<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 1996
---------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from:
---------------------------------
Commission file number: 33-97770
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LEVEL BEST GOLF, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA
(State or other jurisdiction
of incorporation or other organization)
59-3205644
(I.R.S. Employer
Identification Number)
14561 58TH STREET NORTH, CLEARWATER, FLORIDA 34620
(Address of principal offices)
(813) 535-7770
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,252,542 shares of Common
Stock, $.001 par value per share as of February 10, 1997.
Transitional Small Business Disclosure Format (check one);
[ ] Yes [X] No
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS.
Level Best Golf, Inc.
Balance Sheets
December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash .................................................... $ -- $ 1,000
Accounts receivable ..................................... $ 60,105 $ 32,151
Prepaid expenses ........................................ $ 9,000
Inventory ............................................... $ 358,043 $ 192,916
Total current assets ................................. $ 427,148 $ 226,067
Property, plant and equipment, at cost:
Office and production equipment ......................... $ 104,020 $ 44,547
Less: accumulated depreciation .......................... $ 13,989 --
$ 90,031 $ 44,547
Other assets:
Deposits ................................................. $ 9,161 --
Product design and video production, net of
accum. amortization of $53,641 ........................... $ 281,727 --
$ 808,067 $ 270,614
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Notes payable ............................................. $ 71,302 $ --
Notes payable - affiliate ................................. $ 571,915 $ --
Accounts payable .......................................... $ 433,052 $ 187,524
Accrued expenses - affiliate .............................. $ 559,929 $ 151,334
Loans - other ............................................. $ 75,000 $ --
Accrued expenses .......................................... $ 11,047 $ --
Current portion of long-term debt - related parties ....... $ -- $ 156,391
Current portion of long-term debt ......................... $ 21,048 $ 21,048
Total current liabilities ............................. $ 1,743,293 $ 516,297
Long-term debt .................................................. $ 47,380 $ 57,903
Stockholder's equity:
Preferred stock, $1000 par value, convertible,
300 shares authorized -- --
Common stock, $.001 par value, 50,000,000 shares
authorized, 3,246,042 and 2,612,218 shares
issued and outstanding ................................ $ 3,246 $ 2,612
Paid in capital ................................................. $ 1,684,030 $ 734,722
Common stock subscriptions ...................................... $ 100,000 $ --
Accumulated deficit ............................................. $(2,769,882) $(1,040,920)
Total stockholder's equity ...................................... $ 982,606 $ 303,586
Total liabilities and stockholder's equity ...................... $ 808,067 $ 270,614
</TABLE>
<PAGE> 3
Level Best Golf, Inc.
Statements of Operations
For the three months ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenue .......................................... $ 70,200 $ 128,302
----------- -----------
Costs and expenses:
Costs of sales ......................... $ 19,587 $ 29,768
Common shares issued for service ....... $ 92,043 $ --
General and administrative ............. $ 651,318 $ 240,547
----------- -----------
$ 762,948 $ 270,315
Net loss from operations ......................... $ (692,748) $ (142,013)
Other income and (expense):
Interest expense ....................... $ (7,089) $ (5,311)
Interest expense - related party ....... $ (31,254) $ --
----------- -----------
Net loss ................................ $ (731,091) $ (147,324)
Per share information:
Net loss per share ...................... $(0.23) $(0.06)
Weighted average number of
common shares outstanding ................ 3,194,007 2,612,218
</TABLE>
<PAGE> 4
Level Best Golf, Inc.
Statements of Cash Flows
For the Quarters Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss .......................................... $(731,091) $(147,324)
Adjustments to reconcile net loss to net cash (used in )
operating activities:
Depreciation and amortization ..................... $ 17,762 $ 10,223
Common stock issued for services and other non cash
items ........................................... $ 92,043 $ --
(Increase) in receivables ......................... $ (46,967) $ (32,433)
(Increase) decrease in inventory .................. $(201,687) $ (36,259)
(Increase) decrease in other assets ............... $ (84) $ --
Increase in accounts payable and accruals ......... $ 210,710 $ 109,253
Total adjustments ......................................... $ 71,777 $ --
Net cash provided by (used in) operations ................. $(659,314) $ (96,540)
Cash flows from investing activities:
Acquisition of designs and video production ....... $(117,761) $ --
Acquisition of property and equipment ............. $ (33,976) $ (21,248)
Net cash provided by (used in) investing activities ....... $(151,737) $ (21,248)
Cash flows from financing activities:
Increase (decrease) in due to affiliates .......... $ -- $ (27,596)
Increase (decrease) in notes payable-affiliates ... $ -- $ (6,414)
Proceeds from notes and long-term debt ............ $ 75,000 $ --
Repayment of long-term debt ....................... $ -- $ (5,263)
Proceeds from the issuance of stock ............... $ 689,128 $ 150,000
Net cash provided by (used in) financing activities ....... $ 764,128 $ 110,727
Net increase (decrease) in cash and cash equivalents ...... $ (46,923) $ (7,061)
Beginning cash and cash equivalents ....................... $ 46,923 $ 8,061
Ending cash and cash equivalents .......................... $ 0 $ 1,000
</TABLE>
<PAGE> 5
LEVEL BEST GOLF, INC.
