10-Q 1 wol2ndq2003.txt 2ND QUARTER 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 000-32783 WIN OR LOSE ACQUISITION CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 59-3685745 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1268 Bayshore Boulevard Dunedin, Florida 34698 (Address of principal executive offices, including zip code) (727) 734-7346 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Outstanding at August 1, 2003 Common Stock, $0.001 Par Value 2,400,000 Shares TABLE OF CONTENTS

WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of this Statement of Operations. WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) STATEMENTS OF CASH FLOW

The accompanying notes are an integral part of this Statement of Cash Flow WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS 1. Organization and Operations Win or Lose Acquisition Corporation (the "Company") was incorporated in Delaware on December 1, 2000, for the purpose of raising capital through a public offering of securities (the "Proposed Offering), which will be used to effect a merger, acquisition or other business combination transaction (a "Business Combination") with an unidentified privately-held company (a "Target"). Since the Company has not yet identified Target, investors in the Proposed Offering will have virtually no substantive information available for advance consideration of any specific Target. The Company's business strategy may also be referred to as a "blind pool" because neither the management of the Company nor the investors in the Proposed Offering know what the business of the Company will be. The Company's business goal is to increase stockholder value by concluding a Business Combination with a suitable Target where the expected market value of the stock of the combined companies will be greater than the offering price of the Company's shares in the Proposed Offering. The Company is currently in the development stage. All activity of the Company to date relates to its organization and financing activities. The Company has not engaged in any substantive business activities to date and has no specific plans to engage in any particular business in the future. The Company's ability to commence operations is contingent upon completion of the Proposed Offering described in Note 2. 2. Distribution of Securities On June 7, 2002, the Securities and Exchange Commission granted an order of effectiveness with respect to the Company's Form S-1 registration statement under the Securities Act of 1933. The Company's registration statement includes the following securities: o 400,000 shares that the Company's officers will transfer to a total of 800 donees selected by them; o 1,600,000 shares that the Company's officers will offer to sell to advisors to the Company, the owners of a target and other participants in a business combination; and o 12,600,000 shares that the Company will offer to issue in connection with a business combination. The Distribution is subject to and will be conducted in compliance with Rule 419, which was adopted to strengthen the regulation of securities offered by "blank check" companies. Rule 419 defines a blank check company as a development stage company (a) that has no specific business plan or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company and (b) is proposing to issue a "penny stock." For purposes of Rule 419, penny stocks include all shares that have a price of less than $5 per share and are not listed on Nasdaq or a stock exchange. The Company's officers completed the gift share distribution on August 2, 2002. In connection with the Distribution, the Company's officers have distributed a total of 400,000 gift shares and 3,000 founders' shares to 806 individual donees selected by them. Each donee received 500 gift shares and will be subject to the resale restrictions described in the prospectus. The Company has retained Global Securities Transfer, Inc., Denver, Colorado to act as the transfer agent and registrar for its common stock. The Company's officers have delivered a total of 2,400,000 shares to the transfer agent, together with instructions that authorize the transfer agent to hold such shares in un-certificated form pending completion of the Distribution. WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS 2. Distribution of Securities (continued) The Company's officers have delivered instructions to the transfer agent with respect to the 400,000 gift shares and 3,000 founders' shares that were distributed to donees. The transfer agent has issued stock certificates for the 403,000 shares that were distributed to donees and delivered those stock certificates to First Union National Bank, the escrow agent for the Company's Rule 419 escrow. The stock certificates on deposit in the Rule 419 escrow will be held in trust for the sole benefit of the donees until the shares are either released from escrow or returned to the Company's officers in compliance with Rule 419. In connection with the Company's reconfirmation offering, each Donee must approve the proposed transaction in writing and elect to accept delivery of his gift shares. In the absence of an affirmative election by a Donee, the escrow agent will surrender the Donee's stock certificates to the officer who made the original gift. The Company's business plan was based on the assumption that it will require $45,000 in cash to finance its operations during the period between the effective date of the registration statement and the completion of its reconfirmation offering. Since the Company had $37,426 in cash at June 7, 2002, the officers subsequently contributed $7,574 to the Company for the purpose of increasing its' available cash balance to $45,000. As a result of its limited resources, the Company will, in all likelihood, have the ability to affect only a single Business Combination. Accordingly, the prospects for the Company's success will be entirely dependent upon the future performance of a single business. The Company is unlikely to enter into an agreement with a Target that does not have sufficient net tangible assets or operating income to satisfy the minimum listing standards of the Nasdaq stock market. Therefore management expects a business combination to result in a change in control. After a change in control, the owners of the Target will have the right to appoint their own officers and directors, and the Company's current officers will have no ability