Tuesday, December 03, 2002 5:53:26 PM
8-K Continued Again
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
<TABLE>
<CAPTION>
Name Age Position Held
---- --- -------------
<S> <C> <C>
David C. Skinner, Jr. 31 President, CEO, CFO-Treasurer, Director
Charles E. Scott 33 Vice President, Chief Technical Officer
Ronald Oehri 40 Director, Secretary
Markus Buechel 41 Director
Douglas Morgan 47 Director
Dr. Reinhold Proksch 38 Director
</TABLE>
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, Chief Executive Officer and Chief Financial Officer. 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.
RONALD OEHRI. Mr. Oehri was appointed as a Director in July of 1999 and
Secretary in March of 2000. 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.
MARKUS BUECHEL The Honorable Markus Buechel was appointed as a Director
in February 2000. He began his career in 1981 by studying law at the University
of Berne in Switzerland and the University of Munich in Germany. After a few
years of legal practice with two of Liechtenstein's leading law firms, he was
asked by the Liechtenstein Government in 1989 to represent the country in its
European Union negotiations with the primary responsibility in financial
services. Following his successful negotiation of the
<PAGE> 16
European Union in 1992, Buechel was elected to the Liechtenstein Government as
Minister of Finance in 1999 and subsequently as the country's Minister of
Foreign Affairs in 1992. He was then voted Prime Minister of the Principality of
Liechtenstein in a general election during 1993. Since Buechel's retirement from
public office, he is active as a board member of a management consulting firm
and two European telecommunication companies. Buechel's distinguished career in
the public sector also resulted in the Prince of Liechtenstein awarding him the
country's highest honor for his services to the nation.
DDR. REINHARD PROKSCH DDr. Proksch was appointed as a Director in March
2000. He holds double doctorates in Information Systems and in Philosophy from
Vienna and Salzburg Universities and is a Fulbright Scholar. While at Salzburg,
where he also served as Associate Professor of Media and Communication Law, he
was awarded in 1986 the highest academic honor in Austria - personally bestowed
by the president of Austria. He subsequently earned an LL.M. in 1988 in Business
and Tax and is admitted as an Attorney and Counselor at Law in New York state.
DDr. Proksch served as Professor and Director of the Institute on Comparative
Telecommunications Law at Edinburgh University, Scotland and as a Faculty Member
of the McGeorge School of Law in Sacramento, California. He was an Attorney and
Telecom Counsel with Hall Dickler & Co., a New York and LA law firm through
1990. From 1990-1994, he served as Director and Corporate Counsel with
Liechtenstein-based trust company subsidiaries of leading Swiss and
International Banks, including Barclays and Union Bank of Switzerland. Since
1994 he has been engaged in private practice in the areas of Telecom, Tax,
Finance, and Media and served as a Director of Intertreuhand - one of the oldest
asset management trust companies in Liechtenstein and founder of the European
Economic Institute. He is the author of numerous publications and articles on
Tax, Telecom and Media issues, frequently travels as an international lecturer,
and serves on the Boards of several local and European Media and Telecom
companies.
DOUGLAS MORGAN Mr. Morgan was appointed as a Director in February 2000.
He is a magna cum laude graduate from both Massachusetts Institute of Technology
with a Bachelors Degree and Stanford University with a Masters Degree, both in
Computer Science and Electrical Engineering. Mr. Morgan was also a National
Science Foundation Fellow. He has over 25 years of experience in the computer
and hi-tech industry with an early background in programming, design, and
project management with companies such as Computer Sciences Corporation, Hughes,
NCR, and Hewlett Packard. He founded and served from 1981 to 1984 as President
of DynaMicro, Inc., a software and computer game development company known for
its development of the national best selling game Dungeons of Daggorath. Mr.
Morgan also served as Chairman of Unified Technologies, Inc., a
hardware/software development company from 1981 to 1985, when the company merged
with Hirsch Electronics Corp., one of its clients. He served as Vice-President
of Engineering for Hirsch, a successful privately-held networked security system
developer and manufacturer, from 1985 to 1989. From 1989-1994, he served as
President and Chairman of Stratos Scientific Corp., a technical consulting firm,
and from 1995 to 1997, he served as the Chairman of Visual Technologies, Inc., a
multi-media development company. From 1995 to the present he has served as
President and CEO of Performance Strategies, Inc., an international consulting
firm serving the hi-tech and related industries and providing high- level
assistance in strategic planning, corporate communications, business model and
financial development, network and Internet strategies, and web-site
development. He is the holder of 5 U.S. Patents relating to networking, security
and computer systems design.
<PAGE> 17
EXECUTIVE COMPENSATION
The following table shows compensation of our executive officers for
our fiscal years ended 1998 and 1999
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------
Fiscal Restricted Stock or
Name and Principal Position Year Salary ($) Bonus Other(1) Options Granted
--------------------------- ---- ---------- ----- -------- -------------------
<S> <C> <C> <C> <C> <C>
David Skinner Jr. 1999 $78,323 $0 0 66,250 (2)
President, C.E.O. 1998 $79,914 $0 44,520 (3)
Charles E. Scott 1998 50,900 0 0 35,000 (2)
Vice President, Chief Technical Officer
</TABLE>
(1) No other form of compensation has been paid or accrued.
(2) Options granted as of December 31, 1999 which are 5 year
options exercisable at $0.50 per share.
(3) The Company owns a 1998 Ford Explorer vehicle which has been
purchased for corporate use by the President/CEO, Mr. Skinner.
(b) Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------------
Number of Securities
Underlying
Options/SARs Granted % of Total Options/SARs Granted to Exercise or Base Expiration
Name (#) Employees in Fiscal Year Price ($/Sh) Date
---- -------------------- ---------------------------------- ---------------- ----------
<S> <C> <C> <C> <C>
David C. Skinner, 66,250 $0.50 12/31/2005
Jr.