Notes to Financial Statements (Unaudited)
In the opinion of management, the accompanying financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the balance sheets of Level Best Golf, Inc. (the
"Company") as of December 31, 1996 and 1995, and the results of its operations
for the three months ended December 31, 1996 and 1995, and the results of its
cash flows for the three months ended December 31, 1996 and 1995, in accordance
with generally accepted accounting principals. The results for interim periods
are not necessarily indicative of results for a full year.
These interim period financial statements, including the notes thereto,
are condensed and do not include all disclosures required by generally accepted
accounting principles. Such interim period financial statements should be read
in conjunction with the Company's financial statements which are included in the
Company's 1996 Form 10-KSB.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Except for the historical information contained herein, the matters
discussed in this item are forward-looking statements involving risks and
uncertainties which may cause actual results to materially differ. Those risks
and uncertainties include, but are not limited to, economic, competitive,
industry and market factors affecting the Company's operations, markets,
products and prices, and other factors discussed in the Company's filings with
the Securities and Exchange Commission.
Results of Operation For the Quarters Ended December 31, 1996 and 1995.
The Company experienced a net operating loss of ($731,091) for the
quarter ended December 31, 1996 compared to ($147,324) for the quarter ended
December 31, 1995. Net sales and cost of sales for the quarter ended December
31, 1996 were $70,200 and $19,587, respectively, as compared to net sales of
$128,302 and cost of sales of $29,768 for the quarter ended December 31, 1995.
During the quarter, the Company emphasized expansion of its product
line to 14 from 6 products and continuing development of its retail distribution
channels. Several presentations were made to top sporting goods chains and other
retailers with significant commitments from Service Merchandise, The Sports
Authority and Champs. Orders from these retailers are anticipated during the
first quarter of calendar 1997. Interest in the Angleiron is particularly high.
The Company introduced its complete product line at the PGA show in Orlando in
January, 1997 and will present its product line at the Supershow in Atlanta in
February, 1997.
<PAGE> 6
Selling, general and administrative expenses for the quarter ended
December 31, 1996 were $651,318 as compared to selling, general and
administrative expenses of $240,547 for the same period in 1995. The increase
over last year of $410,771 resulted primarily from monies expended in
preparation of the launch of the Company's product line. Some of the categories
these monies were for included advertising, sales promotion, public relations,
trade shows, sales related travel, point of purchase material, infomercial
related consulting and professional endorsements. Additionally, $82,115 for
accrued Officers salaries was included in selling, general and administrative
expense. Stock issued for services for endorsements, consulting and compensation
totalled $92,043 for the quarter ended December 31, 1996. Stock was not issued
for services during the quarter ended December 31, 1995.
Net cash used in operations was $659,314 for the quarter ended December
31, 1996 as compared to $96,540 for the same period in 1995. Notes payable to
affiliates increased by $136,877 and accrued Officers' salaries increased by
$91,246 for the quarter ended December 31, 1996. Proceeds from the issuance of
common stock were $461,005 for the quarter ended December 31, 1996 as compared
to $150,000 for the quarter ended December 31, 1995. Included in the common
stock proceeds for the quarter ended December 31, 1996 was the conversion of the
note payable to affiliates (including interest of $32,404) for $571,915 and the
conversion of accrued officers' salaries (including interest of $21,871) for
$559,929 to stockholders' equity.
Trends and Uncertainties
The Company is focusing its efforts on the retail market development of
its products through presentations to major sporting goods chains and other
retailers, tradeshows, and infomercials beginning in the second quarter of 1997.
The Company seeks to maintain low operating costs and continues to source high
quality low cost manufacturers for its products. However, increased marketing
expenses will probably occur in future periods as the Company continues to
increase its market penetration and operating revenues.
The sale of the Company's products are seasonal with Father's Day and
the Christmas season being two strong buying periods. Additionally, the spring
season produces strong orders
<PAGE> 7
well into the summer months. Major retailers such as Service Merchandise and The
Sports Authority have expressed an interest in carrying several of the Company's
products in their stores. 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.
Inasmuch as a major portion of the Company's activities is in the
development and marketing of golf training aids, the Company's business
operations may be adversely affected by competitors and prolonged recessionary
periods.
