UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-28007
GOLFGEAR INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 43-1627555
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12771 Pala Drive, Garden Grove, California 92841
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(714) 899-4274
--------------------------
(Issuer's telephone number)
Not applicable
---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of April 30, 2000, the Company had 12,991,348 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Documents incorporated by reference: None.
1
<PAGE>
GOLFGEAR INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) - December 31, 1999
and March 31, 2000
Consolidated Statements of Operations (Unaudited) -
Three Months Ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements (Unaudited) -
Three Months Ended March 31, 2000 and 1999
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
<PAGE>
GolfGear International, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
2000 1999
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 135,843 $ 793,262
Accounts receivable, net of
allowance for doubtful
accounts of $48,808 and
$40,000 at March 31, 2000
and December 31, 1999,
respectively 837,936 446,214
Inventories
Component parts 501,481 296,847
Finished goods 143,309 155,425
Prepaid expenses 15,144 20,610
----------- -----------
Total current assets 1,633,713 1,712,358
----------- -----------
Property and equipment 431,783 381,595
Less accumulated depreciation
and amortization (269,979) (259,549)
----------- -----------
161,804 122,046
----------- -----------
Other assets:
Patents and trademarks, net
of accumulated amortization
of $111,333 and $107,114 at
March 31, 2000 and December
31, 1999, respectively 152,285 156,504
Deposits 12,400 23,025
----------- -----------
164,685 179,529
----------- -----------
Total assets $1,960,202 $2,013,933
=========== ===========
(continued)
3
<PAGE>
GolfGear International, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited) (continued)
March 31, December 31,
2000 1999
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank credit line payable $ 14,975 $ 16,020
Notes payable to stockholders 33,434 35,434
Notes payable 52,049 70,631
Accounts payable and accrued
expenses 785,540 641,498
Accrued product warranties 39,663 36,000
Accrued interest 11,534 12,448
Accrued officer's compensation 133,750 124,000
----------- ------------
Total current liabilities 1,070,945 936,031
----------- ------------
Stockholders' equity:
Preferred stock, $.001 par value;
Authorized - 10,000,000 shares
Series A Senior Convertible
Preferred Stock:
Issued and outstanding -
219,858 shares and 216,626 shares
at March 31, 2000 and December 31,
1999, respectively (stated value -
$9.50 per share) 220 217
Common stock, $.001 par value;
Authorized - 50,000,000 shares
Issued and outstanding -
12,826,348 shares and 12,816,348
shares at March 31, 2000 and
December 31, 1999, respectively 12,826 12,816
Additional paid-in capital 8,023,312 7,981,695
Accumulated deficit (7,147,101) (6,916,826)
----------- ------------
Total stockholders' equity 889,257 1,077,902
----------- ------------
Total liabilities and
stockholders' equity $1,960,202 $ 2,013,933
=========== ============
See accompanying notes to consolidated financial statements.
4
<PAGE>
GolfGear International, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31,
------------------------
2000 1999
----------- -----------
Sales $ 624,445 $ 418,727
Cost of goods sold 293,480 181,080
----------- -----------
Gross profit 330,965 237,647
----------- -----------
Expenses:
Selling and marketing 180,025 153,381
Tour and pro contracts 10,231 93,010
Provision for bad debts 15,000 5,000
General and administrative 312,151 301,479
Depreciation and amortization 14,649 10,478
----------- -----------
Total expenses 532,056 563,348
----------- -----------
Net loss from operations (201,091) (325,701)
Other income (expense):
Interest income 5,008
Interest expense (3,492) (10,448)
----------- -----------
Net loss $ (199,575) $ (336,149)
=========== ===========
Net loss applicable to common
stockholders:
Net loss $(199,575) $(336,149)
Less dividends on Series A
Senior Convertible
Preferred Stock (30,701)
----------- -----------
Net loss applicable to common
stockholders $ (230,276) $ (336,149)
=========== ===========
Net loss per common share -
Basic and diluted $ (0.02) $ (0.03)
=========== ===========
Weighted average number of
common shares outstanding -
basic and diluted 12,819,681 12,506,027
=========== ===========
See accompanying notes to consolidated financial statements.
