. We recorded revenues during
the ten month interim period ended October 31, 1999 and have recorded a net
profit for that period, but in the previous two fiscal years we have posted
net losses.

From inception, the focus of our operations has been on Internet gaming
payout structures, but that market's rejection of our goal to function within
government regulations has forced us to move to other markets. To that end we
hope to develop e-commerce operations that will use our financial processing
system. Management believes our software and the banking relations we have
formed will allow a shift to e-commerce and that this diversification will
lessen our susceptibility to governmental changes in regulations and laws
related to Internet gaming. However, as with any new venture, we may
experience unanticipated difficulties which will prevent our expansion into
this market.
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Acquisition

On July 31, 1997 we acquired Davki Agency as a wholly owned subsidiary
through a tax free stock-for-stock exchange structured pursuant to Section 368
(a)(1)(B) of Internal Revenue Code of 1986, as amended. We issued 8,000,000
restricted common shares to the nine shareholders of Davki Agency in exchange
for their 1,500 common shares. Davki Agency owned the test prototype of
financial processing software which we later developed into our Winners
Processing System. Davki Agency was subsequently dissolved in December of
1997.

Liquidity and Capital Resources

Since our inception we have financed our operations primarily through
private placements of equity securities. During fiscal years 1997 and 1998 we
established our operations and in December of 1998 we granted our first
licenses to customers and distributors, but we failed to generate revenues
until January of 1999. Management believes that the ratio of expenses to
revenues will remain relatively constant now that licensing agreements are in
place. However, each licensee has the option to not renew the license after a
term of one year. If several licensees opt to not renew we could experience a
decrease in our revenues.

During the interim period ended October 31, 1999 we have experienced
increased revenues as a result of processing and licensing fees. As of
October 31, 1999 cash reserves totaled $693,253 with total current assets of
$2,718,122. 74.4% of the total current assets are represented by accounts
receivable. We posted operating losses during fiscal years 1998 and 1997, but
we have posted a net income of $1,129,215 for the 1999 interim period. Our
total current liabilities were $821,785 as of October 31, 1999 with $809,374
representing accounts payable, which are funds in our possession being
processed and which will subsequently be disbursed to vendors, less any
processing fees. Our principal commitments as of October 31, 1999 are $2,683
per month for office leases.

A summary of our audited balance sheets for the years ended December 31,
1998 and 1997 and our balance sheet for the ten month interim period ended
October 31, 1999 are as follows:
Interim Period
Years Ended December 31 Ended October 31
1997 1998 1999
-------------- ------------- -----------------
Cash/Cash Equivalents $ 0 $ 28,857 $ 693,253
Current Assets 0 28,857 2,718,122

Total Assets 282,150 204,272 2,891,651

Total Current Liabilities 281,368 13,621 821,785

Total Stockholders' Equity 782 190,651 2,069,886

Total Liabilities &
Stockholder Equity 282,150 204,272 2,891,651

We have relied on equity transactions for funding of our business
operations. During fiscal year 1997 we sold 2,539,912 common shares for
$112,700. During fiscal year 1998 we sold an aggregate of 2,435,000 common
shares for $919,750. During the interim period ended October 31, 1999 we sold
an aggregate of 788,158 common shares for $522,500. We have also issued
common shares in exchange for services rendered to us by third-parties.
Specifically, we issued an aggregate of 1,521,358 common shares during 1998
for payments for our software and for computer equipment. During 1999 we
issued 410,000 shares for technical services. (See, "Recent Sales of
Unregistered Securities").


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We anticipate that we will need up to $10,000,000 to enter into the
e-commerce market. We expect that we will need additional programmers, staff
and technical support, as well as, another facility in Europe to house
additional processing equipment to manage the anticipated e-commerce
transactions. Management will evaluate our needs as we expand into this new
area of operations and we may need to form new alliances with other Internet
companies before we realize an expansion into the e-commerce market. Also,
due to the dynamic nature of the Internet market we cannot assure that we will
be able to compete in this new market.