Charles E. Scott 35,000
$0.50 12/31/2005
</TABLE>
The Company has a Stock Option Plan, entitled the "Directors, Officers
and Employees - Stock Option Plan 1999" (the "Plan"). Its purpose is to advance
the business and development of the Company and its shareholders by affording to
the employees, directors and officers of the Company the opportunity to acquire
a proprietary interest in the Company by the grant of Options to such persons
under the Plan's terms. By doing so the Company seeks to motivate, retain and
attract highly competent, motivated employees, executive Officers and Directors
to lead the Company. The effective date of the Plan was January 1, 1999. The
Plan provides that the Board shall exercise its discretion in awarding Options
under the Plan, not to exceed ten percent of the shares at any one time,
provided that the options granted to any one person may not exceed five percent
of the outstanding. The per share Option price for the stock subject to each
Option shall be such price as the Board may determine. All Options must be
granted within ten years from the effective date of the Plan. There is no
express termination date for the Options, although the Board may vote to
terminate the Plan. Under the Plan, there have been no Options granted.
<PAGE> 18
(c) Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR
Values: None
(d) Long-term Incentive Plans -- Awards in Last Fiscal Year: None
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.
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 1998, we became a member of the CyberLink Monetary System in
July 1998 when CyberLink Monetary Systems agreed to exclusively license us as
the sole provider of Internet gaming for its data processing operations. The
CyberLink Monetary System is managed by Intertreuhand Aktiengesellschaft .
Intertreuhand Aktiengesellschaft is an Asset Management Trust licensed by the
Government of Liechtenstein since 1954. The Managing Director of Intertreuhand
Aktiengesellschaft is DDr. Reinhard Proksch. DDr. Proksch, a Fulbright Scholar,
holds dual doctorates in law and information systems and is a director of
Winners. A total of 2,045,284 shares of Winners common stock was issued to
Intertreuhand Aktiengesellschaft.
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.
In December 1999, we entered into a Marketing Agreement with
Performance Strategies Inc., whereby 300,000 shares and options to acquire an
additional 300,000 shares were issued to Performance Strategies, Inc. Douglas
Morgan is the principal officer and shareholder of Performance Strategies, Inc.,
and is a director of Winners.
<PAGE> 19
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 50,000,000 shares of common stock, par value
$.001, of which 19,612,889 were issued and outstanding as of April 12, 2000. 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 liquidation of the
Company. Our stockholders have no preemptive rights to acquire additional shares
of common stock or any other securities.
CONVERTIBLE DEBENTURE
We issued a convertible debenture for $260,000, which was
collateralized by the issuance of 375,000 common shares. The debenture is
convertible at 80% of the bid price at the time of conversion. The interest rate
on the debenture is 8% per annum. The term of the debenture is three years.
PREFERRED STOCK
We have not authorized preferred stock.
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.
<TABLE>
<CAPTION>
Year Quarter High Low
---- ------- ---- ---
<S> <C> <C> <C>
1997 Third Quarter 4.875 2.25
Fourth Quarter 2.8125 0.375
1998 First Quarter 0.812 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
</TABLE>
<PAGE> 20
We have approximately 650 stockholders of record as of April 12, 2000.
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.
LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of
the date of this filing.
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.
RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities we have sold within
the past three fiscal years without registration.
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.
<PAGE> 21
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.
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.
<PAGE> 22
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.
On February 8, 2000 we sold 650,000 common shares to Ron Sparkman for
marketing and public relations services. 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 February 8, 2000 we sold 650,000 common shares to Petty
International Development for marketing and public relations services. 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 February 8, 2000 we sold 200,000 common shares to World of
Internet.com for marketing and public relations services. 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 February 8, 2000 we sold 120,000 common shares to Ronald Oehri in
consideration of the acquisition of 19% of SupraNet AG. 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 February 28, 2000 we sold 2,500 common shares to Rinaldo Sperandio
for technical consulting services. 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 February 28, 2000 we sold 10,000 common shares to Markus Buechel in
consideration of his appointment to the Winners board of directors. 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 14, 2000 we sold 100,000 common shares to World of
Internet.com for $300,000. 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 March 31, 2000 we sold 10,000 common shares to Douglas Morgan in
consideration of his appointment to the Winners board of directors. 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 31, 2000 we sold 300,000 common shares to Performance
Strategies Inc., in consideration of marketing services. The issuance of such
shares was exempt from registration
<PAGE> 23
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 31, 2000 we sold 1,523,926 common shares to Intertreuhand
Aktiengesellschaft in consideration of the acquisition of the Plus Network
Platform and other technology and services. 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 April 26, 2000, we sold 343,225 shares to Villa Nova Management Co.,
Inc. and 343,225 shares to Michael A. Patterson Enterprises, Inc. for services.
The issuance of such shares was exempt from registration under the Securities
Act of 1933 by reason of Section 4(2) as a private transaction not involving a
public distribution.
On April 26, 2000, we issued a convertible debenture for $260,000,
which was collateralized by the issuance of 375,000 shares. The debenture is
convertible at 80% of the bid price at the time of conversion. The interest rate
on the debenture is 8% per annum. The term of the debenture is three years. The
issuance of such securities 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.
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.
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 willful misconduct toward us, adjudged liable to us, or if he
improperly received personal benefit.
<PAGE> 24
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.
Item 2. Acquisition or Disposition of Assets.
See Item 1 above.
Item 3. Bankruptcy or Receivership.
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable
Item 5. Other Events
See Item 1 above
Item 6. Resignation of Registrant's Directors.
All of the prior officers and directors of GFS have resigned as a part of this
acquisition and have been replaced by David C. Skinner, Jr., who is the sole
officer and director of this subsidiary.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
See Attached Pro-Forma Financial Information.
See Attached Financial Statements.
See Attached Agreement for Share Exchange.
Item 8. Change in Fiscal Year.
Not Applicable
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 10, 2000 By: /s/ David C. Skinner, Jr.
President
<PAGE> 26
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Winners Internet Network, Inc.
