U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
Commission file number 333-59029
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(Exact name of small business issuer as specified in its charter)
South Carolina 57-1069631
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
108 1/2 Courthouse Square
P.O. Box 706
Edgefield, South Carolina 29824
(Address of principal executive offices) (Zip code)
(803) 637-5304
(Issuer's telephone number)
Securities registered under Section 12 (b) of the Exchange Act:
None.
Securities registered under Section 12 (g) of the Exchange Act.
None.
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 __
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this form 10-KSB [X]
State issuer's revenues for its most recent fiscal year: $0
Market value information for the registrant's membership interests is not
available because the membership interests are not traded on any market. Should
a trading market develop for these interests, it is the Manager's belief that
the aggregate market value of the voting members' interest would not exceed
$3,980,000.
<PAGE>
PART I
Certain items discussed in this annual report on Form 10-K may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known
and unknown risks, uncertainties and other factors including, but not limited
to, competition, seasonality, adverse weather, construction delays, and course
conditions, which may cause the actual results, performance or achievements of
Mount Vintage Plantation Golf Club, LLC (the "Company") to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
speak only as of the date of this annual report. The Company expressly disclaims
any obligation or undertaking to release publicly any updates or revisions to
any forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
ITEM I
BUSINESS
The Company was formed on May 26, 1998 and is a manager-managed, term limited
liability company organized under the laws of the State of South Carolina and
has not commenced its principal business activities. The Company was formed
solely to develop and operate the golf course at Mount Vintage Plantation, a
residential and equestrian community located between Edgefield, South Carolina
and Augusta, Georgia. The manager of the Company is MV Development Company, LLC
("MV Development Company"), a South Carolina limited liability company. The
Company's term of existence ends on December 31, 2050; however, the Company can
be liquidated earlier by MV Development Company or by other means as provided in
the Operating Agreement. MV Development Company has no plans at this time to
liquidate the Company prior to the end of its term. The Company will liquidate
on December 31, 2050 and distribute its assets unless previously liquidated or
unless the Members vote to amend the Operating Agreement to extend the term of
the Company's existence.
PRINCIPAL MARKET
The principal market for the Company's golf course is the Augusta, Georgia and
North Augusta and Aiken, South Carolina area. The Company seeks to appeal to the
"upscale" golfer who is interested in playing golf at a particularly beautiful
course with top-quality amenities such as bent-grass greens, concrete cart paths
and high quality service. The Company is initially marketing play to both
daily-fee players and members of the private club associated with the Company.
As the company's reputation develops and more residents move into the Mount
Vintage Plantation residential community, the Company hopes to shift its
emphasis and cater primarily to private club members, including both residents
of Mount Vintage Plantation and nonresidents.
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In addition, the Company seeks to attract daily-fee players visiting the area
during the week of the Masters Tournament held in the Spring of every year in
Augusta, Georgia. The Company expects to charge a higher daily fee for play
during Masters Week, and expects to continue to cater to this special market
even after it shifts its main emphasis to private club players.
COMPETITION
Once the Company's golf course (the "Golf Course") opens, the Company's primary
areas of competition will be Aiken and North Augusta, both in South Carolina,
and Augusta, Georgia. The area within a thirty to fifty mile radius of the Golf
Course has the equivalent of approximately 40 18-hole golf courses. The Company
believes that while its area of competition is highly competitive, there are
adequate rounds of play remaining to be captured to enable the Company to
compete successfully.
The primary modes of competition in the golf industry are quality of the course,
price, convenience of location and aesthetics. Courses in the greater Augusta
market are more conveniently located to a larger population base than is the
Golf Course. The Golf Course will be highly dependent on attracting golf rounds
from the Aiken and Augusta markets. The Company believes that the beauty of the
terrain of the Golf Course will be one of its primary competitive advantages.
The Company believes that the Golf Course will compete most directly with the
higher-quality, up-scale golf properties in the area including Jones Creek, the
River Club, the North Augusta Country Club, the Pine Ridge Country Club and
Forest Hills Golf Club. The Company expects to compete with these up-scale clubs
by charging greens fees comparable to the low end of the range fees charged by
these competitors. The Company also expects to compete with lower-priced clubs,
which it will do by offering a higher-quality golf experience. All of the golf
clubs with which the Company will compete offer some type of membership in the
form of either an annual greens fee or initiation fee with monthly dues. The
Company believes that rounds played in the competitive area are divided roughly
equally between public rounds on the one hand and member and outing rounds on
the other hand. The Company will offer semi-private play, which combines
memberships based on an initiation fee with annual dues and daily-fee play for
non-members.
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THE GOLF COURSE
The Golf Course, which will be called Mount Vintage Plantation Golf Club, will
be located in the center of Mount Vintage Plantation, the common areas of which
are owned and managed by MV Development Company. The Golf Course will be an
18-hole championship course and the Company intends for the facilities of the
Golf Course to include a clubhouse, cart storage facility, maintenance facility,
parking lot and course improvements, including signage, tee markers and cart
paths. As of December 31, 1998, MV Development Company, contributed land to the
Company free and clear of all liens and encumbrances in exchange for 48
membership units. This land is being developed as the Golf Course. See "Item 2:
Description of Properties".
"MOUNT VINTAGE" TRADEMARK PROTECTION
Mount Vintage Property Co., Inc., one of the Company's parent entities, has
applied for protection of the mark "Mount Vintage" used in connection with the
golf club and golf course services with the U.S. Patent and Trademark Office.
If no opposition is filed, the Commissioner of Patents and Trademarks may issue
a notice of allowance pursuant to section 13(b) of the statute. Samples of the
marks are available for review at the Company's office located at 108 1/2
Courthouse Square, Edgefield, South Carolina. The Company will use the mark
under license from Mount Vintage Property Co., Inc.
On March 1 and 23, 1999, Mount Vintage Property Co., Inc. received notice of
allowance to use said mark. Mount Vintage Property Co., Inc. is presently in
the process of filing a statement of first use relating to the mark.