We anticipate the need for additional funds and we are currently
evaluating the availability of external financing. However, we can not assure
that funds will be available from any source, or, if available, that we will
be able to obtain the funds on terms agreeable to us. Also, the acquisition
of funding through the issuance of debt could result in a substantial portion
of our cash flows from operations being dedicated to the payment of principal
and interest on the indebtedness, and could render us more vulnerable to
competitive and economic downturns.

Any future securities offerings will be effected in compliance with
applicable exemptions under federal and state laws. The purchasers and manner
of issuance will be determined according to exemptions available to us. At
this time we expect to offer securities to raise additional funds, however, we
have not determined the type of offering or the type or number of securities
which we will offer. We have no plans to make a public offering of our common
stock at this time. We also note that if we issue more shares of our common
stock our shareholders may experience dilution in the value per share of their
common stock.

Results of Operations

The following table summarizes the results of our operations for the
fiscal years ended December 31, 1998 and 1997 and for the ten month interim
period ended October 31, 1999 and 1998.

Interim Period Interim Period
Years Ended December 31 Ended October 31 Ended October 31
1997 1998 1998 1999
----------- ----------- ---------------- ----------------
Revenues $ 8,604 $ 2,168 $ 2,168 $ 1,749,878

Total Operating
Expense 120,522 842,728 538,581 620,663

Net Profit (loss) (111,918) (840,560) (536,413) 1,129,215



1997 to 1998

Revenues for the fiscal year ended December 31, 1998 were $2,168, which
represented a decrease from the $8,604 recorded for the fiscal year ended
December 31, 1997. These revenues were received from consulting services
provided to one of our licensees starting in 1997, and the bulk of the
consulting services were provided in 1997.

Operating expenses for the fiscal year 1998 were $842,728 which
represented an increase from the $111,918 recorded for the fiscal year 1997.
This increase is reflective of the expansion of our operations, including
increased office and equipment expenditures, hiring of additional employees,
expenses associated with Internet use, increased travel costs, increased
expenditures for marketing and advertising, as well as costs of our financing
activities.

During fiscal year 1997 our operating activities provided $187,300
whereas in fiscal year 1998 our operating activities used $1,091,968 because
of our expansion into Europe. We eliminated a payable to Global Gaming Link
Systems, LTD for the software test prototype which resulted in our investing
activities providing

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$300,000 in fiscal year 1997, compared to $94,335 used for investing
activities in fiscal year 1998. For fiscal year 1997 our financing activities
provided $18,893 from the sale of our common stock compared to $1,026,473 for
fiscal year 1998.

October 31, 1998 Compared to October 31,1999

Our results of operation for the interim period ended October 31, 1999
represents operations conducted in our European processing and licensing
operations. Revenues during the 1999 interim period totaled $1,749,878 with
$1,744,878 generated from our European processing operations and the remaining
$5,000 coming from license income generated in the Unites States. Our $2,168
in revenues during the 1998 interim period were received from consulting fees.

Total operating expenses for the 1999 interim period were $620,663 which
were 35.4% of the total revenues, compared to $538,581 operating expenses in
the 1998 interim period which were 248.4% of revenues. Operating expenses in
the 1998 interim period reflected start-up costs of our operations, including
marketing expenses posted at $175,000, wages at $112,440, travel at $70,191
and $50,000 in commissions from our financing activities.

Expenses in the 1999 interim period were reflective of continuing
operations. Wages and travel were the largest line items for the interim
period with $227,543 and $119,985, respectively. The expenses for operations
in the United States were primarily from administrative expense items such as
payroll, professional and legal fees, taxes, etc. In comparison the European
expenses were attributed to labor, consulting fees, office expenses, travel
and bank charges.

Net cash used by our operating activities was $754,082 for the 1998
interim period compared to $339,778 provided by our operations for the 1999
interim period. Net cash provided by investing activities was $3,022 for the
1998 interim period compared to capital expenditures of $172,122 for offering
expenses during the 1999 interim period. Sales of our common stock provided
$791,950 for the 1998 interim period, compared to $146,490 for the 1999
interim period.