The purchasers in a private placement of shares of the Company's Common
Stock during September through November 1996 may have certain rescission rights
pursuant to federal and state securities laws. Accordingly, the Company may have
a contingent liability for rescission of up to $524,000, plus interest at 12%
per annum. The exercise of such rescission rights by a sufficient number of the
purchasers may have a materially adverse effect upon the Company.
Liquidity and Capital Resources
The Company was in the developmental stage through the fiscal years
ended September 30, 1995. The Company will begin airing infomercials in the
first half of calendar 1997. The infomercials will emphasize the Company's
premier products, ANGLEIRON(TM) and SCRATCH SCORE GOLF, and provide brand
identification for the "Level Best Golf" product line.
In June 1996, the Company entered into a 3-year lease for its current
facility at a monthly rental rate of $6,000. Other than this lease, the Company
has no material commitments for capital expenditures. The Company has an option
to buy its current facility at a price of $600,000. The Company intends to
purchase its new facility when it can obtain acceptable mortgage financing for
not less than 80% of the purchase price. The Company may elect to pay all or
part of the purchase price with proceeds realized, if any, from the sale of
Common Stock pursuant to exercise of outstanding Warrants, although there is no
assurance that sufficient proceeds will be received from such exercise for such
purposes.
The Company has incurred an operating loss of $731,091 for the quarter
ended December 31, 1996 and has incurred operating losses of $1,145,195,
$1,473,182, and $385,126, respectively, for the fiscal years ended 1996, 1995
and 1994. Through the first three months of fiscal 1997, the Company has not
generated positive cash flow from operations.
At December 31, 1996, the Company had negative working capital of
$1,004,043. The Company's independent auditors had qualified their opinion of
the Company's financial statements for the fiscal year ended September 30, 1996,
to the effect that there is substantial doubt about the ability of the Company
to continue as a going concern.
<PAGE> 8
The Company believes it will have a positive cash flow from operations
during fiscal year 1997, although there is no assurance that it will occur. The
Company is planning to seek additional capital through equity financing, but
there is no assurance that such financing will be available on terms acceptable
to the Company or at all.
<PAGE> 9
PART II
ITEM 2. CHANGES IN SECURITIES.
c) During October through December 1996, the Company issued a
total of 191,568 shares of its common stock and obtained a loan from private
parties without registering them pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). The Company issued 170,546 of such shares in
connection with a loan to the Company in the aggregate original principal amount
of $469,000 from a total of six persons; the Company obtained the loan and
issued the shares both in reliance upon the exemption from registration
contained in Section 4(2) of the Securities Act. The Company also issued 17,022
shares to four persons as compensation; 2,000 shares (1,000 shares each) to two
new advisory board members; and 2,000 shares to the Company's Chief Financial
Officer as a signing bonus. In each of those four instances, the Company also
relied upon the exemption from registration contained in Section 4(2) of the
Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits.
Please see the Exhibit Index on Page _____.
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
<S> <C> <C>
10.11 Licensing Agreement dated January 25, 1997, between the
Company and Plane Sight, Inc.
10.12 Endorsement Agreement dated December 19, 1996, between the
Company and Butch Harmon
10.13 Endorsement Agreement dated December 19, 1996, between the
Company and Andy North
27 Financial Data Schedule (For SEC Use Only)
</TABLE>
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LEVEL BEST GOLF, INC.
Date: February 13, 1997 By: /s/ Curt Rodgers
-------------------------------------
Curt Rodgers, Chief Financial Officer
<PAGE> 1
Exhibit 10.11
AGREEMENT
This Agreement is between Plane Sight, Inc., (Plane Sight) and Level Best Golf,
Inc. (LBG), and concerns a golf training device disclosed in U.S. Patent No.
5,544,888, as well as existing and future improvements thereof, all of which is
hereinafter referred to as "the PRODUCT."
Plane Sight and LBG hereby acknowledge that Plane Sight is the sole and
exclusive owner of the intellectual property rights of the PRODUCT.
By this Agreement, Plane Sight grants certain rights to LBG in the PRODUCT under
the following conditions:
1) Plane Sight hereby grants LBG a license to make, use and sell the PRODUCT
through retail chains located within the U.S.A. and its territories. Plane Sight
retains the exclusive right to market the PRODUCT through other channels, such
as by mail order and the Internet, and through green grass pro shops and
off-course golf shops in the U.S.A. and its territories. Plane Sight also
retains the exclusive right to market the PRODUCT in all markets outside of the
U.S.A and its territories. However, LBG will be allowed to pursue these same
markets on a nonexclusive basis provided their efforts are coordinated with and
approved in writing by Plane Sight. If LBG can establish a substantial
representative network to service these markets, Plane Sight agrees to consider
granting LBG exclusive rights to these markets.