St. Augustine, FL
The Unaudited Pro Forma Combined Statement of Operations of the Company for the
fiscal year ended December 31, 1999 and the Unaudited Pro Forma Combined Balance
Sheet of the Company as of December 31, 1999 have been prepared to illustrate
the estimated effect of the Glennaire Financial Services, Inc. transaction. The
Pro Forma Statements of Operations give pro forma effect to the Glennaire
Financial Services, Inc. transaction as if it had occurred on December 31, 1999.
The Pro Forma Balance Sheet gives pro forma effect to the Glennaire Financial
Services, Inc. offering as if it had occurred on December 31, 1999. The Pro
Forma Financial Statements do not purport to be indicative of the results of
operations or financial position of the Company that would have actually been
obtained had such transactions been completed as of the assumed dates and for
the period presented, or which may be obtained in the future. The pro forma
adjustments are described in the accompanying notes and are based upon available
information and certain assumptions that the Company believes are reasonable.
A preliminary allocation of the purchase price has been made to major categories
of assets and liabilities in the accompanying Pro Forma Financial Statements
based on available information. The actual allocation of purchase price and the
resulting effect on income from operations may differ significantly from the pro
forma amounts included herein. These pro forma adjustments represent the
Company's preliminary determination of purchase accounting adjustments and are
based upon available information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts reflected in the Pro Forma
Financial Statements are subject to change, and the final amounts may differ
substantially.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the historical financial statements and related notes of
Winners Internet Network, Inc.
Michael Johnson & Co., LLC
Denver, Colorado
May 10, 2000
<PAGE> 28
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHETT
(DECEMBER 31, 1999)
<TABLE>
<CAPTION>
Winners Glennaire Pro Forma Pro Forma
Dec 31, 1999 Dec 31, 1999 Adjustments Combined
------------- ------------- ------------- -------------
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 32,961 $ -- $ -- $ 32,961
Accounts receivable 548,912 -- -- 548,912
------------- ------------- ------------- -------------
Current assets 581,873 -- -- 581,873
Equipment and furniture, net 549,140 -- -- 549,140
Acquisition of subsidiary -- -- 4,599 4,599
------------- ------------- ------------- -------------
Other assets 549,140 -- 4,599 553,739
Total assets $ 1,131,013 $ -- $ 4,599 $ 1,135,612
============= ============= ============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current portion of notes payable $ 3,600 $ 2,903 $ -- $ 6,503
Accounts payable 173,795 -- -- 173,795
Accrued liabilities 712 -- -- 712
------------- ------------- ------------- -------------
Current liabilities 178,107 2,903 -- 181,010
Notes payable less current portion 7,188 -- -- 7,188
------------- ------------- ------------- -------------
Total liabilities 185,295 2,903 -- 188,198
------------- ------------- ------------- -------------
Capital stock 15,991 1,000 696 17,687
Stock subscription receivable -- (900) 900 --
Paid in capital 2,948,093 -- -- 2,948,093
Retained deficit (2,018,366) (3,003) 3,003 (2,018,366)
------------- ------------- ------------- -------------
Total stockholders' equity 945,718 (2,903) 4,599 947,414
Total liabilities and stockholder's equity $ 1,131,013 $ -- $ 4,599 $ 1,135,612
============= ============= ============= =============
</TABLE>
<PAGE> 29
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(For the Period Ended December 31, 1999)
<TABLE>
<CAPTION>
WINNERS GLENNAIRE Pro Forma
12-Month Period 9-Month Period Combined
Ended Dec 31, 99 Ended Dec 31, 99 Companies
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net Revenue $ 822,673 $ -- $ 822,673
---------------- ---------------- ----------------
Total Revenue 822,673 -- 822,673
General and administrative 183,798 80 183,878
Product development costs 633,808 -- 633,808
---------------- ---------------- ----------------
Net income (loss) $ 5,067 $ (80) $ 4,987
================ ================ ================
PER SHARE DATA:
Net income $ 0.01
================
Weighted average shares outstanding 15,292,927
================
OPERATING AND OTHER DATA:
Cash interest expense, net 108 -- 108
CASH FLOW PROVIDED BY (USED FOR)
Operating activities $ (303,458) $ 80 $ (303,378)
Investing activities (441,238) -- (441,238)
Financing activities 748,800 -- 748,800
</TABLE>
<PAGE> 30
WINNERS INTERNET NETWORK, INC.
Unaudited Pro Forma Combined Financial Statements
December 31, 1999
On May 9, 2000, Winners Internet Network, Inc. and Glennaire Financial Services.
Inc. agreed upon a plan of reorganization. The agreement stated that Winners
Internet Network, Inc. would exchange 10,000 shares of stock for all of the
common stock of Glennaire Financial Services, Inc.
The Glennaire Acquisition was accounted for by the purchase method of
accounting. Under the purchase method of accounting the total purchase price is
allocated to intangible assets. The adjustments are to eliminate stock
subscription receivable and retained deficit as a result of the Glennaire
Acquisition.
The accompanying pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the financial position or results of
operations which would actually have been report had the acquisition been in
effect during the periods presented, or which may be reported in the future.
The accompanying Pro Forma Condensed Consolidated Financial Statements should be
read in conjunction with the historical financial statements and related notes
thereto for Winners Internet Network, Inc. and Glennaire Financial Services,
Inc.
<PAGE> 31
WINNERS INTERNET NETWORK, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Winners Internet Network, Inc.