The Company believes that the protection of the mark is important to the future
identity and promotion of the Golf Course. It views the rights of trademark as
important as it presents the intrinsic value of the name.
CONSTRUCTION OF THE GOLF COURSE
Construction of the Golf Course began in October of 1998. The Company hopes to
be substantially complete with construction of the course in May of 1999 and
begin seeding at that time so that the course will be ready for play by October
of 1999. The Company expects to open the Golf Course for play prior to the
completion of the clubhouse. The Company expects that total cost of development
of the Golf Course will be approximately $6.3 million. Prior to December 31,
1998 development of the Golf Course was financed by MV Development Company. The
following is a summary of the construction progress as of this filing:
- - 121 acres have been cleared and grubbed to make room for the
construction of the golf course and clubhouse.
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- - Rough grading completed on the course, except for holes 2, 3 and 16.
- - Finish-shaping of greens completed on the course, except for holes 2 and
3.
- - Finish-shaping of tees completed on the course, except for holes 2,3 and
16.
- - Finish-shaping of bunkers completed on the course, except for holes 2,3
and 16.
- - Finish-shaping of fairways and rough completed on the course, except for
holes 2, 3 and 16.
- - Storm drainage has been completed on the course, except for holes 2, 3
and 16.
- - Greens drainage has been completed on the course, except for holes 2, 3
and practice green 1.
- - Bunker outfall pipe has been completed on the course, except holes, 2,
3, 16 and practice fairway.
- - Irrigation has been installed on the course, except on holes 2,3,9,10,11
and practice fairway.
- - 8,500 linear feet of cart paths have been completed on the course. There
will be a total of 32,000 linear feet of cart paths on the course when
completed.
- - Clubhouse site grading has been completed. Footers for the clubhouse are
in the process of being poured.
- - Three dozen trees have been transplanted on the golf course from areas
on the practice fairway and clubhouse site, which had to be graded and
would not have allowed these trees to remain in these locations.
The completion of the irrigation system is critical to the "grow-in" phase of
the construction schedule. Work on the irrigation lake is slightly behind
schedule as of this report, however, barring any further construction delays,
the Company believes the "grow-in" schedule necessary for play by October of
1999 is achievable. However, risks of further delays (see Part I on risk
factors) could cause the Golf Course not to be opened on the scheduled date.
ENVIRONMENTAL AND REGULATORY APPROVALS
In order to construct the Golf Course, the Company must obtain several federal
and state permits, approvals and authorizations, including, without limitation,
a permit from the U.S. Corps of Engineers for dredging and filling wetlands,
containing a mitigation plan as required by federal environmental laws or
regulations, and a storm management and erosion control permit (grading permit)
from the S.C. Department of Health and Environmental Control (DHEC).
Specifically, the project consists of filling and flooding wetlands in order to
construct road crossings, golf course fairways, and ponds. The project proposes
to fill .30 acres of wetlands, flood 1.02 acres of wetlands, and impact a total
of 9,477 linear feet of streams. The MV Development Company/Mount Vintage
Plantation Golf Club have offered a compensatory mitigation package which will
preserve 39.64 acres of wetlands, 10.11 acres of upland buffers, and create 1.50
acres of forest wetlands.
The Company, has applied for all necessary permits and/or approvals, and the
Company has already received a grading permit from DHEC that permits grading to
begin on the portion of the project not subject to Corps of Engineers approval.
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The Company believes that the receipt of all requested permits and approvals are
fundamental to the successful completion of the construction of the Golf Course
and facilities and ultimately to the success of the Company. In view of the
importance of these permits and approvals, the Company has engaged H2L, Inc.
engineers, and Ecological Associates, Inc. to assist it in acquiring the
necessary permits and approvals. Specifically, Ecological Associates, an
ecological, environmental and natural resources consulting company has led the
effort to obtain the above mentioned permits and approvals. The Company has paid
H2L, Inc. and Ecological Associates $4,112 to date against an expected total
budget estimate of $10,428. Ecological Associates has assisted in the
development of the Company's mitigation plan. In summary, the plan presents a
declaration of restrictive covenants for wetland preservation for certain real
property consisting of 43,210 linear feet (40.44 acres) of preserved streams and
wetlands and 50.38 acres of upland buffer in consideration of the issuance of
Department of the Army (a 404 Corps of Engineers Permit) Permit Number P/N
98-1A-335-W and a 401 Water Quality Certification by the S.C. Department of
Health and Environmental Control (SCDHEC).
The Company believes its mitigation plan is compatible with the long term
viability of the project.
Substantial progress has been made in the approval process and the Company
believes all approvals will be obtained so that the construction effort will
remain on schedule. However, there can be no assurance that the Company will
obtain all the necessary permits and approvals needed. Failure to obtain one or
more of these permits or approvals could delay construction of the Golf Course
and/or require substantial modification in the plans for construction of the
Golf Course, which could have a material adverse effect on the Company.
EMPLOYEES
The Company currently has one full-time employee, but expects to have
thirty-four (34) employees, including twenty-four (24) full-time and ten (10)
part-time and seasonal, by December 31, 1999.
THE OFFERING
Last year, the Company offered up to 150 membership units (the "Membership
Units") at a price of $20,000 each with an aggregate offering price of
$3,000,000. The "Offering" was registered with the Securities and Exchange
Commission on a Registration Statement on Form S-11, which registration
statement was declared effective on November 9, 1998 (Commission File No.
333-59029). The Offering was fully subscribed as of December 31, 1998, and the
balance of the purchase price of the Membership Units were collected within
fifteen (15) days of the consummation of the Offering. The Company has used, or
intends to use, the Offering proceeds as discussed in "Item 6."