to influence future business decisions. The Company may not qualify for a Nasdaq listing upon completion of a Business Combination. In such an event, the Company's common stock will be traded on the over-the-counter market. It is anticipated that the common stock will qualify for quotation on the OTC Bulletin Board; a NASD sponsored and operated inter-dealer automated quotation system for equity securities that are not included in Nasdaq. It is also anticipated that the company's common stock will qualify for inclusion in the National Quotation Bureau "OTC Pink Sheets." There can be no assurance that the liquidity and prices of the Company's common stock in the secondary market will not be adversely affected. There is no assurance that the Company will be able to affect a Business Combination. If the Company is unable to close a transaction before December 7, 2003, Rule 419 will require that all gift share transactions be unwound and all certificates for gift shares be returned to the Company's officers. In that event, the Donees will receive nothing. At the date of this report, the Company has 810 stockholders, including its four officers and the 806 donees. 3. Summary of Significant Accounting Policies Interim Financial Statements The financial statements as of and for the three-and six-month periods ended June 30, 2003 and 2002 are unaudited, but in the opinion of management include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company's financial position and results of operations. WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fiscal Year The Company's fiscal year begins on January 1 and ends on December 31 of each year. Net Income (Loss) Per Common Share The Company computes net income (loss) per common share in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB No. 98"). Under the provisions of SFAS No. 128 and SAB No. 98, basic net income (loss) per common share ("Basic EPS") is computed by dividing net income (loss) by the weighted average number of common shares outstanding. The Company's net income (loss) per common share has been calculated on the basis of 2,400,000 shares issued and outstanding, which gives retroactive effect to a three share for five stock dividend implemented on December 28, 2001. There were no warrants outstanding at either June 30, 2003 or 2002. Income Taxes Income taxes are accounted for in accordance with SFAS No. 109, "Accounting for Income Taxes." Under this method, deferred income taxes are determined based on differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, and are measured based on enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. 4. Capital Stock The Company's Certificate of Incorporation authorizes the issuance of 25,000,000 shares of Common Stock. The Company's Board of Director's has the power to issue any or all of the authorized but unissued Common Stock without stockholder approval. The Company currently has no commitments to issue any shares of Common Stock other than as described in the Proposed Offering; however, the Company will, in all likelihood, issue a substantial number of additional shares in connection with a Business Combination. To the extent that additional shares of Common Stock are issued, dilution to the interests of the Company's stockholders participating in the Proposed Offering will occur. The Board of Directors of the Company is empowered, without stockholder approval, to issue up to 5,000,000 shares of "blank check" preferred stock (the "Preferred Stock") with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the Company's Common Stock. There are no shares of preferred stock issued or outstanding. WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS 4. Capital Stock (continued) In December 2000, the Company's founders purchased 1,500,000 shares of common stock for cash at a price of $0.03 per share. On December 28, 2001, the board of directors implemented a three share for five stock dividend that increased the number of issued and outstanding shares from 1,500,000 to 2,400,000 shares. 5. Organization and Start-up Costs In accordance with FASB Statement of Position 98-5, all organization and start-up costs were charged to expense on a current basis during the period ended December 31, 2000. 6. Deferred Offering Costs Deferred offering costs will be carried as an asset until the Company completes a business combination or liquidates. Upon the occurrence of either event, deferred offering costs will be offset against additional paid-in capital. The cumulative deferred offering costs incurred through June 30, 2003 were $176,489, including: Expense Class Amount Filing fees $ 2,502 Legal fees 119,328 Document preparation and printing 17,667 Travel, lodging and publicity 19,734 Transfer agent fees 2,758 Website development and support 14,500 -------------- Total deferred offering costs $ 176,489 ========= Of this total, the Company paid $31,037 and the founders of the Company paid or agreed to pay $145,452 from their personal funds. 7. Non-cash Capital Contributions The following table presents summary information on the total organization, operating and offering costs incurred as of December 31, 2002 and allocation of such costs between the Company and its founders:

WIN OR LOSE ACQUISITION CORPORATION (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS 8. Unpaid Organization and Offering Costs The following table summarizes differences between the organization, operating and offering costs that the Company's founders had agreed to pay as of June 30, 2003 and the amounts actually paid prior to that date. Expense Class Amount Organization costs $ 6,715 Operating costs through June 30, 2003 4,250 Offering costs through June 30, 2003 145,452 Less: payments made through June 30, 2003 134,716 ------- Unpaid balance at June 30, 2003 $ 21,701 ======== The Company is not contingently liable for the unpaid balance of the offering costs that its founders have agreed to pay. 9. Incentive Stock Plan The Company's 2000 Incentive Stock Plan was adopted and approved in connection with the organization of the Company. The common stock reserved for issuance under the plan will be the lesser of 750,000 shares, or 10% of the total number of shares outstanding after the closing of a Business Combination. The class of persons eligible to participate in the plan includes all full-time and part-time employees of the Company, provided that the eligible participants do not include