<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1996
COMMISSION FILE NUMBER 33-97770
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT 7 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
The Securities Act of 1933
--------------------------
LEVEL BEST GOLF, INC.
FLORIDA 59-3205644
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Identification Number)
of incorporation
or organization)
11800 28th Street North
St. Petersburg, FL 33716
Telephone: (813) 571-3545
(Address and telephone number of registrant's principal
executive offices and principal place of business.)
Fred Solomon
11800 28th Street North
St. Petersburg, FL 33716
Telephone: (813) 571-3545
(Name, address and telephone number of agent for service.)
with copies to:
Jody M .Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 133, check the
following box:
/x/
<TABLE>
CALCULATION OF REGISTRATION FEE
========================================================================================================
<CAPTION>
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee<F3>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, <F1>
$.001 par value 100,000 1.50 $150,000 $51.72
Class A Warrants 275,000 .09<F2> $24,750 $8.53
Common Stock<F4> 275,000 4.75 $1,306,250 $450.43
Class B Warrants- 275,000 .09<F2> $24,750 $8.53
Common Stock<F4> 275,000 7.50 $2,062,500 $711.21
Common Stock<F5> 1,266,967 1.50 $1,900,451 $655.33
Common Stock<F6> 150,000 1.50 $225,000 $77.59
- --------------------------------------------------------------------------------------------------------
Total 2,616,967 $5,693,701 $1,963.34
========================================================================================================
<FN>
<F1> Represents Shares of common stock necessary to effect the distribution
described in the Registration Statement.
<F2> Estimated solely for purposes of calculating the registration fee.
<F3> Represents 1/29 of 1% of the book value of the Shares of common stock
issuable being registered.
<F4>Represents Common Stock underlying the Class A and Class B Warrants being
registered hereunder on behalf of the Selling Securityholders.
<F5>Represents Common Stock being registered hereunder on behalf of the
Selling Securityholders.
<F6>Represents Common Stock to be issued upon conversion of the Preferred
Shares on behalf of a Selling Shareholder.
</TABLE>
<PAGE> 2
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<TABLE>
LEVEL BEST GOLF, INC.
CROSS REFERENCE SHEET BETWEEN ITEMS OF FORM S-1
AND PROSPECTUS PURSUANT TO 501(b) OF REGULATION S-K.
<CAPTION>
Items in Form S-1 Location in Prospectus
----------------------------------------------------------------------------------------------------------
<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus Outside Front Cover Page.
2. Inside Front and outside Back Cover Pages
of Prospectus Inside Front Cover Page; Outside Back Cover Page.
3. Summary Information & Risk Factors Prospectus Summary; Risk Factors.
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Inside Front Cover Page; Prospectus Summary; The
Distribution
9. Description of Common Stock to be Registered Outside Front Cover Page; Prospectus Summary; Description
of Securities
10. Interest of Named Experts and Counsel Interest of Named Experts and Counsel.
11. Information with Respect to the Registrant The Corporation; Legal Proceedings; Market Information of
Common Shares; Financial Statements; Selected Financial
Data; Management's Discussion and Analysis of Financial
Condition, Management; Certain Relationships and Related
Transactions; Principal Shareholders.
12. Statement as to Indemnification Management - Indemnification.
</TABLE>
<PAGE> 3
PRELIMINARY PROSPECTUS DATED MAY 23, 1996
SUBJECT TO COMPLETION
100,000 Common Shares to be distributed
1,266,967 Common Shares on behalf of Selling Shareholders
150,000 Common Shares to be issued upon conversion of
Preferred Stock
on behalf of Selling Shareholders
275,000 Class A Warrants
275,000 Class B Warrants
LEVEL BEST GOLF, INC.
Common Stock ($.001 Par Value)
As more fully set forth herein, Pratt, Wylce & Lords, Ltd., a Nevada
corporation ("Pratt"), proposes to distribute (the "Distribution") on or
about , 1996 as a dividend to its shareholders of record at the close
of business on January 2, 1995 (the "Record Date"), one share of the common
stock, par value $.001 per share (the "Common Stock") of Level Best Golf,
Inc., a Florida corporation (the "Company"), for each twenty four shares of
Pratt common stock, par value $.001 per share (the "Pratt Common Stock"),
held by each Pratt shareholder on the Record Date. Pratt will distribute
100,000 Common Shares (36% of the 275,000 shares of Common Stock owned by
it), which represents 12.31% of the Company's outstanding Common Stock on the
Record Date. The Distribution will be made by Pratt without the payment of
any consideration by its shareholders. No fractional shares will be
distributed. See "The Distribution." The Common Shares of the Company
owned by Pratt that are not being distributed are being registered for sale
by Pratt as a selling shareholder. The expenses of the Distribution are
estimated to be $34,963.33 and are to be paid by the Company.
Additionally, the Company is registering 1,266,967 common shares on behalf of
its selling security holders. The Company is registering 150,000 common
shares to be issued upon conversion of the Preferred Stock on behalf of
Selling Shareholders. The Company is also registering 275,000 Class A
Warrants and 275,000 Class B and the stock underlying said warrants on behalf
of its selling security holders. The Class A Warrants are exercisable into
One common share at the purchase price of $4.75 and the Class B Warrants are
exercisable into One common share at the purchase price of $7.50. The Class
A and Class B Warrants shall be effective for a period of Four years from the
date of issuance and shall be redeemable by the Company at $.001 per Class A
or Class B Warrant upon thirty days notice.
Prior to the date hereof, there has been no trading market for the Common
Stock of the Company. The Company has agreed to use its best efforts to
apply for the quotation of its Common Stock on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"). There can be no
assurance, however, that the Common Stock will be quoted, that an active
trading and/or a liquid market will develop or, if developed, that it will be
maintained.
THERE ARE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE
SECURITIES. SEE RISK FACTORS, PAGE 8
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sales of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any state.
<PAGE> 4
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. office, a Registration Statement on Form S-1
(Registration No. 33-97770) under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration of the securities offered hereby.
This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and exhibits and schedules relating thereto for further information
with respect to the Company and the securities to which this Prospectus
relates. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by such
reference. Items of information omitted from this Prospectus but contained
in the Registration Statement may be inspected without charge at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and copies of such material can be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates.
Upon consummation of this offering and the Distribution, the Company will
become subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports and other
information with the Securities and Exchange Commission. The reports and
other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission in Washington, D.C.
and at the Chicago Regional Office, Northwestern Atrium Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and the New York
Regional Office, 7 World Trade Center, New York, New York 10048. Copies of
such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates.
REPORTS TO SECURITY HOLDERS
The Company will furnish to shareholders: (i) an annual report containing
financial information examined and reported upon by its certified public
accountants; (ii) unaudited financial statements for each of the first three
quarters of the fiscal year; and (iii) additional information concerning the
business and operations of the Company deemed appropriate by the Board of
Directors.
---------------
The approximate date on which this Prospectus is first being sent to holders
of Pratt Common Stock is --------------, 1996.
<PAGE> 5
<TABLE>
- -------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------
<S> <C>
PROSPECTUS SUMMARY 6
RISK FACTORS 8
THE DISTRIBUTION 12
SELLING SECURITY HOLDERS 12
USE OF PROCEEDS 17
THE COMPANY 18
BUSINESS ACTIVITIES 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 23
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
CERTAIN TRANSACTIONS 27
MANAGEMENT 28
Officers and Directors
Remuneration
Indemnification
PRINCIPAL SHAREHOLDERS 31
SHARES ELIGIBLE FOR FUTURE SALE 33
NASDAQ LISTING 34
DESCRIPTION OF SECURITIES 35
LEGAL MATTERS 36
LEGAL PROCEEDINGS 36
EXPERTS 36
INTERESTS OF NAMED EXPERTS AND COUNSEL 36
</TABLE>
<PAGE> 6
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PROSPECTUS SUMMARY
- -------------------------------------------------------------------------
The following summary is qualified in its entirety by the more
detailed information, financial statements and notes to the
financial statements including the notes thereto appearing
elsewhere in this Prospectus.
THE COMPANY. The Company was incorporated in Florida on
October 1, 1993. The total number of shares of Common Stock
which the Company was authorized to issue was Five Thousand
(5,000), par value $1.00. The Company's Common Stock had no
cumulative rights but did originally have preemptive rights. On
December 8, 1994, the Articles of Incorporation were amended to
increase the authorized Common Shares to Fifty Million
(50,000,000), to change the par value to $.001 and to remove any
preemptive rights.
The Company's executive offices are located at 11800 28th Street
North, St. Petersburg, Florida 33716. Telephone No. (813)
571-3545. These offices consist of 13,500 square feet on a month
to month lease for $4,000 per month.
The Company is a distributor of golf training aids and golf
accessories. It is the Company's mission to provide products
which help golfers at all levels master their game.
<TABLE>
<CAPTION>
THE DISTRIBUTION.
<C> <S>
Securities Being Distributed 100,000 shares of the Company's Common Stock.
Purpose of Distribution To enhance the Company's ability to raise additional capital, if necessary, in
the future.
Shares of Common Stock Outstanding
After Distribution 2,665,852 shares of Common Stock.
Distributing Company Pratt, Wylce & Lords, Ltd., a Nevada corporation.
Distribution Ratio One share of Common Stock for every twenty four shares of Pratt Common Stock
owned of record on January 2, 1995 (the "Record Date").
Use of Proceeds The securities to which this Prospectus relates are being distributed to
holders of Pratt Common Stock as a dividend and neither the Company nor Pratt
will receive any cash or other proceeds in connection with the Distribution.
Additionally this Prospectus relates to securities being registered on behalf
of selling securityholders and the
<PAGE> 7
<C> <S>
Company will not receive any cash or other proceeds in connection with the
subsequent sale. Any proceeds received from the subsequent exercise of the
Class A, Class B and Class C Warrants shall be used as working capital and to
expand operations.
Federal Income Taxes The Distribution will constitute a dividend fully taxable as income to holders
of Pratt Common Stock. See "Federal Income Taxes."
Certain Factors to be Considered See "Risk Factors."
Absence of Dividends; Dividend Policy The Company does not currently intend to pay regular cash dividends on its
Common Stock; such policy will be reviewed by the Company's Board of
Directors from time to time in light of, among other things, the Company's
earnings and financial position. See "Risk Factors."
Transfer Agent The Company shall act as its own Transfer Agent until further financing is
obtained.
</TABLE>
SELECTED FINANCIAL INFORMATION;. The selected financial
information presented below under the captions and "Balance Sheet"
as of September 30, 1994 and 1995 and "Statement of Operations"
for the year ended September 30, 1994 and 1995 are derived from
the audited financial statements of the Company. The selected
financial information presented below under the captions "Balance
Sheet" as of March 31, 1996 and Statement of Operations for the
six months ended March 31, 1996 and 1995 is derived from the
unaudited financial statements of the Company. The Balance Sheet
and Statement of Operations have not been audited by independent
certified public accountants' however, in the opinion of
management, all adjustments (which include only normal recurring
adjustments) have been made in order to present fairly the
operations for this period. See "Management's Discussion and
Analysis of Financial Condition" and "Financial Statements."
<TABLE>
<CAPTION>
BALANCE SHEET
September 30 September 30, March 31,
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Total Assets $90,704 $188,214 $334,684
Total Liabilities $248,436 $536,226 $574,386
Total Stockholders'
Equity (Deficit) $(157,732) $(348,012) $(239,702)
Total Liabilities &
Stockholders' Equity $90,704 $188,214 $334,684
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For Year For Year For Six Months For Six Months From Inception
Ended Ended Ended Ended (Oct. 1, 1993)
September 30 September 30, March 31, March 31, to March 31,
1994 1995 1996 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues from continuing
operations $22,339 $98,474 $167,107 $3,035 $287,920
Income (Loss) from
continuing operations (372,744) (1,442,693) (265,530) (390,711) (2,080,967)
Nonoperating Income
(Expense) (12,382) (30,489) (7,043) (14,432) (49,914)
Provision (Credit) For
Income Taxes - - - - -
Net income (loss) (385,126) (1,473,182) (272,573) (405,143) (2,130,881)
Net income (loss) per common
share of outstanding stock $ (.24) $ (.74) $ (.10) $ (21) $ (.91)
</TABLE>
- -------------------------------------------------------------------------
RISK FACTORS
- -------------------------------------------------------------------------
In analyzing this offering, prospective investors should read this
entire Prospectus and carefully consider, among other things, the
following Risk Factors:
UNCERTAINTY OF FUTURE FINANCIAL RESULTS. The Company
has experienced accumulated losses from operations to date and
future financial results are uncertain. As such, there can be no
assurance that the Company can be operated in a profitable manner.
Profitability depends upon many factors, including the success of
the Company's marketing program, the maintenance or reduction of
expense levels and the success of the Company's business
activities. The Company has accumulated losses from operations
as of March 31, 1996 of $2,130,881. Lacking future profitable
operations, the Company will require additional capital. Even if
the Company obtains future financing or revenues to expand
operations, increased production or marketing expenses would
adversely affect liquidity of the Company. See "FINANCIAL
STATEMENTS."
DOUBT ABOUT COMPANY'S ABILITY TO CONTINUE AS A GOING
CONCERN. The auditors' report on the Company's financial
statements contains an explanatory paragraph indicating there is
substantial doubt about the Company's ability to continue as a
going concern. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Financial
Statements."
POTENTIAL CONTINGENT LIABILITY REGARDING SECTION 5
VIOLATIONS. It appears that the securities of the Company
privately placed after October 5, 1995 should be integrated with
this offering and thus should have been registered under Section 5
of the Securities Act of 1933. In addition, it appears that this
registration statement constitutes a solicitation of an
unregistered offering, requiring registration under Section 5 of
the Securities Act, with regard to those shares issued after
October 5, 1995, for which the private placement purchasers are
selling shareholders. As a result, there is potential contingent
liability of the Company arising from the Section 5 violations.
<PAGE> 9
LIQUIDITY DEPENDENT ON ADDITIONAL CAPITAL AND DEBT FINANCING.
On a long term basis, liquidity is dependent on increased revenues from
operations, additional infusions of capital and debt financing. The
Company believes that additional capital and debt financing in the short
term will allow the Company to increase its marketing and sales efforts
and thereafter result in increased revenue and greater liquidity in the
long term. However, there can be no assurance that the Company will be
able to obtain additional equity or debt financing in the future,
if at all.
UNCERTAINTY OF CONTINUATION OF MATERIAL AGREEMENT. The
Company has an exclusive marketing agreement with Marshall
Products, Inc. regarding certain products developed by Mr. Perry
Marshall. Mr. Marshall individually holds the patent to those
products and, as a result, Marshall Products, Inc. may not be able
to meet its contract obligations should Mr. Marshall decide to
limit the use of his products. See "The Company - Business
Activities."
NO ABILITY TO CONTROL AFFAIRS OF THE COMPANY. The majority shareholders
and the officers and directors of the Company as a group own over 50% of
all of the outstanding common shares of the Company. As a result, these
individuals have the ability to control the affairs of the Company.
Therefore, the financial success of the Company is dependent upon the
management expertise, judgment and experience of its officers And
directors. See "MANAGEMENT" and "PRINCIPAL SHAREHOLDERS".
DEPENDENCE ON KEY INDIVIDUALS. The future success of the
Company is highly dependent upon the Company's ability to attract
and retain qualified key employees. The Company has not yet
entered into definitive employment agreements with any such
individuals. The inability to attract and retain these
individuals for the long term would have a material impact upon
the business of the Company. See "COMPANY - EMPLOYEES" AND
"MANAGEMENT."
LACK OF EXPERIENCE OF MANAGEMENT. The financial success of
the Company is partly dependent upon the management expertise and
judgment of its officers regarding the promotion of its products.
The current officers all have prior management experience with
large and small businesses However, the current officers do not
have specific prior experience in the specific type of golf
product promotion being conducted by the Company. Current
officers devote 80% of their time to the affairs of the Company.
The officers and directors will have the exclusive authority to
manage and control and make all decisions regarding the business
and affairs of the Company. There can be no assurance that
management will be able to successfully conduct the operations of
the Company due to this lack of experience.
The current officers of the Company devote all of their time to
the affairs of the Company. The remaining directors spend as
much time as deemed necessary on the corporate business affairs
(estimated to be approximately 15% of their time) but are not
required nor expected to devote their entire time or efforts to
the Company's business and affairs. Fred Solomon is currently
President, Treasurer and Director. James Solomon serves as Vice
President and a Director, Patricia Sanders serves as Secretary and
a Director.