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REPORTS AND AVAILABLE INFORMATION
Pursuant to the requirements of the Company's operating agreement, the Company
will provide its members with an annual report containing audited financial
statements of the Company. The Company files periodic reports required by
Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with the SEC pursuant to Section 15(d) of the Exchange Act. Such reports
include annual reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and
Current Reports on the Form 8-K. The public may read and copy any materials the
Company files with SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company
files its reports electronically. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at http://www.sec.gov.
The Company has no Internet address.
ITEM 2
DESCRIPTION OF PROPERTIES
As of December 31, 1998 the Company's only property consisted of 252.6 acres of
land contributed by MV Development Company, LLC in exchange for 48 Membership
Units. The 252.6 acres is 9.6 acres more than originally intended to be
contributed by the Manager. This additional 9.6 acres was included in the "golf
course tract" conveyance at no additional cost to the Company. This additional
acreage benefits the Company by including all of the proposed pond on Dry Branch
Creek, as opposed to partial control of the pond via a pond center line
boundary. The Manager contributed the land to the Company free and clear of all
liens and encumbrances. As of this filing, the land is encumbered as more fully
described under "Development of the Property". The land is located
approximately 10 miles south of Edgefield, South Carolina, 13 miles north of
Augusta, Georgia and 16 miles west of Aiken, South Carolina on Mount Vintage
Plantation which encompasses approximately 4,000 acres of land between
Sweetwater Road, (S.C. Highway 34) and U.S. Highway 25. The land was appraised
in June of 1998 to have a fair market value to be $960,000. Accordingly, the
carrying amount of the land as of December 31, 1998 is $960,000.
The Company borrowed money from the Manager to finance initial development of
the Golf Course. The Company expects to complete development of the Golf Course
and provide initial working capital through a bank credit facility with a
commercial bank. The Company has no plans to engage in further borrowing at this
time. The Company has invested in the Golf Course land primarily for the purpose
of producing income. The Company does not expect to invest in any other real
estate. The Company does not expect to materially engage in any of the following
activities: making loans to other persons or entities, investing in the
securities of other entities in order to exercise control, underwriting the
securities of other issuers, engaging in the purchase or sale of investments,
investing in mortgages or investing in other securities. The Company has issued
48 Membership Units to the Manager in a private placement separate from the
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Offering in exchange for the land for the Golf Course. The Company does not
expect to issue any further Membership Units in exchange for property.
MOUNT VINTAGE PLANTATION
The Golf Course which will bear the name of "Mount Vintage Plantation Golf Club"
will be located in the center of Mount Vintage Plantation (the "Plantation"),
the common areas of which are owned and managed by the Manager. The Plantation
is located approximately 10 miles south of Edgefield, South Carolina, 13 miles
north of Augusta, Georgia and 16 miles west of Aiken, South Carolina. The
Plantation encompasses approximately 4,000 acres of land between Sweetwater Road
(S.C. Highway 34) and U.S. Highway 25.
Mount Vintage Plantation is a residential and equestrian community. Portions of
the Plantation are being developed into housing and recreational areas
consistent with maintaining the natural beauty of the property. The Plantation
currently includes 25 lots of 2 to 5 acres each, some located around a pond, and
several 8 to 15 acre mini-farms. It is expected that upon completion of
development, the Plantation will comprise in excess of 400 lots. All properties
sold within the Plantation are subject to restrictions designed to protect its
natural beauty. As of February 28, 1999, 22 lots had been sold in the Plantation
and 2 more were under contract.
The Manager, in its capacity as the developer of Mount Vintage Plantation, may
in the future offer to pay the club membership initiation fees for lot
purchasers as an incentive to purchase lots at Mount Vintage Plantation. Payment
of such fees will come from the Manager's own funds, and no Company funds will
be used to pay these initiation fees. The Manager has not yet determined whether
it will pay such initiation fees.
GOLF COURSE REAL ESTATE
The Golf Course will be located on the land, and comprises approximately 252.6
acres located in the western portion of Mount Vintage Plantation. The topography
of the land varies from level to undulating or rolling terrain with several
small, meandering creeks and branches, which provide sources of irrigation for
the Golf Course. Much of the acreage is covered with old, massive hardwoods and
southern pines with many unusual rock outcroppings.
The Golf Course will be an 18-hole championship course with what the Company
expects will be a maximum play of 6,985 yards from the back tees. The Company
expects the course to offer four sets of tees at a variety of lengths to provide
an enjoyable experience to a broad range of golfers with the play from the
shortest tees at about 5,245 yards. The Company expects the course to have bent
grass greens and Bermuda tees and fairways, with a season overseed of rye grass.
The Company intends for the course to have a traditional mix of holes with 4
pars 3s, 4 par 5s and 10 par 4s. The current plan design includes a traditional
"returning nines" concept with holes one and ten beginning, and holes nine and
eighteen returning near the clubhouse facility. The Company intends
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to locate a practice range (including target greens and practice bunkers) and a
practice putting green adjacent to the clubhouse. Current plans include
"Clubhouse to Clubhouse" eight-foot wide concrete cart paths throughout the golf
course with quality signage, markers and ball washers.
The Company expects the quality of the greens to meet USGA specifications. The
Company intends for the irrigation system to be designed to provide a fully
independent water supply for the Golf Course. Water will be pumped from on-site
lakes. Bulkheading, stonework, bridges and related woodwork are expected to be
constructed and installed for bank stabilization, erosion control and
aesthetics.
The Company intends for the facilities of the Golf Course to include a
clubhouse, cart storage facility, maintenance facility, parking lot and course
improvements, including signage, tee markers and cart paths. The clubhouse, cart
storage and other out-buildings are currently being designed to follow an old
Southern plantation theme. The planned clubhouse is expected to be approximately
5,500 square feet of which 3,000 square feet will be of new construction. The
main core of the clubhouse facility is a currently-existing 2,500 square foot
1840's vintage Southern plantation house. The overall atmosphere and
architectural style of the facilities will be consistent with the old structure.
