U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from: to:
Commission file number: 33-97770
LEVEL BEST GOLF, INC.
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(Exact Name of Registrant as specified in its charter)
FLORIDA 59-3205644
- -------------------------------- --------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
14561 58th Street North
Clearwater, FL 34620
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(Address code of principal executive offices)
(813) 535-7770
--------------------------
(Issuer's telephone number)
Check mark whether the Issuer (1) has filed all reports required by Section 13
or 15(d) of the Exchange Act 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 the filing requirements for at least the past 90 days. YES: X NO:
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PREVIOUS FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by the court. YES: NO:
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the last practicable date: 2,692,140
<PAGE>
LEVEL BEST GOLF, INC.
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Index
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PART I FINANCIAL INFORMATION
- ------ ---------------------
Balance Sheet
June 30, 1996 3
Statements of Operations
Nine Months and Three Months
Ended June 30, 1996 and 1995 4
Statements of Cash Flows
Nine Months Ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II
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Other Information 9
Signatures 10
<PAGE>
Level Best Golf, Inc.
Balance Sheets
(Unaudited)
June 30, September 30,
1996 1995
------------ -------------
Assets
Current Assets:
Cash $ 1,126 $ 8,061
Accounts receivable 180,628 202
Inventory 221,401 156,657
----------- ----------
Total current assets 403,155 164,920
Equipment, net of accumulated
depreciation 198,205 13,071
Other assets
Deposits 9,540 -
Patents, net of amortization 15,940 10,223
----------- ---------
$ 626,840 $ 188,214
=========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Checks written against future deposits $ 41,140 $ -
Due to stockholders 65,396 181,135
Note payable - related party 482,430 149,840
Current portion of long-term debt 21,048 21,048
Accounts payable 123,420 108,072
---------- ----------
Total current liabilities 733,434 460,095
Long-term debt 47,380 63,166
Long-term debt - related party - 12,965
Shareholders' equity
Preferred stock, $1,000 par value,
convertible, 300 shares authorized,
issued and outstanding 300,000 -
Common stock, $.001 par value,
50,000,000 shares authorized, 2,692,140 and
2,612,218 shares issued and outstanding 2,692 2,612
Paid in capital 662,775 542,972
Accumulated deficit (1,119,441) (893,596)
---------- ---------
(153,974) (348,012)
$ 626,840 $ 188,214
=========== ==========
See accompanying notes to financial statements.
3
<PAGE>
Level Best Golf, Inc.
Statements of Operations
For the Nine Months and Three Months Ended June 30, 1996 and 1995
(Unaudited)
Nine Months Ended Three Months Ended
----------------------- ---------------------
1996 1995 1996 1995
---------- --------- -------- ---------
Revenue $ 481,514 $ 80,791 $314,407 $ 3,035
Cost of sales 337,060 79,889 137,594 -
Operating expenses 349,761 516,720 116,590 166,895
----------- --------- -------- ---------
Total expenses 686,821 596,609 254,184 166,895
----------- --------- -------- ---------
Net income (loss)
from operations (205,307) (515,818) 60,223 (163,860)
Other income and expense:
Interest expense (20,538) (23,140) (13,495) (9,849)
---------- --------- -------- ---------
Net income (loss) $ (225,845) $(538,958) $ 46,728 $(173,709)
========== ========== ======== =========
Net income (loss)
per share $ (.09) $ (.28) $ .02 $ (.09)
=========== ========== ========= =========
Average shares outstanding 2,652,035 1,913,560 2,678,850 2,031,325
=========== ========== ========= =========
See accompanying notes to financial statements.
4
<PAGE>
Level Best Golf, Inc.
Statements of Cash Flows
For the Nine Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Cash from operations $(309,901) $(573,191)
Cash flows from investing activities
Purchase of fixed assets (185,134) -
-------- ----------
Net cash provided by (used in)
investing activities (185,134) -
Cash flows from financing activities
Increase (decrease) in loan from
Shareholders 203,886 (12,976)
Increase in long-term debt - 97,000
Repayment of long-term debt (15,786) -
Sale of preferred stock 300,000 -
Sale of common stock - 490,798
-------- ---------
Net cash provided by (used in)
financing activities 488,100 574,822
-------- ---------
Increase (decrease) in cash (6,935) 1,631
Cash and cash equivalents,
beginning of period 8,061 -
-------- ---------
Cash and cash equivalents,
end of period $ 1,126 $ 1,631
======== =========
See accompanying notes to financial statements.