CONFLICTS OF INTEREST. Some of the directors of the Company
are currently principals of other businesses. As a result,
conflicts of interest may arise. The directors shall immediately
notify the other directors of any possible conflict which may
arise due to their involvement with other businesses. The
interested directors in any conflict shall refrain from voting on
any matter in which a conflict of interest has arisen. The
Company has adopted a policy that any transactions with directors,
officers or entities of which they are also officers or directors
or in which they have a financial interest, will only be on terms
<PAGE> 10
which are fair and reasonable to the Company and approved by a
majority of the disinterested directors of the Company's Board of
Directors. For further discussion see "Management - Conflicts of
Interest Policy." There can be no assurance that such other
activities will not interfere with the officers' and directors'
ability to discharge their obligation herein.
COMPETITION. The Company will be competing with established
companies and other entities (many of which may possess
substantially greater resources than the Company. Almost all of
the companies with which the Company competes are substantially
larger, have more substantial histories, backgrounds, experience
and records of successful operations, greater financial,
technical, marketing and other resources, more employees and more
extensive facilities than the Company now has, or will have in the
foreseeable future. It is also likely that other competitors will
emerge in the near future. There is no assurance that the
Company's products will compete successfully with other
established and/or well regarded products. The Company shall
compete on the basis of quality and cost of its products.
Inability to compete successfully might result in increased costs,
reduced yields and additional risks to the investors herein. See
"THE COMPANY - Competition."
BENEFIT TO MANAGEMENT. Although currently, the officers and
directors have received minimal compensation and common shares for
their services, the Company may, in the future, compensate the
Company's management with substantial salaries and other benefits.
Even though no compensation plan has been proposed or agreed upon,
the payment of future salaries and the costs of these benefits may
be a burden on the Company and may be a factor in limiting or
preventing the Company from achieving profitable operations in the
future. However, the Company would not continue to compensate
management with such substantial salaries and other benefits under
circumstances where to do so would have a material negative effect
on the Company's financial condition. See "MANAGEMENT - Remuneration."
ARBITRARILY DETERMINED WARRANT EXERCISE PRICE. The exercise price of the
Class A and Class B Warrants being registered on behalf of the Selling
Security holders was established arbitrarily by the Company with no direct
relationship to the original offering price or the Company's assets, book
value, shareholder's equity or any other recognized criterion of value.
Accordingly, the Class A and Class B Warrants can be considered to have
little or no value at the present time.
NO ASSURANCE OF PUBLIC MARKET FOR SECURITIES. There is no
market for the securities of the Company and there can be no
assurance that an established trading market (or any public
market) will develop at the conclusion of this Offering, or that
if developed, it would be sustained, or that the securities
distributed hereunder may be resold at their original book value
price or at any other price. Any market for the securities of the
Company that may develop will, in all likelihood, be a
substantially limited one.
EFFECT OF FUTURE SALES OF SHARES AND UNCERTAINTY OF
MARKET DEVELOPMENT. Upon completion of the distribution and a
successful completion of the registration of warrants herein the
Company will have 2,665,852 common shares outstanding, of which
the Warrants and Registered Warrants and underlying Shares
registered in this Offering will be freely tradable without
restriction or further registration under the Securities Act of
1933 (the "Securities Act"). Upon the effective date of this
Registration Statement, 1,266,967 of the currently 2,665,852
restricted Shares subject to certain limitations of Rule 144 of
the Securities Act will become available for public sale. This
does not include any Common Shares underlying the Preferred
Shares, Class A, Class B or Class C Warrants (the Class A and
Class B Warrants which are being registered in this Registration
Statement.) No assurance can be given that the availability of
such Shares for sale will not
<PAGE> 11
have an adverse impact on the market price of the Company's Shares, should
one develop. Prior to this Offering, there has been little public market
for any securities of this Company. Management of the Company cannot
predict to what extent a secondary market in the Shares will develop and
provide liquidity for holders of the Shares. See "SALE OF SHARES PURSUANT
TO RULE 144" and "MARKET INFORMATION ON COMMON SHARES."
POSSIBLE RESTRICTIONS TO SALES OF COMPANY SECURITIES. Until the Company
obtains a listing on NASDAQ, if ever, the Company's securities may be
covered by a Rule 15c2-6 under the Securities Exchange Act of 1934 that
imposes additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination of the purchaser and have received the
purchaser's written agreement to the transaction prior to the sale. In
order to approve a person's account for transactions in designated
securities, the broker or dealer must (i) obtain information concerning
the person's financial situation, investment experience and investment
objectives; (ii) reasonably determined, based on the information required
by paragraph (i) that transactions in designated securities are
suitable for the person and that the person has sufficient
knowledge and experience in financial matters that the person
reasonably may be expected to be capable of evaluating the rights
of transactions in designated securities; and (iii) deliver to the
person a written statement setting forth the basis on which the
broker or dealer made the determination required by paragraph (ii)
in this section, stating in a highlighted format that it is
unlawful for the broker or dealer to effect a transaction in a
designated security subject to the provisions of paragraph (ii) of
this section unless the broker or dealer has received, prior to
the transaction, a written agreement to the transaction from the
person; and stating in a highlighted format immediately preceding
the customer signature line that the broker or dealer is required
to provide the person with the written statement and the person
should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person's financial
situation, investment experience and investment objectives and
obtain from the person a manually signed and dated copy of the
written statement. A designated security means any equity
security other than a security (i) registered, or approved for
registration upon notice of issuance on a national securities
exchange that makes transaction reports available pursuant to 17
CFR 11Aa3-1 (ii) authorized or approved for authorization upon
notice of issuance, for quotation in the NASDAQ system; or . . .
(iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to
the date of the transaction with the person. Consequently, the
rule may affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of purchasers
in this Offering to sell their shares in the secondary market.
See "NASDAQ Listing - Broker-Dealer Sales of Company's Securities."
LACK OF DIVIDENDS. There can be no assurance that the
continued operations of the Company will result in any revenues or
will be profitable. At the present time, the Company intends to
use any earnings which may be generated to finance the growth of
the Company's business. Accordingly, while payment of dividends
rests within the discretion of the Board of Directors, the Company
does not presently intend to pay dividends and there can be no
assurance that dividends will ever be paid. See "DIVIDEND
POLICY."
VULNERABILITY TO FLUCTUATIONS IN ECONOMY. Demand for the
Company's proposed products is dependent on, among other things,
general economic conditions which are cyclical in nature.
Prolonged recessionary periods may be damaging to the Company.
<PAGE> 12
- -------------------------------------------------------------------------
THE DISTRIBUTION
- -------------------------------------------------------------------------
After careful study and review, the Board of Directors of Pratt
determined that it would be in the best interests of Pratt and its
shareholders to distribute a proportion of the Company's Common
Shares held by Pratt to its shareholders. In addition, the
Company and Pratt determined that such a distribution would be in
the best interests of the Company. Pratt shareholder's may
realize economic benefits from the sale of any Common Stock
distribution if a market for the Company's Common Stock develops,
although there can be no assurances that any such market will
result. Pratt and the Company believe that the distribution to
Pratt's shareholders, which will result in an increased
shareholder base of the Company, will be an advantage to the
Company at such time as the Company may require additional capital
and/or make application to NASDAQ. The increased shareholder
base of approximately 1,321 shareholders represents an increase in
potential future purchasers of additional stock in any subsequent
offering or in the stock market if these individuals are satisfied
with the performance of the Company's operations.
Accordingly, after obtaining the approval of the independent
directors on Pratt's Board of Directors, the Board of Directors of
Pratt declared a dividend pursuant to which, on or
about , 1996, 100,000 shares of the issued and
outstanding Common Stock of the Company, constituting 36% of the
shares of Common Stock owned by Pratt, will be distributed to the
shareholders of record of Pratt as of January 2, 1995 on the basis
of one share of Common Stock for each twenty four shares of Pratt
Common Stock held. The shares of Common Stock are being
distributed by Pratt as a dividend to holders of Pratt Common
Stock and neither the Company nor Pratt will receive any cash or
other proceeds in connection with the Distribution. No
fractional shares of Common Stock will be issued. Pratt had
approximately 1,321 shareholders of record on the Record Date.
The Pratt Common Stock is quoted on over-the-counter under the
symbol "PWLS".
In order to comply with certain provisions of Florida corporate
law, on September 15, 1995 (the "Payment Date") Pratt deposited
the shares of Common Stock to be distributed with Florida Atlantic
Stock Transfer, Inc. (the "Depositary"). The Depositary will
hold such shares for the benefit of Pratt shareholders on the
Record Date. The terms of the agreement with the Depositary
provides that the shares will be released promptly after the
Registration Statement to which this Prospectus relates is
declared effective by the Commission. However, if the
Registration Statement is not declared effective prior to June 30,
1996, then, unless such date is changed by notice to the
Depositary from the Company, the Depositary shall return all such
shares to Pratt without effecting the distribution.
- -------------------------------------------------------------------------
SELLING SECURITY HOLDERS
- -------------------------------------------------------------------------
The Company shall register pursuant to this prospectus 1,266,967
Common Shares currently outstanding for the account of the
following individuals or entities. The percentage owned prior to
and after the offering reflects all of the then outstanding common
shares. The amount and percentage owned after the offering
assumes the sale of all of the Common Shares being registered on
behalf of the selling shareholders.
<PAGE> 13
<TABLE>
<CAPTION>
Name and Amount Total Number Percentage Amount Owned Percentage Owned
Being Registered of Shares Owned prior After Offering After Offering
- ---------------- --------- to Offering -------------- --------------
-----------
<S> <C> <C> <C> <C>
Fred L. Solomon<F1> - 65,538 655,381 25.09% 589,843 22.58%
James G. Solomon<F2> - 66,011 660,114 25.27% 594,103 22.74%
Jimmy Wright - 35,000 35,000 1.33% 0 0%
Michael Simon - 10,000 10,000 .38% 0 0%
Gregory J. Jorgensen - 2,000 2,000 .08% 0 0%
Keith J. Maurer - 4,000 4,000 .15% 0 0%
Lincoln Trust Company, FBO
P.L. Lawrence, III - 6,667 6,667 .26% 0 0%
Myers Krause & Stevens
Charted Profit Sharing - 5,000 5,000 .19% 0 0%
Robert & Michele Gordon -
3,000 3,000 .11% 0 0%
Earl & Barbara Pickney -
6,667 6,667 .26% 0 0%
Rena Blackmer - 10,000 10,000 .38% 0 0%
Wing Hughes - 2,500 2,500 .10% 0 0%
Jeffrey Nowicki - 2,000 2,000 .08% 0 0%
Matt J. Ritola - 4,000 4,000 .20% 0 0%
Raymond James & Assoc. 25,000 .96% 0 0%
Inc., FBO Norman F.
Whitbeck, Jr. - 25,000
Acquire Venture Capital 2,223
Group - 2,223
Scott Malaney - 3,000 3,000 .11% 0 0%
David Black - 7,000 7,000 .27% 0 0%
Susan Black - 3,000 3,000 .11% 0 0%
Robert E. Oberndorf - 6,000 6,000 .23% 0 0%
Mike Souchak - 3,000 3,000 .11% 0 0%
Barbara A. Reinstein - 3,000 3,000 .11% 0 0%
Saran J. Koplas & Dennis
Enge - 4,000 4,000 .15% 0 0%
Wendell & Saralou Zimmer -
6,000 6,000 .11% 0 0%
Myrtle M. Bearman - 3,000 3,000 .11% 0 0%
J.D. Lawson - 36,000 36,000 1.37% 0 0%
Wayne I. Anderson - 6,000 6,000 .23% 0 0%
Robert Gerner - 2,500 2,500 .10% 0 0%
Robert Gerner - Keogh -
5,500 5,500 .21% 0 0%
Paul Rice - 2,000 2,000 .08% 0 0%
Mark A. Landrigan - 3,000 3,000 .11% 0 0%
Michael C. Dickson - 8,000 8,000 .31% 0 0%
Mr. & Mrs. Richard D.
Sutherlin - 3,000 3,000 .11% 0 0%
Robert Kube - 3,700 3,700 .14% 0 0%
Lauren Tracy - 3,000 3,000 .11% 0 0%
Elizabeth Gheen - 9,500 9,500 .36% 0 0%
Roger Vosti - 3,000 3,000 .11% 0 0%
Richard G. Hinkle - 3,000 3,000 .11% 0 0%
<PAGE> 14
<S> <C> <C> <C> <C>
Shlomo & Gitty Fuhrer -
3,000 3,000 .11% 0 0%
R.E. Hunt Trust - 3,000 3,000 .11% 0 0%
William Hidde - 3,000 3,000 .11% 0 0%
James Yanai - 5,000 5,000 .19% 0 0%
Gerald Dooher - 5,000 5,000 .19% 0 0%
John Engel - 3,000 3,000 .11% 0 0%
Michael T. Lloyd - 3,000 3,000 .11% 0 0%
Dorothy J. Filson - 7,000 7,000 .27% 0 0%
Terrence E. Dooher - 5,000 5,000 .19% 0 0%
Stephen A. Jones - 2,000 2,000 .08% 0 0%
David Warren - 9,944 9,944 .38% 0 0%
Lynne Gjertsen - 2,000 2,000 .08% 0 0%
Francine Jacoby - 750 750 .03% 0 0%
Terry W. King - 3,000 3,000 .11% 0 0%
Dunvegan Mortgage Corp -
9,000 9,000 .34% 0 0%
Hosea E. Taylor Retirement
Account - 3,000 3,000 .11% 0 0%
Roger E. Becker - 3,000 3,000 .11% 0 0%
Donald C. Hardyman - 3,000 3,000 .11% 0 0%
Robert Odom - 1,000 1,000 .04% 0 0%
Sharon Lunde - 3,000 3,000 .11% 0 0%
David E. Black - 13,334 13,334 .51% 0 0%
Paine Webber, Inc. for
Johnny & Barbara Wong -
6,000 6,000 .22% 0 0%
Edward D. Jones & Company
- - Trustee FBO Perry
Marshall - 10,739 21,477 .82% 10,738 .401
Dr. & Mr. Oswald Coury -
6,000 6,000 .23% 0 0%
Richard S. Zinn - 3,000 3,000 .11% 0 0%
Mark A. McAlister - 11,900 11,900 .46% 0 0%
Robert G. Schwartz - 5,000 5,000 .19% 0 0%
Keith J. Maurer - 4,000 4,000 .15% 0 0%
Joseph Mazurski, Jr. - 3,000 .11% 0 0%
3,000
Paine Webber, Inc. for
Mitsuo Tatsugau - 7,500 7,500 .29% 0 0%
James Filson - 3,000 3,000 .11% 0 0%
Blayne & Lisa Gumm - 9,000 9,000 .34% 0 0%
Charlie A. Ker - 3,000 3,000 .11% 0 0%
Mark W. Maurer - 3,000 3,000 .11% 0 0%
Paul Maurer - 3,000 3,000 .11% 0 0%
Judith R. Maurer - 3,000 3,000 .11% 0 0%
Suzanne M. Nolan - 3,000 3,000 .11% 0 0%
Frank P. Roche - 1,665 1,665 .06% 0 0%
John Fritts - 6,000 6,000 .23% 0 0%
Paul Bennett - 17,000 17,000 .65% 0 0%
David Blessing - 700 700 .03% 0 0%
James F. Clifford - 3,000 3,000 .11% 0 0%
Donald Johnson - 3,000 3,000 .11% 0 0%
Ronald Gluck - 3,000 3,000 .11% 0 0%
<PAGE> 15
<S> <C> <C> <C> <C>
Fred Solomon, Sr. - 9,000 9,000 .34% 0 0%
Norman Krause and Ann R.
Goodwin - 6,000 6,000 .23% 0 0%
Max Battle - 3,000 3,000 .11% 0 0%
Michael Orr - 1,000 1,000 .04% 0 0%
Steve Solomon - 11,000 11,000 .42% 0 0%
Hank Johnson - 2,000 2,000 .08% 0 0%
Bill Thompson - 3,000 3,000 .11% 0 0%
Don Thompson - 12,325 49,300 1.89% 4,500 .168%
Greg Ortman<F4> - 14,667 14,667 .56% 0 0%
Melody Webber - 300 300 .01% 0 0%
Jerry Hogg - 3,000 3,000 .11% 0 0%
Celeste Nash - 1,000 1,000 .04% 0 0%
Jock Terry<F6>- 13,500 13,500 .49% 0 0%
Rene Gareau - 4,000 4,000 .15% 0 0%
Cindy Delporte - 4,334 4,334 .17% 0 0%
Dominic J. & Robin E.