5
<PAGE>
GolfGear International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
-------------------------
2000 1999
------------- ----------
Cash flows from operating activities:
Net loss $(199,575) $(336,149)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 14,649 10,478
Provision for bad debts 15,000 5,000
Common stock issued for services
received 13,770
Fair value of stock options and
warrants issued to non-employees 139,100
Changes in operating assets and
liabilities:
(Increase) decrease in:
Accounts receivable (406,722) (108,789)
Inventories (192,518) 37,829
Prepaid expenses 5,466 12,450
Deposits 10,625
Increase (decrease) in:
Accounts payable and
accrued expenses 144,042 126,165
Accrued product warranties 3,663 (2,576)
Accrued interest 16
Accrued officer's
compensation 9,750
------------- ----------
Net cash used in operating
activities (595,604) (102,722)
------------- ----------
Cash flows from investing activities:
Purchase of property and equipment (50,188)
------------- ----------
Net cash used in investing activities (50,188)
------------- ----------
(continued)
6
<PAGE>
GolfGear International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
Three Months Ended
March 31,
--------------------
2000 1999
---------- --------
Cash flows from financing activities:
Decrease in notes payable to
stockholders $ (2,000) $
Increase (decrease) in bank credit
line (1,045) 18,964
Proceeds from short-term borrowings 60,000
Repayments on short-term borrowings (8,582)
---------- --------
Net cash provided by (used in)
financing activities (11,627) 78,964
---------- --------
Cash and cash equivalents:
Net decrease (657,419) (23,758)
At beginning of period 793,262 31,771
---------- --------
At end of period $ 135,843 $ 8,013
========== ========
See accompanying notes to consolidated financial statements.
7
<PAGE>
GolfGear International, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Three Months Ended March 31, 2000 and 1999
1. Organization and Basis of Presentation
Basis of Presentation - The accompanying consolidated financial statements
include the operations of GolfGear International, Inc. and its wholly-owned
subsidiaries (the "Company"). All significant intercompany transactions and
balances have been eliminated in consolidation.
Business - The Company designs, develops and markets golf clubs and related golf
products utilizing its proprietary forged face insert technology.
Comments - The accompanying consolidated financial statements are unaudited, but
in the opinion of management of the Company, contain all adjustments, which
include normal recurring adjustments, necessary to present fairly the financial
position at March 31, 2000, the results of operations for the three months ended
March 31, 2000 and 1999, and the cash flows for the three months ended March 31,
2000 and 1999. The consolidated balance sheet as of December 31, 1999 is
derived from the Company's audited financial statements.
Certain information and footnote disclosures normally included in financial
statements that have been presented in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although management of
the Company believes that the disclosures contained in these financial
statements are adequate to make the information presented therein not
misleading. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999, as filed with the Securities
and Exchange Commission.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending December 31, 2000.
8
<PAGE>
Loss Per Share - Basic earnings per share are calculated by dividing net loss
applicable to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share reflects the
potential dilution that would occur if stock options and warrants were
exercised. These potentially dilutive securities were anti-dilutive for all
periods presented, and accordingly, basic and diluted earnings per share are the
same for all periods presented. As of March 31, 2000, potential dilutive
securities consisted of 1,979,903 stock options and 2,119,679 common stock
purchase warrants outstanding.
Comprehensive Income - A statement of comprehensive income is not presented as
the Company has no items of comprehensive income for the periods presented.
2. Stockholders' Equity
During the three months ended March 31, 2000, the Company repaid a note payable
for $10,000 by issuing 10,000 shares of common stock valued at $1.00 per share.
During the three months ended March 31, 1999, the Company issued 18,500 shares
of common stock for services received and recognized non-cash compensation
expense of $13,770.
