UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2001
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-29015
SAF-T-HAMMER CORPORATION
(Name of Small Business Issuer in Its Charter)
NEVADA 87-0543688
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
14500 N. NORTHSIGHT, STE. 221
SCOTTSDALE, ARIZONA 85260
(Address of Principal Executive Offices) (Zip Code)
(480) 949-9700
(Issuer's Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(None)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $0.001
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 class of
common stock as of the latest practicable date:
Title of each class of Common Stock Outstanding as May 11, 2001
----------------------------------------- ---------------------------------
Common Stock, $0.001 par value 17,006,163
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheets at March 31, 2001 (Unaudited).
Condensed Statements of Operations (Unaudited) for the three
months ended March 31, 2001 and 2000 and for the period from
inception to March 31, 2001.
Statement of Stockholders' Equity/(Deficit) for the period since inception
To March 31, 2001.
Condensed Statements of Cash Flows (Unaudited) for the three months
ended March 31, 2001 and 2000 and for the period from inception to
March 31, 2001.
Notes to Interim Financial Statements (Unaudited) at March 31, 2001.
Item 2. Plan of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SAF-T-HAMMER CORPORATION
(FORMERLY DE ORO MINES, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - MARCH 31, 2001
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 181,430
Accounts receivable 18,015
Inventory 8,420
------------
Total current assets 207,865
------------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation 31,232
OTHER ASSETS:
Goodwill, net 393,748
Deposits 5,372
------------
Total other assets 399,120
------------
$ 638,217
============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES -
accrued expenses $ 131,431
Loans Payable, unrelated parties, due July 1, 2002 and unsecured 500,000
10% NOTES PAYABLE, related parties, due September 30, 2002 and unsecured 597,425
STOCKHOLDERS' DEFICIENCY:
Common stock; $0.001 par value, 100,000,000 shares
authorized, 16,850,834 shares issued and outstanding 14,720
Additional paid-in capital 3,807,664
Accumulated deficit (4,413,024)
------------
Total stockholders' deficiency (590,640)
------------
$ 638,217
============
See accompanying notes to unaudited financial statements.
SAF-T-HAMMER CORPORATION
(FORMERLY DE ORO MINES, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the period
Three months ended since inception to
March 31, March 31, March 31,
2001 2000 2001
-------------------- ----------- --------------------
REVENUES $ 21,151 $ - $ 34,518
COST OF REVENUES 8,418 - 13,765
-------------------- ----------- --------------------
GROSS PROFIT 12,733 - 20,753
GENERAL AND ADMINISTRATIVE 445,728 547,095 4,433,776
-------------------- ----------- --------------------
NET LOSS $ (432,996) $ (547,095) $ (4,413,024)
==================== =========== ====================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
basic and diluted 15,931,330 8,871,501
==================== ===========
NET LOSS PER SHARE -
basic and diluted $ (0.03) $ (0.06)
==================== ===========
See accompanying notes to unaudited financial statements.