St. Augustine, FL
We have audited the accompanying balance sheet of Winners Internet Network, Inc.
as of December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winners Internet Network, Inc.,
as of December 31, 1999 and 1998, and the results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Michael Johnson & Co., LLC
Denver, Colorado
March 22, 2000
<PAGE> 33
WINNERS INTERNET NETWORK, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS:
Current assets:
Cash in bank $ 1,866 $ 28,857
LTG - European bank 31,095 --
A/R - Licensing Fees 310,000 --
A/R - Credit Cards 238,912 --
----------- -----------
Total current assets 581,873 28,857
Fixed assets:
Software 516,138 75,000
Equipment 84,289 84,289
Furniture & Fixtures 4,489 4,489
Vehicles 44,500 44,500
Less Depreciation (100,276) (61,563)
----------- -----------
Total fixed assets 549,140 146,715
Other assets
Loan receivable - D. Skinner, Jr -- 3,700
Prepaid marketing -- 25,000
----------- -----------
Total other assets -- 28,700
TOTAL ASSETS $ 1,131,013 $ 204,272
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts Payable $ 173,795 $ 427
Accrued Payables 712 (1,326)
Notes Payable - Current Portion 3,600 3,600
----------- -----------
Total current liabilities 178,107 2,701
Long term liabilities:
Notes Payable 7,188 10,920
----------- -----------
Total long term liabilities 7,188 10,920
----------- -----------
Total liabilities 185,295 13,621
STOCKHOLDERS' EQUITY
Common Stock, par value $0.001: 50,000,000 shares
authorized; 15,990,863 shares issued and
outstanding for 1999 and 14,791,355 shares issued 15,991 14,791
and outstanding for 1998
Additional Paid-In Capital 2,948,093 2,199,293
Accumulated Deficit (2,018,366) (2,023,433)
----------- -----------
Total stockholders' equity 945,718 190,651
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,131,013 $ 204,272
=========== ===========
</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 34
WINNERS INTERNET NETWORK, INC.
Statement of Operations
For the Period Ended December 31, 1999
With Comparative Totals for December 31, 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
REVENUE:
Licensing Fees $ 395,000 $ --
Processing Income 422,673 --
License Income 5,000
Consulting Income -- 2,168
------------ ------------
TOTAL REVENUE 822,673 2,168
EXPENSES:
Bank Charges 1,730 490
Commissions 12,500 179,750
Consulting Fees 450,000 71,297
Deprecation Expense 38,713 43,713
Dues & Subscriptions 3,906 2,301
Insurance 15,664 5,398
Internet 16,300 18,333
Interest Expense 108 --
Marketing Expense 25,000 50,000
Meals & Entertainment 25,506 387
Miscellaneous Expense -- 548
Office Expenses 8,559 13,065
Professional & Legal Fees 25,333 13,311
Rent 19,850 32,499
Royalties -- 26,450
Taxes & Licenses 7,250 28,833
Telephone 26,410 11,370
Travel 24,231 110,630
Utilities 8,999 494
Wages 107,547 233,859
------------ ------------
TOTAL EXPENSES 817,606 842,728
------------ ------------
NET PROFIT (DEFICIT) $ 5,067 $ (840,560)
============ ============
NET PROFIT (LOSS) PER COMMON STOCK $ 0.01 $ (0.06)
------------ ------------
WEIGHTED AVERAGE SHARES OUTSTANDING 15,282,927 13,988,450
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 35
WINNERS INTERNET NETWORK, INC.
Statement of Cash Flow
For the Period Ended December 31, 1999
With Comparative Totals for December 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 5,067 $ (840,560)
Depreciation 38,713 43,713
CHANGES IN ASSETS & LIABILITIES:
GGLS Payable -- (250,000)
Accounts Payable 173,368 (941)
Accrued Payables 2,038
Notes Payable - Ford Credit (3,732) 14,520
Accounts Receivable (548,912)
Loan Receivable -- (3,700)
Prepaid Marketing -- (25,000)
Advances Payable 30,000 (30,000)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES (303,458) (1,091,968)
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Capital Expenditure (441,238) 94,335
----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (441,238) 94,335
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Ordinary Shares 748,800 1,026,473
----------- -----------
NET CASH PROVIDED BY FINANCING 748,800 1,026,473
NET CASH IN CASH & CASH EQUIVALENTS 4,104 28,840
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,857 17
----------- -----------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 32,961 $ 28,857
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest 108 --
Income Taxes -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 36
WINNERS INTERNET NETWORK, INC.
STOCKHOLDERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS Additional Accumulated Total
----------------------------- Paid-In Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Davki Agency Ltd., Inc. Merger 8,000,000 $ 8,000 $ 359,287 $ (367,287) $ --
Comstock/Empire International, Inc. Merger 294,944 295 703,373 (703,668) --
Issuance of Stock for Cash & Services 2,539,912 2,540 110,160 -- 112,700
Net Deficit 12/31/97 -- (111,918) (111,918)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 10,834,856 10,835 1,172,820 (1,182,873) 782
=========== =========== =========== =========== ===========
Issuance of 4/28 for Services 500,000 500 49,500 -- 50,000
Issuance of 5/7 for Cash 1,000,000 1,000 299,000 -- 300,000
Issuance of 5/19 for Cash 500,000 500 199,500 -- 200,000
Issuance of 7/20 for Services 500,000 500 24,500 -- 25,000
Issuance of 8/18 for Cash 550,000 550 219,450 -- 220,000
Issuance of 11/1 for Cash 285,000 285 99,465 -- 99,750
Issuance of 12/4 for Services 21,358 21 10,658 -- 10,679
Issuance of 12/15 for Services 500,000 500 24,500 -- 25,000
Issuance of 12/22 for Cash 100,000 100 99,900 -- 100,000
Issuance Correction 12/31(Comstock Merger) 141 -- -- -- --
Net Deficit 12/31/98 (840,560) (840,560)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 14,791,355 14,791 2,199,293 (2,023,433) 190,651
=========== =========== =========== =========== ===========
Issuance of 1/8 for Cash 100,000 100 99,900 -- 100,000
Issuance of 3/25 for Cash 225,000 225 202,275 -- 202,500
Issuance of 6/18 for Services 10,000 10 7,488 -- 7,498
Issuance Correction 6/30 (Comstock Merger) 1,350 2 -- -- 2
Issuance of 7/15 for Cash 400,000 400 219,600 -- 220,000
Issuance of 9/28 for Cash 315,789 316 149,684 150,000
Issuance of 10/11 for Cash 147,369 147 69,853 -- 70,000
Net Profit 12/31/99 -- -- -- 5,067 5,067
----------- ----------- ----------- ----------- -----------
Balance December 31, 1999 15,990,863 $ 15,991 $ 2,948,093 $(2,018,366) $ 945,718
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 37
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
<TABLE>
<CAPTION>
Name Age Position Held
---- --- -------------
<S> <C> <C>
David C. Skinner, Jr. 31 President, CEO, CFO-Treasurer, Director
Charles E. Scott 33 Vice President, Chief Technical Officer
Ronald Oehri 40 Director, Secretary
Markus Buechel 41 Director
Douglas Morgan 47 Director
Dr. Reinhold Proksch 38 Director
</TABLE>
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, Chief Executive Officer and Chief Financial Officer. 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.