employees who are eligible to receive awards under the terms of any employment contract or specialty plan adopted by us in the future. The plan permits the grant of a variety of incentive awards including (i) non-qualified stock options, (ii) incentive stock options, (iii) shares of restricted stock, (iv) shares of phantom stock, and (v) stock bonuses. In addition, the plan allows us to grant cash bonuses that will be payable when an employee is required to recognize income for federal income tax purposes because of the vesting of shares of restricted stock or the grant of a stock bonus. The exercise price of all Incentive Stock Options granted under the Plan must be at least equal to the fair market value of such shares on the date of grant or, in the case of Incentive Stock Options granted to the holder of 10% or more of the Company's Common Stock, at least 110% of the fair market value of such shares on the date of grant. The exercise period for which incentive awards may be granted is ten years from the date of grant (five years in the case of Incentive Stock Options granted to an individual owning more than 10% of the Company's Common Stock). The aggregate fair market value (determined at the date of the grant) of such shares with respect to which Incentive Stock Options are exercisable for the first time by the holder of the option during any calendar year shall not exceed $100,000. ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND PLAN OF OPERATIONS Results of Operations for the Three Months Ended March 30, 2003 During the six months ended June 30, 2003, we had no revenue and paid $8,863 in operating expenses, including o $5,000 in cash overhead allowances to our president; o $1,000 in audit fees; and o $2,863 in transfer agent fees and other out-of-pocket costs. We have not yet identified a potential target that satisfies our acquisition standards. We have, however, engaged in preliminary discussions with a number of companies that may be able to satisfy our acquisition standards in the foreseeable future. We have not entered into a letter of intent or standstill agreement with any potential target. However we have advised a number of potential targets that we would be willing to negotiate a transaction with them if they are able to attain certain quantifiable business goals in a timely manner. We are continuing with our efforts to find a suitable target and negotiate a business combination agreement. While our discussions to date indicate that a number of desirable potential targets would be interested in pursuing a business combination with our company, all of these companies need to achieve other business goals before a business combination with our company is a feasible alternative. There can be no assurance that we will be successful in our efforts to locate a potential target, or that we will be able to negotiate a business combination with any target that is ultimately selected by our officers. Even if we negotiate and close a business combination, there is no assurance that a trading market for the stock of the combined companies will ever develop. Financial Condition and Plan of Operations At June 30, 2003, we had $1,085 in cash and a working capital deficit of $3,767. While our entire working capital deficit is attributable to amounts owed to affiliates, our available financial resources are not sufficient to pay our anticipated operating expenses. Simply stated, we are running out of money and time. The SEC's integration and general solicitation doctrines will preclude private placement transactions until we close a business combination. Therefore, we cannot obtain funds by selling additional securities. Moreover,. Rule 419 will require us to unwind the gift share distribution and cancel the advisors' stock purchase rights if we fail to complete a business combination before December 7, 2003. After evaluating the time required to prepare, file and obtain an order of effectiveness for a post-effective amendment and conduct a reconfirmation offering, the board of directors has decided to liquidate our Company if we are unable to identify a target and file a post-effective amendment before the end of September. We have not yet identified a target and there is no assurance that we will be able to do so before the deadline selected by the board of directors. If our company requires additional cash resources during the period between the date of this report and the end of September, our founders will advance the necessary funds. Such advances will be in the form of stockholder loans that bear interest at reasonable commercial rates. We intend to request a reasonable due diligence fee before we begin a detailed investigation into the affairs of a potential target. There can be no assurance that any potential target will be willing to pay a due diligence fee, or that any due diligence fees we receive will be sufficient to offset the out-of-pocket costs incurred. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Substantially all of our financial assets consist of bank deposits and we own no portfolio investments that would expose our Company to the type of risks described in Item 304 of Regulation S-K. ITEM 4 -- CONTROLS AND PROCEDURES As of August 1, 2003, an evaluation was completed under the supervision and with the participation of the Company's management, including the Company's President and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management including the President and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of August 1, 2003. There have been no significant changes to the Company's internal controls or other factors that could significantly affect internal controls subsequent to August 1, 2003. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS NONE ITEM 3. DEFAULTS ON SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5. OTHER INFORMATION NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) 32.1 Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code 32.2 Statement of Chief Financial Officer Pursuant to Section1350 of Title 18 of the United States Code (b) REPORTS ON FORM 8-K NONE SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WIN OR LOSE ACQUISITION CORPORATION /s/ Sally A Fonner Sally A. Fonner, President Dated: August 4, 2003 /s/ John L. Petersen ----------------------------------------------------- John L. Petersen, Chief Accounting Officer Dated: August 4, 2003

WIN OR LOSE ACQUISITION CORP 10-Q