2) LBG will evaluate its retail store placement of the PRODUCT into the direct
response broadcast channel of distribution. The decision to pursue this
distribution strategy will be solely at the discretion of LBG.
3) LBG is responsible for all manufacturing, packaging and marketing costs
associated with their efforts, and agrees to permit Plane Sight to independently
and directly purchase the PRODUCT and its components from LBG at cost plus 20%
for sales by Plane Sight.
4) LBG agrees to pay Plane Sight a royalty of ten (10) percent of Net Collected
Sales on a quarterly basis, but not less than $3.00 per unit. As used herein,
Net Collected Sales is defined as gross sales minus returns, allowances, rebates
and discounts. Royalty payments are to be made within 30 days of the close of
each calendar quarter. Any royalty payment not received when due shall bear
interest at the rate of 1.5% per month. LBG agrees to provide Plane Sight with a
complete statement of orders placed by LBG from its manufacturing sources, and a
complete statement of sales of the PRODUCT, each on a quarterly basis. These
statements shall be furnished to Plane Sight regardless of whether any Products
were sold during the quarter or whether any actual royalty payment is owed.
Plane Sight has the right, at their own expense, to audit the sales records and
receipts on an annual basis.
5) Plane Sight is responsible for any and all payments to any partner or agents
of Plane Sight who may be involved with the PRODUCT.
<PAGE> 2
6) Plane Sight is responsible for any costs associated with maintaining any
patents owned by Plane Sight at the time of the signing of this Agreement, and
must provide a copy of all of the aforementioned to LBG for their files.
7) The term of this agreement is for thirty-six (36) months from the first
shipment date of the PRODUCT to any retail account. LBG agrees to maintain sales
of the following minimum quantities:
<TABLE>
<S> <C>
First Twelve Months 25,000 units
Second Twelve Months 40,000 units
Third Twelve Months 60,000 units
</TABLE>
Plane Sight shall have the right to terminate this Agreement if LBG fails to
make a first shipment within six (6) months of the signing of this Agreement. In
the event that LBG fails to maintain the above minimum quantities for any one of
the above-stated twelve-month periods, Plane Sight shall have the right to
terminate this Agreement.
8) Plane Sight shall have the right to immediately terminate this Agreement by
giving written notice to LBG in the event that LBG files a petition in
bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for
the benefit of creditors or an arrangement pursuant to any bankruptcy law, or if
LBG discontinues or dissolves its business or if a receiver is appointed for LBG
or for LBG's business.
9) LBG shall, throughout the term of the Agreement, obtain and maintain at its
own cost and expense from a qualified insurance company licensed to do business
in Indiana, standard Product Liability Insurance naming Plane Sight and its
officers, directors, employees, agents, and shareholders, as an additional
insured. This policy shall provide protection against all claims, demands, and
causes of action arising out of any defect or failure to perform, alleged or
otherwise, of the Product or any material used in connection therewith or any
use thereof. The amount of coverage shall be five million U.S. dollars
($5,000.000). The policy shall provide for notice to Plane Sight from the
insurer by registered or certified mail, return receipt requested, in the event
of any modification, cancellation, or termination thereof. LBG agrees to furnish
Plane Sight a certificate of insurance evidencing same within 60 days after
execution of this Agreement and, in no event, shall LBG manufacture, distribute,
or sell the Product prior to receipt by Plane Sight of such evidence of
insurance.
10) Governing Law - This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of Indiana. All disputes
hereunder shall be resolved in the applicable state or federal courts of
Indiana. Plane Sight and LBG consent to the jurisdiction of such courts, agree
to accept service of process by mail, and waive any jurisdictional or venue
defenses otherwise available.
11) Binding Effect - This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors and permitted
assigns.
<PAGE> 3
12) Entire Agreement - This Agreement constitutes the entire understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, understandings and
agreements, oral or written, between the parties with respect to the subject
matter hereof.
13) Amendment - This Agreement may not be amended, except by written instrument
executed by the respective duly-authorized officers of the parties.
14) Assignment - Neither party may assign this Agreement to any third party
without the express prior written consent of the other party.
The parties have caused this Agreement to be executed in duplicate by their
respective duly-authorized officers, with the effective date of this Agreement
being the last date shown below.
/s/ Bill Foley /s/ Plane Sight, Inc.
- ------------------------- ---------------------
for Level Best Golf, Inc. for Plane Sight, Inc.