SAF-T-HAMMER CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Additional Total
Common stock paid-in Accumulated stockholders'
Shares Amount capital deficit deficit
------- ------- --------- --------- ---------
Balance at January 1, 1998 (post
4:1 stock split) 2,131,152 $ - $ - $ - $ -
Capital contribution into
Saf-T-Hammer, Inc. (pre-reverse
merger) by shareholders - - 104,546 - 104,546
New common stock shares issued
per reverse merger agreement
on October 20, 1998 (post
4:1 stock split) 5,325,000 5,325 (5,325) - -
Net loss for the year ended
December 31, 1998 (194,918) (194,918)
--------- ------- --------- ----------- ---------
Balance at December 31, 1998 7,456,152 5,325 99,221 (194,918) (90,372)
Issuance of common stock during
private placement, net 985,000 985 843,140 844,125
Issuance of common stock for
services rendered 137,458 137 137,321 137,458
Net loss for the year ended
December 31, 1999 (1,243,040) (1,243,040)
--------- ------- --------- ----------- ---------
Balance at December 31, 1999 8,578,610 6,447 1,079,682 (1,437,958) (351,829)
Shares issued related to acquisition
of Lost Coast Ventures, Inc. 450,000 450 337,050 337,500
Issuance of common stock during
private placement, net 773,037 773 666,752 667,525
Convertibility feature of debentures
issued 118,280 118,280
Conversion debt 2,651,658 2,652 838,348 841,000
Issuance of common stock during
private placement, net 1,600,000 1,600 198,400 200,000
Shares issued in exchange for
services 998,500 999 411,951 412,950
Net loss for the year ended
December 31, 2000 (2,542,070) (2,542,070)
--------- ------- --------- ----------- ---------
Balance at December 31, 2000 15,051,805 $ 12,921 $ 3,650,463 $(3,980,028) $ (316,644)
Conversion debt 1,799,029 1,799 157,201 159,000
Net loss for the three months
ended March 31, 2001 (Unaudited) (432,996) (432,996)
--------- ------- --------- ----------- ---------
Balance at March 31, 2001 (Unaudited) 16,850,834 $ 14,720 $ 3,807,664 $(4,413,024) $ (590,640)
========= ======= ========= =========== =========
See accompanying notes to unaudited financial statements.
SAF-T-HAMMER CORPORATION
(FORMERLY DE ORO MINES, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
For the period
Three months ended since inception to
March 31, March 31, March 31,
2001 2000 2001
-------------------- ----------- --------------------
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $ (432,996) $ (547,095) $ (4,413,024)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Depreciation 13,938 1,935 67,764
Capital contribution - product development - - 74,046
Stock compensation for services rendered - 155,250 550,408
Interest 18,300 14,352 301,278
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS:
Accounts receivables (18,015) (5,372) (18,015)
Inventory (8,420) - (8,420)
Prepaid expense 15,184 - -
Deposits - (5,372) (5,372)
INCREASE (DECREASE) IN LIABILITIES -
accrued expenses 10,317 113,590 131,433
-------------------- ----------- --------------------
Total adjustments 31,304 274,383 1,093,122
-------------------- ----------- --------------------
Net cash used for operating activities (401,692) (272,712) (3,319,902)
-------------------- ----------- --------------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments to acquire Lost Coast Ventures, Inc. - (100,000) (100,000)
Payments to acquire property and equipment - - (24,744)
-------------------- ----------- --------------------
Net cash used for investing activities - (100,000) (124,744)
-------------------- ----------- --------------------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from notes payable, related parties 80,000 234,075 902,925
Payments on notes payable, related parties (80,000) - (305,500)
Proceeds from issuance of convertible debentures - 950,000
Proceeds from loans payable 500,000 500,000
Payments on debt issue costs - - (133,000)
Proceeds from issuance of common stock - 545,875 1,711,650
-------------------- ----------- --------------------
Net cash provided by financing activities 500,000 779,950 3,626,075
-------------------- ----------- --------------------
NET INCREASE/(DECREASE) IN CASH 98,309 407,238 181,430
CASH, beginning of year/period 83,121 1,000 -
-------------------- ----------- --------------------
CASH, end of period $ 181,430 $ 408,238 $ 181,430
==================== =========== ====================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock during reverse merger $ - $ - $ 74,046
==================== =========== ====================
Contribution of property and equipment $ - $ - $ 30,500
==================== =========== ====================
Issuance of stock for services $ - $ 155,250 $ 550,408
==================== =========== ====================
Acquisition of Lost Coast Ventures, Inc. $ - $ 337,500 $ -
==================== =========== ====================
Conversion of debt $ 159,000 $ - $ 159,000
==================== =========== ====================
Convertibility feature related to debentures issued $ - $ - $ 118,280
==================== =========== ====================
See accompanying notes to unaudited financial statements.
