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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 September 30, 2004

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 November 9, 2004
Common Stock, $0.001 Par Value
  
2,400,000 Shares

 
Form 10-Q — Page-1
     
 

TABLE OF CONTENTS


PART I
FINANCIAL INFORMATION
  
PAGE
       
ITEM 1
Financial Statements
    
       
 
Balance Sheet as of September 30, 2004 and December 31, 2003
  
3
       
 
Statement of Operations for the three- and nine-month periods ended September 30, 2004 and 2003
  
4
       
 
Statement of Cash Flow for the nine-month periods ended September 30, 2004 and 2003
  
5
       
 
Notes to Unaudited Interim Financial Statements
  
6
       
ITEM 2
Management’s Discussion and Analysis of Results of Operations, Financial Condition and Plan of Operations
  
9
       
       
ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
  
10
       
ITEM 4
Controls and Procedures
  
10
       
PART II
OTHER INFORMATION
  
10
       
ITEM 6
Exhibits and Reports on Form 8-K
  
11
       
 
SIGNATURES
  
11

 
Form 10-Q — Page-2
     
 

WIN OR LOSE ACQUISITION CORPORATION
BALANCE SHEETS

ASSETS
 
   
September 30,
  
December 31,
  
   
2004
  
2003
  
   
(unaudited)
  
(audited)
  
Current Assets:
              
Cash
  
$
15,541
 
$
1,085
 
Deposits and prepaid expense
  
$
4,375
 
$
-
 
Total current assets
    
19,916
   
1,085
 
               
Deferred Offering Costs
              
Filing fees
    
462
   
10
 
Miscellaneous offering costs
    
11,096
   
-
 
Legal fees
    
1,625
   
-
 
Total deferred offering costs
    
13,184
   
10
 
               
Total Assets
  
$
33,100
 
$
1,095
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
              
Accounts payable
  
$
250
 
$
2,250
 
Due to affiliates
  
$
-
 
$
-
 
Total current liabilities
  
$
250
 
$
2,250
 
               
Long-term Debt
              
Total long-term debt
  
$
-
 
$
-
 
               
Total Liabilities
  
$
250
 
$
2,250
 
               
Stockholders’ Equity
              
Common stock, $0.001 par value, 25,000,000 shares authorized, 2,400,000 shares outstanding at September 30, 2003 and 2002
  
$
2,400
 
$
2,400
 
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, no shares outstanding
    
-
   
-
 
Additional paid in capital
  
$
253,444
 
$
213,443
 
Deficit accumulated during development stage
  
$
(222,994
)
$
(216,998
)
               
Total Stockholder’s Equity
  
$
32,850
 
$
(1,155
)
               
Total Liabilities and Stockholders’ Equity
  
$
33,100
 
$
1,095
 



The accompanying notes are an integral part of these financial statements.

 
Form 10-Q — Page-3
     
 

WIN OR LOSE ACQUISITION CORPORATION
STATEMENT OF OPERATIONS

   
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
   
2004
  
2003
  
2004
  
2003
  
   
(Unaudited)
  
(Unaudited)
  
(Unaudited)
  
(Unaudited)
  
Revenue
  
$
-
 
$
-
 
$
-
 
$
-
 
                           
Expenses
                          
General and administrative
  
$
222
 
$
3,750
 
$
5,995
 
$
12,236
 
Total Expenses
  
$
222
 
$
3,750
 
$
5,995
 
$
12,236
 
                           
Net(Loss)
  
$
(222
)
$
(3,750
)
$
(5,995
)
$
(12,236
)
                           
Net (Loss) Per Common Share
  
$
-
 
$
-
 
$
-
 
$
-
 
                           
Number of common shares issued
                          
and outstanding during period
    
2,400,000
    
2,400,000
    
2,400,000
    
2,400,000
  
                           
Number of common shares used
                         
to compute net loss per share
    
2,400,000
    
2,400,000
    
2,400,000
    
2,400,000
  



The accompanying notes are an integral part of these financial statements.