The new construction will include mens and ladies locker rooms which will be
approximately 1,000 square feet and a dining facility of approximately 1,000
square feet. In addition, the clubhouse will have a golf shop of moderate size,
small offices for administrative activities and storage. In addition to the
planned clubhouse, cart storage facility and maintenance facility, the Golf
Course may also include a pool, pool pavilion and tennis facilities; however, no
decision has been made on these matters at this time. The Company expects to
spend approximately $4.8 million on improvements to the real estate in
construction of the Golf Course and related buildings and facilities. See "Item
6: Management's Discussion and Analysis or Plan of Operation".
The Company believes that the land is suitable for the development of a
high-quality golf course. The Company believes that the aesthetic appeal of
Mount Vintage Plantation, home pricing, quality of construction and restrictions
regarding construction provide a suitable setting for the Golf Course. The
fairways and greens would be situated adjacent to an up-scale neighborhood with
rolling terrain of woodlands and pasture land. There is an abundance of water
available to the site for irrigation, since there are various streams and
branches meandering through the land. The climate in the Augusta, Georgia -
Edgefield, South Carolina area makes the Golf Course suitable for year-round
play.
DEVELOPMENT OF THE PROPERTY
Construction on the Golf Course began in October 1998 with the awarding of
general contracts to Champion Construction of Kings Mountain, North Carolina.
The Company hopes to complete construction of the course in May of 1999 and
begin seeding at that time so that the course will be ready for play by October
of 1999. If the Company is unable to begin seeding in the Spring of 1999,
development and commencement of operations could be delayed for as much as a
year while the Company waits for the 2000
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growing season. Construction of the Golf Course clubhouse began in April of
1999. The Company expects to open the Golf Course for play prior to completion
of the clubhouse. Water for the Golf Course will be obtained from ponds located
on the Land. Aiken Electric Cooperative, Inc. will provide electrical power for
the Golf Course.
The Company expects the total cost of development of the Golf Course to be
approximately $6.3 million. The contract for the construction of the Golf Course
itself is priced on a "fixed price" basis. The Company cannot predict what the
actual terms of other construction contracts will be, but the Company expects
that such construction contracts will be on a "cost plus" basis such that there
will be no absolute cap on the cost of construction. Construction costs, even
under the fixed price contract, are likely to change in response to constant
interplay between on-going construction and planning. Consequently, the Company
may have to pay substantially more to complete construction than initial
estimates indicate.
Proceeds of the Offering were first used to reimburse the Manager for $733,016
of development costs financed by the Manager prior to the Offering, with
remaining funds used to help finance completion of development of the Golf
Course. Completion of development will also be financed through the credit
facility with Regions Bank. The Company will use proceeds from operations to
make payments on the credit facility.
Subsequent to year end, the Company entered into the credit facility with
Regions Bank to finance development of the Golf Course and to provide operating
capital. The facility provides for up to $3,300,000 in proceeds with an initial
interest rate of 8.75%. The note is secured by a mortgage, from the Company, on
the 252.6 acres of land with improvements thereon. Additionally, the note is
secured by a Certificate of Deposit in the original principal amount of
$400,000. The agreement provides for monthly interest only payments, beginning
in March, 1999 and monthly principal and interest payments, for a term of
fifty-nine (59) months beginning in February, 2001. In addition, the agreement
provides for a single payment of approximately $2,670,000 on January 15, 2006.
COMPETITIVE CONDITIONS
The Company's primary areas of competition will be Aiken and North Augusta, both
in South Carolina, and Augusta, Georgia. The area within a thirty to fifty mile
radius of the Golf Course has the equivalent of approximately 40 18-hole golf
courses. The Company believes that while its area of competition is highly
competitive, there are adequate rounds of play remaining to be captured to
enable the Company to compete successfully. See "ITEM 1: Business-Competition".
INSURANCE
Presently the Company has general liability coverage providing protection from
liability for bodily injury and property damage arising from the Golf Course
premises. Additionally, coverage is in place for Company vehicles and equipment.
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The Company expects to purchase liability and casualty insurance tailored for a
golf course from a commercial insurance provider, including the following types
of additional coverage (1) pesticide and herbicide liability coverage providing
pollution liability coverage for bodily injury and property damage due to the
application of pesticides and herbicides, (2) liquor liability coverage to
protect the Company from restaurant and bar exposure, (3) property coverage to
protect Company buildings and building contents from loss due to fire,
lightning, theft and vandalism, (4) workers compensation coverage providing
employers liability and medical benefits to a Company employee injured on the
job and (5) umbrella coverage to provide an extra layer of business liability
protection over the underlying coverage described above. The Company may also
purchase coverage protecting against employee dishonesty, burglary and robbery
as it deems necessary. The Company does not intend to purchase coverage against
damage due to hurricanes or tornadoes. The Company believes that the insurance
it will purchase will adequately protect it and its property from loss due to
liability or casualty.
REAL ESTATE TAXES
The Company does not know what its real estate taxes will be at this time
because the Company understands that golf course real estate tax rates are
unique to individual courses and are arrived at by negotiations between course
operators and tax authorities. The Company understands that the 1997 real estate
taxes for the neighboring golf courses of Pine Ridge and North Augusta were
$13,216.64 and $19,822.00, respectively. The Company believes that its annual
real estate taxes will be between $25,000 and $30,000 once the course is
completed.