SAF-T-HAMMER CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(1) ORGANIZATION AND BUSINESS ACTIVITY:
Prior to incorporation as Saf-T-Hammer Corporation in 1998, the Company existed
as De Oro Mines, Inc. De Oro Mines, Inc. was incorporated on June 17, 1991 in
the State of Nevada. Its original Articles of Incorporation provided for
1,000,000 shares of common stock with a par value of $0.01 per share.
On August 15, 1996, the shareholders of the Company authorized the
recapitalization of the Company and the amendment of its Articles of
Incorporation to allow the corporation to issue up to 100,000,000 shares of a
single class of Common Stock with a par value of $0.001. The amended Articles
were duly adopted as stated and were filed on October 16, 1996 with the State of
Nevada. From its inception, De Oro Mines, Inc. was in the development stage and
was primarily engaged in the business of developing mining properties. During
1992, De Oro lost its remaining assets and settled its liabilities, and from
that date forward remained dormant.
Effective October 20, 1998, the Company acquired the assets of Saf-T-Hammer,
Inc. and changed its name from De Oro Mines, Inc. to Saf-T-Hammer Corporation.
The acquisition was accounted for under the purchase method. Prior to this
agreement becoming effective, De Oro Mines, Inc. had a total of 532,788 shares
of common stock issued and outstanding. Pursuant to the Asset Acquisition
Agreement, the Company issued 1,331,250 shares of common stock to Saf-T-Hammer,
Inc., which then resulted in a total of 1,864,038 shares of common stock being
issued and outstanding.
Pursuant to Accounting Principles Board Opinion No. 16, "Accounting for Business
Combinations," Saf-T-Hammer, Inc. was the acquirer and De Oro Mines, Inc., the
acquiree, and accordingly, this transaction was accounted for as a reverse
merger since effective control of the Company was with the officer/shareholders
of Saf-T-Hammer, Inc. The shareholders also approved a four share for one share
stock split. The majority of the shareholders of both corporations approved this
asset purchase agreement and related bill of sale.
The primary asset of Saf-T-Hammer Corporation is a childproof gun safety device
that the Company plans to manufacture and sell throughout the world. Currently,
the Company has begun production of its gun safety device and has a patent
pending for rights to the childproof gun safety device.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The accompanying unaudited interim consolidated financial statements of
Saf-T-Hammer Corporation, for the three month periods ended March 31, 2001 and
2000, respectively, reflect all adjustments (consisting of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the results for the interim periods presented. These financial
statements have been prepared in accordance with the instructions to Form 10-QSB
and Article 10 of Regulation SB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These financial statements should be read in
conjunction with the Company's annual audited financial statements for the year
ended December 31, 2000. Operating results for the three month period ended
March 31, 2001 are not necessarily indicative of the results that may be
expected for the full year ending December 31, 2001.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain 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.
PRINCIPLES OF CONSOLIDATION:
The accompanying financial statements include the accounts of Saf-T-Hammer
Corporation and Lost Coast Ventures, Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation.
FAIR VALUE:
Unless otherwise indicated, the fair values of all reported assets and
liabilities, which represent financial instruments, none of which are held for
trading purposes, approximate the carrying values of such amounts.
NEW ACCOUNTING PRONOUNCEMENTS:
In December 1999, the Securities and Exchange Commission (the Commission) issued
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements,
which is to be applied beginning with the fourth fiscal quarter of fiscal years
beginning after December 15, 1999, to provide guidance related to recognizing
revenue in circumstances in which no specific authoritative literature exists.
The adoption by the Company in the application of the Staff Accounting Bulletin
to the Company's financial statements did not have a material change in the
amount of revenues the Company ultimately realized.