OTC Bulletin Board Eligibility Rule

In January of 1999, the SEC granted approval of amendments to the NASD
OTC Bulletin Board Eligibility Rule 6530 and 6540. These amendments now
require a company listed on the OTC Bulletin Board to be a reporting company
and current in its reports filed with the SEC. As a result of this rule
change we have voluntarily filed this registration statement in order to
become a fully reporting company and maintain the listing of our common stock
on the OTC Bulletin Board. The rule requires that the SEC come to a position
of no further comment regarding the registration statement before a company is
considered compliant. We cannot assure that the SEC will come to such a
position in regards to this registration statement prior to our phase-in-date
of May 1, 2000. According to the rules, if we are not in compliance at our
phase-in-date our common stock will be removed from the OTC Bulletin Board. At
that time we intend to move our listing to the National Quotation Bureau's
Pink Sheets. This possible move to the "pink sheets" may adversely affect the
market, if any, in our stock.

Year 2000 Compliance

We have completed a review of our computer systems and operations to
determine the extent to which our business will be vulnerable to potential
errors and failures as a result of the "Year 2000" problem. Year 2000 errors
could result in system failures or miscalculations, causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, provide services or engage in similar activities.

Our computer systems, Winners Processing System, the Gaming System and
the CyberLink Monetary System are Year 2000 compliant. Our suppliers,
distributors and licensees have indicated that they are also Year 2000
compliant. In the worst case scenario we may experience a decrease in
revenues because of technical difficulties related to our licensees' business
operations. Our contingency plan is to have technical support teams

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<PAGE>

and developers on site in our computer operation facilities in Austria and
Liechtenstein on December 31, 1999 through January 1, 2000 to provide
technical support for the transition into the new century.


ITEM 3: DESCRIPTION OF PROPERTIES

Our principal business office in the United States is located in St.
Augustine, Florida. We lease 2,106 square feet of office space in an
individual unit. We have a three year lease which expires March 30, 2001 and
management believes this facility is adequate for our anticipated growth in
the United States. We pay $1,683 per month for this lease, and the agreement
does not provide for termination, other than by a court process.

In August of 1999 we leased the top floor of a three story building
located in Ruggell, Liechtenstein, which is approximately 10,000 square feet
and houses our technical operations. This facility has state-of-the-art
security and is made of concrete construction and will allow for limited
future expansion, if needed. The lease has a monthly rent of $1,000 and is a
month-to-month open-end lease for a term of one year. The rent will not
change for a twelve month period from the date of said lease and thereafter
will be reviewed for a potential cost-of-living increase anticipated to be
between 5-8%.



ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of our
outstanding common stock of; (i) each person or group known by us to own
beneficially more than 5% of our outstanding common stock, (ii) each of our
executive officers, (iii) each of our director's and (iv) all executive
officers and directors as a group. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or
investment power with respect to securities. Except as indicated by footnote,
the persons named in the table below have sole voting power and investment
power with respect to all shares of common stock shown as beneficial ownership
of those shares. The percentage of beneficial ownership is based on
16,186,613 shares of common stock, 15,990,863 outstanding as of October 31,
1999 and 195,750 shares subject to options under our employee stock option
plan.


CERTAIN BENEFICIAL OWNERS

Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
------------------------------- ---------------------- ---------------------

David Skinner, Sr. 1,610,000 9.9%
126 Staghorn Hollow
Beech Mountain, North Carolina
28604

Kimberly Stein 1,130,000 6.9%
1005 Baron Lane
Myrtle Beach, South Carolina

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MANAGEMENT

Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
--------------------------------- ---------------------- --------------------
David Skinner, Jr. 1,263,750 7.8%
145 Oviedo Street
St. Augustine, Florida 32084

Charles E. Scott 990,000 6.1%
145 Oviedo Street
St. Augustine, Florida 32084

Ronald Oehri 10,000 *
Schlattstrasse 215 FL-9491
Ruggell, Liechtenstein

Chad Millward 15,000 *
Schlattstrasse 215 FL-9491
Ruggell, Liechtenstein


All executive officers and
directors as a group 2,278,750 14.0%

* Less than 1%


The following chart lists shares and options held by management

Securities
Common Stock underlying Options
--------------- ------------------
Mr. Skinner 1,210,000 53,750

Mr. Scott 960,000 30,000

Mr. Millward 0 15,000

Mr. Oehri 10,000 0

Options are exercisable upon issuance at $0.50 per share. None of the options
have been exercised as of the date of this filing.