RONALD OEHRI. Mr. Oehri was appointed as a Director in July of 1999 and
Secretary in March of 2000. 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.
MARKUS BUECHEL The Honorable Markus Buechel was appointed as a Director
in February 2000. He began his career in 1981 by studying law at the University
of Berne in Switzerland and the University of Munich in Germany. After a few
years of legal practice with two of Liechtenstein's leading law firms, he was
asked by the Liechtenstein Government in 1989 to represent the country in its
European Union negotiations with the primary responsibility in financial
services. Following his successful negotiation of the
<PAGE> 16
European Union in 1992, Buechel was elected to the Liechtenstein Government as
Minister of Finance in 1999 and subsequently as the country's Minister of
Foreign Affairs in 1992. He was then voted Prime Minister of the Principality of
Liechtenstein in a general election during 1993. Since Buechel's retirement from
public office, he is active as a board member of a management consulting firm
and two European telecommunication companies. Buechel's distinguished career in
the public sector also resulted in the Prince of Liechtenstein awarding him the
country's highest honor for his services to the nation.
DDR. REINHARD PROKSCH DDr. Proksch was appointed as a Director in March
2000. He holds double doctorates in Information Systems and in Philosophy from
Vienna and Salzburg Universities and is a Fulbright Scholar. While at Salzburg,
where he also served as Associate Professor of Media and Communication Law, he
was awarded in 1986 the highest academic honor in Austria - personally bestowed
by the president of Austria. He subsequently earned an LL.M. in 1988 in Business
and Tax and is admitted as an Attorney and Counselor at Law in New York state.
DDr. Proksch served as Professor and Director of the Institute on Comparative
Telecommunications Law at Edinburgh University, Scotland and as a Faculty Member
of the McGeorge School of Law in Sacramento, California. He was an Attorney and
Telecom Counsel with Hall Dickler & Co., a New York and LA law firm through
1990. From 1990-1994, he served as Director and Corporate Counsel with
Liechtenstein-based trust company subsidiaries of leading Swiss and
International Banks, including Barclays and Union Bank of Switzerland. Since
1994 he has been engaged in private practice in the areas of Telecom, Tax,
Finance, and Media and served as a Director of Intertreuhand - one of the oldest
asset management trust companies in Liechtenstein and founder of the European
Economic Institute. He is the author of numerous publications and articles on
Tax, Telecom and Media issues, frequently travels as an international lecturer,
and serves on the Boards of several local and European Media and Telecom
companies.
DOUGLAS MORGAN Mr. Morgan was appointed as a Director in February 2000.
He is a magna cum laude graduate from both Massachusetts Institute of Technology
with a Bachelors Degree and Stanford University with a Masters Degree, both in
Computer Science and Electrical Engineering. Mr. Morgan was also a National
Science Foundation Fellow. He has over 25 years of experience in the computer
and hi-tech industry with an early background in programming, design, and
project management with companies such as Computer Sciences Corporation, Hughes,
NCR, and Hewlett Packard. He founded and served from 1981 to 1984 as President
of DynaMicro, Inc., a software and computer game development company known for
its development of the national best selling game Dungeons of Daggorath. Mr.
Morgan also served as Chairman of Unified Technologies, Inc., a
hardware/software development company from 1981 to 1985, when the company merged
with Hirsch Electronics Corp., one of its clients. He served as Vice-President
of Engineering for Hirsch, a successful privately-held networked security system
developer and manufacturer, from 1985 to 1989. From 1989-1994, he served as
President and Chairman of Stratos Scientific Corp., a technical consulting firm,
and from 1995 to 1997, he served as the Chairman of Visual Technologies, Inc., a
multi-media development company. From 1995 to the present he has served as
President and CEO of Performance Strategies, Inc., an international consulting
firm serving the hi-tech and related industries and providing high- level
assistance in strategic planning, corporate communications, business model and
financial development, network and Internet strategies, and web-site
development. He is the holder of 5 U.S. Patents relating to networking, security
and computer systems design.
<PAGE> 17
EXECUTIVE COMPENSATION
The following table shows compensation of our executive officers for
our fiscal years ended 1998 and 1999
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------
Fiscal Restricted Stock or
Name and Principal Position Year Salary ($) Bonus Other(1) Options Granted
--------------------------- ---- ---------- ----- -------- -------------------
<S> <C> <C> <C> <C> <C>
David Skinner Jr. 1999 $78,323 $0 0 66,250 (2)
President, C.E.O. 1998 $79,914 $0 44,520 (3)
Charles E. Scott 1998 50,900 0 0 35,000 (2)
Vice President, Chief Technical Officer
</TABLE>
(1) No other form of compensation has been paid or accrued.
(2) Options granted as of December 31, 1999 which are 5 year
options exercisable at $0.50 per share.
(3) The Company owns a 1998 Ford Explorer vehicle which has been
purchased for corporate use by the President/CEO, Mr. Skinner.
(b) Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------------
Number of Securities
Underlying
Options/SARs Granted % of Total Options/SARs Granted to Exercise or Base Expiration
Name (#) Employees in Fiscal Year Price ($/Sh) Date
---- -------------------- ---------------------------------- ---------------- ----------
<S> <C> <C> <C> <C>
David C. Skinner, 66,250 $0.50 12/31/2005
Jr.