Bill Foley /s/ J. Thomas Pellegrini
- ------------------------- ------------------------
Name (printed) J. Thomas Pellegrini
Title: Chief Operating Officer Title: President
Date: 1/25/97 Date: 1/20/97
<PAGE> 1
Exhibit 10.12
ENDORSEMENT AGREEMENT
This Endorsement Agreement is made and entered into this 19th day of December,
1996 by and between Level Best Golf, Inc. (hereinafter referred to as "Company")
and Butch Harmon (hereinafter referred to as BH).
WITNESSETH:
WHEREAS, BH is recognized and widely known as a highly skilled
professional golfer, and
WHEREAS, BH by virtue of his ability and extensive experience, has
acquired a secondary meaning in the mind of Company's target marketplace, and
WHEREAS, Company is engaged in the sale of golf training aids, among
other things, and is desirous of acquiring a non-exclusive right to utilize BH's
name in connection with the advertisement, promotion and sale of a Company
product, and
WHEREAS, BH has agreed to authorize such use upon the terms and
conditions hereinafter contained;
NOW, THEREFORE, for and in consideration of the promises and mutual
covenants herein set forth and for other good and valuable consideration, it is
agreed to as follows:
1) DEFINITIONS
As used herein, the terms set forth below shall be defined as follows:
(a) "Athlete Endorsement" shall mean the name, likeness, photograph,
and written endorsement of BH. The endorsement applies to any packaging of the
product and written or print advertising. It does not apply to any other means
of advertising.
(b) "Endorsed Product" shall mean each part of the "Angle Iron" named
product manufactured, promoted, advertised and sold by Company. Other products
manufactured, promoted and advertised by Company are not considered an "Endorsed
Product" under the terms of this agreement.
(c) "Contract Territory" shall mean the entire world.
(d) "Contract Period" shall mean that period of time commencing
December 19, 1996, and concluding January 31, 1999, unless sooner terminated in
accordance with terms and conditions in paragraph 9 & 10. In the event that the
contract is terminated and sales of the Angle Iron continue, BH shall be
entitled to royalties thereon as covered in 6 (a) and (b) if the
<PAGE> 2
product in any way uses BH name or image to promote product or uses
instructional video with BH's image.
2) BH TO PROMOTE THE ENDORSED PRODUCT.
BH agrees to promote the Endorsed Product during the term of this
Agreement.
3) RETENTION OF ENDORSED RIGHTS.
Company agrees that BH shall retain all rights in and to this Athlete
Endorsement and shall not be prevented from using or permitting or licensing
others to use his name or endorsement in connection with the promotion
advertisement, or sale of any product or service in the Contract Territory
during the contract period. Company further agrees that upon termination of this
Endorsement Agreement for any reason, whatsoever, it will cease using the
Athlete Endorsement, the name "Butch Harmon" or any facsimile thereof, for any
purpose, provided, however, that existing printed materials may be utilized
until consumed or exhausted provided that the payments specified in Paragraph 6
hereof are made in a timely manner.
4) FILM, AND/OR PHOTO SHOOTS.
BH agrees, when requested by Company, to make himself available for a
one day production shoot on behalf of Company at a time and a place mutually
convenient to BH and Company.
(a) BH will receive $15,000 for his participation in the production of
instructional video and infomercial for Angle Iron. Said fee to be paid as
follows:
$7,500 will be due upon signing of this agreement and $7,500 will be
due upon completion of Film/Photo shoot.
(b) BH will allow LBG to use his likeness on sales materials, print
ads, packaging and videos associated with Angle Iron, provided prior approval
has been given by BH.
5) APPROVAL OF ADVERTISING.
Company agrees to provide BH for approval a copy of all advertising,
promotional, and packaging materials to be used in connection with the Athlete
Endorsement at least ten (10) days prior to their release to the general public,
and Company further agrees that the same shall not be released without the prior
approval of BH. The failure of BH to approve or disapprove within ten (10) days
shall constitute approval to use, BH agrees that he shall not unreasonably
disapprove any advertising or promotional material submitted hereunder.
<PAGE> 3
6) ROYALTY PAYMENT.
In consideration of the rights and benefits granted to Company
hereunder, Company agrees to pay BH the following compensation in addition to
the filming fee in Paragraph 4 (a):
(a) A total of $.50 for each unit of Endorsed Product sold by Company.
(b) A total of $.75 for each unit of Endorsed Product sold by Company
through use of infomercial and related advertising. Company agrees to provide
quarterly sales reports and make all royalty payments within thirty (30) days
after the end of each quarter.
7) PAYMENT TO BH.
All payments to be made to BH pursuant to the terms hereof shall be
made by check drawn in U.S. Dollars to the order of Butch Harmon and mailed to
him at the address set forth in Paragraph 15 below.
8) TIME OF THE ESSENCE.
Company acknowledges and agrees that time of the essence in the payment
of all compensation due Athlete hereunder.