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<PAGE>


ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our directors, executive officers and key employees and their respective
ages and positions are set forth below. Biographical information for each of
those persons is also presented below. Our bylaws require three (3) directors
and our executive officers are appointed by our Board of Directors and serve
at its discretion.

Directors and Officers

Name Age Position Held
---------------------- ------- ----------------
David C. Skinner, Jr. 31 President, CEO, Treasurer, Director

Charles E. Scott 33 Vice President, Chief Technical Officer

Chad A. Millward 27 Secretary, Director

Ronald Oehri 40 Director

David C. Skinner, Jr. Mr. Skinner was appointed Chairman of the Board,
President and Treasurer on June 1, 1997. In July of 1999 he was re-elected
President and CEO. From January 1995 he managed Skinner, Varney & Associates,
a tax and business consulting firm. In 1996, Mr. Skinner was affiliated with
Grand Holiday Casino of Aruba, where he managed the payout structure for an
international sportsbook. From 1995 to 1997 he was employed by Enterprise
Distributors, Inc., who made video gaming devices. In 1996 he served as a
President of Caribbean Palace, Inc. (Club Casablanca) of Myrtle Beach, South
Carolina.

Charles E. Scott. Mr. Scott was appointed Vice President Technical on
June 1, 1997. He was elected Vice President and appointed Chief Technical
Officer in July of 1999. From 1995 to 1997, he was employed by Skinner,
Varney & Associates as an office administrator. From 1996 to 1998 he was
employed by Telephone Information System Services in Curacao where he designed
and implemented secure Internet and intranet access to multiple sportsbooks.
He received a bachelors degree in computer information systems from Florida
State University.

Chad A. Millward. Mr. Millward was elected as a Director and appointed
Secretary in July of 1999. He was our Chief Systems Administrator since April
of 1999. Prior to joining Winners Internet he was a United States Air Force
Network Administrator since 1993.

Ronald Oehri. Mr. Oehri was elected as a Director in July of 1999. From
January 1, 1999 to the present he has been the C.E.O. of Quality Net AG which
provides Internet marketing. Since September 1997 he has been the C.E.O. of
SupraNet AG which is an Internet service provider. Beginning in December 1984
through the present he has been the C.E.O. of Koro AG, a trading company.

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<PAGE>

ITEM 6: EXECUTIVE COMPENSATION

The following table shows compensation of our executive officers for our
fiscal year 1998.


SUMMARY COMPENSATION TABLE

Annual Compensation
-------------------
Fiscal
Name and Principal Position Year Salary ($) Bonus Other
--------------------------- -------- ----------- -------- ---------
David Skinner Jr. 1998 $ 79,914 $ 0 $ 44,520*
President, C.E.O.

Charles E. Scott 1998 50,900 0 0
Vice President, Chief
Technical Officer

*The Company owns a 1998 Ford Explorer vehicle which has been
purchased for corporate use by the President/CEO, Mr. Skinner.

Compensation of Directors

We do not have any standard arrangement for compensation of our directors
for any services provided as director, including services for committee
participation or for special assignments.

Employment Contracts

As of the date of this filing we have not entered into formal employment
agreements with our executive officers.

ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following information summarizes certain transactions either we
engaged in during the past two years or we propose to engage in involving our
executive officers, directors, 5% stockholders or immediate family members of
such persons:

In July of 1999 we entered into an agreement with SupraNet AG for
Internet services. Mr Oehri, our director, is the President and C.E.O. of
SupraNet AG. The monthly fee for the services provided to Winners Internet by
SupraNet AG is $1,340 per month and the agreement provides a 30 day opt-out
clause for either party.