The Company accounts for stock options and warrants granted to non-employees in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation", which establishes a fair value method of
accounting for stock-based compensation plans and for transactions in which an
entity acquires goods or services in exchange for equity instruments. The
Company calculates the fair value of the stock options and warrants issued on
the date of grant using the Black-Scholes option pricing model, and charges the
fair value to operations over the expected period of benefit. During the three
months ended March 31, 1999, the Company recognized $139,100 of such costs. The
Company did not recognize any such costs during the three months ended March 31,
2000.
On September 27, 1999, the Company entered into an agreement for the sale of
210,526 shares of its Series A Senior Convertible Preferred Stock, for
$2,000,000, which was received in cash during October 1999. The 210,526 shares
of Series A Senior Convertible Preferred Stock are convertible into 2,105,260
shares of the Company's common stock, currently equal to 14.3% of the
post-converted outstanding common stock of the Company. The Series A Senior
Convertible Preferred Stock votes on an "as if converted" basis and may be
converted in whole or in part for a period of two years after which it
automatically converts into common stock. A 6% annual dividend is payable
quarterly in cash or additional shares of preferred stock at the option of the
Company. In conjunction with the preferred stock financing, the Company also
issued 330,000 common stock purchase warrants exercisable at $1.00 per share
through October 2002.
9
<PAGE>
For the three months ended December 31, 1999, 2,339 shares of Series A Senior
Convertible Preferred Stock were issued as payment of dividends of $22,215. For
the three months ended March 31, 2000, 3,232 shares of Series A Senior
Convertible Preferred Stock were issued as payment of dividends of $30,701.
Anti-dilution provisions permit the preferred stockholder to purchase additional
shares of preferred stock so as to maintain its 14.3% interest in the Company
for a period of five years. Furthermore, on a one-time only basis, as a result
of the acquisition of the Bel Air Golf Companies (see Note 4), additional
preferred shares are required to be issued to the preferred stockholder for no
additional consideration in order to maintain the preferred stockholder's 14.3%
interest in the Company. Accordingly, during 1999, the Company issued 3,761
additional shares of Series A Senior Convertible Preferred Stock to the
preferred stockholder, and as a result of the closing of the Bel Air Golf
Companies transaction during April 2000 (see Note 4), the Company will issue an
additional 3,170 shares of Series A Senior Convertible Preferred Stock to the
preferred stockholder.
3. Segment and Geographic Information; Major Customers
The Company operates in one business segment. The Company sells to customers in
both the United States and the Far East. During the three months ended March
31, 2000, sales to customers in the United States and the Far East were $509,881
(82%) and $114,564 (18%), respectively. During the three months ended March 31,
1999, sales to customers in the United States and the Far East were $182,427
(44%) and $236,300 (56%), respectively.
During the three months ended March 31, 2000, three customers accounted for
approximately 51% of total sales. During the three months ended March 31, 1999,
two customers accounted for approximately 62% of total sales.
4. Subsequent Event - Acquisition of Bel Air Golf Companies
On April 11, 2000, the Company completed the acquisition of certain assets of
the Bel Air Golf Companies, which included the "Bel Air Golf" and "Players Golf"
trade names. The acquisition consisted primarily of inventory, trade names,
trademarks and other intangible assets. The Bel Air Golf Companies offer a full
line of junior golf clubs under the Players Golf brand, and Bel Air Golf is
known primarily for golf club products and accessories that offer both value and
quality. The Company, through its wholly-owned subsidiary, Bel Air-Players
Group, Inc., a California corporation, is operating the Bel Air Golf Companies
as a separate division of the Company, and will continue to market junior golf
clubs under the name Players Golf and will continue to develop and market other
products under the Players Golf line, the Bel Air Golf line and other trade
names acquired.