Cipolla - 3,000 3,000 .11% 0 0%
Francis Fazzina - 3,000 3,000 .11% 0 0%
William A. Lawson - 6,000 6,000 .23% 0 0%
Wally Armstrong<F5> - 10,000 10,000 .38% 0 0%
Andy Bean - 5,000 5,000 .19% 0 0%
Pat Sanders<F3> - 51,450 102,900 3.94% 51,450 1.97%
Mickler Bentley - 43,300 43,300 1.66% 0 %
Perry Marshall - 37,931 75,861 2.88% 37,930 1.44%
Douglas Screen Printing -
3,000 3,000 .11% 0 0%
Neil Fabricant - 3,000 3,000 .11% 0 0%
Gregory Coffin - 200 200 .01% 0 0%
Tom Ritenour - 200 200 .01% 0 0%
Paul Simmons - 3,000 3,000 .11% 0 0%
Duane B. Sawtelle - 3,000 3,000 .11% 0 0%
Pratt Wylce & Lords<F7> -
175,000 275,000 10.53% 0 0%
Andrew J. Zak - 1,000 1,000 .04% 0 0%
Bradley J. Lawson - 1,300 1,300 .05% 0 0%
Kenneth B. Lawson - 1,300 1,300 .05% 0 0%
Anthony E. and Anna L.
Gowan - 3,000 3,000 .11% 0 0%
Douglas G. Lawson - 400 400 .02% 0 0%
William C. and Connie A.
Noble - 41,864 41,864 1.59% 0 0%
Elizabeth P. & Claudette
L. Ray - 1,500 1,500 .06% 0 0%
Douglas M. Dixon - 3,000 3,000 .11% 0 0%
Nancy G. Dixon - 3,000 3,000 .11% 0 0%
Audrey Skinner Geisler
Rev. Trust - 3,000 3,000 .11% 0 0%
Marguerite Cook - 3,000 3,000 .11% 0 0%
Dean Witter Reynolds, Inc.
for Gene Goulooze - 12,000 12,000 .46% 0 0%
Frederick J. Graft
Retirement - 6,000 6,000 .23% 0 0%
<PAGE> 16
<S> <C> <C> <C> <C>
Delaware Charter &
Guarantee for Howe Barnes
Investments & Hosea Taylor
- - 1,334 1,334 .05% 0 0%
Howe Barnes Investments - 2,000 .10% 0 0%
2,000
Alan R. Filson - 67,000 67,000 2.56% 0 0%
Signe & Theodore Keyes -
200 200 .01% 0 0%
Michael W. Jamison - 1,000 1,000 .04% 0 0%
Albert or Cyndee Jarrell - 3,000 .11% 0 0%
3,000
James T. Norris - 3,000 3,000 .11% 0 0%
Lacey McClellan - 1,500 1,500 .06% 0 0%
Cede & Co. FOB Rosella 3,000 .11% 0 0%
Cook - 5,000
J. Stuart Grant - 5,000 5,000 .19% 0 0%
Peter Groh - 2,834 2,834 .11% 0 0%
Regarding Golf - 5,334 5,334 .20% 0 0%
Beverly Evans - 2,000 2,000 .08% 0 0%
Robert Bassell - 1,000 1,000 .04% 0 0%
Robert Bonefant, Jr - 1,000 .04% 0 0%
1,000
Wes Whitingham - 1,000 1,000 .04% 0 0%
Gary Koch - 3,000 3,000 .11% 0 0%
Dale Hawkins - 2,666 2,666 .10% 0 0%
Rick Bradshaw - 3,000 3,000 .11% 0 0%
Scott Edmiston - 6,136 6,136 .23% 0 0%
Zadie Riise Madsen - 600 600 .02% 0 0%
Tom Lehman - 1,000 1,000 .04% 0 0%
Steve Wright - 5,000 5,000 .19% 0 0%
Jim Dent - 1,000 1,000 .04% 0 0%
Robert Evans - 14,288 14,288 .54% 0 0%
Cynthia E.Solomon - 5,000 5,000 .19% 0 0%
Marshall Solomon - 5,000 5,000 .19% 0 0%
James M. Solomon - 5,000 5,000 .19% 0 0%
Christopher Sanders - 5,000 .19% 0 0%
5,000
Douglas W. Sanders - 5,000 5,000 .19% 0 0%
Michael S. Solomon - 5,000 5,000 .19% 0 0%
Dr. Chas J. Morris - 500 500 .02% 0 0%
Jackson Morris - 3,000 3,000 .11% 0 0%
<FN>
<F1> Fred Solomon is currently President and a Director of the Company.
<F2> James G. Solomon is currently Vice President and a Director of the Company.
<F3> Pat Sanders is currently Secretary and a Director of the Company.
<F4> Gregory Ortman was previously a Director of the Company.
<F5> Wally Armstrong was previously a Director of the Company.
<F6> Jock Terry was previously Chief Financial Officer and Controller of the Company.
<F7> Pratt, Wylce & Lords, Ltd. is distributing 100,000 of its common shares
to its shareholders. These common shares are being registered in this
Offering.
</TABLE>
The Company shall register pursuant to this prospectus on behalf of J.D.
Lawson, 50,000, Richard Hinkle, 25,000, Perry Marshall, 25,000 and William
Hansen, 50,000 shares of common stock which may be issued upon conversion of
the Company's preferred stock.
<PAGE> 17
The Company shall register pursuant to this prospectus 275,000 Class A
Warrants currently outstanding for the account of the following individuals
or entities. The percentage owned prior to and after the offering reflects
all of the then outstanding warrants. The amount and percentage owned after
the offering assumes the sale of all of the Class A Warrants and does not
include any Common Shares underlying the Class A Warrants being registered on
behalf of the selling security holders.
<TABLE>
<CAPTION>
Name and Amount Total Number Percentage Amount Owned Percentage Owned
Being Registered of Class A Owned prior After Offering After Offering
- ---------------- Warrants to Offering -------------- --------------
-------- -----------
<S> <C> <C> <C> <C>
Perry & Ellen Marshall - 15,015 5.46% 0 0%
15,015
Don & Jane Thompson - 6,683 2.43% 0 0%
6,683
C. Mickler Bentley - 6,683 6,683 2.43% 0 0%
Fred Solomon - 109,367 109,367 39.77% 0 0%
James Solomon - 109,367 109,367 39.77% 0 0%
Pat Sanders - 20,047 20,047 7.29% 0 0%
Jimmy Wright - 5,390 5,390 1.96% 0 0%
Michael Simon - 1,540 1,540 .56% 0 0%
Gregory J. Jorgensen - 303 303 .11% 0 0%
Keith J. Maurer - 605 605 .22% 0 0%
</TABLE>
The Company shall register pursuant to this prospectus 275,000 Class B
Warrants currently outstanding for the account of the following individuals
or entities. The percentage owned prior to and after the offering reflects
all of the then outstanding warrants. The amount and percentage owned after
the offering assumes the sale of all of the Class B Warrants and does not
include any Common Shares underlying the Class B Warrants being registered on
behalf of the selling security holders.
<TABLE>
<CAPTION>
Name and Amount Total Number Percentage Amount Owned Percentage Owned
Being Registered of Class B Owned prior After Offering After Offering
- ---------------- Warrants to Offering -------------- --------------
-------- -----------
<S> <C> <C> <C> <C>
Perry & Ellen Marshall - 15,015 5.46% 0 0%
15,015
Don & Jane Thompson - 6,683 2.43% 0 0%
6,683
C. Mickler Bentley - 6,683 6,683 2.43% 0 0%
Fred Solomon - 109,367 109,367 39.77% 0 0%
James Solomon - 109,367 109,367 39.77% 0 0%
Pat Sanders - 20,047 20,047 7.29% 0 0%
Jimmy Wright - 5,390 5,390 1.96% 0 0%
Michael Simon - 1,540 1,540 .56% 0 0%
Gregory J. Jorgensen - 303 303 .11% 0 0%
Keith J. Maurer - 605 605 .22% 0 0%
</TABLE>
- ------------------------------------------------------------------------------
USE OF PROCEEDS
- ------------------------------------------------------------------------------
The securities to which this Prospectus relates are being distributed to
holders of Pratt Common Stock as a dividend and neither the Company nor Pratt
will receive any cash or other proceeds in connection with the Distribution.
<PAGE> 18
Additionally, securities are being registered on behalf of the selling
securityholders and the Company will not receive any cash or other proceeds
in connection with the subsequent sale. Any proceeds received from the
subsequent exercise of the Class A and Class B Warrants shall be used as
working capital and to expand operations. If all of the Class A Warrants are
exercised, the proceeds shall be utilized over a six month period. If all of
the Class B Warrants are exercised, the proceeds shall be utilized over a two
year period.
- ------------------------------------------------------------------------------
THE COMPANY
- ------------------------------------------------------------------------------
THE COMPANY. The Company was incorporated in Florida on October 1, 1993.
The total number of shares of Common Stock which the Company was authorized
to issue was Five Thousand (5,000), par value $1.00. The Company's Common
Stock had no cumulative rights but did originally have preemptive rights .
On December 8, 1994, the Articles of Incorporation were amended to increase
the authorized Common Shares to Fifty Million (50,000,000), to change the par
value to $.001 and to remove any preemptive rights.
The Company's executive offices are located at 11800 28th Street North, St.
Petersburg, Florida 33716. Telephone No. (813) 571-3545. These offices
consist of 13,500 square feet leased on a month to month basis for $4,000 per
month.
There are presently outstanding 2,665,852 Common Shares. This does not
include any Common Shares which may be issued pursuant to the exercise of the
Class A, Class B or Class C Warrants. See "DESCRIPTION OF SECURITIES" and
"CERTAIN TRANSACTIONS."
BUSINESS OBJECTIVE. The operations and objectives of the Company are to
market unique golf training aids to domestic and foreign markets.
EMPLOYEES. As of the date of this Prospectus, the Company has eight full
time employees. The Company will, as operations demand, sub-contract the
balance of its personnel through independent contractors or hire additional
employees.
CONSULTING AGREEMENT. On October 24, 1994, the Company has entered into
a consulting agreement on with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist
the Company in its capitalization and the obtainment of additional financing.
To date, Pratt provided consulting services regarding capital structuring,
initial equity financing, and preparation of a registration statement. The
term of the agreement is for one year from October 24, 1994 and has been
extended through April 30, 1996. To date, Pratt has received 275,000 common
shares valued at $1.50 per common share which represents 10.26% of the
currently outstanding common stock of Pratt. As a result, Pratt would be
deemed to be an affiliate of the Company. Subsequent to the distribution
pursuant to this registration statement, Pratt shall be a nonaffiliate owning
6.23% of the total outstanding common shares of the Company. As partial
payment for consulting services, the Company issued 275,000 of its Common
Shares to Pratt, of which 100,000 Common Shares are to be registered and
distributed to Pratt shareholders. Included in the 275,000 Common Shares are
67,000 Common Shares issued to a nominee of Pratt. In addition, Pratt
received total cash compensation of $17,500.
COMPETITION. The Company's golf system, together with other future
products of the Company will compete in the recreation, fitness and sports
training markets, which are highly competitive. Increased competition
generally, and the introduction or promotion of competing products
specifically, could adversely affect the Company's sales and
<PAGE> 19
profitability by exerting pricing pressure, reducing market share and creating
other obstacles. In the golf industry, a distributor's ability to compete is
dependent in part upon its ability to satisfy various subjective preferences
of golfers, including the look and "feel" of a golf product and the level of
acceptance that the product has achieved among professional and other golfers.
The subjective preferences of purchasers of golf training products may be
subject to rapid and unanticipated changes.
The Company will be competing with established companies and other entities
(many of which may possess substantially greater resources than the Company.
Almost all of the companies with which the Company competes are
substantially larger, have more substantial histories, backgrounds,
experience and records of successful operations, greater financial,
technical, marketing and other resources, more employees and more extensive
facilities than the Company now has, or will have in the foreseeable future.
It is also likely that other competitors will emerge in the near future.
There is no assurance that the Company's products will compete successfully
with other similar products. The Company shall compete on the basis of
quality of its products in addition to a price basis. Inability to compete
successfully might result in increased costs, reduced yields and additional
risks to the investors herein.
- ------------------------------------------------------------------------------
BUSINESS ACTIVITIES
- ------------------------------------------------------------------------------
PRODUCT LINE.
Level Best Golf System - The Level Best Golf System consists of three
engineered plastic components (hand positioner, loft indicator and lie
detector), a 20-minute instructional video featuring Wally Armstrong, a
carrying pouch and bag tag for recording training information specific to
each golfer. The Level Best Golf System retails for $49.95, plus $4.95
shipping and handling. The Company introduced this product in green grass
pro shops (a traditional pro-shop located at a golf course or driving range)
and concrete golf shops (off-course golf shops which sell golf clubs and
accessories) nationwide in January, 1995.
Hand Positioner: The hand positioner is a small plastic curved component
which attaches to the golf club just below the grip. The hand positioner's
vial and bubble indicate the golfer's hand position when he/she addresses the
ball and actually remain on the club as practice balls are hit. This allows
the golfer to return to the same position before hitting each shot, which in
turn, builds consistency into the golfer's set-up and shot-making.
Loft Indicator: The loft indicator magnetically attaches a curved plastic
and vial component to the club face of the golf club. The loft indicator
will actually read the loft of the club face as the golfer addresses the ball
and it also indicates whether the face of the club is pointed at the target
(square), which is the desired position, pointed to the right of the target
(open) or pointed to the left of the target (closed). Achieving proper
alignment of the club face to the target is an ongoing challenge for golfers
of all skill levels and the loft indicator provides a quick and repeatable
method of achieving proper club face to target alignment.
Lie Detector: The lie detector is a smaller plastic component which also
magnetically attaches to the club face and has a small vial just like a
carpenter's level. Proper club lie can vary as much as four degrees from
one player to the next. When the lie detector is placed parallel to a
groove in the club face and the bubble is centered between the lines on
<PAGE> 20
the vial (which indicate level), if the hands are not in a comfortable
relaxed position an adjustment to the club lie would be indicated. The
adjustment would be either upright or flat, which would bring a golfer's
hands to a comfortable and relaxed position with the bubble in the level
centered.
The 20 minute video which accompanies the components shows proper use of each
component and how they may be used in combination to improve set-up and
shot-making. It also shows how to record an individual golfer's proper hand
position and loft at address for quick reference and maximum benefit when
using the system to practice.
The basic components of the Level Best Golf System were invented and
patented by Mr. Perry Marshall in 1990. The components have been updated
and redesigned to create the present form of the system. New patents were
filed in January, 1994 to encompass these changes, as well as to tie the
components together for use as a training system. These patents are still
held by Mr. Marshall.
The Putt Perfector - The Putt Perfector is a patented training aid
designed to help golfers of any skill level develop a pendulum putting
stroke. The Putt Perfector is a small plastic component. It attaches to
the shaft of a putter just above the head and has a small vial which assures
that the Putt Perfector is squared to the club face of the putter in one
plane, and is level with the horizon when the golfer address the ball.
Inside the body of the Putt Perfector, a small white ball sits on the front
end of the Putt Perfector when the golfer is addressing a putt. When the
golfer makes a putting stroke, the white ball travels toward the rear of the
Putt Perfector and lands in one of three pockets (similar to a pool table
pocket and ball). The center pocket is located directly behind the point
from which the small white ball sits prior to making the stroke. If a
proper straight back and straight through (pendulum stroke) to the target
stroke is made, the white ball will go into this pocket which is centered
between two other pockets. If the white ball travels into either of the
other pockets, it would indicate the putter stroke was incorrect by taking
the putter path inside or outside of the desired center line path and would
indicate that correction is needed. The 30 minute instructional video shows
golfers how to attach and use the Putt Perfector and also shows how to make
proper stroke and correct faults in improper strokes.
The Putt Perfector is planned to retail at $24.95, plus $3.95 shipping and
handling. The Company introduced this product in sporting goods stores as
well as in green grass pro shops and concrete golf shows nationwide following
the introduction of the Level Best Golf System, in the first quarter of 1995.