In March 2000, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 44 (Interpretation 44), "Accounting for Certain Transactions
Involving Stock Compensation". Interpretation 44 provides criteria for the
recognition of compensation expense in certain stock-based compensation
arrangements that are accounted for under APB Opinion No. 25, Accounting for
Stock-Based Compensation. Interpretation 44 is effective July 1, 2000, with
certain provisions that are effective retroactively to December 15, 1998 and
January 12, 2000. Interpretation 44 did not have any material impact on the
Company's financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133,
as amended by SFAS No. 137, is effective for fiscal years beginning after June
15, 2000. SFAS No. 133 requires the Company to recognize all derivatives as
either assets or liabilities and measure those instruments at fair value. It
further provides criteria for derivative instruments to be designated as fair
value, cash flow and foreign currency hedges and establishes respective
accounting standards for reporting changes in the fair value of the derivative
instruments. Upon adoption, the Company will be required to adjust hedging
instruments to fair value in the balance sheet and recognize the offsetting
gains or losses as adjustments to be reported in net income or other
comprehensive income, as appropriate. The Company is evaluating its expected
adoption date and currently expects to comply with the requirements of SFAS 133
in fiscal year 2001. The Company does not expect the adoption will be material
to the Company's financial position or results of operations since the Company
does not believe it participates in such activities.
In January 2001, the Financial Accounting Standards Board Emerging Issues Task
Force issued EITF 00-27 effective for convertible debt instruments issued after
November 16, 2000. This pronouncement requires the use of the intrinsic value
method for recognition of the detachable and imbedded equity features included
with indebtedness, and requires amortization of the amount associated with the
convertibility feature over the life of the debt instrument rather than the
period for which the instrument first becomes convertible. Inasmuch as all debt
instruments that were entered into prior to November 16, 2000 and all of the
debt discount relating to the beneficial conversion feature was previously
recognized as expense in accordance with EITF 98-5, there is no impact on these
financial statements. This EITF 00-27, could impact future financial
statements, should the Company enter into such agreements.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF:
The Company uses the provision of FASB No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amounts of the assets exceed the fair values of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of this statement did not have
a material impact on the Company's financial position, results of operations or
liquidity.
SUBSEQUENT EVENT:
On May 11, 2001, the Company acquired 100% of the outstanding common stock of
Smith & Wesson Corporation. The Company will file the required Form 8-K filing
describing the transaction within 15 days.
ITEM 2. MANGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENTS:
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company intends that such
forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Quarterly Report contains forward-looking statements
regarding the financial condition, operating results, business prospects or any
other aspect of the Company, please be advised that the Company's actual
financial condition, operating results and business performance may differ
materially from that projected or estimated by the Company in forward-looking
statements. The differences may be caused by a variety of factors, including
but not limited to adverse economic conditions, intense competition, including
intensification of price competition and entry of new competitors and products,
adverse federal, state and local government regulation, inadequate capital,
unexpected costs and operating deficits, increases in general and administrative
costs, lower sales and revenues than forecast, loss of customers, customer
returns of products sold to them by the Company, termination of contracts, loss
of supplies, technological obsolescence of the Company's products, technical
problems with the Company's products, price increases for supplies, inability to
raise prices, failure to obtain new customers, litigation and administrative
proceedings involving the Company, the possible acquisition of new businesses
that result in operating losses or that do not perform as anticipated, resulting
in unanticipated losses, the possible fluctuation and volatility of the
Company's operating results, financial condition and stock price, inability of
the Company to continue as a going concern, losses incurred in litigating and
settling cases, adverse publicity and news coverage, inability to carry out
marketing and sales plans, loss or retirement of key executives, changes in
interest rates, inflationary factors and other specific risks that may be
alluded to in this Quarterly Report or in other reports issued by the Company.
In addition, the business and operations of the Company are subject to
substantial risks that increase the uncertainty inherent in the forward-looking
statements. The inclusion of forward-looking statements in this Quarterly
Report should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.
COMPANY OVERVIEW
Saf-T-Hammer Corp. ("Saf-T-Hammer" or the "Company"), is a Nevada corporation
headquartered in Scottsdale, Arizona. The Company was initially formed in June
1991. The Company's principal asset are two unique products in development and
the patent pending rights to two childproof gun safety devices known as the
"Saf-T-Hammer" and "Saf-T-Trigger". Both devices are easily removable,
external devices that enable safe storage of weapons, including loaded firearms.