10
<PAGE>
In consideration for these assets, the Company assumed a liability of $50,000
and issued 400,000 shares of its restricted common stock. The Company agreed to
issue 255,000 common stock purchase warrants exercisable at $1.00 per share for
a period of six months from closing and 100,000 common stock purchase warrants
exercisable at $1.00 per share for a period of one year from closing. In
addition, the Company agreed to issue 100,000 common stock purchase warrants
exercisable at $1.00 per share, 100,000 common stock purchase warrants
exercisable at $2.00 per share, and 100,000 common stock purchase warrants
exercisable at $3.00 per share, vesting and exercisable only if net revenues
from Bel Air Golf and Players Golf reach $1,500,000, $2,000,000 and $2,500,000
in 2000, 2001 and 2002, respectively. The Company also issued 10% of the
securities described above as a finder's fee with respect to this transaction.
The Company issued 250,000 of the 400,000 shares on November 29, 1999 as an
advance, in order to be able to operate the Bel Air Golf Companies on an interim
basis. The 250,000 shares, as well as the related 25,000 shares issued as a
finder's fee, were valued at $168,934 and allocated to inventories.
In connection with the agreement, during April 2000 the Company issued a
promissory note for $50,000 with interest at 8% per annum commencing January 1,
2000, with quarterly interest payments of $1,000 through March 31, 2003, at
which time all principal and unpaid accrued interest is due and payable. The
Company also issued 25,000 common stock purchase warrants exercisable at $1.50
per share through March 31, 2003.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
2000 contains "forward-looking" statements within the meaning of the Federal
securities laws. These forward-looking statements include, among others,
statements concerning the Company's expectations regarding its working capital
requirements, gross margin, results of operations, business, growth prospects,
competition and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. The forward-looking statements in this
Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2000
are subject to risks and uncertainties that could cause actual results to differ
materially from those results expressed in or implied by the statements
contained herein.
Overview:
The Company designs, develops and markets golf clubs and related golf products.
The Company utilizes its proprietary forged face insert technology to offer a
full line of golf equipment and accessories. The Company's patent portfolio
with respect to insert technology is the largest and most comprehensive in the
golf industry, with nine domestic and foreign patents issued related to forged
face insert technology. These patents incorporate a wide variety of forged face
insert materials, including titanium, beryllium copper, stainless steel, carbon
steel, aluminum, and related alloys thereof, and include technology relating to
varying the face thickness of the insert.
The Company operates in one business segment. The Company sells to customers in
both the United States and the Far East. During the three months ended March
31, 2000, sales to customers in the United States and the Far East were $509,881
(82%) and $114,564 (18%), respectively. During the three months ended March 31,
1999, sales to customers in the United States and the Far East were $182,427
(44%) and $236,300 (56%), respectively.
During the three months ended March 31, 2000, three customers accounted for
approximately 51% of total sales. During the three months ended March 31, 1999,
two customers accounted for approximately 62% of total sales.
The golf club industry is highly seasonal, with most companies experiencing up
to 60% of their annual sales between February and June, with an additional 20%
of their annual sales occurring between October and December for the Christmas
buying season.
12
<PAGE>
Recent Developments:
On April 11, 2000, the Company completed the acquisition of certain assets of
the Bel Air Golf Companies, which included the "Bel Air Golf" and "Players Golf"
trade names. The acquisition consisted primarily of inventory, trade names,
trademarks and other intangible assets. The Bel Air Golf Companies offer a full
line of junior golf clubs under the Players Golf brand, and Bel Air Golf is
known primarily for golf club products and accessories that offer both value and
quality. The Company, through its wholly-owned subsidiary, Bel Air-Players
Group, Inc., a California corporation, is operating the Bel Air Golf Companies
as a separate division of the Company, and will continue to market junior golf
clubs under the name Players Golf and will continue to develop and market other
products under the Players Golf line, the Bel Air Golf line and other trade
names acquired.