The Company has negotiated an exclusive marketing agreement with Marshall
Products, Inc. for the Level Best Golf System, The Putt Perfector and other
golf related products currently under review and development by Mr. Marshall,
its principal. The agreement is for a term of five years from the effective
date of January 1, 1994 with an option to renew the agreement for an
additional five years. The Company pays a royalty of 7.5% of the net sales
price for each product sold by the Company. In the event that net sales of
units shall not exceed in the aggregate, for a period of four years, unit
sales of 60,000, Marshall Products shall have the right to give the Company
30 days notice of the termination of the exclusive character of the
agreement; unless the Company can show, to the satisfaction of Marshall
Products, Inc. that its failure was attributable to facts beyond its control,
such as market conditions, failure of supply of needed raw materials, strike,
etc. Marshall Products, Inc. may terminate the Agreement upon written
notice if timely payments of royalties are not made by the Company or in the
event the Company declares bankruptcy or is insolvent. The Company would
have 90 days to cure any defect.
<PAGE> 21
The patents relating to these products are held individually by Mr. Marshall
and, as a result, Mr. Marshall could, in the future, limit the Company's use
of the products. However, Marshall Products, Inc. is controlled by Mr. and
Mrs. Marshall and the Company does not foresee any limitations or possible
breach of contract by Marshall Products, Inc.
Other Products. The Company acquired exclusive marketing rights to
Wally Armstrong's "Maximizing Your Game" system. The term of the exclusive
marketing agreement is for 18 months commencing on March 15, 1995 and
continuing on a year to year basis assuming annual revenue paid to Gator
Golf, a company controlled by Mr. Armstrong are at least $20,000. The
Company pays 10% of gross collected revenue on Maximizing Your Game to Gator
Golf. Gator Golf may terminate the Agreement upon written notice if timely
payments are not made by the Company or in the event the Company declares
bankruptcy or is insolvent. The Company would have 10 days to cure any
defect.
Maximizing Your Game consists of three, 2-hour videos which address almost
every facet of the game. It also comes with 5 training aids designed to
work in conjunction with the practice drills demonstrated on the videos.
Tape 1 - The Clinic: The Full Fall Swing gives easy to follow instruction
which help the golfer feel the correct swing motion for driver, fairway woods
and long irons. Tape 2, The Short Game: Error Corrections and
Misconceptions of Golf shows proper techniques for chipping, pitches, sand
shots and putting. Tape 2 also demonstrates correction for hooks, slices
and other problem shots. Tape 3 Playing The Course shows golfers how to not
get bogged down with too many swing mechanics and also how to manage the golf
game on the course. Included is a 20 minute segment with noted sports
psychologist, Dr. David Cook. Mr. Armstrong uses training aids throughout
the videos to convey easy to understand practice drills from which to build a
solid swing.
The Company has re-introduced the product at $79.95 via a 30-minute
infomercial featuring Mr. Armstrong and testimonials. The Company did not
participate in any way with the initial introduction of this product by Mr.
Armstrong. The product was initially introduced by American Telecast and
Mr. Armstrong in 1992 and the infomercial ran into 1993. This was done as
"Wally Armstrong Golf, Inc." and over 100,000 units were sold at $149.95 per
unit.
The Company is reviewing numerous products for market viability. The
Company is also currently evaluating other golf companies for potential
acquisition. Currently no acquisitions have been targeted by the Company.
Any future products or acquisitions would be financed by future revenue
and/or any proceeds received from subsequent sales of the Company's debt or
equity securities or upon exercise of Company's warrants, if any.
MARKET. Based on statistics from the National Golf Foundation, there are
estimated to be 24,300,000 golfers in the United States as of 1994. The
Japanese market, based on statistics published in September, 1993 in Golfweek
Magazine, is estimated to be 17,500,000 golfers and 20,000,000 range players
who practice regularly at range facilities with little or no opportunity to
get on a golf course. Europe, Australia and Asia are also experiencing
growth in the golf industry and represent a significant opportunity for
expansion of the Company's sales.
<PAGE> 22
MARKETING STRATEGY. The Company's marketing strategy employs a
multi-tier strategy of direct response television, direct response print,
event marketing and television supported retail marketing through
conventional distribution systems and outlets. Direct response is when the
customer responds to a television commercial or print ads and places a credit
card order with the Company.
A 2-minute direct response television commercial and a 1 minute retail
support commercial on the Company has been completed. The commercials
feature pro golfer Wally Armstrong and golf school owner Greg Ortman, all
filmed at Greenlefe Resort near Orlando, Florida.
The Company intends to employ the development of golf tips column by Wally
Armstrong and a series of 3 minute instructional mini-programs to be inserted
into golf programs on the various broadcast and cable sports networks.
Home Shopping Network will feature the Putt Perfector with Wally Armstrong as
the show's host in 1996. Additionally, The Company is also selling Maximizing
Your Game and Putt Perfector into Japan through SNUGZ USA, Inc. SNUGZ USA,
Inc., a non-affiliate Utah company, originally manufactured eyeglass
retainers and then broadened its product line and sells its printed products
through a specialized distributor system. SNUGZ USA, Inc. currently
services over 2,500 distributors.
With the help of OpenNet Technology, the Company has created an interactive
golf product page featuring all the products, golf clubs, training aid and
instruction. NBC's GolfData Web has sought out Wally Armstrong and Greg
Ortman to be on-line instructors. The Company will have no interest or
involvement with Messrs. Armstrong or Ortman in this endeavor.
Editors and writers at both general consumer and specialty publications have
received complete information kits (news release, photos, video and actual
product samples). Articles are planned to support the primary marketing
thrust provided by direct response television. The publicity effort is
planned to include the use of a newspaper mat service. Three different
articles are planned to be distributed to small daily and large weekly
newspapers in wealthy suburban markets. These types of articles offer
advice and talk about the benefits of the Level Best Golf products. A
toll-free number appears in some articles, while others offer a free
brochure.
The Company entered into a three year Personal Services Agreement with Wally
Armstrong, a former director of the Company, on January 7, 1994. Pursuant to
the agreement, Mr. Armstrong shall receive compensation of $25,000 per year.
Mr. Armstrong agreed to grant a non-exclusive right to utilize his name in
connection with advertisement, promotion and sale of the Level Best Golf
System for a period of time commencing January 1, 1994 to December 31, 1996.
Mr. Armstrong has the right of first refusal to endorse future products.
The Company recently entered into an exclusive national distribution
agreement with The Booklegger of California, a non-affiliate. The
Booklegger distributes, among other items, golf books, videos and training
aids, with over 20 years experience and has 7,000 accounts consisting of
green grass and off course shops.
Austad's, a catalog retailer of golf products and a non-affiliate of the
Company, has produced and run a half-page ad in its summer catalog and will
continue to do so in future editions. Additionally, Amway is currently
carrying the Level Best Golf System in its holiday catalog.
<PAGE> 23
New-Era Trading Group, Inc., Largo, Florida, a non-affiliate, represents the
Company throughout Europe. The Level Best Golf System is currently being
marketed in Sweden and is being evaluated in other European countries. The
Company anticipates the receipt of orders in the first quarter of 1996.
MANUFACTURING AND ASSEMBLY. The Company outsources all component
manufacturing to proven reliable sources and also has alternate sources
available at similar costs for all components of the Level Best Golf System.
All components except for curved glass vials and custom molded plastic
bodies are readily available from a number of suppliers. Winders Products
Company, Port Austin, Michigan is the current source for glass curved vials.
The Company's alternate source for glass curved vials is W.A. Moyer and
Sons, Emporia, Kansas. The plastic molded bodies are currently being
provided by Dickson Tool and Mold, Inc., Brooksville, Florida. The Company
owns all tooling used in this process.
Final assembly of components is currently being accomplished by UPARC, Inc.,
St. Petersburg, Florida with quality surveillance being conducted by the
Company's personnel. The Company also has in-house tooling and capability
to support near term requirements.
- ------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
TRENDS AND UNCERTAINTIES. Inasmuch as a major portion of the Company's
activities is the development and marketing of golf training aids, the
Company's business operations may be adversely affected by competitors and
prolonged recessionary periods. The sale of the Company's products are
seasonal in that the Christmas season and Father's Day are two strong buying
periods. Additionally, however, the spring season also produces strong
orders in the first six months of each year.
The Company utilizes Dickson Tool & Mold, Inc. as its current source for
plastic molded parts. However, the Company owns the actual molds and there
are several local injection molding companies which could be approached.
There can be no assurance that if Dickson Tool & Mold, Inc. were unable to
continue as the Company's source, that the Company could obtain its injection
molding at the same price level per product.
The Company has been adding new accounts, representative groups, expanding
into new markets and channels of distribution in recent months. See
"Business Activities - Marketing Strategy" The continuation of obtaining
additional types of new business and markets is uncertain and the continued
success of any of the Company's new marketing strategies for generating
revenue is uncertain.
During January, 1995, the Company entered into an agreement to acquire
certain assets and assume certain liabilities related to the operation of a
golf school. Pursuant to the agreement, the Company issued the owner of the
property cash aggregating $12,500 and issued 8,334 shares of its common
stock. This agreement was rescinded in early October, 1995. The Company
is of the opinion that the rescission will not have a negative impact on the
Company's future operations.
<PAGE> 24
In addition, the future exercise of any of the Warrants is uncertain based on
the current financial condition of the Company. The lack of future exercise
of the Class A or Class B Warrants registered hereunder would negatively
impact the Company's ability to successfully expand operations.
It appears that the securities of the Company privately placed after October
5, 1995 should be integrated with this offering and thus should have been
registered under Section 5 of the Securities Act of 1933. In addition, it
appears that this registration statement constitutes a solicitation of an
unregistered offering, requiring registration under Section 5 of the
Securities Act, with regard to those shares issued after October 5, 1995, for
which the private placement purchasers are selling shareholders. As a
result, there is potential contingent liability of the Company arising from
the Section 5 violations. If the Company were required to rescind the
placement of the securities after October 5, 1995, the Company would owe
$80,883 plus interest at 12% per annum accruing from the date of issuance.
There can be no assurance that any contingent liability which may result will
not have a material impact on the Company.
CAPITAL AND SOURCE OF LIQUIDITY. In May, 1995, the Company entered
into a month to month lease for new premises at the monthly rate of $4,000
per month. Other than the lease, the Company has no material commitments
for capital expenditures.
Plan of Operation. The Company has planned capital expenditures as
discussed in "Business Activities". The Company intends to use future
revenue and proceeds from future sales of its equity securities. There can
be no guarantee that the Company will be able to obtain the additional funds
from any of the sources listed and will not make the proposed acquisitions if
said funds are not available.
The Company has developed the following to implement the marketing plan of
its products.
Sales to National Chains. The Company has established a relationship
on a national level with Sports & Recreation which currently has the
Company's products in all eighty of their stores. The Company is seeking to
create similar relationships with other national chains.
Catalog Sales. The Company has had its products featured in the
catalogues of both "Hammacher Schlemmer" and "Austad's ". This has helped
promote the Company's products on a national level.
Sales to Golf Shops. The Company is purchasing close-out inventory of
several major golf manufacturers and will be aggressively marketing those
products. This will occur both on a local level through newspaper ads and
contact with local golf shops, and on a national level through a relationship
as an approved vendor of "Play It Again Sports", a sporting goods chain with
over 650 stores. The markup on the products will be approximately forty
percent. A portion of the financing of this effort is being provided by
Lorimar Capital Management Corp. located in Columbus, Ohio which approved a
$100,000 loan for a golf club close-out purchase from Head Sports in Boulder,
Colorado.
Overseas Sales. The Company is working with SNUGZ USA, Inc. who will
distribute our products to Japan beginning with "Maximizing Your Game".
This requires no outlay of cash on the part of the Company as the distributor
will be responsible for the marketing expense associated with this project.
<PAGE> 25
National Infomercial. The Company authorized its Canadian distributor
to produce a thirty minute infomercial featuring "Maximizing Your Game".
The commercial has already been produced and is in the final editing stages.
It is expected to be aired on both U.S. and Canadian television nationally
beginning in February 1996. This commercial features PGA Teacher Wally
Armstrong, PGA tour member Andy Bean, who has won eleven times on tour and
actor Mclean Stevenson. All of the costs for this production are being
borne by the Canadian distributor and the Company shall be providing the
product at a reduced cost basis. The Company also has in excess of 100,000
units of this product in inventory that has already been paid for. The
Company will only have to provide the video tapes in the product package.
The Infomercial will also provide advertising support to the Company's retail
sales without the expense associated with conventional retail support
advertising.
Based on its established channels of distribution, its recent marketing and
current and projected sales levels, the Company should begin to have positive
cash flow from operations in first quarter of 1996 and management is of the
opinion that the Company will be able to generate sufficient cash flows to
support these operations during fiscal year 1996. The Company is currently
financing its sales with a combination of cash generated from internal
operations and additional equity and debt financing. The Company has
recently raised $200,000 in the private placement of preferred shares to
three individuals from October, 1995 to January, 1996. The Company shall
pursue additional equity or debt financing, if necessary, to continue or
expand operations.
For the year ended September 30, 1995, the Company purchased property and
equipment for $3,831. This resulted in net cash used in investing activities
of $3,831 for the year ended September 30, 1995.
The Company utilized $15,217 in the acquisition of product rights and video
production for the year ended September 30, 1994. The Company also utilized
$13,259 for the acquisition of property and equipment necessary to commence
operations. As a result, net cash used in investing activities was $28,476
for the year ended September 30, 1994.
For the six months ended March 31, 1996, the Company purchased property and
equipment for $22,469. This resulted in net cash used in investing
activities of $22,469 for the period ended March 31, 1996.
For the year ended September 30, 1995, the Company received $609,177 from the
sale of its common stock and $100,000 from the U.S. Small Business
Administration. This note is payable in installments of $1,754 plus
interest at 11% per annum and is due on or before October 1, 1999. As of
September 30, 1995, the balance of the note is $84,214. The Company repaid
$13,795 on its long term debt to a related party. The Company also repaid
$15,786 in its long-term debt and decreased its related party payables by
$30,942. As a result, the Company had net cash provided by financing
activities of $648,654 for the year ended September 30, 1995.
For the year ended September 30, 1994, affiliates of the Company advanced
$42,137 to the Company for working capital. The Company also had an
increase in notes-payable - affiliates of $176,600 due to further amounts
advanced for working capital. In addition, the Company received $84,094 from
the issuance of its common stock. Net cash provided by financing
activities was $302,831 for the year ended September 30, 1994.
<PAGE> 26
For the six months ended March 31, 1996, the Company received $300,000 from
the sale of its Preferred Stock. The Company had an increase of $27,706 on
its long term debt to a related party due to amounts received from said
related party to continue operations. The Company also repaid $10,522 in
its long-term debt. As a result, the Company had net cash provided by
financing activities of $317,184 for the period ended March 31, 1996.
On a long term basis, liquidity is dependent on increased revenues from
operations, additional infusions of capital and debt financing. The Company
believes that additional capital and debt financing in the short term will
allow the Company to increase its marketing and sales efforts and thereafter
result in increased revenue and greater liquidity in the long term. However,
there can be no assurance that the Company will be able to obtain additional
equity or debt financing in the future, if at all.
RESULTS OF OPERATIONS. The Company experienced a net operating loss of
$(1,473,182) for the year ended September 30, 1995 compared to $(385,126) for
the year ended September 30, 1994. Net sales increased from $22,339 and
cost of sales increased from $15,791 for the year ended September 30, 1994 to
net sales of $98,474 and cost of sales of $149,263 for the year ended
September 30, 1995 due to increased operations. Selling, general and
administrative expenses increased from $379,292 for the year ended September
30, 1994 to $1,391,904 for the same period in 1995 due to management's
attempt for obtain further capitalization and increase operations. The
primary change was stock issued for salaries and to consultants for services
related to product development and marketing of $664,725. The other
material components consisted of increases in salaries and payroll taxes of
$133,000, consulting fees of $50,000 and advertising of $28,000, telephone
of $11,000, shipping of $16,000, rent of $10,000 and other miscellaneous
general and administrative expenses of $113,000. Net cash used in
operations was $636,762 for the year ended September 30, 1995.
The Company experienced a net operating loss of $(385,126) for the year ended
September 30, 1994. Depreciation and amortization totaled $3,135 for the
year ended September 30, 1994. Officers of the Company contributed salaries
to capital of $121,800 and common stock issued for services related to
product development and marketing valued at $21,500. The Company
experienced an increase in inventory of $61,437 due to the commencement of
operations. Other assets increased $3,926 and accounts payable increased
$29,699 due to the commencement of operations. Net cash used in operations
for the year ended September 30, 1994 was $274,355.