 
Form 10-Q — Page-4
     
 

WIN OR LOSE ACQUISITION CORPORATION
STATEMENT OF CASH FLOW

   
Nine-Months Ended September 30,
  
   
2004
  
2003
  
   
(Unaudited)
  
(Unaudited)
  
Cash flows from operating activities
              
Net income (loss)
  
$
(5,995
)
$
(12,236
)
Less expenses paid by affiliates
  
$
-
 
$
-
 
Net cash operating loss
  
$
(5,995
)
$
(12,236
)
               
Change in operating assets and liabilities:
              
(Increase) decrease in deposits and prepaid expenses
  
$
(4,375
)
      
Increase (decrease) in current liabilities
  
$
(2,000
)
$
2,015
 
Net cash provided by (used in)
              
operating activities
  
$
(12,371
)
$
(10,221
)
               
Cash flows from financing activities
              
Proceeds from issuance of common stock
              
Additional capital contribution
  
$
40,000
       
Decrease (increase) in deferred offering costs
              
incurred by the company
  
$
(13,174
)
$
13,164
 
Net cash provided by (used in)
              
financing activities
  
$
26,826
 
$
13,164
 
               
Net increase (decrease) in cash
  
$
14,456
 
$
2,942
 
               
Cash balance, beginning of period
  
$
1,085
 
$
-
 
               
Cash balance, end of period
  
$
15,541
 
$
2,942
 



The accompanying notes are an integral part of these financial statements.

 
Form 10-Q — Page-5
     
 

WIN OR LOSE ACQUISITION CORPORATION
(A DEVELOPMENT STAGE ENTITY)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2004


1.
Basis of Presentation

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our December 31, 2003 Annual Report on Form 10-K and should be read in conjunction with the Notes to financial statements which appear in that report.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates u nder different assumptions or conditions.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three- and nine-month periods ended September 30, 2004 and 2003. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform to annual reporting requirements.

2.
Stock Options

As of January 1, 2003, the Company adopted the fair value method of accounting for employee stock options contained in Statement of Financial Standards No.123 ("SFAS No. 123") "Accounting for Stock-Based Compensation," which is considered the preferable method of accounting for stock-based employee compensation. Prior to the change, the Company accounted for employee stock options using the intrinsic value method of APB 25. During the transition period, the Company will be utilizing the prospective method under SFAS No.148 "Accounting for Stock-Based Compensation -Transition and Disclosures." All employee stock options granted subsequent to January 1, 2003 will be expensed over the stock option vesting period based on fair value, determined using the Black-Scholes option-pricing method, at the date the options were granted.

There was no impact on the financial statements for the three- and nine-month periods ended September 30, 2004 and 2003, since no employee stock options were granted during those periods. 

3.
Earnings/Loss Per Share

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assumes that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-di lutive.

 
No common equivalent shares were required to be added back to the basic weighted average shares outstanding in order to compute the diluted weighted average shares outstanding
 


 
Form 10-Q — Page-6
     
 

WIN OR LOSE ACQUISITION CORPORATION
(A DEVELOPMENT STAGE ENTITY)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2004

4.
Stockholders’ Equity

The Company’s Certificate of Incorporation authorizes the issuance of 25,000,000 shares of common stock. The Company’s Board of Directors 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, however, it may issue a substantial number of additional shares in connection with a Business Combination.

The Board of Directors is also empowered, without stockholder approval, to issue up to 5,000,000 shares of “blank check” 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.

Rule 419 Distribution

In February 2004, our officers elected to recapitalize the Company by contributing an additional $40,000 and filing a second Form S-1 registration statement under the Securities Act of 1933. This registration statement was declared effective on March 8, 2004 and included:

·   403,000 shares that the Company’s officers intend to transfer to the 806 donees who received shares in connection with the first Rule 419 distribution;

·   1,597,000 shares that the Company’s officers intend to offer to advisors to the Company, the owners of a target and other participants in a business combination; and

·   12,600,000 shares that the Company intends to offer in connection with a business combination.