In consideration for these assets, the Company assumed a liability of $50,000
and issued 400,000 shares of its restricted common stock. The Company agreed to
issue 255,000 common stock purchase warrants exercisable at $1.00 per share for
a period of six months from closing and 100,000 common stock purchase warrants
exercisable at $1.00 per share for a period of one year from closing. In
addition, the Company agreed to issue 100,000 common stock warrants exercisable
at $1.00 per share, 100,000 common stock purchase warrants exercisable at $2.00
per share, and 100,000 common stock purchase warrants exercisable at $3.00 per
share, vesting and exercisable only if net revenues from Bel Air Golf and
Players Golf reach $1,500,000, $2,000,000 and $2,500,000 in 2000, 2001 and 2002,
respectively. The Company also issued 10% of the securities described above as
a finder's fee with respect to this transaction.
The Company issued 250,000 of the 400,000 shares on November 29, 1999 as an
advance, in order to be able to operate the Bel Air Golf Companies on an interim
basis. The 250,000 shares, as well as the related 25,000 shares issued as a
finder's fee, were valued at $168,934 and allocated to inventories.
In connection with the agreement, during April 2000 the Company issued a
promissory note for $50,000 with interest at 8% per annum commencing January 1,
2000, with quarterly interest payments of $1,000 through March 31, 2003, at
which time all principal and unpaid accrued interest is due and payable. The
Company also issued 25,000 common stock purchase warrants exercisable at $1.50
per share through March 31, 2003.
13
<PAGE>
Results of Operations:
Three Months Ended March 31, 2000 and 1999 -
For the three months ended March 31, 2000, net sales increased by $205,718 or
49.1% to $624,445, as compared to $418,727 for the three months ended March 31,
1999, as a result of increased unit sales and increasing market acceptance of
the Company's proprietary forged face insert technology products. Approximately
20% of sales for the three months ended March 31, 2000 consisted of sales
generated by the product lines acquired from the Bel Air Golf Companies.
For the three months ended March 31, 2000, gross profit increased to $330,965,
as compared to $237,647 for the three months ended March 31, 1999. As a percent
of net sales, gross margin decreased to 53.0% in 2000 from 56.8% in 1999,
primarily as a result of sales in 2000 including the product lines acquired from
the Bel Air Golf Companies, which have gross margins somewhat less then the
Company's proprietary forged face insert technology product lines.
For the three months ended March 31, 2000, selling and marketing expenses
increased by $26,644 or 17.4% to $180,025 (28.8% of sales), as compared to
$153,381 (36.6% of sales) for the three months ended March 31, 1999. Despite
decreasing as a percent of sales, selling and marketing expenses increased in
2000 as compared to 1999 on an absolute basis due to increased selling and
marketing activities, particularly with respect to the product lines acquired
from the Bel Air Golf Companies.
For the three months ended March 31, 2000, tour and pro contracts decreased by
$82,779 or 89.0% to $10,231 (1.6% of sales), as compared to $93,010 (22.2% of
sales) for the three months ended March 31, 1999, as a result of reduced
emphasis and reliance on the services of touring professionals to promote the
Company's products.
For the three months ended March 31, 2000, general and administrative expenses
increased by $10,672 or 3.5% to $312,151 (50.0% of sales), as compared to
$301,479 (72.0% of sales) for the three months ended March 31, 1999.
Net loss was $199,575 for the three months ended March 31, 2000, as compared to
a net loss of $336,149 for the three months ended March 31, 1999.
Liquidity and Capital Resources - March 31, 2000:
The Company utilized cash of $595,604 in operating activities during the three
months ended March 31, 2000, as compared to utilizing cash of $102,722 during
the three months ended March 31, 1999. The increase in cash utilized in
operating activities in 2000 as compared to 1999 of $492,882 was primarily a
result of an increase in cash utilized for accounts receivables and inventories.