For the year ending September 1994, the Company promoted and sold 894 units
of The Level Best Golf System. For the year ending September 1995, the
Company promoted three products and sold 140 units of The Level Best Golf
System, 1,832 units of Maximizing Your Game and 372 units of the Putt
Perfector.
The Company had a net operating loss of $(265,573) for the six months ended
March 31, 1996 compared to $(390,711) for the six months ended March 31,
1995. Net sales increased from $3,035 and cost of sales increased from
$16,220 for the six months ended March 31, 1995 to net sales of $167,107 and
cost of sales of $60,400 for the six months ended March 31, 1996 due to
commencement of and increased operations. Selling, general and
administrative expenses remained relatively the same from $377,526 for the
six months ended March 31, 1995 to $372,237 for the same period in 1996 due
to management's continuing attempt for obtain further capitalization and
increase operations. The main components of selling, general and
administrative expenses were advertising of $89,735 and salaries and payroll
taxes of $70,134. Stock issued for salaries and to consultants for services
related to product development and marketing of $7,127. The other material
components of selling, general and administrative expenses consisted of
<PAGE> 27
increases in stock issued for salaries and to consultants for services
related to product development and marketing of $7,126, consulting fees of
$34,237, telephone of $17,609, shipping of $5,665, rent of $24,900, travel of
$10,247, insurance of $7,358, entertainment and meals of $21,888, auto of
$14,109 and other miscellaneous general and administrative expenses of
$69,228. Net cash used in operations was $301,650 for the period ended
March 31, 1996.
For the six months ended March 31 1995, the Company promoted and sold 220
units of The Level Best Golf System. For the six months ended March 31
1996, the Company promoted three products and sold 30 units of The Level Best
Golf System, 1,311 units of Maximizing Your Game and 257 units of the Putt
Perfector.
The Company is seeking to lower its operating expenses while expanding
operations and increasing its customer base and operating revenues. The
Company is focusing on decreasing administrative costs. However, increased
marketing expenses will probably occur in future periods as the Company
attempts to further increase its marketing and sales efforts.
- ------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- ------------------------------------------------------------------------------
LONG-TERM DEBT. During December, 1993, the Company borrowed $177,000
from an entity controlled by its two largest shareholders. This note had a
balance of $176,600 at September 30, 1994 and a balance of $162,805 at
September 30, 1995, $149,840 of the note bears interest at prime plus 1.5
percent and is due on demand. A remaining portion of the note $12,965 bears
interest of 6% per annum and is due on or before December 31, 1996.
RECENT ACQUISITION. During January, 1995, the Company entered into an
agreement to acquire certain assets and assume certain liabilities related to
the operation of a golf school. Pursuant to the agreement, the Company
issued the owner of the property cash aggregating $12,500 and issued 8,334
shares of its common stock. This agreement was rescinded in early October,
1995.
RELATED PARTY TRANSACTIONS. During the year ended September 30, 1994
certain officers and directors of the Company and parties related to these
individuals made non-interest bearing advances to the Company aggregating
$42,137. During the year ended September 30, 1995 $9,000 of this debt was
converted into common stock and $30,932 was repaid. In addition, the
Company accrued $178,930 in unpaid salary due these individuals bringing the
balance due to $181,135 at September 30, 1995. During the six months
ended March 31, 1996, an additional amount of $27,706 was advanced to the
Company.
DISTRIBUTION OF SECURITIES. On October 26, 1994, the Board of
Directors authorized the distribution of 275,000 each of A, B, and C stock
purchase warrants exercisable as follows:
$4.75 plus one A warrant for each share of common stock;
$7.50 plus one B warrant for each share of common stock; and
$12.50 plus one C warrant for each share of common stock.
The warrants are exercisable for a period of 48 months from the date of issue
and are callable with 30 days notice at a price of $.001 per warrant.
<PAGE> 28
These distributions shall be made to the owners of record of common stock on
the books of the Company as of January 2, 1995. The Class A and Class B
Warrants and the common stock underlying said Class A and Class B Warrants
are being registered in this Offering.
LOCKUP AGREEMENT. Pursuant to a written agreement on October 1, 1995,
the principal shareholders and officers and directors (Fred Solomon, James
Solomon and Patricia Sanders) who received warrants issued them pursuant to
the Special Meeting of the Board of Directors held on October 1, 1995 have
agreed as follows:
In the event the shareholder exercises any warrants, the stock issued to the
shareholder pursuant to the exercise shall be locked in and restricted from
trading for a period of two years. A notice is to be placed on the face of
each stock certificate covered by the terms of the Agreement stating that the
transfer of the stock evidenced by the certificate is restricted until
twenty-four (24) months from the date of issuance. The shareholder also
agrees not to sell or otherwise transfer their interest in the warrants
except to an underwriter or other market makers in the stock once a market is
established. The shareholder further agrees that the total value in cash,
or other consideration, paid by the buyer to the seller shall not exceed $.01
per warrant.
- ------------------------------------------------------------------------------
MANAGEMENT
- ------------------------------------------------------------------------------
OFFICERS AND DIRECTORS. Pursuant to the Articles of Incorporation, each
Director shall serve until the annual meeting of the stockholders, or until
his successor is elected and qualified. It is the intent of the Company to
support the election of a majority of "outside" directors at such meeting.
Directors may only be removed for "cause". The term of office of each
officer of the Company is at the pleasure of the Company's Board.
The principal executive officers and directors of the Company will be as
follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
- ------------------------------------------------------------------------------
<S> <C> <C>
Fred L. Solomon, age 50 Vice President Inception to November 4, 1994
President November 5, 1994 to present
Controller January 1, 1996 to present
Director Inception to present
James G. Solomon, age 41 President Inception to November 4, 1994
Vice President November 5, 1994 to present
Director Inception to present
Patricia Sanders, age 46 Secretary/Director Inception to present
</TABLE>
Mr. Wally Armstrong was a Director of the Company from inception to March 6,
1995. Mr. Armstrong's resignation was prompted by the needs of his other
business activities and was not the result of any disagreement with the Board
or management of the Company.
Mr. Greg Ortman was a Director of the Company from March 7, 1995 to October
15, 1995. Mr. Ortman's resignation was also prompted by the needs of his
other business activities and was not the result of any disagreement with the
Board or management of the Company.
<PAGE> 29
Mr. Jock Terry was Chief Financial Officer and Controller for the Company
from September 15, 1995 to December 31, 1995. Mr. Terry left the Company
due to the Company's cash flow considerations.
Resumes:
Fred L. Solomon - Mr. Solomon received an Associates of Arts degree at
Daytona Community College in 1964 and a Bachelor of Arts degree at the
University of Florida in 1966. From April, 1978 to August, 1989 Mr. Solomon
was President of Specialty Maintenance & Construction, Inc., a general
contractor with over 200 employees. Mr. Solomon performed a variety of
sales, estimating, accounting, purchasing, human resources, contract
negotiations and executive management services. From October, 1989 to
November, 1990, Mr. Solomon was President of Southern Energy & Aerospace,
Inc., a family owned business which fabricated and installed mechanical
systems for the electric utility power generation industry and which was
acquired by JWP-Zack. Mr. Solomon's responsibilities included total
management of the Gary, Evansville and Tampa Divisions which included sales,
estimating, procurement and construction of the mechanical systems. From
January, 1993 to January, 1994, Mr. Solomon was Vice President of Power
Generation for Nab Construction Company. He was responsible for all aspects
of the operation of power generation and mechanical contracting for all
projects.
James G. Solomon - Mr. Solomon attended Daytona Beach Community College in
1972 and the Hobart Vo/Tech Welding School in the same year. From October,
1981 to July, 1993, Mr. Solomon was Vice President of Southern Energy &
Aerospace, Inc., a family owned business which fabricated and installed
mechanical systems for the electric utility power generation industry. He
was responsible for operations and achieving the goals of the board of
directors. He was also responsible for ensuring that critical schedules and
project budgets were achieved through proper utilization of corporate
resources. From November, 1979 to September, 1989, Mr. Solomon also acted
as Vice President of Specialty Maintenance & Construction, Inc., a general
contractor with over 200 employees. Mr. Solomon performed a variety of
sales, estimating, accounting, purchasing, human resources, contract
negotiations and executive management services. . Mr. Solomon performed
sales, estimating, accounting, purchasing, human resources, contract
negotiations and executive management services.
Patricia A. Sanders - Ms. Sanders attended St. Petersburg Junior College in
1967. She has also attended motivational and educational seminars. From
January, 1979 to January, 1989, Ms. Sanders was administrative assistant at
Nu-Room Company. Her responsibilities included marketing strategy,
negotiating contracts, processing mortgages, payroll, inventory and
overseeing staff and the production team. From January, 1989 to April,
1993, Ms. Sanders worked as an executive assistant/corporate officer to Paul
L. Simmon in the following companies; (I) Viral Control Technology, Inc.
(VCT, a public traded company, located in Tampa, Florida which marketed a
line of environmentally safe disinfectants; (ii) Fam-Pak, St. Petersburg,
Florida, a private company manufacturing Viral On-Guard, a disinfectant
spray. (iii) R.O.S.T., Inc., a Tampa research and development company of
environmental products and (iv) SanDesign, Inc., an environmental product
design company.
Remuneration. The following table sets forth the cash compensation paid by
the Company to its officers and directors from October 1, 1994 to September
30, 1995, during which there were four (4) officers and three (4) directors:
<PAGE> 30
<TABLE>
<CAPTION>
Salaries, Securities or
Fees Property Insurance Aggregate
Directors Benefits or of
Name of Individual Capacities Fees reimbursement Contingent
Number of Persons in which Commissions Personal Forms of
in group served & Bonus Benefits Remuneration
- -------- ------ ------- -------- ------------
<S> <C> <C> <C> <C>
Fred L. Solomon President/Director $22,100 $1,692 $0
James G. Solomon Vice President/ $20,800 $2,102 $0
Director
Patricia A. Sanders Secretary/Director $21,170 $468
Gregory Ortman Director $29,500 $0 $0
Wally Armstrong Director $0 $0 $0
Jock Terry Controller $0 $0 $0
Chief Financial
Officer
All Officers and $93,570 $4,262 $0
Directors as a Group
(6 persons)
</TABLE>
The Company has not entered into Employment Agreements with its Officers.
The Company does have in place medical insurance for its employees (insurance
cost of approximately $1,066 every three months), however, it does not have
any retirement benefit programs, or 401(k) benefit plans.
The above amounts for Mr. Armstrong do not include $25,000 paid to Mr.
Armstrong pursuant to the Personal Services Agreement entered into on January
7, 1994 by and between the Company and Mr. Armstrong. See "The Company -
Business Activities."
Board of Directors Compensation. Members of the Board of Directors may
receive an amount yet to be determined annually for their participation and
will be required to attend a minimum of four meetings per fiscal year. All
expenses for meeting attendance or out of pocket expenses connected directly
with their Board representation will be reimbursed by the Company. Director
liability insurance may be provided to all members of the Board of Directors.
No differentiation is made in the compensation of "outside directors" and
those officers of the Company serving in that capacity.
CONFLICTS OF INTEREST POLICY. The Company has adopted a policy that any
transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only
be on terms fair and reasonable to the Company (based on competitive bids, if
appropriate, or on terms similar contracts with the Company by unaffiliated
entities) and approved by a majority of the disinterested directors of the
Company's Board of Directors. The Board of Directors resolved that the
Bylaws of the Company shall be amended to provide that no such transactions
by the Company shall be either void or voidable solely because of such
relationship or interest of directors or officers or solely because such
directors are present at the meeting of the Board of Directors of the Company
or a committee thereof which approves such transactions, or solely because
their votes are counted for such purpose if: (i) the fact of such common
<PAGE> 31
directorship or financial interest is disclosed or known by the Board of
Directors or committee and noted in the minutes, and the Board or committee
authorizes, approves or ratifies the contract or transaction in good faith by
a vote for that purpose without counting the vote or votes of such interested
directors; or (ii) the fact of such common directorship or financial interest
is disclosed to or known by the shareholders entitled to vote and they
approve or ratify the contract or transaction in good faith by a majority
vote or written consent of shareholders holding a majority of the Common
Shares entitled to vote (the votes of the common or interested directors or
officers shall not be counted in any such vote of shareholders), or (iii) the
contract or transaction is fair and reasonable to the Company based on
competitive bids, if appropriate, and/or on terms consistent with similar
contracts with the Company by unaffiliated entities at the time it is
authorized or approved. In addition, interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
of the Company or a committee thereof which approves such transactions.
Currently, there are only three directors. Two of the directors are
brothers who are also majority shareholders. As a result, until such time as
additional directors are appointed or elected to the Board of Directors, and
even though the directors are aware of their fiduciary duty to the
shareholders, there can be no assurance that the utilization of the policy
will result in the resolution of any conflict of interest.
INDEMNIFICATION. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Florida, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company, or
served any other enterprise as director, officer or employee at the request
of the Company. The Board of Directors, in its discretion, shall have the
power on behalf of the Company to indemnify any person, other than a director
or officer, made a party to any action, suit or proceeding by reason of the
fact that he/she is or was an employee of the Company. The extent of the
indemnification shall be determined on a case by case basis and will be
dependent on the nature of the action, suit or proceeding and the specific
facts and circumstances surrounding the situation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company, the
Company understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceedings) is asserted by such director, officer, or controlling person in
connection with any securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
- ------------------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ------------------------------------------------------------------------------
There are currently 2,665,852 Common Shares outstanding. The following
tabulates holdings of shares of the Company by each person who, subject to
the above, at the date of this Prospectus, holds of record or is known by
Management to own beneficially more than 5.0% of the Common Shares and, in
addition, by all directors and officers of the Company individually and as a
group.
<PAGE> 32
<TABLE>
<CAPTION>
Shareholdings at Date of
This Prospectus
------------------------
Amount Amount
Name and Address of of Common Shares of Common Shares
Beneficial Owner Currently Owned Percent Owned After Offering Percent
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fred L. Solomon 691,781 26.13% 622,603 23.56%
285 - 107th Avenue, #801
Treasure Island, Florida 33706
James G. Solomon 686,781<F1> 25.94% 619,603 23.40%
4101 Kipling Avenue
Plant City, FL 33567
Patricia A. Sanders 113,900<F2> 4.33% 61,950 2.34%
11680 Shipwatch Drive
Villa 1452
Largo, Florida 34644
Pratt, Wylce & Lords 275,000 10.26% 0 0%
P.O. Box 1427
Idaho Springs, Colorado 80452
All Directors & Officers
as a group (3) 1,492,462 56.38% 1,304,156 49.26%
<FN>
<F1> Includes 15,000 Common Shares issued to the children of Mr. James Solomon
and deemed to be beneficially owned by Mr. Solomon.
<F2> Includes 10,000 Common Shares issued to the children of Ms. Sanders and
deemed to be beneficially owned by Ms. Sanders.