A gun owner can easily engage either the Saf-T-Hammer or Saf-T-Trigger in
approximately one second, thereby relieving the fear of death or injury to a
child or other person due to an accidental discharge of the weapon. Upon the
gun owner's return, he or she can easily disengage either device in about a
second, as well. Thus, the Saf-T-Hammer and Saf-T-Trigger allows both safety
and protection while the weapon remains loaded. The unique and salient
features of the Saf-T-Hammer and Saf-T-Trigger are as follows:
- Saf-T-Hammer & Saf-T-Trigger, unlike conventional trigger locks, can
be used with a loaded weapon;
- Saf-T-Hammer & Saf-T-Trigger cannot be fired when in safety mode;
- Saf-T-Hammer & Saf-T-Trigger can be removed and re-armed in less than
a second;
- Saf-T-Hammer requires no keys;
- Saf-T-Hammer & Saf-T-Trigger requires no codes to remember;
- Saf-T-Hammer & Saf-T-Trigger requires no appreciable level of
mechanical ability to operate;
- Saf-T-Hammer & Saf-T-Trigger cannot be broken, twisted or cut-off;
- Saf-T-Hammer & Saf-T-Trigger are cheaper than other similar gun
safety devices to produce; and
- Saf-T-Hammer & Saf-T-Trigger are currently patent pending.
As a direct result of the Company's emphasis upon internal development, it has
fostered two gun safety products, Saf-T-Hammer and Saf-T-Trigger that will be
marketed and distributed through standard firearms industry distribution
channels, catalogue outlets and direct sales. The Company's web site is
www.saf-t-hammer.com.
Additionally, the Company has recently begun the development of two additional
firearms related safety devices, the Maximum Security Cable and the Versa Vault.
The Maximum Security Cable(TM) is "shockproof" and unlike many similar products
currently on the market, will not open when subjected to jarring and its heavier
steel cable is virtually cut proof. As recently discovered, many cable lock
devices for firearms were less than adequate. Through independent testing, the
product has proven to be up to 10 times stronger than a variety of conventional
cable locks currently available.
The Versa Vault(TM) is a handgun vault designed to provide more than 40 percent
more capacity than any comparable product on the market. It offers the highest
possible degree of electronic and mechanical security available and features an
owner-programmable and user-friendly lighted keypad with four keys and has more
than 10,000 available combinations.
The vault is designed for both vertical and horizontal installation, includes a
steel mounting plate, and has a tamper alert, low battery alert and easy access
for electronic backup and internal lighting. Its small 10-inch x 14-inch x
3.5-inch external dimensions provide maximum space utilization and allows the
Versa Vault to be installed nearly anywhere. It has a unique internal holster
that presents the firearm to the owner for maximum speed and accessibility. This
holster is also removable, providing additional storage capacity depending upon
the owners needs.
The Maximum Security Cable (TM) and the Versa Vault (TM) are both still under
development. The Company anticipates initiating sales of these products by the
third quarter of 2001.
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31,
2000
REVENUES - Revenues totaled $21,151 and $0 for the three month periods ended
March 31, 2001 and 2000, respectively. Towards the end of the fiscal year
ended December 31, 2000, the Company began the production and sale of its
firearms related safety products, which the Company expects to grow
substantially in the year 2001.
COST OF SALES - Cost of sales totaled $8,418 and $0 for the three month
periods ended March 31, 2001 and 2000, respectively. As a percentage of net
revenues, cost of sales was approximately 40% and 0%, respectively,
resulting in a gross profits of 60% and 0% for the three month periods ended
March 31, 2001 and 2000, respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative ("SG&A") expenses totaled $445,728 and $547,095, for the
three month periods ended March 31, 2001 and 2000, respectively. During the
three month periods ended March 31, 2001, selling, general and administrative
expenses included payroll and related expenses of approximately $171,000,
marketing and advertising expenses of $48,000, regulatory filings and investor
relations of $26,000, professional fees of $100,000, interest of $36,000,
and general operating costs of $65,000. SG&A decreased by $101,367 during
2001 as compared to 2000 primarily due to no issuance of stock in exchange for
general consulting services during 2001.