At March 31, 2000, cash and cash equivalents had decreased by $657,419, to
$135,843, as compared to $793,262 at December 31, 1999. As a result, the
Company had working capital of $562,768 at March 31, 2000, as compared to
working capital of $776,327 at December 31, 1999, resulting in current ratios of
1.53:1 and 1.83:1 at March 31, 2000 and December 31, 1999, respectively.
14
<PAGE>
During the three months ended March 31, 2000, net cash used in investing
activities for the purchase of property and equipment was $50,188. During the
three months ended March 31, 1999, the Company did not utilize any cash in
investing activities.
During the three months ended March 31, 2000, the Company repaid $8,582 of
short-term borrowings, as compared to generating $60,000 from short-term
borrowings during the three months ended March 31, 1999. During the three
months ended March 31, 2000, the Company reduced its bank line of credit by
$1,045, as compared to increasing it by $18,964 for the three months ended March
31, 1999.
The Company has incurred operating losses and negative cash flows from
operations during the past few years, and has relied on the sale of its
securities to fund its operations since 1997. The Company believes that the
anticipated cash flows from operations, combined with the net proceeds from the
recent sale of the Company's preferred stock, will be adequate to fund
operations for 2000. However, to the extent that the Company experiences a
substantial increase in revenues and/or acquires other golf operations or
companies, the Company may seek additional debt or equity financing. Should the
cash flows generated by operating and financing activities be insufficient to
fund the Company's future operations, the Company believes that it will be able
to adjust its expenditures and/or reduce its operations, as it has in previous
years, to a level consistent with its available working capital resources.
Year 2000 Issue:
As of December 31, 1999, the Company had completed any required modifications to
its software to ensure that its software systems were Year 2000 compliant. The
cost of such modifications was not significant.
Since the date rollover on January 1, 2000, the Company has not experienced any
material adverse effect from the Year 2000 Issue. While the primary risk to the
Company with respect to the Year 2000 Issue continued to be the ability of third
parties to provide goods and services in a timely and accurate manner, the
Company has not experienced any such disruption to date. The Company does not
expect any remaining risks with respect to the Year 2000 Issue to have a
material adverse effect on the Company.
15
<PAGE>
New Accounting Pronouncement:
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"),
which is effective for financial statements for all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those item as
assets or liabilities in the statement of financial position and measure them at
fair value. SFAS No. 133 also addresses the accounting for hedging activities.
The Company will adopt SFAS No. 133 for its fiscal year beginning January 1,
2001. The Company does not expect that adoption of SFAS No. 133 will have a
material impact on its financial statement presentation or disclosures.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Recent sales of unregistered securities
During the three months ended March 31, 2000, the Company repaid a note payable
for $10,000 by issuing 10,000 shares of common stock valued at $1.00 per share.
For the three months ended March 31, 2000, 3,232 shares of Series A Senior
Convertible Preferred Stock were issued as payment of dividends of $30,701.
The shares of common stock and stock options were issued based on an exemption
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, based on the representations of the recipients.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K:
Three Months Ended March 31, 2000 - None
17
<PAGE>
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.
GOLFGEAR INTERNATIONAL, INC.
----------------------------
(Registrant)
Date: May 10, 2000 By: /s/ DONALD A. ANDERSON
-------------------------
Donald A. Anderson
President
(Duly Authorized Officer)
Date: May 10, 2000 By: /s/ ROBERT N. WEINGARTEN
-------------------------
Robert N. Weingarten
Chief Financial Officer
(Principal Financial
Officer)
18
<PAGE>
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<FISCAL-YEAR-END> DEC-31-2000
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<BONDS> 0
0
220
<COMMON> 12826
<OTHER-SE> 876211
<TOTAL-LIABILITY-AND-EQUITY> 1960202
<SALES> 624445
<TOTAL-REVENUES> 624445
<CGS> 293480
<TOTAL-COSTS> 293480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 15000
<INTEREST-EXPENSE> 3492
<INCOME-PRETAX> (199575)
<INCOME-TAX> 0
<INCOME-CONTINUING> (199575)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (199575)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