Charles E. Scott 35,000
$0.50 12/31/2005
</TABLE>
The Company has a Stock Option Plan, entitled the "Directors, Officers
and Employees - Stock Option Plan 1999" (the "Plan"). Its purpose is to advance
the business and development of the Company and its shareholders by affording to
the employees, directors and officers of the Company the opportunity to acquire
a proprietary interest in the Company by the grant of Options to such persons
under the Plan's terms. By doing so the Company seeks to motivate, retain and
attract highly competent, motivated employees, executive Officers and Directors
to lead the Company. The effective date of the Plan was January 1, 1999. The
Plan provides that the Board shall exercise its discretion in awarding Options
under the Plan, not to exceed ten percent of the shares at any one time,
provided that the options granted to any one person may not exceed five percent
of the outstanding. The per share Option price for the stock subject to each
Option shall be such price as the Board may determine. All Options must be
granted within ten years from the effective date of the Plan. There is no
express termination date for the Options, although the Board may vote to
terminate the Plan. Under the Plan, there have been no Options granted.
<PAGE> 18
(c) Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR
Values: None
(d) Long-term Incentive Plans -- Awards in Last Fiscal Year: None
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.
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 1998, we became a member of the CyberLink Monetary System in
July 1998 when CyberLink Monetary Systems agreed to exclusively license us as
the sole provider of Internet gaming for its data processing operations. The
CyberLink Monetary System is managed by Intertreuhand Aktiengesellschaft .
Intertreuhand Aktiengesellschaft is an Asset Management Trust licensed by the
Government of Liechtenstein since 1954. The Managing Director of Intertreuhand
Aktiengesellschaft is DDr. Reinhard Proksch. DDr. Proksch, a Fulbright Scholar,
holds dual doctorates in law and information systems and is a director of
Winners. A total of 2,045,284 shares of Winners common stock was issued to
Intertreuhand Aktiengesellschaft.
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.
In December 1999, we entered into a Marketing Agreement with
Performance Strategies Inc., whereby 300,000 shares and options to acquire an
additional 300,000 shares were issued to Performance Strategies, Inc. Douglas
Morgan is the principal officer and shareholder of Performance Strategies, Inc.,
and is a director of Winners.
<PAGE> 19
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 50,000,000 shares of common stock, par value
$.001, of which 19,612,889 were issued and outstanding as of April 12, 2000. 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 liquidation of the
Company. Our stockholders have no preemptive rights to acquire additional shares
of common stock or any other securities.
CONVERTIBLE DEBENTURE
We issued a convertible debenture for $260,000, which was
collateralized by the issuance of 375,000 common shares. The debenture is
convertible at 80% of the bid price at the time of conversion. The interest rate
on the debenture is 8% per annum. The term of the debenture is three years.
PREFERRED STOCK
We have not authorized preferred stock.
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.
<TABLE>
<CAPTION>
Year Quarter High Low
---- ------- ---- ---
<S> <C> <C> <C>
1997 Third Quarter 4.875 2.25
Fourth Quarter 2.8125 0.375
1998 First Quarter 0.812 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
</TABLE>
<PAGE> 20
We have approximately 650 stockholders of record as of April 12, 2000.
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.
LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of
the date of this filing.
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.
RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities we have sold within
the past three fiscal years without registration.
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.
<PAGE> 21
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.
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.
<PAGE> 22
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.
On February 8, 2000 we sold 650,000 common shares to Ron Sparkman for
marketing and public relations services. 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 February 8, 2000 we sold 650,000 common shares to Petty
International Development for marketing and public relations services. 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 February 8, 2000 we sold 200,000 common shares to World of
Internet.com for marketing and public relations services. 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 February 8, 2000 we sold 120,000 common shares to Ronald Oehri in
consideration of the acquisition of 19% of SupraNet AG. 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 February 28, 2000 we sold 2,500 common shares to Rinaldo Sperandio
for technical consulting services. 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 February 28, 2000 we sold 10,000 common shares to Markus Buechel in
consideration of his appointment to the Winners board of directors. 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 14, 2000 we sold 100,000 common shares to World of
Internet.com for $300,000. 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 March 31, 2000 we sold 10,000 common shares to Douglas Morgan in
consideration of his appointment to the Winners board of directors. 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 31, 2000 we sold 300,000 common shares to Performance
Strategies Inc., in consideration of marketing services. The issuance of such
shares was exempt from registration
<PAGE> 23
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 31, 2000 we sold 1,523,926 common shares to Intertreuhand
Aktiengesellschaft in consideration of the acquisition of the Plus Network
Platform and other technology and services. 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 April 26, 2000, we sold 343,225 shares to Villa Nova Management Co.,
Inc. and 343,225 shares to Michael A. Patterson Enterprises, Inc. for services.
The issuance of such shares was exempt from registration under the Securities
Act of 1933 by reason of Section 4(2) as a private transaction not involving a
public distribution.
On April 26, 2000, we issued a convertible debenture for $260,000,
which was collateralized by the issuance of 375,000 shares. The debenture is
convertible at 80% of the bid price at the time of conversion. The interest rate
on the debenture is 8% per annum. The term of the debenture is three years. The
issuance of such securities 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.
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.
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 willful misconduct toward us, adjudged liable to us, or if he
improperly received personal benefit.
<PAGE> 24
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.
Item 2. Acquisition or Disposition of Assets.
See Item 1 above.
Item 3. Bankruptcy or Receivership.
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable
Item 5. Other Events
See Item 1 above
Item 6. Resignation of Registrant's Directors.
All of the prior officers and directors of GFS have resigned as a part of this
acquisition and have been replaced by David C. Skinner, Jr., who is the sole
officer and director of this subsidiary.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
See Attached Pro-Forma Financial Information.
See Attached Financial Statements.
See Attached Agreement for Share Exchange.
Item 8. Change in Fiscal Year.
Not Applicable
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 10, 2000 By: /s/ David C. Skinner, Jr.
President
<PAGE> 26
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Winners Internet Network, Inc.
St. Augustine, FL
The Unaudited Pro Forma Combined Statement of Operations of the Company for the
fiscal year ended December 31, 1999 and the Unaudited Pro Forma Combined Balance
Sheet of the Company as of December 31, 1999 have been prepared to illustrate
the estimated effect of the Glennaire Financial Services, Inc. transaction. The
Pro Forma Statements of Operations give pro forma effect to the Glennaire
Financial Services, Inc. transaction as if it had occurred on December 31, 1999.