5
<PAGE>
Level Best Golf, Inc.
Notes to Financial Statements
The accompanying condensed unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The accompanying
financial statements should be read in conjunction with the Company's form S-1
which included audited financial statements for the year ended September 30,
1995.
Prior to April 1, 1996 the Company had been in the development stage.
Income (loss) per share was computed using the weighted average number of common
shares outstanding.
Stockholders' Equity
--------------------
During October, 1995 the Company filed a Form S-l registration statement whereby
it registered 1,902,268 shares of common stock, 275,000 Class A warrants, and
275,000 Class B warrants.
During the period from October 1, 1995 to June 30, 1996 the Company issued
65,634 shares of common stock for consulting services valued at $98,451.
During January, 1996 the Company issued 14,288 shares of common stock in
exchange for inventory valued at $21,432.
During the period from December, 1995 through February, 1996 the Company issued
300 shares of its preferred stock in exchange for cash aggregating $300,000
pursuant to a private placement.
Inventory
---------
Inventory consists principally of work in process.
6
<PAGE>
Level Best Golf, Inc.
Notes to Financial Statements
(Continued)
Income Taxes
------------
During the periods presented the Company has not provided for income taxes as a
result of the available operating loss carryforwards.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared on a "going concern"
basis which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business.
The Company has incurred an operating loss during the year ended September 30,
1995 aggregating $1,473,182 and for the nine months ended June 30, 1996 of
$225,845 and has negative working capital of $330,279 at June 30, 1996.
During the periods presented, other than the three months ended June 30, 1996,
the Company has not generated positive cash flow from operations and there can
be no assurance that the trend will not continue. Profitable operations are
dependent upon, among other factors, the Company's ability to obtain equity or
debt financing and its ability to successfully market its products.
The Company undertaken the raising of additional equity capital. In addition,
the Company is attempting to obtain debt financing for certain golf products
which it intends to market, is seeking to expand its customer base and is
attempting to lower operating expenses. The Company's continued operations are
dependent upon it ability to obtain financing and market its products.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales increased from $80,791 for the nine months ended June 30, 1995 to
$481,514 for the nine months ended June 30, 1996 and increased from $3,035 for
the three months ended June 30, 1995 to $314,407 for the three months ended June
30, 1996. These increases were due primarily to the Company's penetration into
the retail market by its national sales representative organizations.
Cost of sales increased from $79,889 for the nine months ended June 30, 1995 to
$337,060 for the nine months ended June 30, 1996 and increased from $0 for the
three months ended June 30, 1995 to $137,594 for the three months ended June 30,
1996. These increases were due primarily to the increased sales volume in the
1996 periods.
Operating expenses decreased from $516,720 for the nine months ended June 30,
1995 to $349,761 for the nine months ended June 30, 1996 and from $166,895 for
the three months ended June 30, 1995 to $116,590 for the three months ended June
30, 1996. These decreases resulted primarily from decreased television media
purchases for both short form (1 to 2 minute advertisements) and long form (30
minute infomercials).
Liquidity and Capital Resources
The Company has historically financed its operations primarily through the sale
of common and preferred stock and borrowings from affiliates and a bank.
During the nine months ended June 30, 1996 the Company expended $185,134 for the
acquisition of property and equipment.
During the nine months ended June 30, 1996 the Company sold 300 shares of its
preferred stock for cash aggregating $300,000 and received an aggregate of
$203,886 in advances from affiliates. In addition the Company repaid $15,786 in
long-term debt.
Other than the lease for its office and warehouse facilities the Company has no
material commitments for capital expenditures.
8
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
------------------
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
----------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
--------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION.
------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Not applicable.
(b) Not applicable.
9
<PAGE>
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 thereunto duly authorized.
Level Best Golf, Inc.
(Registrant)
Dated: August 13, 1996 By: /S/ FRED SOLOMON
-------------------------------
President
10
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