</TABLE>
There are currently 275,000 Class A Warrants outstanding. The following
tabulates holdings of Class A Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<TABLE>
<CAPTION>
Name Total Number Percentage Amount Percentage
- ---- of Class A Owned prior Owned After Owned After
Warrants to Offering Offering Offering
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Perry & Ellen 15,015 5.46% 0 0%
Marshall
Fred Solomon 109,367 39.77% 0 0%
James Solomon 109,367 39.77% 0 0%
Pat Sanders 20,047 7.29% 0 0%
All Officers and 238,781 86.83% 0 0%
Directors (3)
</TABLE>
There are currently 275,000 Class B Warrants outstanding. The following
tabulates holdings of Class B Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<PAGE> 33
<TABLE>
<CAPTION>
Name Total Number Percentage Amount Percentage
- ---- of Class B Owned prior Owned After Owned After
Warrants to Offering Offering Offering
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Perry & Ellen 15,015 5.46% 0 0%
Marshall
Fred Solomon 109,367 39.77% 0 0%
James Solomon 109,367 39.77% 0 0%
Pat Sanders 20,047 7.29% 0 0%
All Officers and 238,781 86.83% 0 0%
Directors (3)
</TABLE>
There are currently 275,000 Class C Warrants outstanding. The following
tabulates holdings of Class C Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<TABLE>
<CAPTION>
Name Total Number Percentage Amount Percentage
- ---- of Class C Owned prior Owned After Owned After
Warrants to Offering Offering Offering
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Perry & Ellen 15,015 5.46% 0 0%
Marshall
Fred Solomon 109,367 39.77% 0 0%
James Solomon 109,367 39.77% 0 0%
Pat Sanders 20,047 7.29% 0 0%
All Officers and 238,781 86.83% 0 0%
Directors (3)
</TABLE>
- ------------------------------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
- ------------------------------------------------------------------------------
Upon completion of the Distribution, the Company will have 2,665,852 shares
of Common Stock outstanding, 1,266,967 of which are being registered on
behalf of selling shareholders in this Offering. This does not include any
Common Stock issued upon exercise of the 100,000 Preferred Shares, 275,000
Class A Warrants and 275,000 Class B Warrants currently being registered on
behalf of selling shareholders. Of these shares, 100,000 shares distributed
in the Distribution will be freely tradable without restriction or further
registration under the Securities Act, except for any shares purchased by an
existing "affiliate" of the Company, which will be subject to the resale
limitations of Rule 144 under the Securities Act. The remaining shares, as
well as other securities which may be issued, in the future, in private
transactions pursuant to an exemption from the Securities Act are "restricted
securities" and may be sold in compliance with Rule 144 adopted under the
Securities Act of 1933, as amended. Rule 144 provides, in essence, that a
person who has held restricted securities for a period of two years may sell
every three months in a brokerage transaction or with a market maker an
amount equal to the greater of 1% of the Company's outstanding shares or the
average weekly trading volume, if any, of the shares during the four calendar
weeks preceding the sale. The amount of "restricted securities" which a
person who is not an affiliate of the Company may sell is not so limited:
nonaffiliates may each sell without limitation shares held for three years.
The Company will make application for the listing of its Shares in the NASDAQ
system or the American Stock Exchange. Sales under Rule 144 may, in the
future, depress the price of the Company's Shares in the over-the-counter
market, should a market develop.
<PAGE> 34
Prior to this offering there has been no public market for the Common Stock
of the Company. The effect, if any, of a public trading market or the
availability of shares for sale at prevailing market prices cannot be
predicted. Nevertheless, sales of substantial amounts of shares in the
public market could adversely effect prevailing market prices.
- ------------------------------------------------------------------------------
NASDAQ LISTING
- ------------------------------------------------------------------------------
CRITERIA FOR NASDAQ LISTING. Prior to the date hereof, there has been
no trading market for the Common Stock of the Company. The Company has
agreed to use its best efforts to apply for the quotation of its Common Stock
on the National Association of Securities Dealers Automated Quotation System
("NASDAQ"). The Company will not meet the proposed criteria as of the
completion of the offering. In order to obtain the NASDAQ listing, the
Company must meet the following criteria: (i) have total assets in excess of
$4,000,000; (ii) have net equity in excess of $2,000,000; (iii) become a
reporting company under the Securities Exchange Act of 1934; (iv) have a
minimum of 300 shareholders; (v) have a public float of at least 100,000
shares and (vi) have a bid price of $3.00. The Company hopes to meet (i)
and (ii) upon the exercise of the warrants being registered in this offering.
There can be no assurance that any warrants will, in fact, be exercised.
Additionally, the Company shall file a Form 10 immediately after the
effective date of this registration statement to meet the requirements of
(iii). After the effective date of this registration statement, the Company
shall meet the criteria in (iv). Immediately after the effective date of
this registration statement, the Company shall apply for the quotation of its
Common Stock on the over-the-counter market. There can be no assurance,
however, that the Common Stock will be quoted, that an active trading and/or
a liquid market will develop or, if developed, that it will be maintained.
The Company does not intend to apply for quotation of its Common Stock on
NASDAQ until it meets the above criteria.
BROKER-DEALER SALES OF COMPANY SECURITIES. Until the Company
successfully obtains a listing on the NASDAQ quotation system, if ever, the
Company's securities may be covered by Rule 15c2-6 under the Securities
Exchange Act of 1934 that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse).
For transactions covered by the rule, the broker-dealer must make a special
suitability determination of the purchaser and have received the purchaser's
written agreement to the transaction prior to the sale. In order to approve
a person's account for transactions in designated securities, the broker or
dealer must (i) obtain information concerning the person's financial
situation, investment experience and investment objectives; (ii) reasonably
determine, based on the information required by paragraph (i) that
transactions in designated securities are suitable for the person and that
the person has sufficient knowledge and experience in financial matters that
the person reasonably may be expected to be capable of evaluating the rights
of transactions in designated securities; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made
the determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph
(ii) of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and
stating in a highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with the
written statement and the person should not sign and return the written
statement to the broker or dealer if it does not accurately reflect the person's
financial situation, investment experience and investment objectives and
<PAGE> 35
obtain from the person a manually signed and dated copy of the written
statement. A designated security means any equity security other than a
security (i) registered, or approved for registration upon notice of
issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ system; or
. . . (iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months
previously that the broker or dealer has reviewed and has a reasonable basis
to believe are true and complete in relation to the date of the transaction
with the person. Consequently, the rule may affect the ability of
broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this Offering to sell their shares in the secondary
market.
- ------------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
- ------------------------------------------------------------------------------
QUALIFICATION. The following statements constitute brief summaries of the
Company's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their entirety
by reference to the full text of the Certificate of Incorporation and Bylaws.
The Company's articles of incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value per Common Share. Shares of
common stock purchased in this offering will be fully paid and
non-assessable.
COMMON STOCK. Holders of Common Shares of the Company are entitled to
cast one vote for each share held at all shareholders meetings for all
purposes. Upon liquidation or dissolution, each outstanding Common Share
will be entitled to share equally in the assets of the Company legally
available for distribution to shareholders after the payment of all debts and
other liabilities. Common Shares do not have any cumulative or preemptive or
other rights to subscribe to or purchase additional Common Shares in the
event of a subsequent offering. All outstanding Common Shares are, and the
shares offered hereby will be legally issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the Board of
Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will
depend upon, among other considerations, the Company's need for working
capital and its financial conditions at the time.
COMMON STOCK PURCHASE WARRANTS. On October 26, 1994, the Board of
Directors authorized the distribution of 275,000 each of A, B, and C stock
purchase warrants exercisable as follows:
$4.75 plus one A warrant for each share of common stock;
$7.50 plus one B warrant for each share of common stock; and
$12.50 plus one C warrant for each share of common stock.
The warrants are exercisable for a period of 48 months from the date of issue
and are callable with 30 days notice at a price of $.001 per warrant.
<PAGE> 36
These distributions were made to the owners of record of common stock on the
books of the Company as of October 1, 1994. The Class A and Class B
Warrants and the common stock underlying said Class A and Class B Warrants
are being registered in this Offering.
PREFERRED STOCK. During October, 1995, the Company authorized the
issuance of 300 shares of $1000 par value of preferred stock. The preferred
stock is convertible into 1,000 shares of common stock for each preferred
share at any time after 180 days or as required by the Company from the date
of issue at the option of the holder. The preferred stock shall not have
any voted on matters submitted to shareholders and shall not be entitled to
the payment of dividends and shall be deemed for the purpose of distribution
of assets in liquidation to be converted into common stock.
TRANSFER AGENT. The Company shall act as its own transfer agent until
after the completion of the registration process.
- ------------------------------------------------------------------------------
LEGAL MATTERS
- ------------------------------------------------------------------------------
The due issuance of the Common Shares offered hereby will be opined upon for
the Company by Jacobs, Forlizzo & Neal, P.A. in which opinion Counsel will
rely on the validity of the Certificate and Articles of Incorporation issued
by the State of Florida, as amended and the representations by the management
of the Company that appropriate action under Florida law has been taken by
the Company.
- ------------------------------------------------------------------------------
LEGAL PROCEEDINGS
- ------------------------------------------------------------------------------
The Company is not involved in any legal proceedings as of the date of this
Prospectus.
- ------------------------------------------------------------------------------
EXPERTS
- ------------------------------------------------------------------------------
The audited financial statements included in this Prospectus have been so
included in reliance on the report of Winter, Scheifley & Associates P.C.,
Certified Public Accountants, on the authority of such firm as experts in
auditing and accounting.
- ------------------------------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- ------------------------------------------------------------------------------
None of the experts or counsel named in the Prospectus are affiliated with
the Company.
<PAGE> 37
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Balance Sheet
March 31, 1996
(Unaudited)
<CAPTION>
Assets
------
<S> <C>
Current Assets:
Cash $ 1,126
Accounts receivable 33,586
Inventory 254,204
--------
Total current assets 288,916
--------
Property and Equipment, net 35,539
--------
Other Assets:
Intangible assets, net 10,229
--------
$334,684
========
<CAPTION>
Liabilities and Stockholders' Equity
------------------------------------
<S> <C>
Current Liabilities:
Accounts payable $ 129,049
Accrued expenses - related party 116,405
Current portion of long-term debt-related
parties 255,241
Current portion of long-term debt 21,048
----------
Total current liabilities 521,743
----------
Long term debt 52,643
Stockholders' equity:
Preferred Stock, $1,000 par value, convertible,
300 shares authorized and outstanding 300,000
Common stock, $.001 par value,
50,000,000 shares authorized, 2,666,210
shares issued and outstanding 2,666
Paid in capital 623,801
Deficit accumulated during the
development stage (1,166,169)
----------
(239,702)
----------
Total liabilities and stockholders' equity $ 334,684
==========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE> 38
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statements of Operations
For The Six Months Ended March 31, 1996 and 1995 and the Period
From Inception (October 1, 1993) to March 31, 1996
(Unaudited)
<CAPTION>
Inception to
March 31,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Net sales $ 167,107 $ 3,035 $ 287,920
Cost of sales 60,400 16,220 225,454
Selling, general and
administrative expenses 372,237 377,526 2,143,433
----------- ----------- -----------
432,637 393,746 2,368,887
(Loss) from operations (265,530) (390,711) (2,080,967)
Other income and expense:
Interest expense - related party - - (32,696)
Interest expense (7,043) (14,432) (17,218)
----------- ----------- -----------
(7,043) (14,432) (49,914)
Net (loss) $ (272,573) $ (405,143) $(2,130,881)
=========== =========== ===========
Net (loss) per share $ (.10) $ (.21) $ (.91)
=========== =========== ===========
Weighted average shares 2,640,280 1,951,534 2,336,690
=========== =========== ===========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE> 39
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
for the Period From September 30, 1995 to March 31, 1996
(Unaudited)
<CAPTION>
Deficit
Accumulated
During the
Common Stock Preferred Stock Paid in Development
Shares Amount Shares Amount Capital Stage Total
------ ------ ------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance September 30, 1995 2,612,218 $2,612 - $ - $542,972 $ (893,596) $(348,012)
Shares issued for services
at $1.50 per share
(October, 1995 to March,
1996) 39,634 40 59,411 59,451
Shares issued for inventory
at $1.50 per share
(January, 1996) 14,288 14 21,418 21,432
Shares issued pursuant to
a private placement at
$1000 per share
(December, 1995 to
February, 1996) 300 300,000 300,000
Net loss for the period (272,573) (272,573)
-------- -----------
Balance March 31, 1996 2,666,210 $2,666 300 $300,000 $623,801 $(1,166,169) $(239,702)
========= ====== ======= ======== ======== =========== =========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE> 40
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statements of Cash Flows
For The Six Months Ended March 31, 1996 and 1995 and the Period From
Inception (October 1, 1993) to March 31,1996
(Unaudited)
<CAPTION>
Inception to
March 31,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Operating activities: $ (301,650) $ (413,050) $(1,212,867)
Investing activities:
Acquisition of intangibles - - (15,217)
Purchase of fixed assets (22,469) - (39,559)
---------- ---------- -----------
Net cash (used in)
investing activities (22,469) - (54,776)
---------- ---------- -----------
Financing activities:
Sale of common stock - 313,050 693,271
Sale of Preferred stock 300,000 - 300,000
Increase in related party debt 27,706 - 201,806
Increase in long-term debt - 100,000 100,000
Repayment of long-term debt (10,522) - (26,308)
---------- ---------- -----------
Net cash provided by
financing activities 317,184 413,050 1,268,769
Net increase (decrease) in cash and
cash equivalents (6,935) - 1,126
Beginning cash and cash equivalents 8,061 $ - $ -
---------- ---------- -----------
Ending cash and cash equivalents $ 1,126 $ - $ 1,126
========== ========== ===========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE> 41
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
March 31, 1996
Note 1. Basis of presentation
---------------------
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. 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 audited financial
statements for the year ended September 30, 1995 included elsewhere in this
Form S-1.
Note 2. Stockholders' Equity
--------------------
During October, 1995 the Company filed a Form S-l registration statement
whereby it is attempting to register 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 March 31, 1996 the Company issued
39,634 shares of common stock for consulting services valued at $59,451.
During January, 1996 the Company issued 14,288 shares of common stock in
exchange for inventory valued at $21,432.
It appears that the securities of the Company privately placed after
September 30, 1995, should have been registered under the Securities Act of
1933. As a result, these is a potential contingent liability of the Company
if the Company were required to rescind the placement of these securities of
$80,883 plus interest of 12% per annum.
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.
Note 3. Inventory
---------
Inventory consists principally of work in process.
<PAGE> 42
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
(Continued)
Note 4. 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 six months ended March 31, 1996
of $272,573 and has negative working capital of $232,827 at March 31, 1996.
During the periods presented 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 is unable to project a level of revenue which would allow a
reversal of its history of operating losses in the near future. In this
regard the Company has 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 obtaining financing.
<PAGE> 43
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Level Best Golf, Inc.