9) SPECIAL RIGHT OF TERMINATION BY BH.
BH shall have the right to terminate this Agreement upon Company's
failure to cure within thirty (30) days of receipt of prior written notice to
Company in the event of occurrence of any of the following contingencies:
(a) If Company is adjudicated insolvent, declares bankruptcy or fails
to continue its business of selling Endorsed Services, or
(b) If Company fails to make timely payment to BH of any sums due
pursuant to this Agreement.
10) SPECIAL RIGHT OF TERMINATION BY COMPANY.
Company shall have the right to terminate this Agreement upon thirty
(30) days prior written notice to BH or his representative in the event of the
occurrence of any of the following contingencies:
(a) In the event of BH's death during the Contract Period;
(b) In the event BH is convicted of a felony.
<PAGE> 4
11) PAYMENT IN EVENT OF TERMINATION.
In the event of termination pursuant to Paragraph 10 or 11 above, the
parties agree that the compensation due BH pursuant to Paragraph 6 shall be paid
to the date of termination only, except as provided in Paragraph 3 hereof.
12) INDEMNITY.
Company agrees to protect, indemnify and hold BH harmless from and
against any and all expenses, damages, claims, suits, actions, judgments and
cost whatsoever, including attorney's fees, arising out of, or in any way
connected with any claim action which arises from the use of the Endorsed
Services, the use of the BH Endorsement, or the performance of BH's obligations
hereunder. The company agrees to purchase liability coverage which will include
"product liability" coverage and will name BH as additional named insured. Such
insurance shall remain in full force during the term of this Agreement.
13) WAIVER.
The failure of company or BH at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed as continuing waiver or relinquishment thereof and
either may at any time demand strict and complete performance by the other of
said terms, covenants and conditions.
14) ASSIGNMENT.
Neither party shall have any right to grant sublicenses hereunder or to
otherwise assign, transfer, alienate, encumber or hypothecate any of its rights
or obligations hereunder without the express prior written consent of the other
party, except that BH shall have the right to assign the financial benefits
hereof and Company hereby consents to such assignment.
15) NOTICES.
All notices, statements and payments required hereunder shall be sent
by first class mail (or any form superior thereto) to the parties at the
following addresses, or to such other address as either may from time to time
designate to the other:
Butch Harmon Butch Harmon
c/o Pros Incorporated
P. O. Box 673
Richmond, VA 23218
Level Best Golf, Inc. Level Best Golf, Inc.
Attn: Greg Solomon 14561 58th St. N.
Clearwater, FL 34620
<PAGE> 5
16) COMPANY/BH RELATIONSHIP.
BH's performance of services for company hereunder shall be in his
capacity as an independent contractor. Accordingly, nothing contained in this
Agreement shall be construed as establishing an employer/employee, partnership
or joint venture relationship between Company and BH. BH shall be solely
responsible for payment of all taxes on compensation received hereunder.
17) RIGHT TO CONTRACT.
Each party hereto represents to the other that it is authorized to
enter into this Agreement and to provide the services to be provided hereunder
and that the exercise of the rights granted to the other party hereunder will
not conflict with any commitments or agreements previously entered into between
the party so representing and any other party.
18) GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to contracts entered into and wholly
to be performed within the State of Florida and, in the event of any litigation
arising out of this Agreement, venue shall be in the Courts of the State of
Florida.
19) SIGNIFICANCE OF PARAGRAPH HEADING.
Paragraph headings contained hereunder are solely for the purpose of
aiding in speedy location of subject matter and are not in any sense to be given
weight in the construction of this Agreement. Accordingly, in the case of any
question with respect to the construction of this Agreement, it is construed as
though such paragraph headings had been omitted.
20) SEVERABILITY.
Every provision of this Agreement is severable. If any term or
provision herein is held to be illegal for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement or other provision.
21) ENTIRE AGREEMENT.
This agreement constitutes the entire understanding between BH and
Company, and cannot be altered or modified except by an agreement in writing
signed by both parties. Upon its execution, this Agreement shall supersede all
prior negotiations, understandings and agreements whether oral or written, such
prior agreements shall thereupon be null and void and without further legal
effect.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
/s/ Butch Harmon 1/14/97
- -------------------------------------- -------
Butch Harmon Date
/s/ Greg Solomon 1/6/97
- -------------------------------------- ------
Greg Solomon, Executive Vice President Date
Level Best Golf, Inc.
<PAGE> 1
Exhibit 10.13
ENDORSEMENT AGREEMENT
This Endorsement Agreement is made and entered into this 19th day of December,
1996 by and between Level Best Golf, Inc. (hereinafter referred to as "Company")
and Andy North (hereinafter referred to as AN).