We will not be able to obtain additional financing until we complete a Business Combination. If we spend our available cash before we close a Business Combination, we may be forced to unwind the second Rule 419 distribution and deregister the founders’ shares and acquisition shares.

Deferred Offering Costs

Costs incurred in connection with the Rule 419 Distribution are capitalized and will be recorded as a reduction to additional paid-in capital upon the completion of the offering. As of September 30, 2004, we capitalized deferred offering costs in the amount of $13,184. These amounts are included in deferred offering costs on the balance sheet. If the offering is terminated, all amounts will be charged to operations in the period of the termination.

5.
New Accounting Standards

In March 2004 the Emerging Issues Task Force ("EITF") reached a final consensus on EITF Issue No. 03-06, "Participating Securities and the Two-Class Method under FAS 128, Earnings Per Share". Issue No. 03-06 addresses a number of questions regarding the computation of earnings per share ("EPS") by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of the company when, and if, it declares dividends on its common stock. The issue also provides further guidance in applying the two-class method of calculating EPS. It clarifies what constitutes a participating security and how to apply the two-class method of computing EPS once it is determined that a security is participating, including how to allocate undistributed earnings to su ch a security. EITF 03-06 is effective for the fiscal quarter ending September 30, 2004. We do not anticipate that adopting EITF 03-06 will have any impact on our consolidated financial statements.



 
Form 10-Q — Page-7
     
 

WIN OR LOSE ACQUISITION CORPORATION
(A DEVELOPMENT STAGE ENTITY)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2004

5.
New Accounting Standards (continued)

Variable Interest Entities: In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB 51” (“FIN 46”). The primary objectives of FIN 46 were to provide guidance on the identification of entities for which control is achieved through means other than through voting rights and how to determine when and which business enterprise should consolidate the variable interest entity (“VIE”). We adopted FIN 46 on July 1, 2003. The implementation of FIN 46 did not have an impact on the earnings or financial position of the Company.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No.146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." The principal difference between SFASNo.146 and EITF 94-3 relates to the recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability be recognized for those costs only when the liability is incurred. A commitment to an exit or disposal plan no longer will be a sufficient basis for recording a liability for those activities. The provisions of SFAS No. 146 are effective for exit or disposal activities initiated after December 31, 2002. Accordingly, the Company adopted the provisions of SFAS No. 146 effective January 1, 2003. The implementation of SFAS No. 146 did not have a material impact on the earnings or financial position of the Company.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires the guarantor to recognize a liability for the non-contingent component of a guarantee; that is, the obligation to stand ready to perform in the event that specified triggering events or conditions occur. The initial measurement of this liability is the fair value of the guarantee at its inception. The recognition of the liability is required even if it is not probable that payments will be required under the guarantee or if the guarantee was issued with a premium payment or as part of a transaction with multiple elements. FIN 45 also requires additional disclosures related to guarantees. The recognition meas urement provisions of FIN45 are effective for all guarantees entered into or modified after December 31, 2002. FIN 45 also requires additional disclosures related to guarantees in interim and annual financial statements.

Accordingly, we adopted the provisions of FIN 45, effective January 1,2003. The implementation of FIN 45 did not have an impact on our earnings or financial position.

 
Form 10-Q — Page-8
     
 


ITEM  2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS

Organization and prior distribution

We were incorporated in Delaware on December 1, 2000. Thereafter, we registered an initial public offering of common stock under the Securities Act. Our prior registration statement was declared effective in June 2002 and we completed our first Rule 419 distribution in August 2002. Market conditions were very poor in late 2002 and early 2003. Moreover, our president became ill in early 2003 and she subsequently learned that her condition would require surgery and a lengthy recovery. The combination of poor market timing and unanticipated medical problems negatively impacted our ability to implement our business plan. Since our first distribution was subject to Rule 419 and we were unable to close an acquisition within 18 months, we unwound our first Rule 419 distribution in November 2003 and removed all our sh ares from registration.