DEPRECIATION
Once Golf Course operations begin, the Company expects to take depreciation on
improvements to the Golf Course, buildings, normal furniture, fixtures and
equipment and computers and short-lived assets. The Company intends, for
financial purposes, to depreciate the Golf Course construction as land
improvements over a 30 year period. Pursuant to Rev. Rul. 55-290, for federal
income tax purposes, the Company will not depreciate the Golf Course
construction. The Company expects to depreciate all subsequent expenses for land
improvements. The following table indicates the life, rate and method of
depreciation the Company expects to take:
<TABLE>
<CAPTION>
FEDERAL INCOME TAX PURPOSES FINANCIAL PURPOSES
------------------------------------------------------
LIFE LIFE
ASSET (YEARS) METHOD (YEARS) METHOD
- ------------------------------- ---------- ---------------------------- -------------
<S> <C> <C> <C> <C>
Buildings 39 straight-line 40 straight-line
Golf Course improvements 15 straight-line * straight-line
Normal furniture, fixtures & 7 double-declining 7 straight-line
equipment balance
Computers & short-lived assets 5 double-declining 5 straight-line
balance
</TABLE>
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The tax basis for all depreciable assets will be the cost of the assets to the
Company.
*The estimated life of the Golf Course improvements for financial reporting
purpose is to be determined.
ITEM 3
LEGAL PROCEEDINGS
None.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5
MARKET FOR REGISTRANT'S EQUITY AND RELATED MEMBER MATTERS
As of December 31, 1998, the Company had issued fifty-one (51) of its single
class of $20,000 par value membership units (the "Membership Units") and had
subscriptions for an additional 148 Membership Units. The subscription
receivables totaling $2,812,000 reported at year end were received on or before
January 15, 1999. As of the date of this report, the 199 Membership Units were
held by thirty-nine (39) holders of record. The Company's Membership Units are
not traded on any established public trading market, and it is not anticipated
that such a market will develop in the future. No cash distributions were
declared or paid during the year. Future distributions will depend on the levels
of cash generated from operations, refinancings, and the availability of cash
reserves.
In 1998, the Company offered 150 Membership Units at a purchase price of $20,000
per Membership Unit (or an aggregate purchase price of $3 million) in a public
offering (the "Offering") registered with the U.S. Securities and Exchange
Commission on a Registration Statement on Form S-11 (Commission File No.
333-59029, the "S-11"). The SEC declared the S-11 effective on November 9, 1998.
The Offering terminated on December 31, 1998, and all 150 Membership Units
offered were subscribed to by that date. The Company's total expenses in
connection with the Offering were approximately $112,500, all of which were paid
to persons not affiliated with the issuer. No underwriters were used in
connection with the Offering, and the Company paid no underwriting discounts,
commissions, or finders' fees to any person. The Company
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received net proceeds after offering expenses of $2,887,000 from the Offering.
The Company used the Offering proceeds for liabilities incurred as of year end
and expects to use the Offering proceeds during 1999, as follows:
<TABLE>
<CAPTION>
Incurred as of Projected
December 31, expenditures
1998 1999 Total
----------------------------------------------
<S> <C> <C> <C>
Golf Course development assets $ 262,532 $ 1,454,409 $ 1,716,941
Purchase of vehicles 19,740 180,260 200,000
Purchase of Golf Course development
assets from Manager 606,484 - 606,484
Golf Course development expenses
reimbursed to Manager 106,792 - 106,792
Legal and accounting fees 85,244 22,469 107,713
Consulting fees to Don Howard, President 100,000 - 100,000
Printing and other costs 22,889 139,181 162,070
----------- ----------- -----------
$ 1,203,681 $ 1,796,319 $ 3,000,000
=========== =========== ===========
</TABLE>
In addition to settling its liabilities at December 31, 1998, the Company
further used Offering proceeds for ongoing development of the Golf Course. The
Company does not expect total expenditures for the Golf Course development to
materially differ from those reported in the S-11 (See ITEM 6. "Management's
Discussion and Analysis or Plan of Operation").
The Manager paid all expenses related to the development of the Company's Golf
Course prior to consummation of the Offering. Upon consummation of the Offering,
the Company purchased all assets from the Manager and reimbursed expenses
incurred by the Manager related to such development in the amounts indicated
above. Such assets and expenses included design plans, surveys, marketing
material, permits, market research, improvements to the Golf Course and initial
construction related to the club house for the Golf Course. The price the
Company paid for these assets was equal to the costs incurred by the Manager in
the development of the Golf Course prior to consummation of the Offering plus
interest at the prime rate as quoted in the WALL STREET JOURNAL. The legal,
accounting, and consulting expenses listed above include a $100,000 payment to
the Company's President, Donald P. Howard, for services rendered in formation of
the Company.
The offering was originally intended to close on October 31, 1998. Because the
Offering did not close until December 31, 1998 the amount of assets purchased
from the Manager and expense reimbursements paid to the Manager increased from
$251,000 as reported in the S-11 to $733,016.
One Membership Unit was issued to the Manager in a private placement for $20,000
cash upon formation of the Company, and these proceeds were used for general
business purposes of the Company. Forty-eight Membership Units were issued to
the Manager on December 31, 1998, in a private placement in exchange for the
contribution of the 252.6
12
<PAGE>
acres of land on which the Company's Golf Course is being constructed. The land
was appraised in June of 1998 at an approximate aggregate value of $960,000,
which equates to a price of $20,000 per Membership Unit. No underwriters were
used in either private placement and no underwriters discounts or commissions
were given or paid. The Company believes that both private placements were
exempt from registration under the Securities Act of 1933, as amended, pursuant
to Section 4(2) thereof.
ITEM 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
The Company's net loss for the year ended December 31, 1998, and since
inception, was $315,726. There were no revenues during the year as the Company
is a development stage company and planned principal operations have not
commenced. The Company did incur start up and organizational costs, and general
and administrative expenses of $315,726 during the year. These expenses
consisted primarily of professional and consulting fees.
Liquidity and Capital Resources
The Company intends to use the $3,000,000 offering proceeds for the following
purposes in the order of priority in which they are listed. MV Development
Company paid all of the expenses related to the development of the golf course
prior to the consummation of the offering. As of December 31, 1998, MV
Development Company had paid $626,224 in golf course development costs and
$106,792 in expenses related to the development of the golf course. As of year
end, the Company purchased these assets, reimbursed MV Development for the
expenses incurred, and assumed the obligations of MV Development for the golf
course construction. Remaining proceeds will be used to directly finance
development of the golf course.