WITNESSETH:
WHEREAS, AN is recognized and widely known as a highly skilled
professional golfer; and
WHEREAS, AN by virtue of his ability and extensive experience, has
acquired a secondary meaning in the mind of Company's target marketplace; and
WHEREAS, Company is engaged in the sale of golf training aids, among
other things, and is desirous of acquiring a non-exclusive right to utilize AN's
name in connection with the advertisement, promotion and sale of a Company
product; and
WHEREAS, AN has agreed to authorize such use upon the terms and
conditions hereinafter contained;
NOW, THEREFORE, for and in consideration of the promises and mutual
covenants herein set forth and for other good and valuable consideration, it is
agreed to as follows:
1) DEFINITIONS.
As used herein, the terms set forth below shall be defined as follows:
(a) "Athlete Endorsement" shall mean the name, likeness, photograph,
and written endorsement of AN. The endorsement applies to any packaging of the
product and written or print advertising. It does not apply to any other means
of advertising.
(b) "Endorsed Product" shall mean each part of the "Angle Iron" named
product manufactured, promoted, advertised and sold by Company. Other products
manufactured, promoted and advertised by Company are not considered an "Endorsed
Product" under the terms of this agreement.
(c) "Contract Territory" shall mean the entire world.
(d) "Contract Period" shall mean that period of time commencing
December 19, 1996, and concluding January 31, 1999, unless sooner terminated in
accordance with terms and conditions in paragraph 9 & 10. In the event that the
contract is terminated and sales of the Angle Iron continue, AN shall be
entitled to royalties thereon as covered in 6 (a) and (b) if the
<PAGE> 2
product in any way uses AN's name or image to promote product or uses
instructional video with AN's image.
2) AN TO PROMOTE THE ENDORSED PRODUCT.
AN agrees to promote the Endorsed Product during the term of this
Agreement.
3) RETENTION OF ENDORSED RIGHTS.
Company agrees that AN shall retain all rights in and to this Athlete
Endorsement and shall not be prevented from using or permitting or licensing
others to use his name or endorsement in connection with the promotion,
advertisement, or sale of any product or service in the Contract Territory
during the contract period. Company further agrees that upon termination of this
Endorsement Agreement for any reason, whatsoever, it will cease using the
Athlete Endorsement, the name "Andy North" or any facsimile thereof, for any
purpose, provided, however, that existing printed materials may be utilized
until consumed or exhausted provided that the payments specified in Paragraph 6
hereof are made in a timely manner.
4) FILM, AND/OR PHOTO SHOOTS.
AN agrees, when requested by Company, to make himself available for a
two day production shoot on behalf of Company at a time and a place mutually
convenient to AN and Company.
(a) AN will receive $15,000 for his participation in the production of
instructional video and infomercial for Angle Iron. Said fee to be paid as
follows:
$7,500 will be due upon signing of this agreement and $7,500 will be
due upon completion of Film/Photo shoot.
(b) AN will allow LBG to use his likeness on sales materials, print
ads, packaging and videos associated with Angle Iron, provided prior approval
has been given by AN.
5) APPROVAL OF ADVERTISING.
Company agrees to provide AN for approval a copy of all advertising,
promotional, and packaging materials to be used in connection with the Athlete
Endorsement at least ten (10) days prior to their release to the general public,
and Company further agrees that the same shall not be released without the prior
approval of AN. The failure of AN to approve or disapprove within ten (10) days
shall constitute approval to use. AN agrees that he shall not unreasonably
disapprove any advertising or promotional material submitted hereunder.
<PAGE> 3
6) ROYALTY PAYMENT.
In consideration of the rights and benefits granted to Company
hereunder, Company agrees to pay AN the following compensation in addition to
the filming fee in Paragraph 4 (a):
(a) A total of $.50 for each unit of Endorsed Product sold by Company.
Company agrees to provide quarterly sales reports and make all royalty payments
within thirty (30) days after the end of each quarter.
7) PAYMENTS TO AN.
All payments to be made to AN pursuant to the terms hereof shall be
made by check drawn in U.S. Dollars to the order of Andy North and mailed to him
at the address set forth in Paragraph 15 below.
8) TIME IS OF THE ESSENCE.
Company acknowledges and agrees that time is of the essence in the
payment of all compensation due Athlete hereunder.
9) SPECIAL RIGHT OF TERMINATION BY AN.
AN shall have the right to terminate this Agreement upon Company's
failure to cure within thirty (30) days of receipt or prior written notice to
Company in the event of occurrence of any of the following contingencies:
(a) If Company is adjudicated insolvent, declares bankruptcy or fails
to continue its business of selling Endorsed Services; or
(b) If Company fails to make timely payment to AN of any sums due
pursuant to this Agreement.