NET LOSS - Net loss decreased to $432,996 during the three month period
ended March 31, 2001 as compared to $547,095 during the three month period
ended March 31, 2000 due to a decrease in SG&A expenses and gross profit of
$12,733.
NET LOSS PER SHARE - Net loss per share, basic and diluted, decreased to $0.03
per share for the three months ended March 31, 2001 as compared to $0.06 per
share for the three months ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2001 the Company had $21,151 in revenues and $638,217 in
total assets. The Company incurred a net loss of $432,996 during the three
months ended March 31, 2001 as compared to $547,095 for the three months ended
March 31, 2000. As of March 31, 2001, our total current assets exceeded total
current liabilities by $76,434.
As of March 31, 2001, all the 3% Convertible Debentures sold during 2000 had
been converted. During the three months ended March 31, 2001, the remaining
$159,000 of Convertible Debentures were converted into 1,799,029 shares of
common stock at an average price of $0.09 per share.
During March 2001, the Company obtained a short term loan from an unrelated
party for $500,000. This loan is due on July 1, 2002, is unsecured and bears
interest at LIBOR plus 1.75% per annum. The Company anticipates that it has
sufficient working capital through the end of June 2001. The Company intends to
raise additional working capital through either debt or equity financing. There
can be no assurances that the Company will be successful in raising additional
funds. Failure to raise additional funds will have a material adverse effect on
the Company's results of operations.
Additionally, a slower than expected rate of acceptance of the Company's planned
products, when available to the public, or lower than expected revenues
generated from the Company's products, would materially adversely affect the
Company's liquidity. The Company would need additional capital sooner than
anticipated. The Company has no commitments for additional financing, and there
can be no assurances that any such additional financing would be available in a
timely manner or, if available, would be on terms acceptable to the Company.
Furthermore, any additional equity financing could be dilutive to our
then-existing shareholders and any debt financing could involve restrictive
covenants with respect to future capital raising activities and other financial
and operational matters.
CAPITAL EXPENDITURES
The Company's anticipated capital expenditures for the fiscal year ended
December 31, 2001 is expected to consist of development and manufacturing costs
for the Company's proposed products. The Company expects to expend
approximately $500,000 towards additional inventory and samples of its products,
$500,000 in marketing materials, $200,000 in print advertising through fiscal
year 2001 in the development and initial production of its products. Currently,
the Company has insufficient funds for its planned capital expenditures and will
need to raise additional funds either through additional debt or equity
financing. Failure to raise additional funds will adversely affect the Company's
plan of operations.
INFLATION
Management believes that inflation has not had a material effect on the
Company's results of operations.
RECENT ACQUISITION
On May 11, 2001, the Company completed the acquisition of 100% of the
outstanding stock of Smith & Wesson Corporation. The Company will file a Current
Report on Form 8-K with the Securities and Exchange Commission within 15 days of
the acquisition, which will provide details of this acquisition.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation that it believes could
have a materially adverse effect on its financial condition or results of
operations.
ITEM 2 - CHANGES IN SECURITIES
In March 2000, the Company issued convertible debentures with a face value of
$1,000,000 under Rule 504 of Regulation D. The debentures are convertible into
common stock at the discretion of the holder at a 25% discount. As of December
31, 2000, $841,000 of the Debentures have been converted into 2,651,658 shares
of common stock at an average price of $0.317 per share. During January 2001,
the remaining $159,000 of the Debentures were converted into 1,799,029 shares of
common stock at an average price of $0.088 per share.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders for a vote during the period
covered by this report
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None
(B) REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with 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, thereunto duly authorized.
SAF-T-HAMMER CORPORATION
By /s/ Mitchell A. Saltz
----------------------------------
Mitchell A. Saltz
CEO & CFO
Dated: May 15, 2001