We have audited the accompanying balance sheets of Level Best Golf, Inc. (a
development stage Company) as of September 30, 1994 and 1995, and the related
statements of operations, stockholders' equity, and cash flows for each of
the two years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Level Best Golf, Inc. (a
development stage Company) as of September 30, 1994 and 1995, and the
results of its operations, and its cash flows for each of the two years then
ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, substantial doubt exists about the Company's continued
existence should it be unable to complete its proposed financing and market
its products. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
November 4, 1995
<PAGE> 44
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Balance Sheets
<CAPTION>
September 30,
1994 1995
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash $ - $ 8,061
Accounts receivable - 202
Inventory 61,437 156,657
--------- ---------
Total current assets 61,437 164,920
Property, plant and equipment,
at cost:
Office and production equipment 13,259 17,090
Less: accumulated depreciation 1,225 4,019
--------- ---------
12,034 13,071
Other assets:
Product rights and video production
net of accumulated amortization
of $1,910 and $4,994 13,307 10,223
Other 3,926 -
--------- ---------
17,233 10,223
--------- ---------
$ 90,704 $ 188,214
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 29,699 $ 108,072
Current portion of long-term debt -
related party (Note 5) 150,000 149,840
Current portion of long-term debt (Note 5) - 21,048
Due to affiliates (Note 6) 42,137 181,135
--------- ---------
Total current liabilities 221,836 460,095
Long-term debt - related party (Note 5) 26,600 12,965
Long-term debt (Note 5) - 63,166
Commitments and contingencies
(Note 7, 8 and 9)
Stockholders' equity: (Notes 2 and 3)
Preferred stock, $1,000 par value,
convertible, 300 shares authorized - -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,732,000 and 2,612,218 shares
issued and outstanding 1,732 2,612
Paid in capital 225,662 542,972
Deficit accumulated during the
development stage (385,126) (893,596)
--------- ---------
(157,732) (348,012)
--------- ---------
$ 90,704 $ 188,214
========= =========
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 45
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (October 1, 1993) to September 30, 1995
<CAPTION>
Deficit
Accumulated
Common Stock Paid in During the
Shares Amount Capital Development Stage Total
------- ------ ------- ----------------- -----
<S> <C> <C> <C> <C> <C>
Shares issued for cash to
affiliates at $.003
per share (October, 1993) 1,418,162 $ 1,418 $ 2,676 $ - $ 4,094
Shares issued for cash to
affiliates at $.08
per share (October, 1993) 129,900 130 9,871 - 10,000
Shares issued for cash at
$.46 per share (May, 1994) 97,338 98 44,901 - 45,000
Shares issued for cash at
$.58 per share (June, 1994) 43,300 43 24,957 - 25,000
Shares issued for services
at $.50 per share
(May, 1994) 43,300 43 21,457 - 21,500
Contribution of officers
salaries to capital - - 121,800 - 121,800
Net loss for the year - (385,126) (385,126)
---------- -------- ---------- ----------- ----------
Balance September 30, 1994 1,732,000 1,732 225,662 (385,126) (157,732)
Shares issued for cash at
$1.00 per share
(November, 1994) 51,000 51 51,949 - 52,000
Shares issued for the
conversion of debt to
affiliate at $1.00 per share
(November, 1994) 9,000 9 8,991 - 9,000
Shares issued pursuant to
a private placement at
$1.50 per share (December,
1994 to September, 1995) 377,067 377 565,221 - 565,598
Cost of private placement - - (8,422) - (8,422)
Shares issued for services and
inventory at $1.50 per
share (January, 1995) 8,334 8 12,492 - 12,500
Shares issued for services
at $1.50 per share
(October, 1994) 275,000 275 412,225 - 412,500
Shares issued for services
at $1.50 per share
(September, 1995) 159,817 160 239,566 - 239,726
Reclassification of
S Corporation deficit to
paid in capital - - (964,712) 964,712 -
Net loss for the year - (1,473,182) (1,473,182)
---------- -------- ---------- ----------- ----------
Balance September 30, 1995 2,612,218 $ 2,612 $ 542,972 $ (893,596) $ (348,012)
========== ======== ========== =========== ==========
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 46
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended September 30, 1994 and 1995 and
the Period From Inception (October 1, 1993) to September 30, 1995
<CAPTION>
Year Ended Inception to
-------------------- September 30,
1994 1995 1995
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (385,126) $(1,473,182) $(1,858,308)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization 1,910 3,084 4,994
Depreciation 1,225 2,794 4,019
Officers salary contributed to capital 121,800 - 121,800
Common stock issued for salaries and
consulting fees 21,500 664,725 686,225
Increase in receivables - (202) (202)
Increase in inventory (61,437) (95,220) (156,657)
Increase (decrease) in other assets (3,926) 3,926 -
Increase in due to affiliates - 178,940 178,940
Increase in accounts payable 29,699 78,373 108,072
--------- ---------- -----------
Total adjustments 110,771 836,420 947,191
Net cash provided by (used in)
operations (274,355) (636,762) (911,117)
--------- ---------- -----------
Cash flows from investing activities:
Acquisition of rights and video production (15,217) - (15,217)
Acquisition of property and equipment (13,259) (3,831) (17,090)
--------- ---------- -----------
Net cash provided by (used in)
investing activities (28,476) (3,831) (32,307)
--------- ---------- -----------
Cash Flows From Financing activities:
Increase (decrease) in due to affiliates 42,137 (30,942) 11,195
Increase (decrease) in notes payable -
affiliates 176,600 (13,795) 162,805
Proceeds from long-term debt - 100,000 100,000
Repayment of long-term debt - (15,786) (15,786)
Proceeds from the issuance of common stock 84,094 609,177 693,271
--------- ---------- -----------
Net cash provided by (used in)
financing activities 302,831 648,654 951,485
--------- ---------- -----------
Net increase (decrease) in cash and
cash equivalents - 8,061 8,061
Beginning cash and cash equivalents - - -
--------- ---------- -----------
Ending cash and cash equivalents $ - $ 8,061 $ 8,061
========= ========== ===========
Supplemental cash flow information:
Cash paid for: Income taxes $ - $ - $ -
Interest $ 12,382 $ 28,735 $ 41,117
Non-cash investing and financing activities:
Conversion of note payable - affiliate to
common stock $ - $ 9,000 $ -
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 47
<TABLE>
Level Best Golf, Inc.
(A Development Stage Company)
Statements of Operations
For the Years Ended September 30, 1994 and 1995 and
the Period From Inception (October 1, 1993) to September 30, 1995
<CAPTION>
Inception to
Year Ended September 30,
------------------
1994 1995 1995
---- ---- ----
<S> <C> <C> <C>
Revenue $ 22,339 $ 98,474 $ 120,813
Costs and expenses:
Cost of sales 15,791 149,263 165,054
General and administrative 379,292 1,391,904 1,771,196
--------- ----------- -----------
395,083 1,541,167 1,936,250
Net loss from operations (372,744) (1,442,693) (1,815,437)
Other income and (expense):
Interest expense - (10,175) (10,175)
Interest expense - related party (12,382) (20,314) (32,696)
--------- ----------- -----------
Net loss $(385,126) $(1,473,182) $(1,858,308)
========= =========== ===========
Per share information:
Weighted average number of common
shares outstanding 1,624,703 1,991,640 1,808,172
========= =========== ===========
Net loss per share $ (.24) $ (.74) $ (1.03)
========= =========== ===========
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 48
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1995
Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on October 1, 1993, in the State of Florida.
The Company is in the development stage and its intent is to develop and
market golf training aids. The Company has chosen September 30, as a year
end.
Inventories: Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. Inventory consists
principally of work in process.
Fixed assets: The company depreciates its office equipment utilizing the
straight line method over periods of five to seven years.
Net loss per share: The net loss per share is computed by dividing the net
loss for the period by the weighted average number of common shares
outstanding for the period. Common stock equivalents are excluded from the
computation as their effect would be anti-dilutive.
Product rights and video production: The company amortizes its product rights
and video production over a period of 5 years using the straight line method.
Amortization charged to operations was $1,910 and $3,084 for the years ended
September 30, 1994 and 1995.
Cash and cash equivalents: Cash and cash equivalents consist of cash and
other highly liquid debt instruments with original maturities of less than
three months.
Revenue recognition: The company recognizes revenue from the sale of its
products upon shipment.
Advertising costs: Advertising costs, except for costs associated with direct
response advertising are charged to operations when incurred. The costs of
direct response advertising will be capitalized and amortized over the period
which future benefits are expected to be received if the Company has
determined that there are historical patterns of the results of direct
advertising upon which it can base its decision to capitalize these costs,
otherwise these costs will be charged to expense as incurred. Costs
associated with product endorsements are charged to expense when incurred.
Advertising costs charged to operations were $15,465 and $42,719 during 1994
and 1995.
<PAGE> 49
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
Note 2. STOCKHOLDERS EQUITY
Common stock:
At inception, the Company issued 1,418,162 shares of its $.001 par value
common stock to two of its officers and directors in exchange for cash of
$4,094 and 129,900 shares of its $.001 common stock to an officer and
director in exchange for cash of $10,000.
During the year ended September 30, 1994 the Company issued shares of its
$.001 par value common stock to non-affiliates as follows:
97,338 shares for cash of $45,000
43,300 shares for cash of $25,000
43,300 shares for services related to product development and
marketing valued at $21,500
During October, 1994 the Company declared a 346.4 to 1 stock split. All
shares included in these financial statements have been adjusted to reflect
this split.
During October, 1994 the Company entered into a one year consulting agreement
with an entity whereby the entity would provide to the Company financial
consulting services. Pursuant to the agreement the entity agreed to assist
the Company in preparing a private placement memorandum to obtain equity or
debt financing in the amount of $525,000 and to assist the Company in
completing the offering. In exchange for these services the Company agreed to
pay $17,500 in cash and to issue 275,000 shares of its $.001 par value common
stock valued at $412,500.
During October, 1994, the Company authorized the issuance of 275,000 each of
A, B, and C stock purchase warrants exercisable as follows:
$ 4.75 plus one A warrant for each share of common stock
$ 7.50 plus one B warrant for each share of common stock
$12.50 plus one C warrant for each share of common stock
The warrants are exercisable for a period of 48 months from the date of issue
and are callable with 30 days notice at a price of $.001 per warrant.
During December, 1994 the Company began offering shares of its common stock
at $1.50 per share pursuant to a private placement. Pursuant to this private
placement the Company issued 377,067 shares of common stock for cash
aggregating $565,598.
<PAGE> 50
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
During November, 1994 the Company issued 51,000 shares of its common stock
for cash aggregating $52,000.
During January, 1995 the Company entered into an agreement to acquire certain
inventory and assume certain liabilities related to the operation of a golf
school which had been formed in December, 1994. Pursuant to the agreement the
Company agreed to pay the owner of the inventory cash aggregating $12,500 and
to issue 8,334 shares of its common stock to him. During November, 1995 the
Company rescinded the transaction. The operation of the golf school was not
material to the Company's operations during the period which it was operated.
The Company has accounted for its investment in the golf school as a
temporary investment and has charged the acquisition costs aggregating
$25,000 to operations during the year ended September 30, 1995.
During September, 1995 the Company issued 159,817 shares of its common stock
to certain employees for salaries and consultants for services related to
product development and marketing valued at $239,726.
During November, 1994 an affiliate of the Company converted a loan in the
amount of $9,000 into 9,000 shares of the Company's $.001 par value common
stock (see Note 6).
During October, 1995 the Company filed a registration statement with the
Securities and Exchange Commission on Form S-1 whereby it is attempting to
register 275,000 Class A warrants, 275,000 Class B warrants and 1,902,268
shares of common stock (including the 550,000 shares of common stock
underlying the Class A and Class B warrants).
During the periods covered by these financial statements the Company issued
shares of common stock without registration under the Securities Act of 1933.
Although the Company believes that the sales did not involve a public
offering of its securities and that the Company did comply with the "safe
harbor" exemptions from registration under section 4(2), it could be liable
for recission of the sales if such exemptions were found not to apply.
Preferred stock:
During October, 1995 the Company authorized the issuance of 300 shares of
$1,000 par value preferred stock. The preferred stock is convertible into
1,000 shares of common stock for each preferred share at any time after 4
months from the date of issue at the option of the holder. The preferred
stock shall not have any vote on matters submitted to shareholders and shall
not be entitled to the payment of dividends and shall be deemed for the
purpose of distribution of assets in liquidation to be converted into common
stock as described above.
<PAGE> 51
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
Note 3. CONTRIBUTION TO PAID IN CAPITAL
During September, 1994, certain officers agreed to contribute $121,800 in
unpaid salaries to the capital of the Company.
Note 4. INCOME TAXES
The Company had elected to be an "S" corporation under the provisions of the
Internal Revenue Code and state statutes. Under these provisions, no income
tax is normally incurred at the corporate level. Instead the shareholder
includes his pro rata share of the corporation's income or loss on his
personal tax returns. During March, 1995 the number of shareholders in the
Company exceeded the maximum number of shareholders allowed for an "S"
corporation and the election was terminated. In addition, the Company used
December 31, as its year end for income tax purposes. Effective April 1, 1995
the Company adopted Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. Of the loss for the year ended September 30,
1995 approximately $893,596 will be available as an operating loss
carryforward for the Company expiring during 2010, and the balance will be
allocated to the shareholders. The accumulated loss through the termination
of the "S" election of $964,712 has been reclassified to paid in capital in
the accompanying financial statements. The Company is unable to predict
future taxable income that would enable it to utilize the deferred tax asset
and therefore the deferred tax asset of approximately $304,000 related to its
operating loss carryforward which expires in 2010 is fully reserved.
Note 5. LONG-TERM DEBT
Related parties:
During December, 1993 the Company borrowed $177,000 from an entity controlled
by its two largest shareholders. This note had a balance of $176,600 and
$162,805 at September 30, 1994 and 1995. The note bears interest and is due
as follows:
<TABLE>
<CAPTION>
Amount Interest rate Due date
------ ------------- --------
<S> <C> <C>
$149,840 Prime + 1.5% On demand
$ 12,965 6% December, 1996
</TABLE>
Other:
During October, 1994 the Company obtained a U.S. Small Business
Administration loan in the amount of $100,000. This note is payable in
installments of $1,754 plus interest at 11% per annum and is due on or
<PAGE> 52
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
before October 1, 1999. The balance of this note was $84,214 at September 30,
1995.
Maturity of long-term debt - other is as follows:
Year ended September 30, 1996: $21,048
1997: $21,048
1998: $21,048
1999: $21,070
Note 6. RELATED PARTY TRANSACTIONS
During the year ended September 30, 1994 certain officers and directors of
the Company and parties related to these individuals made advances to the
Company aggregating $42,137. During the year ended September 30, 1995 $9,000
of this debt was converted into common stock (see Note 2) and $30,932 was
repaid. In addition, the Company accrued $178,930 in unpaid salary due these
individuals bringing the balance due to $181,135 at September 30, 1995. The
Company has not recorded any interest expense related to the advances as it
would not be material to the financial statements.
Note 7. COMMITMENTS
During January, 1994 the Company entered into a three year product
endorsement agreement with a professional athlete in which the athlete agreed
to make personal appearances and to otherwise promote the Company's products.
In exchange for his services the athlete is to be paid a minimum annual fee
of $25,000. In addition, in the event sales of the endorsed product exceed
$222,222 in any calendar year the Company also agreed to pay a royalty to the
athlete equal to 7.5% of the collected endorsed product sales.
During January, 1994 the Company entered into a five year license agreement
(renewable by the Company at its option for an additional five years if all
of the terms and conditions of the agreement are met by the Company during
the initial five year term) with an entity engaged in the manufacture of golf
training devices whereby the Company obtained rights to manufacture and sell
certain of the licenser's products in the United States and in certain
European countries. Pursuant to the agreement the Company agreed to pay the
licenser a fee of 7.5% of the net sales price of the licensed products sold.
In addition, it was agreed that if the net sales of
<PAGE> 53
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
the licensed product did not exceed 60,000 units during the initial four
years of the agreement that the licenser could cancel the agreement at its
option.
Note 8. OPERATING LEASES
The Company moved to its new facility during May, 1995 and currently rents
these facilities on a month to month basis at a monthly rental of $4,000.
Rent expense was $8,922 and $18,181 for the years ended September 30, 1994
and 1995. In addition, the Company leases certain office equipment under
operating leases expiring in 1998.
Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of 1 year are as follows:
Year ended September 30, 1996: $ 3,468
1997: 3,468
1998: 2,973
--------
$ 9,909
========
Note 9. 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 losses during the years ended September
30, 1994 and 1995 aggregating $385,126 and $1,473,182 and has negative
working capital of $295,175 at September 30, 1995.
During the periods presented 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.
<PAGE> 54
Level Best Golf, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
The Company is unable to project a level of revenue which would allow a
reversal of its history of operating losses in the near future. In this
regard the Company has undertaken the raising of additional equity capital
(see Note 2). In addition, the Company is attempting to obtain debt financing
for the acquisition of certain golf products which it intends to market, is
seeking to expand its customer base and attempting to lower its operating
expenses. The Company's continued operations are dependent upon obtaining
financing and its ability to market its products.
Note 10. SUBSEQUENT EVENTS
During October, 1995 the Company issued 100 shares of the preferred stock
described in Note 2 for cash aggregating $100,000. In addition during
December, 1995 and January, 1996 the Company accepted subscriptions for 100
shares of the preferred stock described in Note 2 for cash aggregating
$100,000.
<PAGE> 55
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid by
Level Best Golf, Inc. (hereinafter in this Part II referred to as the
"Company") are estimated to be substantially as follows:
<TABLE>
<CAPTION>
Amount
Payable
Item By Company
- ---- ----------
<S> <C>
S.E.C. Registration Fees $ 1,963.33
State Securities Laws (Blue Sky) Fees and Expenses 1,500.00
Printing and Engraving Fees 5,000.00
Legal Fees 15,000.00
Accounting Fees and Expenses 10,000.00
Transfer Agent's Fees 1,500.00
-----------
Total $ 34,963.33
</TABLE>
Item 14. Indemnification of Officers and Directors.
INDEMNIFICATION. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Florida, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company, or
served any other enterprise as director, officer or employee at the request
of the Company. The Board of Directors, in its discretion, shall have the
power on behalf of the Company to indemnify any person, other than a director
or officer, made a party to any action, suit or proceeding by reason of the
fact that he/she is or was an employee of the Company. The extent of the
indemnification shall be determined on a case by case basis and will be
dependent on the nature of the action, suit or proceeding and the specific
facts and circumstances surrounding the situation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company, the
Company understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceedings) is asserted by such director, officer, or controlling person in
connection with any securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
Item 15. Recent Sales of Unregistered Securities.
During May and June, 1994 and November-December, the Company issued 1,732,000
common shares for cash $227,394 to eight individuals who were associated with
the Company. These sales were made in reliance on Section 4(2) of the
Securities Act of 1933.
During the last quarter of 1994, the Company issued 52,000 common shares at
$1.00 per common share for an aggregate of $52,000. The common shares were
issued to four individuals who had a prior relationship with the Company.
On January 2, 1995, the Company declared a dividend to the shareholders of
record on that date. The dividend was in the form of A, B and C Common
Stock Purchase Warrants. The dividend was at a rate of one A, one B and one
C warrant for each shares of common stock owned.