10) SPECIAL RIGHT OF TERMINATION BY COMPANY.
Company shall have the right to terminate this Agreement upon thirty
(30) days prior written notice to AN or his representatives in the event of the
occurrence of any of the following contingencies:
(a) In the event of AN death during the Contract Period;
(b) In the event AN is convicted of a felony.
<PAGE> 4
11) PAYMENT IN EVENT OF TERMINATION.
In the event of termination pursuant to Paragraph 10 or 11 above, the
parties agree that the compensation due AN pursuant to Paragraph 6 shall be paid
to the date of termination only, except as provided in Paragraph 3 hereof.
12) INDEMNITY.
Company agrees to protect, indemnify and hold AN harmless from and
against any and all expenses, damages, claims, suits, actions, judgments and
cost whatsoever, including attorney's fees, arising out of, or in any way
connected with, any claim action which arises from the use of the Endorsed
Services, the use of the AN Endorsement, or the performance of AN's obligations
hereunder. The Company agrees to purchase liability coverage which will include
"products liability" coverage and will name AN as additional named insureds.
Such insurance shall remain in full force during the term of this Agreement.
13) WAIVER.
The failure of Company or AN at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed as continuing waiver or relinquishment thereof and
either may at any time demand strict and complete performance by the other of
said terms, covenants and conditions.
14) ASSIGNMENT.
Neither party shall have any right to grant sublicenses hereunder or to
otherwise assign, transfer, alienate, encumber or hypothecate any of its rights
or obligations hereunder without the express prior written consent of the other
party, except that AN shall have the right to assign the financial benefits
hereof and Company hereby consents to such assignment.
15) NOTICES.
All notices, statements and payments required hereunder shall be sent
by first class mail (or any form superior thereto) to the parties at the
following addresses, or to such other address as either may from time to time
designate to the other.
Andy North Andy North
3289 High Point Rd.
Madison, WI 53719
Level Best Golf, Inc. Level Best Golf, Inc.
Attn: Greg Solomon 14561 58th St. N.
Clearwater, FL 34620
<PAGE> 5
16) COMPANY/AN RELATIONSHIP.
AN's performance of services for company hereunder shall be in his
capacity as an independent contractor. Accordingly, nothing contained in this
Agreement shall be construed as establishing an employer/employee, partnership
or joint venture relationship between Company and AN. AN shall be solely
responsible for payment of all taxes on compensation received hereunder.
17) RIGHT TO CONTRACT.
Each party hereto represents to the other that it is authorized to
enter into this Agreement and to provide the service; to be provided hereunder
and that the exercise of the rights granted to the other party hereunder will
not conflict with any commitments or agreements previously entered into between
the party so representing and any other party.
18) GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to contracts entered into and wholly
to be performed within the State of Florida and, in the event of any litigation
arising out this Agreement, venue shall be in the Courts of the State of
Florida.
19) SIGNIFICANCE OF PARAGRAPH HEADING.
Paragraph heading contained hereunder are solely for the purpose of
aiding in speedy location of subject matter and are not in any sense to be given
weight in the construction of this Agreement. Accordingly, in the case of any
question with respect to the construction of this Agreement, it is construed as
though such paragraph headings had been omitted.
20) SEVERABILITY.
Every provision of this Agreement is severable. If any term or
provision herein is held to be illegal for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement or other provision.
21) ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding between AN and
Company, and cannot be altered or modified except by an agreement in writing
signed by both parties. Upon its execution, this Agreement shall supersede all
prior negotiations, understandings and agreements, whether oral or written, such
prior agreements shall thereupon be null and void and without further legal
effect.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
/s/ Andy North 1/8/97
- -------------------------------------- ------
Andy North Date
/s/ Greg Solomon 1/6/97
- -------------------------------------- ------
Greg Solomon, Executive Vice President Date
Level Best Golf, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LEVEL BEST GOLF, INC. FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 60,105
<ALLOWANCES> 0
<INVENTORY> 358,043
<CURRENT-ASSETS> 427,148
<PP&E> 104,020
<DEPRECIATION> 13,989
<TOTAL-ASSETS> 808,067
<CURRENT-LIABILITIES> 1,743,293
<BONDS> 47,380
0
0
<COMMON> 3,246
<OTHER-SE> (985,852)
<TOTAL-LIABILITY-AND-EQUITY> 808,067
<SALES> 70,200
<TOTAL-REVENUES> 70,200
<CGS> 19,587
<TOTAL-COSTS> 762,948
<OTHER-EXPENSES> 38,343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,343
<INCOME-PRETAX> (731,091)
<INCOME-TAX> 0
<INCOME-CONTINUING> (731,091)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (731,091)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