The Company expects the proceeds of this Offering to cover all of its
expenditures through the end of April of 1999, after which borrowing under a
credit facility is required to continue to finance expenditures. The Company
expects total expenditures from November 1, 1998 to September 30, 1999 to be
approximately $5,254,000. Of this amount, the Company expects that approximately
$296,000 will be related to the cost of designing the golf course, market
studies, legal, accounting and Offering fees and pre-opening marketing costs.
The Company expects that, approximately $374,000 will be related to the
purchase, lease, or maintenance of equipment, approximately $829,000 will be
related to the construction of the golf course club house, cart storage and
maintenance facilities and grounds, approximately $160,000 will be related to
construction interest and $71,000 will be a reserve for operating losses. The
Company expects to borrow approximately $2,746,000 under the credit facility and
use $2,508,000 out of the expected $3,000,000 of gross offering proceeds to
finance these expenditures. As of this
13
<PAGE>
filing, actual development costs have not materially differed from those
projected in the Company's Form S-11 Prospectus previously filed with the SEC.
However, because the Offering did not close on October 31, 1998 as intended but
rather on December 31, 1998, the amount of assets purchased from the Manager and
expense reimbursements paid to the Manager increased from $251,000 as reported
in the S-11 to $733,016. The Company expects to have thirty-four (34) employees,
including full-time and part-time, by the end of December 1999.
Year 2000
All technology users including the Company face a potential "Year 2000" or "Y2K"
problem. The Company believes that it is not as susceptible to Year 2000
problems as many other companies because it is a new company with no existing
equipment or contract with third parties who are susceptible to the Year 2000
problem. The Company has not and does not expect to expend a material amount of
resources to address Year 2000 problems. The Manager will adhere to a policy of
purchasing equipment that uses computer programs only if the equipment comes
with a warranty that it is "Year 2000 compliant." Similarly, the Manager will
adhere to a policy of contracting with third party suppliers and other
contractors who will provide the Company with satisfactory representations or
warranties regarding such third party's Year 2000 compliance. In the Company's
worst case Year 2000 scenario, a supplier would cease to be able to meet its
obligations to the Company in which case the Company would seek an alternative
supplier. The Company cannot estimate the cost of such contingency but does not
believe such cost would be substantial.
14
<PAGE>
ITEM 7
FINANCIAL STATEMENTS
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
LIST OF FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Balance sheet
Statement of operations
Statement of members' equity
Statement of cash flows
Notes to financial statements
15
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Members
of Mount Vintage Plantation Golf Club, LLC
We have audited the accompanying balance sheet of Mount Vintage
Plantation Golf Club, LLC (a South Carolina Limited Liability Company) as of
December 31, 1998, and the related statements of operations, members' equity and
cash flows for the period from inception, May 26, 1998, to December 31, 1998.
These financial statements are the responsibility of Mount Vintage Plantation
Golf Club, LLC'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 made 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 Mount Vintage
Plantation Golf Club, LLC as of December 31, 1998, and the results of its
operations and its cash flows for the initial period then ended in conformity
with generally accepted accounting principles.
/s/ Elliott, Davis & Company, L.L.P.
Augusta, Georgia
March 26, 1999
16
<PAGE>
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 207,023
PROPERTY AND EQUIPMENT 1,878,977
----------------
$ 2,086,000
================
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,133,726
Accrued liabilities 100,000
----------------
Total current liabilities 1,233,726
----------------
COMMITMENTS
MEMBERS' EQUITY
Membership units ($20,000 par, 51 issued and 148 3,980,000
subscribed)
Deficit accumulated during the development stage (315,726)
----------------
3,664,274
Less: membership units subscribed (2,812,000)
----------------
852,274
----------------
$ 2,086,000
================
The accompanying notes are an integral part of this financial statement.
17
<PAGE>
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, MAY 26, 1998, TO DECEMBER 31, 1998
REVENUE $ -
EXPENSES
Consulting fees 100,000
Professional fees 137,553
Advertising 38,127
Salaries and benefits 22,254
Other costs 17,792
---------------
Net loss 315,726
ACCUMULATED DEFICIT, INCEPTION -
---------------
ACCUMULATED DEFICIT, END OF PERIOD $ 315,726
===============
The accompanying notes are an integral part of this financial statement.
18
<PAGE>
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF MEMBERS' EQUITY
FOR THE PERIOD FROM INCEPTION, MAY 26, 1998, TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Membership units
(20,000 par)
-----------------------
Deficit
Membership accumulated
No. of unit during the
units Amount subscriptions development stage Total
---------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, INCEPTION - $ - $ - $ - $ -
Membership units, issued
for land 48 960,000 - - 960,000
Membership units, issued
for cash 3 60,000 - - 60,000
Membership units,
subscribed to 148 2,960,000 (2,812,000) - 148,000
Net loss - - - (315,726) (315,726)
---------- ------------ ---------------- ---------------- ----------
BALANCE, END OF
PERIOD 199 $3,980,000 $ (2,812,000) $ (315,726) $ 852,274
========== ============ ================ ================ ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
19
<PAGE>
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION, MAY 26, 1998, TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net loss $ (315,726)
Adjustments to reconcile net loss to net
cash provided by operating activities
Changes in deferred and accrued amounts
Accounts payable 1,133,726
Accrued liabilities 100,000
---------------
Net cash provided by operating activities 918,000
----------------
INVESTING ACTIVITIES
Purchase of property and equipment (918,977)
FINANCING ACTIVITIES
Proceeds from issuance of membership units 208,000
----------------
Net increase in cash and cash equivalents 207,023
CASH AND CASH EQUIVALENTS, INCEPTION -
----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 207,023
================
NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of 48 membership units to MV Development
Co., LLC in exchange for land $ 960,000
================
148 membership units subscribed to as of year end with
subscription receivables due January 15, 1999 $ 2,812,000
================
</TABLE>
The accompanying notes are an integral part of this financial statement.