<PAGE> 56
The Company also pursued a private placement at $1.50 per common shares
during that same period and issued a total of 371,065 to the following
individuals. These issuances were made in compliance with Rule 505,
Regulation D of the Securities Act of 1933 by Registrant's management,
consultants and selected broker/dealers. No commissions or other
remuneration was paid to anyone other than a NASD selected broker/dealer.
No general solicitation was utilized. There was a total of 24 nonaccredited
investors. The determination of whether an investor was accredited or
nonaccredited was based on the responses in the subscription agreement filled
out by each investor.
<TABLE>
<CAPTION>
Date Amount of
Issued Name Common Stock Amount Paid
------ ---- ------------ -----------
<C> <S> <C> <C>
1/9/95 William Myers 5,000 $7,500 cash
1/11/95 Lincoln Trust Company, FBO P.L. Lawrence, III 6,667 $10,000 cash
1/25/95 Paine Webber, Inc. for Johnny & Barbara Wong 3,000 $4,500 cash
1/25/95 Mike Souchak 3,000 $4,500 cash
1/25/95 Earl & Barbara Pickney 6,667 $10,000 cash
1/25/95 Paine Webber, Inc. for Johnny & Barbara Wong 3,000 $4,500 cash
2/2/95 Barbara Reinstein 3,000 $4,500 cash
2/13/95 Saran Koplas & Enge 4,000 $6,000 cash
2/15/95 Myrtle Bearman 3,000 $4,500 cash
2/15/95 Wendell & Saralou Zimmer 6,000 $9,000 cash
2/16/95 Robert Gerner- Keogh 5,500 $8,250 cash
2/22/95 Richard G. Hinkle 3,000 $4,500 cash
2/16/95 Robert Gerner M.D. 2,500 $3,750 cash
2/24/95 Wayne Anderson 6,000 $9,000 cash
2/24/95 Paul Rice 2,000 $3,000 cash
2/24/95 Mark A. Landrigan 3,000 $4,500 cash
2/25/95 Robert E. Oberndorf 6,000 $9,000 cash
3/2/95 Michael C. Dickson 3,000 $4,500 cash
3/25/95 Mr. & Mrs. Richard D. Sutherlin 3,000 $4,500 cash
3/6/95 Robert Kube 3,700 $5,550 cash
3/7/95 Shlomo & Gitty Fuhrer 3,000 $4,500 cash
3/10/95 Lauren Tracy 3,000 $4,500 cash
3/10/95 Elizabeth Gheen 9,500 $14,250 cash
3/10/95 Roger Vosti 3,000 $4,500 cash
3/13/95 Paine Webber for Mitsuo Tatsugawa 7,500 $11,250 cash
3/13/95 James Yanai 5,000 $7,500 cash
3/15/95 William Hidde 3,000 $4,500 cash
3/20/95 R.E. Hunt Trust 3,000 $4,500 cash
3/23/95 Gerald Dooher 5,000 $7,500 cash
3/23/95 John Engel 3,000 $4,500 cash
3/24/95 Michael T. Lloyd 3,000 $4,500 cash
3/24/95 Hosea E. Taylor Retirement Account 3,000 $4,500 cash
3/28/95 Dorothy J. Filson 7,000 $10,500 cash
3/30/95 Terrence E. Dooher 5,000 $7,500 cash
4/3/95 Stephen A. Jones 2,000 $3,000 cash
4/3/95 David Warren 5,500 $8,250 cash
4/7/95 Lynne Gjertsen 2,000 $3,000 cash
4/14/95 Terry W. King 3,000 $4,500 cash
4/14/95 Dunvegan Mortgage Corp. 9,000 $13,500 cash
4/24/95 Roger E. Becker 3,000 $4,500 cash
<PAGE> 57
4/27/95 Robert Odom 1,000 $1,500 cash
4/27/95 Sharon Lunde 3,000 $4,500 cash
4/27/95 Donald C. Hardyman 3,000 $4,500 cash
5/3/95 David E. Black 13,334 $20,000 cash
5/4/95 Robert G. Schwartz 5,000 $7,500 cash
5/5/95 Richard S. Zinn 3,000 $4,500 cash
5/8/95 Dr. & Mr. Oswald Coury 6,000 $9,000 cash
5/8/95 Keith Maurer 4,000 $6,000 cash
5/12/95 Mark A. McAlister 3,000 $4,500 cash
5/12/95 Joseph Mazurski, Jr. 3,000 $4,500 cash
5/18/95 James Filson 3,000 $4,500 cash
5/18/95 Blayne & Lisa Gumm 9,000 $13,500 cash
5/26/95 Charlie A. Ker 3,000 $4,500 cash
5/30/95 Mark W. Maurer 3,000 $4,500 cash
5/30/95 Paul Maurer 3,000 $4,500 cash
5/30/95 Judith R. Maurer 3,000 $4,500 cash
6/5/95 Suzanne M. Nolan 3,000 $4,500 cash
6/5/95 Frank P. Roche 1,665 $2,497.50 cash
6/13/95 Francis Fazzina 3,000 $4,500 cash
6/20/95 John Fritts 6,000 $9,000 cash
6/21/95 Paul Bennett 17,000 $25,500 cash
7/5/95 David Blessing 700 $1,050 cash
7/5/95 James F. Clifford 3,000 $4,500 cash
7/10/95 Donald Johnson 3,000 $4,500 cash
7/12/95 Ronald Gluck 3,000 $4,500 cash
7/18/95 Norman Krause and Ann R. Goodwin 6,000 $9,000 cash
7/31/95 Dominic J. & Robin E. Cipolla 3,000 $4,500 cash
8/17/95 Dean Witter Reynolds, Inc. for Gene Goulooze 12,000 $18,000 cash
8/21/95 William A. Lawson 6,000 $9,000 cash
9/5/95 Duane B. Sawtelle 3,000 $4,500 cash
9/8/95 Bradley J. Lawson 1,300 $1,950 cash
9/8/95 Kenneth B. Lawson 1,300 $1,950 cash
9/8/95 Douglas G. Lawson 400 $600 cash
9/11/95 Anthony E. and Anna L. Gowan 3,000 $4,500 cash
9/11/95 Elizabeth P. & Claudette L. Ray 1,500 $2,250 cash
9/11/95 Andrew J. Zak 1,000 $1,500 cash
9/11/95 William C. and Connie A. Noble 6,000 $9,000 cash
9/13/95 Douglas M. Dixon 3,000 $4,500 cash
9/13/95 Nancy G. Dixon 3,000 $4,500 cash
9/13/95 Audrey Skinner Geisler Rev. Trust 3,000 $4,500 cash
9/14/95 Marguerite Cook 3,000 $4,500 cash
9/18/95 Frederick J. Graft Retirement 6,000 $9,000 cash
9/18/95 Delaware Charter & Guarantee for Howe Barnes Investments & Hosea Taylor 1,334 $2,000 cash
9/21/95 Albert or Cyndee Jarrell 3,000 $4,500 cash
</TABLE>
On September 19, 1995, the Company issued 275,000 common shares to
Pratt, Wylce & Lords, Ltd. and 67,000 common shares to Alan Filson
for consulting services pursuant to the terms of a consulting
agreement filed as an exhibit to the registration statement.
On August 28, 1995, the Company issued a total of 1,600 common shares
to four employees as bonuses.
<PAGE> 58
The Company issued a total of 137,606 to the following individuals
and entities which have had continuing business relationships with
the Company and were willing to accept common stock for services
and/or products in light of the Company's negative cash flow
situation.
<TABLE>
<CAPTION>
Date # of Nature of services and
Issued Name shares value of said services
------ ---- ------ ----------------------
<C> <S> <C> <C>
1/19/95 Robert & Michele Gordon - 3,000 For marketing consulting services valued at $4,500
2/15/95 J.D. Lawson 3,000 For purchase of Chip & Putt product valued at $4,500
3/2/95 Dickson Tool & Mold 5,000 For production services relating to molds valued at $7,500
4/13/95 Francine Jacoby 750 For marketing consulting services valued at $1,125
6/30/95 Celeste & P. Andrew Nash 1,000 Employee bonus valued at $1,500
7/28/95 Hank Johnson 2,000 For marketing consulting services valued at $3,000
7/28/96 Bill Thompson 3,000 For media consulting services valued at $4,500
7/28/95 Don Thompson 6,000 For communication consulting services valued at $9,000
7/28/95 Jackson Morris 3,000 For legal services valued at $4,500
8/28/95 Steve Solomon 6,000 Employee bonus valued at $9,000
8/28/95 Beverly Evans 2,000 For salary compensation valued at $3,000
8/28/95 Max Battle 3,000 For legal services valued at $4,500
8/28/95 Michael Orr 1,000 For consulting regarding the golf industry valued at $1,500
8/30/95 Melody Webber 300 For printing services valued at $450
8/30/95 Cindy Delporte 4,334 For marketing services valued at $6,501
8/30/95 Jerry Hogg 3,000 For professional golf scouting services valued at $4,500
8/31/95 Wally Armstrong 10,000 For endorsement services valued at $15,000
8/31/95 Douglas Screen Printing 3,000 For printing services valued at $4,500
8/31/95 Paul Simmons 3,000 For equipment related services valued at $4,500
9/15/95 Theodore & Signe Keys 200 Employee bonus valued at $300
9/26/95 Michael W. Jamison 1,000 For communication consulting valued at $1,500
9/26/95 Lacey McClellan 1,500 For marketing consulting services valued at $2,250
9/28/95 Greg Ortman 14,667 For professional golf services valued at $22,005
11/14/95 Peter Groh 1,834 For financial consulting services valued at $2,751
11/14/95 Regarding Golf 5,334 For expert advise regarding the golf industry valued at $8,001
11/14/95 Robert Bassell 1,000 For services valued at $1,500
11/14/95 Robert Bonefant, Jr. 1,000 For services valued at $1,500
11/14/95 Rene Gareau 4,000 For European marketing Services valued at $6,000
9/18/95 Jock Terry 13,500 For financial services valued at $20,250
12/27/95 Wes Whitingham 1,000 For services valued at $1,500
12/27/95 Gary Koch 3,000 For services valued at $1,500
12/27/95 Dale Hawkins 2,666 For services valued at $3,999
12/27/95 Andy Bean 5,000 For endorsement services valued at $7,500
<PAGE> 59
1/3/96 Rick Bradshaw 3,000 For services valued at $4,500
1/3/96 Tom Ritenour 200 Employee bonus valued at $300
1/3/96 Tom Lehman 1,000 For professional services valued at $1,500
1/3/96 Gregory Coffin 200 Employee bonus valued at $300
1/3/96 Jim Dent 1,000 For services valued at $1,500
1/3/96 Robert Evans 14,288 For inventory valued at $21,432
1/3/96 Dr. Chas J. Morris 500 For services valued at $750
</TABLE>
During December, 1995 and early January, 1996, the Company issued an
additional 11,864 common shares to William Noble, 6,136 common shares to
Scott Edmiston, 600 common shares to Zadie Riise Madsen for cash of $1,200.
The issuance of these shares were unsolicited.
Due to the integration rules of Section 502(a), all of the above issuances of
common stock would be deemed to be integrated and deemed to be part of the
same Regulation D offering (Section 505). As a result, the Company obtained
subscription agreements from all investors which indicated whether or not the
investors were accredited. There were a total of 33 non-accredited
investors. All of the above sales were made without general solicitation.
No commissions were paid to anyone other than registered NASD broker-dealers.
The total aggregate value of all of the issuances were substantially less
than $5,000,000.
<PAGE> 60
POTENTIAL SECTION 5 VIOLATIONS. It appears That the securities of
the Company privately placed after October 5, 1995 should be integrated with
this offering and thus should have been registered under Section 5 of the
Securities Act of 1933. In addition, it appears that this registration
statement constitutes a solication of an unregistered offering, requiring
registration under Section 5 of the Securities Act, with regard to those
shares issued after October 5, 1995, for which the private placement
purchasers are selling shareholders. As a result, there is potential
contigent liability of the Company arising from the Section 5 violations.
<TABLE>
<CAPTION> PAGE IN SEQUENTIAL
EXHIBIT INDEX. NUMBER SYSTEM
<C> <S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation, Amendments and Bylaws incorporated by
to registration statement filed on Form S-1, File #33-97770
(4) Specimen certificate for Common Stock - to be filed by amendment
(5) Consent and Opinion of Jacobs, Forlizzo & Neal, P.A. regarding legality of
securities registered under this Registration Statement and to the
references to such attorney in the Prospectus
filed as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10.1) License and Technical Assistance Agreement incorporated by reference
to registration statement on Form S-1, File #33-97770
(10.2) Agreement with The Booklegger incorporated by reference to registration
statement on Form S-1, File #33-97770
(10.3) Agreement between the Company and Gator Golf incorporated by reference
to registration statement on Form S-1, File #33-97770
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Consent of Winter, Scheifley & Associates, P.C., Certified Public
Accountants for the Company
(24) Not Applicable
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
(99.1) Personal Services Agreement incorporate by reference to registration
statement on Form S-1, File #33-97770
(99.2) Lease incorporated by reference to registration statement on Form S-1,
File #33-97770
(99.3) Consulting Agreement with Pratt, Wylce & Lords, Ltd. incorporated
by reference to registration statement on Form S-1, File #33-97770
(99.4) Lock Up Agreement incorporated by reference to registration statement
on Form S-1, File #33-97770
</TABLE>
<PAGE> 61
Item 17. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the Registration
Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Delivery of Certificates.
The undersigned registrant hereby undertakes to provide to the
Transfer Agent at the closing, certificates in such denominations and
registered in such names as are required by the Transfer Agent to permit
prompt delivery to each purchaser.
(c) Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions set forth in
the Company's Articles of Incorporation or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-1 as amended to be
signed on its behalf by undersigned, thereunto duly authorized, in the city
of St. Petersburg, State of Florida on the 24th day of May, 1996.
Level Best Golf, Inc.
/s/ Fred Solomon
-------------------------------------
By: Fred Solomon, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
on Form S-1 as amended has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
/s/ Fred Solomon Chief Operating Officer 5/23/96
- -------------------------------
Fred Solomon Chief Executive Officer
Chief Financial Officer
Controller
Director
/s/ James Solomon Vice President/Director 5/23/96
- -------------------------------
James Solomon
/s/ Patricia Sanders Secretary/Director 5/23/96
- -------------------------------
Patricia Sanders
<PAGE> 1
JACOBS, FORLIZZO & NEAL, P.A.
-----------------------------
----Attorneys at Law----
Feather Sound Corporate Center II
13577 Feather Sound Drive, Suite 300
Clearwater, Florida 34622-5547
A.R. "Charlie" Neal May 16, 1996 Telephone (813) 571-1727
Fax (813) 572-9454
Level Best Golf, Inc.
11800 28th Street North
St. Petersburg, FL 33716
Gentlemen:
We have acted as counsel to Level Best Golf, Inc. (hereinafter
called the "Company") for the purpose of rendering this opinion in
connection with the Company's filing of a registration statement on
Form S-1 (file no. 33-97770) and amendments thereto (which
registration statement, as amended at the time of its effectiveness,
is hereinafter called the "Registration Statement"), covering shares
of the Company's common stock, $.001 par value, warrants for shares
of such stock and shares issuable pursuant to said warrants (which
shares and warrants are hereinafter called the "Securities").
As such counsel, we have examined original copies, or copies
certified to our satisfaction, of the corporate records of the
Company, agreements and other instruments, certificates of public
officials and such other documents as we deemed necessary as a basis
for the opinion hereinafter set forth.
On the basis of the foregoing, we are of the opinion that the
Securities have been validly authorized and will, when sold as
contemplated by the Registration Statement, be legally issued,
fully paid and non-assessable.
We have been engaged solely for the purpose of giving our
legal opinion regarding the matters addressed herein. We have not
been engaged to, nor have we participated in preparing the
Registration Statement.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference made to us under
the caption "Legal Matters" in the prospectus constituting part of
such Registration Statement.
Very truly yours,
/s/ Jacobs, Forlizzo & Neal, P.A.
JACOBS, FORLIZZO & NEAL, P.A.
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1
of our report dated November 4, 1995 relating to the financial statements
of Level Best Golf, Inc. as of September 30, 1995, and the reference
to our firm under the caption "EXPERTS" in the Registration Statement.
/s/ Winter, Scheifley & Associates, P.C.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
May 23, 1996
Englewood, Colorado