ITEM 8: DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue 50,000,000 shares of common stock, par value
$.001, of which 15,990,863 were issued and outstanding as of October 31, 1999.
All shares of common stock have equal rights and privileges with respect to
voting, liquidation and dividend rights. Each share of common stock entitles
the holder thereof (i) to one non-cumulative vote for each share held of
record of all matters submitted to a vote of the stockholders, (ii) to
participate equally and to receive any and all such dividends as may be
declared by the Board of Directors out of funds legally available; and (iii)
to participate pro rata in any distribution of assets available for
distribution upon

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<PAGE>

liquidation of the Company. Our stockholders have no preemptive rights to
acquire additional shares of common stock or any other securities.

Preferred Stock

We have not authorized preferred stock.


PART II

ITEM 1: MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

Our common stock is traded over-the-counter and quoted on the OTC NASDAQ
Electronic Bulletin Board under the symbol "WINR". The following table
represents the range of the high and low bid prices of our stock as reported
by the Nasdaq Trading and Market Services for each fiscal quarter for the last
two fiscal years ending December 31, 1998 and the nine month interim period
ended September 30, 1999. There was no market activity prior to August 1997.
Such quotations represent prices between dealers and may not include retail
markups, markdowns, or commissions and may not necessarily represent actual
transactions.

Year Quarter High Low
-------- ---------------- ------ -----
1997 Third Quarter 4.875 2.25
Fourth Quarter 2.8125 0.375
1998 First Quarter 0.8125 0.15
Second Quarter 1 0.40625
Third Quarter 1.625 0.33
Fourth Quarter 3.00 0.45
1999 First Quarter 2.96875 1.34
Second Quarter 2.4375 1.21875
Third Quarter 1.71875 0.8125

We have approximately 614 stockholders of record as of October 31, 1999.
We have not declared dividends on our common stock and do not anticipate
paying dividends on our common stock in the foreseeable future. On July 14,
1997 we effected an 100-to-1 reverse stock split. All per share information in
this registration statement has been retroactively restated to reflect this
change.

ITEM 2: LEGAL PROCEEDINGS

We are not a party to any proceedings or threatened proceedings as of the
date of this filing.


ITEM 3: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

We have had no change in, or disagreements with, our principal
independent accountant during our last two fiscal years.


ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES

The following discussion describes all securities we have sold within the
past three fiscal years without registration.

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<PAGE>


On January 31, 1997 we issued an aggregate of 600 common shares to three
of our then officers and directors for services rendered on our behalf. The
services were valued at $20.00 each and each received 200 shares. The
issuance of such shares was exempt from registration under the Securities Act
of 1933 by reason of Sections 3(b) and 4(2) as a private transaction not
involving a public distribution.

On March 7, 1997 we issued 4,076 common shares to four persons for
accounting and legal services. Such services were valued at $407.00. The
issuance of such shares was exempt from registration under the Securities Act
of 1933 by reason of Sections 3(b) and 4(2) as a private transaction not
involving a public
distribution.

On August 1, 1997 we sold 2,500,000 common shares for $50,000 to five
persons. Such shares were issued pursuant to Rule 504.

On September 15, 1997 we sold 17,145 common shares to Tom Curtis for
$30,000. Such shares were issued pursuant to Rule 504.

On December 19, 1997 we sold 20,000 common shares to Capital
Communications, Inc. for $10,000. Such shares were issued pursuant to Rule
504.

On April 28, 1998 we issued 500,000 common shares valued at $50,000 to
Columbia Financial Group for public relations services. Such shares were
issued pursuant to Rule 504.

On May 7, 1998 we sold an aggregate of 1,000,000 common shares for
$300,000 to Cognitive Investco, Inc. and Epicontinental Holding's Limited.
Each purchased 500,000 common shares and such shares were issued pursuant to
Rule 504.

On May 19, 1998 we sold 500,000 common shares for $200,000 to Codecraft
Corporation, Inc. Such shares were issued pursuant to Rule 504.

On July 20, 1998 we issued 500,000 common shares to Intertreuhand
Aktiengesellschaft in consideration for technology and services. Such shares
were valued at $25,000. The issuance of such shares was exempt from
registration under the Securities Act of 1933 by reason of Sections 3(b) and
4(2) as a private transaction not involving a public distribution.