The Pro Forma Balance Sheet gives pro forma effect to the Glennaire Financial
Services, Inc. offering as if it had occurred on December 31, 1999. The Pro
Forma Financial Statements do not purport to be indicative of the results of
operations or financial position of the Company that would have actually been
obtained had such transactions been completed as of the assumed dates and for
the period presented, or which may be obtained in the future. The pro forma
adjustments are described in the accompanying notes and are based upon available
information and certain assumptions that the Company believes are reasonable.
A preliminary allocation of the purchase price has been made to major categories
of assets and liabilities in the accompanying Pro Forma Financial Statements
based on available information. The actual allocation of purchase price and the
resulting effect on income from operations may differ significantly from the pro
forma amounts included herein. These pro forma adjustments represent the
Company's preliminary determination of purchase accounting adjustments and are
based upon available information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts reflected in the Pro Forma
Financial Statements are subject to change, and the final amounts may differ
substantially.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the historical financial statements and related notes of
Winners Internet Network, Inc.
Michael Johnson & Co., LLC
Denver, Colorado
May 10, 2000
<PAGE> 28
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHETT
(DECEMBER 31, 1999)
<TABLE>
<CAPTION>
Winners Glennaire Pro Forma Pro Forma
Dec 31, 1999 Dec 31, 1999 Adjustments Combined
------------- ------------- ------------- -------------
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 32,961 $ -- $ -- $ 32,961
Accounts receivable 548,912 -- -- 548,912
------------- ------------- ------------- -------------
Current assets 581,873 -- -- 581,873
Equipment and furniture, net 549,140 -- -- 549,140
Acquisition of subsidiary -- -- 4,599 4,599
------------- ------------- ------------- -------------
Other assets 549,140 -- 4,599 553,739
Total assets $ 1,131,013 $ -- $ 4,599 $ 1,135,612
============= ============= ============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current portion of notes payable $ 3,600 $ 2,903 $ -- $ 6,503
Accounts payable 173,795 -- -- 173,795
Accrued liabilities 712 -- -- 712
------------- ------------- ------------- -------------
Current liabilities 178,107 2,903 -- 181,010
Notes payable less current portion 7,188 -- -- 7,188
------------- ------------- ------------- -------------
Total liabilities 185,295 2,903 -- 188,198
------------- ------------- ------------- -------------
Capital stock 15,991 1,000 696 17,687
Stock subscription receivable -- (900) 900 --
Paid in capital 2,948,093 -- -- 2,948,093
Retained deficit (2,018,366) (3,003) 3,003 (2,018,366)
------------- ------------- ------------- -------------
Total stockholders' equity 945,718 (2,903) 4,599 947,414
Total liabilities and stockholder's equity $ 1,131,013 $ -- $ 4,599 $ 1,135,612
============= ============= ============= =============
</TABLE>
<PAGE> 29
WINNERS INTERNET NETWORK, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(For the Period Ended December 31, 1999)
<TABLE>
<CAPTION>
WINNERS GLENNAIRE Pro Forma
12-Month Period 9-Month Period Combined
Ended Dec 31, 99 Ended Dec 31, 99 Companies
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net Revenue $ 822,673 $ -- $ 822,673
---------------- ---------------- ----------------
Total Revenue 822,673 -- 822,673
General and administrative 183,798 80 183,878
Product development costs 633,808 -- 633,808
---------------- ---------------- ----------------
Net income (loss) $ 5,067 $ (80) $ 4,987
================ ================ ================
PER SHARE DATA:
Net income $ 0.01
================
Weighted average shares outstanding 15,292,927
================
OPERATING AND OTHER DATA:
Cash interest expense, net 108 -- 108
CASH FLOW PROVIDED BY (USED FOR)
Operating activities $ (303,458) $ 80 $ (303,378)
Investing activities (441,238) -- (441,238)
Financing activities 748,800 -- 748,800
</TABLE>
<PAGE> 30
WINNERS INTERNET NETWORK, INC.
Unaudited Pro Forma Combined Financial Statements
December 31, 1999
On May 9, 2000, Winners Internet Network, Inc. and Glennaire Financial Services.
Inc. agreed upon a plan of reorganization. The agreement stated that Winners
Internet Network, Inc. would exchange 10,000 shares of stock for all of the
common stock of Glennaire Financial Services, Inc.
The Glennaire Acquisition was accounted for by the purchase method of
accounting. Under the purchase method of accounting the total purchase price is
allocated to intangible assets. The adjustments are to eliminate stock
subscription receivable and retained deficit as a result of the Glennaire
Acquisition.
The accompanying pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the financial position or results of
operations which would actually have been report had the acquisition been in
effect during the periods presented, or which may be reported in the future.
The accompanying Pro Forma Condensed Consolidated Financial Statements should be
read in conjunction with the historical financial statements and related notes
thereto for Winners Internet Network, Inc. and Glennaire Financial Services,
Inc.
<PAGE> 31
WINNERS INTERNET NETWORK, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Winners Internet Network, Inc.