Between December 2000 and December 2003, our officers spent $218,999 to organize our company, register our prior distribution and finance our operations. Our expenses included $7,215 in organization costs, $176,479 in offering costs and $35,305 in operating costs. When our first Rule 419 distribution was unsuccessful, our officers considered the available options and ultimately decided to recapitalize our company and file a second registration statement for a substantially identical distribution of securities. We believe market conditions and our president’s health have improved to a point where we have a reasonable probability of success. However we cannot give you any assurance that our second Rule 419 distribution will have a better outcome than our prior distribution.

Financial condition

During the nine-months ended September 30, 2004, our officers contributed $40,000 in additional paid in capital to our Company. We will not be able to obtain additional financing until we complete a Business Combination. If we spend our available cash before we close a Business Combination, we may be forced to unwind the second Rule 419 distribution and deregister the founders’ shares and acquisition shares.

We had $15,541 in cash and $250 in current liabilities at September 30, 2004.

Results of Operations

Three Months Ended September 30, 2004 and 2004

During the three months ended September 30, 2004, we had no revenue and paid 222 in expenses. During the comparable period of the preceding year, we had no revenue and paid $5,995 expenses.

In connection with our first Rule 419 distribution, our president received an office overhead allowance of $1,000 per month. We will not pay any compensation to our president in connection with our second Rule 419 distribution. Accordingly we believe our future operating expenses will be lower than our historical operating expenses.

Nine Months Ended September 30, 2004 and 2004

During the nine months ended September 30, 2004, we had no revenue and paid $5,996 in expenses. During the comparable period of the preceding year, we had no revenue and paid $12,236 in expenses.

Financial Condition and Plan of Operations

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.


 
Form 10-Q — Page-9
     
 

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.

We will use our available cash resources to pay the costs of operating our company, investigating business opportunities, negotiating a business combination and preparing the required post-effective amendment to our registration statement. We will not pay any compensation to our officers, but we will reimburse any out-of-pocket expenses they incur on our behalf. 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 fees we receive will be sufficient to offset the out-of-pocket costs incurred.

Rule 419 will require us to unwind the gift share distribution and deregister the gift shares, founders’ shares and acquisition shares if we are unable to negotiate a business combination, complete our reconfirmation offering and close the transaction prior to September 8, 2005 (18 months from the date of our prospectus). We believe our available cash resources will be adequate for our anticipated needs. Nevertheless, we may run out of money if a particular investigation requires significant technical expertise, or if we spend substantial amounts of money investigating a potential target and then determine that the potential target is not suitable.

The SEC’s integration and general solicitation doctrines will preclude private placement transactions until we complete our reconfirmation offering and close the associated business combination. Therefore, we will be unable to obtain funds by selling additional securities. We have the corporate power to borrow money, but credit is not likely to be available. Our officers have no duty to loan money to our company. If we spend our available cash and are unable to obtain additional financing, we will be forced to abandon our business and liquidate.

 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.

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

Disclosure controls and procedures are designed to ensure that the information we are required to disclose in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to management, including our chief executive officer and our chief financial officer, to allow timely decisions regarding required disclosure.

After the end of the fiscal quarter ended September 30, 2004, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. The evaluation was conducted under the supervision and with the participation of our chief executive officer and our chief financial officer. Based on that evaluation, our company’s management including our chief executive officer and our chief financial officer concluded that the design of our system of disclosure controls and procedures was effective to ensure that material information relating to our company is made known to them and that our system of disclosure controls and procedures is operating to provide a reasonable level of assurance that information required to be disclosed in our reports is recorded, processed, summar ized and reported in a timely manner.

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls between the date we completed our evaluation and the date of filing of this Report on Form 10-Q.


 
Form 10-Q — Page-10
     
 

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

 
Form 10-Q — Page-11
     
 

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: November 9, 2004
  
   
/s/ John L. Petersen 
  
John L. Petersen, Chief Accounting Officer
Dated: November 9, 2004
  

 
Form 10-Q — Page-12