20
<PAGE>
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
BUSINESS ACTIVITY
MOUNT VINTAGE PLANTATION GOLF CLUB, LLC (the Club) is a newly-formed,
manager-managed, term limited liability corporation which was organized in
May, 1998. The Club was formed solely to develop and operate a golf course
at Mount Vintage Plantation, a residential and equestrian community located
between Edgefield, South Carolina and Augusta, Georgia.
BASIS OF PRESENTATION
The Club is a development stage enterprise as defined by Statement of
Financial Standards Number 7, Accounting and Reporting by Development Stage
Enterprises, as it devotes substantially all of its efforts to establish the
Club. The Club's planned principal operations have not commenced and revenue
has not been recognized from the planned principal operations.
CASH AND CASH EQUIVALENTS
The Club considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents. The Club places its
temporary cash investments with high credit quality financial institutions.
At times such investments may be in excess of FDIC insurance limits.
INCOME TAXES
The Club anticipates that it will be classified as a partnership for Federal
income tax purposes, and as such it will not be subject to income tax. Under
this classification the Club's income, deductions and credits are reported
by the Club's members on their individual income tax returns. Therefore no
provision for income taxes is recorded by the Club.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
21
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, CONTINUED
PROPERTY AND EQUIPMENT
Property and equipment are recorded at historical cost, except for land
acquired in an exchange for membership units (See Note 4). Once property and
equipment are placed into operation, provisions for depreciation and
amortization are made by charges to income at rates based upon the estimated
useful lives of the assets and are computed by the straight-line method for
financial reporting purposes and accelerated methods for tax purposes. Major
additions for capital assets are capitalized as constructed. The carrying
amount of land is not depreciated.
The following accounting policies will be enacted upon the commencement of the
Club's planned principal operations.
INVENTORIES
Inventories are stated at lower of cost or market using the
first-in, first-out (FIFO) method.
MEMBERSHIP DUES
Membership dues are recognized as revenue in the applicable
membership period. Any unearned amounts are included in deferred
revenue at the end of each accounting period.
INITIATION FEES
Initiation fees are recorded as revenue over the life of an
expected membership of ten years.
NOTE 2 - LIMITED LIABILITY CORPORATION
The Club has been organized as a South Carolina Limited Liability
Company by the issuance of a certificate of organization for the Company by the
Secretary of State of South Carolina. As a result, the members' liability is
limited. MV Development Co., LLC is designated as the Manager.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Assets under development
Land $ 960,000
Golf course development in progress 849,406
Clubhouse 49,831
----------
Total assets under development 1,859,237
Vehicles 19,740
----------
$1,878,977
==========
22
<PAGE>
NOTE 3 - PROPERTY AND EQUIPMENT, CONTINUED
Assets under development are recorded at cost, except for land
contributed by the Manager which is recorded at fair market value (See Note 4).
Cost includes all expenditures incurred in acquiring the asset and preparing it
for its intended and productive use and interest costs on related debt
obligations which are capitalized until the asset is substantially completed and
ready for its intended and productive use.
NOTE 4 - RELATED PARTY TRANSACTIONS, COMMITMENTS, AND SUBSEQUENT EVENTS
The Club issued forty-eight (48) membership units to the Manager (MV
Development Company, LLC) in exchange for 252.6 acres of land. The land
contributed by the Manager was assigned a fair market value of $960,000 based
upon its appraised value. The number of membership units issued was calculated
by dividing the fair market value of the land by the par value of a membership
unit.
The Club's president/CEO was paid $100,000 for consulting services
relating to formation of the Club.
Pursuant to the consummation of the December 31, 1998 offering, the Club
assumed the obligations the Manager incurred for the development of the golf
course. As of year end, contracts totaling $1,132,146, with a remaining contract
balance of $401,435 were executed.
As of year end, one hundred forty-eight (148) of the Club's membership
units were subscribed to. Subsequent to year end, membership unit subscriptions
receivable of $2,812,000 were received.
Subsequent to year end, the Club entered into a credit facility with a
bank to finance development of the golf course and to provide operating capital.
The facility provides for up to $3,300,000 in proceeds with an initial interest
rate of 8.75%. The note is secured by a mortgage, from the Club, on the 252.6
acres of land with improvements thereon. Additionally, the note is secured by a
Certificate of Deposit in the original principal amount of $400,000. The
agreement provides for monthly interest only payments, beginning in March, 1999
and monthly principal and interest payments, for a term of fifty-nine (59)
months beginning in February, 2001. In addition, the agreement provides for a
single payment of approximately $2,670,000 on January 15, 2006.
23
<PAGE>
ITEM 8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On March 19, 1999, Mount Vintage Plantation Golf Club, LLC, a South
Carolina limited liability company (the "Company"), dismissed Serotta Maddocks
Evans & Co., CPAs ("SME") as its independent accountant engaged as the principal
accountant to audit the Company's financial statements and, on March 19, 1999,
retained Elliott, Davis & Company, LLP ("Elliott, Davis") in its place. SME
recommended that the Company change its independent accountants and recommended
Elliott, Davis in particular because SME does not generally provide services to
SEC reporting companies. The Company believes that Elliott, Davis has
substantial experience in providing services to SEC reporting companies and will
be able to provide fully adequate services to the Company. The decision to
change the Company's independent accountants was made by the Company's Manager,
MV Development Company, LLC, a South Carolina limited liability company.
No report of SME on any financial statements of the Company contained an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles. The Company and SME have had
no disagreements on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of SME, would have caused SME to make reference
to the subject matter of the disagreements in connection with any report by SME.