On August 18, 1998 we sold an aggregate of 550,000 common shares for
$220,000. Columbia Financial Group purchased 150,000 common shares and
Codecraft Corporation purchased 400,000 common shares. Such shares were
issued pursuant to Rule 504.

On November 1, 1998 we sold 285,000 common shares for $99,750 to
Cognitive Investco, Inc. Such shares were issued pursuant to Rule 504.

On December 4, 1998 we issued 21,358 common shares to Intertreuhand
Aktiengesellschaft for computer equipment valued at $10,679. The issuance of
such shares was exempt from registration under the Securities Act of 1933 by
reason of Sections 3(b) and 4(2) as a private transaction not involving a
public distribution.

On December 15, 1998 we issued 500,000 common shares to Columbia
Financial Group pursuant to Rule 505. Such shares were valued at $25,000 and
were issued for public relations services provided to us.

On December 22, 1998 we sold 100,000 common shares for $100,000 to
Codecraft Corporation. Such shares were issued pursuant to Rule 504.

On January 8, 1999 we sold 100,000 common shares for $100,000 to
Cognitive Investco, Inc. Such shares were issued pursuant to Rule 504.

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<PAGE>

On March 25, 1999 we sold 225,000 common shares for $202,500 to Bluegrass
Secure Corp. Such shares were issued pursuant to Rule 504.

On June 18, 1999 we issued 10,000 common shares valued at $7,498 to
Ronald Oehri for technology services rendered. The issuance of such shares was
exempt from registration under the Securities Act of 1933 by reason of
Sections 3(b) and 4(2) as a private transaction not involving a public
distribution.

On July 15, 1999 we sold 400,000 common shares for $220,000 to
Trans-Pacific Security Consultants. Such shares were issued pursuant to Rule
504.

On September 28, 1999 we sold 315,789 common shares for $149,999 to
Orienstar Finance, Ltd. Such shares were issued pursuant to Rule 504.

On October 1, 1999 we sold 147,369 common shares to Orienstar Finance,
Ltd. for $70,000. Such shares were issued pursuant to Rule 504.

In connection with each of these private transactions of our securities
listed above, we believe that each purchaser (i) was aware that the securities
had not been registered under federal securities laws, (ii) acquired the
securities for his/her/its own account for investment purposes and not with a
view to or for resale in connection with any distribution for purpose of the
federal securities laws, (iii) understood that the securities would need to be
indefinitely held unless registered or an exemption from registration applied
to a proposed disposition and (iv) was aware that the certificate representing
the securities would bear a legend restricting their transfer. We believe
that, in light of the foregoing, the sale of our securities to the respective
acquirers did not constitute the sale of an unregistered security in violation
of the federal securities laws and regulations by reason of the exemptions
provided under Sections 3(b) and 4(2) of the Securities Act, and the rules and
regulations promulgated thereunder.


ITEM 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to Nevada Revised Statutes Section 78.7502 and 78.751 our
Articles of Incorporation and bylaws provide for the indemnification of
present and former directors and officers and each person who serves at our
request as our officer or director. We will indemnify such individuals
against all costs, expenses and liabilities incurred in a threatened, pending
or completed action, suit or proceeding brought because such individual is our
director or officer. Such individual must have conducted himself in good
faith and reasonably believed that his conduct was in, or not opposed to, our
best interest. In a criminal action he must not have had a reasonable cause
to believe his conduct was unlawful. This right of indemnification shall not
be exclusive of other rights the individual is entitled to as a matter of law
or otherwise.

We will not indemnify an individual adjudged liable due to his negligence
or wilful misconduct toward us, adjudged liable to us, or if he improperly
received personal benefit. Indemnification in a derivative action is limited
to reasonable expenses incurred in connection with the proceeding. Also, we
are authorized to purchase insurance on behalf of an individual for
liabilities incurred whether or not we would have the power or obligation to
indemnify him pursuant to our bylaws.

Our bylaws provide that individuals may receive advances for expenses if
the individual provides a written affirmation of his good faith belief that
the has met the appropriate standards of conduct and he will repay the advance
if he is adjudged not to have met the standard of conduct.

continued