St. Augustine, FL
We have audited the accompanying balance sheet of Winners Internet Network, Inc.
as of December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winners Internet Network, Inc.,
as of December 31, 1999 and 1998, and the results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Michael Johnson & Co., LLC
Denver, Colorado
March 22, 2000
<PAGE> 33
WINNERS INTERNET NETWORK, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS:
Current assets:
Cash in bank $ 1,866 $ 28,857
LTG - European bank 31,095 --
A/R - Licensing Fees 310,000 --
A/R - Credit Cards 238,912 --
----------- -----------
Total current assets 581,873 28,857
Fixed assets:
Software 516,138 75,000
Equipment 84,289 84,289
Furniture & Fixtures 4,489 4,489
Vehicles 44,500 44,500
Less Depreciation (100,276) (61,563)
----------- -----------
Total fixed assets 549,140 146,715
Other assets
Loan receivable - D. Skinner, Jr -- 3,700
Prepaid marketing -- 25,000
----------- -----------
Total other assets -- 28,700
TOTAL ASSETS $ 1,131,013 $ 204,272
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts Payable $ 173,795 $ 427
Accrued Payables 712 (1,326)
Notes Payable - Current Portion 3,600 3,600
----------- -----------
Total current liabilities 178,107 2,701
Long term liabilities:
Notes Payable 7,188 10,920
----------- -----------
Total long term liabilities 7,188 10,920
----------- -----------
Total liabilities 185,295 13,621
STOCKHOLDERS' EQUITY
Common Stock, par value $0.001: 50,000,000 shares
authorized; 15,990,863 shares issued and
outstanding for 1999 and 14,791,355 shares issued 15,991 14,791
and outstanding for 1998
Additional Paid-In Capital 2,948,093 2,199,293
Accumulated Deficit (2,018,366) (2,023,433)
----------- -----------
Total stockholders' equity 945,718 190,651
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,131,013 $ 204,272
=========== ===========
</TABLE>
The accompany notes are an integral part of these financial statements.
<PAGE> 34
WINNERS INTERNET NETWORK, INC.
Statement of Operations
For the Period Ended December 31, 1999
With Comparative Totals for December 31, 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
REVENUE:
Licensing Fees $ 395,000 $ --
Processing Income 422,673 --
License Income 5,000
Consulting Income -- 2,168
------------ ------------
TOTAL REVENUE 822,673 2,168
EXPENSES:
Bank Charges 1,730 490
Commissions 12,500 179,750
Consulting Fees 450,000 71,297
Deprecation Expense 38,713 43,713
Dues & Subscriptions 3,906 2,301
Insurance 15,664 5,398
Internet 16,300 18,333
Interest Expense 108 --
Marketing Expense 25,000 50,000
Meals & Entertainment 25,506 387
Miscellaneous Expense -- 548
Office Expenses 8,559 13,065
Professional & Legal Fees 25,333 13,311
Rent 19,850 32,499
Royalties -- 26,450
Taxes & Licenses 7,250 28,833
Telephone 26,410 11,370
Travel 24,231 110,630
Utilities 8,999 494
Wages 107,547 233,859
------------ ------------
TOTAL EXPENSES 817,606 842,728
------------ ------------
NET PROFIT (DEFICIT) $ 5,067 $ (840,560)
============ ============
NET PROFIT (LOSS) PER COMMON STOCK $ 0.01 $ (0.06)
------------ ------------
WEIGHTED AVERAGE SHARES OUTSTANDING 15,282,927 13,988,450
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 35
WINNERS INTERNET NETWORK, INC.
Statement of Cash Flow
For the Period Ended December 31, 1999
With Comparative Totals for December 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 5,067 $ (840,560)
Depreciation 38,713 43,713
CHANGES IN ASSETS & LIABILITIES:
GGLS Payable -- (250,000)
Accounts Payable 173,368 (941)
Accrued Payables 2,038
Notes Payable - Ford Credit (3,732) 14,520
Accounts Receivable (548,912)
Loan Receivable -- (3,700)
Prepaid Marketing -- (25,000)
Advances Payable 30,000 (30,000)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES (303,458) (1,091,968)
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Capital Expenditure (441,238) 94,335
----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (441,238) 94,335
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Ordinary Shares 748,800 1,026,473
----------- -----------
NET CASH PROVIDED BY FINANCING 748,800 1,026,473
NET CASH IN CASH & CASH EQUIVALENTS 4,104 28,840
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,857 17
----------- -----------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 32,961 $ 28,857
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest 108 --
Income Taxes -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 36
WINNERS INTERNET NETWORK, INC.
STOCKHOLDERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS Additional Accumulated Total
----------------------------- Paid-In Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Davki Agency Ltd., Inc. Merger 8,000,000 $ 8,000 $ 359,287 $ (367,287) $ --
Comstock/Empire International, Inc. Merger 294,944 295 703,373 (703,668) --
Issuance of Stock for Cash & Services 2,539,912 2,540 110,160 -- 112,700
Net Deficit 12/31/97 -- (111,918) (111,918)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 10,834,856 10,835 1,172,820 (1,182,873) 782
=========== =========== =========== =========== ===========
Issuance of 4/28 for Services 500,000 500 49,500 -- 50,000
Issuance of 5/7 for Cash 1,000,000 1,000 299,000 -- 300,000
Issuance of 5/19 for Cash 500,000 500 199,500 -- 200,000
Issuance of 7/20 for Services 500,000 500 24,500 -- 25,000
Issuance of 8/18 for Cash 550,000 550 219,450 -- 220,000
Issuance of 11/1 for Cash 285,000 285 99,465 -- 99,750
Issuance of 12/4 for Services 21,358 21 10,658 -- 10,679
Issuance of 12/15 for Services 500,000 500 24,500 -- 25,000
Issuance of 12/22 for Cash 100,000 100 99,900 -- 100,000
Issuance Correction 12/31(Comstock Merger) 141 -- -- -- --
Net Deficit 12/31/98 (840,560) (840,560)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 14,791,355 14,791 2,199,293 (2,023,433) 190,651
=========== =========== =========== =========== ===========
Issuance of 1/8 for Cash 100,000 100 99,900 -- 100,000
Issuance of 3/25 for Cash 225,000 225 202,275 -- 202,500
Issuance of 6/18 for Services 10,000 10 7,488 -- 7,498
Issuance Correction 6/30 (Comstock Merger) 1,350 2 -- -- 2
Issuance of 7/15 for Cash 400,000 400 219,600 -- 220,000
Issuance of 9/28 for Cash 315,789 316 149,684 150,000
Issuance of 10/11 for Cash 147,369 147 69,853 -- 70,000
Net Profit 12/31/99 -- -- -- 5,067 5,067
----------- ----------- ----------- ----------- -----------
Balance December 31, 1999 15,990,863 $ 15,991 $ 2,948,093 $(2,018,366) $ 945,718
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 37
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