Prior to retaining Elliott, Davis as its principal independent
accountant, the Company consulted Elliott, Davis in connection with the
preparation of the Company's first Quarterly Report on Form 10-QSB filed with
the Commission (File No. 333-15029) for the Company's third quarter of the 1998
fiscal year (the "10-QSB"). The Company has also consulted Elliott, Davis in
connection with the preparation of its Annual Report on Form 10-KSB for the 1998
fiscal year (the "10-KSB"). The Company expects that Elliott, Davis will provide
a report on the financial statements of the Company contained in the 10-KSB.
Elliott, Davis provided the Company and SME with general advice on the
organization and preparation of the financial disclosure contained in the 10-QSB
and the 10-KSB. None of these consultations resulted from any disagreement
between the Company and SME.
The Company filed a current report on Form 8-K dated March 31, 1999,
with the Commission on April 6, 1999 (Commission File No. 333-59029), pertaining
to the change in its independent accountants and containing a letter from SME
expressing its concurrence with the aforementioned discussion. An amended Form
8-K dated March 19, 1999, was filed with the Commission on April 14, 1999.
24
<PAGE>
PART III
ITEM 9
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
The business and affairs of the Company are managed by its Manager: MV
Development Company, LLC a member-managed, term South Carolina limited liability
company, formed in 1995 ("Development"). Its term expires on December 31, 2050.
A majority of the interests in Development is owned by Mount Vintage Property
Co., Inc., a South Carolina corporation formed in 1992 ("Property"). Property is
primarily engaged in the business of owning and managing the approximately 4,000
acres of property which comprise Mount Vintage Plantation. Development is
primarily engaged in the business of developing lots within Mount Vintage
Plantation for residential use. Property is owned in equal shares by Bettis C.
Rainsford and Talmadge Knight. Mssrs. Rainsford and Knight also own the minority
interest in Development, and Mr. Rainsford has authority to conduct
Development's business. See "Item 12. Certain Relationships and Related
Transactions".
The Operating Agreement provides that the Manager may, from time to time,
designate officers of the Company. The names and ages of the directors and
executive officers of MV Development Company, LLC and the Company are set forth
below. There are no family relationships between or among any officers and
directors.
<TABLE>
<CAPTION>
Date
Position
Name Age Position Obtained Company
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bettis C. Rainsford 47 Secretary/Treasurer 5/8/92 Mount Vintage Property
Company, Inc.
Member 2/3/95 MV Development Company,
LLC
Secretary/Treasurer/CFO 5/26/98 Mount Vintage Plantation
Golf Club, LLC
Talmadge Knight 57 President/Director 1/1/98 Mount Vintage Property
Company, Inc.
Member 1/1/98 MV Development Company,
LLC
Vice President 5/26/98 Mount Vintage Plantation
Golf Club, LLC
Donald Price Howard 52 President/CEO 5/26/98 Mount Vintage Plantation
Golf Club, LLC
</TABLE>
BETTIS C. RAINSFORD has been a director, Executive Vice President and Chief
Financial Officer of Delta Woodside Industries, Inc. ("DWI") or its predecessors
from the founding of its predecessors in 1984. Mr. Rainsford has served as
Treasurer of DWI or its predecessors from 1984 to 1986, from August 1988 to
November 1988 and from 1990 to
25
<PAGE>
the present. He is a director, Executive Vice President, Chief Financial Officer
and Treasurer of DWI's subsidiary, Delta Mills, Inc. He is also President of The
Rainsford Development Corporation, which is engaged in general business
development activities in Edgefield, South Carolina. Mr. Rainsford serves as a
director of Martin Color-Fi, Inc. Mr. Rainsford received his B.A. degree in 1973
from Harvard College and his J.D. degree from the University of South Carolina
School of Law in 1976.
TALMADGE KNIGHT is founder, President and a director of Knight Textile Co., an
apparel manufacturing company formed in 1971, which supplies private label and
branded merchandise to major department stores and specialty stores in the
United States. Knight Textile Co. is a private company with its headquarters in
Saluda, South Carolina.
DONALD PRICE HOWARD, 52, has been Assistant Professor of Management and
Marketing at the Augusta State University College of Business Administration
since 1996. He is founder, President, and a director of Genin Corporation
("Genin"), formed in 1987 and located in Augusta, Georgia. He has served as
Genin's President since its formation. Genin formerly was a retail and wholesale
apparel brokerage and consulting firm and is now a real estate holding
corporation. He was also President and a director of Commercial Driver Training,
Inc., formed in 1995 and located in Augusta, Georgia, and had been its President
until August 1998. Mr. Howard worked for Belk Stores from 1968 to 1987, where he
became a director and Vice President in 1975 and Executive Vice President and a
partner in 1981. Mr. Howard holds an MBA from the University of South Carolina.
ITEM 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name & Principal Position Year Compensation
------------------------- ---- ------------
Donald P. Howard, President 1998 $100,000
Mr. Howard was paid $100,000 following closing of the Offering in compensation
for his services relating to formation of the Company. The Company has not yet
determined whether or how Mr. Howard will be compensated for his services as
president following closing of the Offering. The Company believes that Mr.
Howard will be retained as president for a reasonable compensation; however,
there can be no assurance that Mr. Howard and the Company will be able to arrive
at a satisfactory compensation package, and Mr. Howard could leave the Company
to its financial detriment. Messrs. Knight and Rainsford will receive no
compensation for their service as officers of the Company.
ITEM 11
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
As of January 1, 1999 there were fifty-one (51) Membership Units issued and
another 148 subscribed to. All Membership Units subscribed to were paid for and
issued by
26
<PAGE>
January 15, 1999. The following table sets forth certain information, as of
March 31, 1999 with respect to the ownership of membership units by: (i) any
person or group who is known to the Company to be the beneficial owner of more
than 5% of the membership units, (ii) the manager and officers of the Company;
and (iii) the manager and officers of the Company as a group.
Name of beneficial owner Units Percentage
- ------------------------ ----- ----------
MV Development Company, LLC (1)
P.O. Box 388
Edgefield, SC 29824
(Talmadge Knight and Bettis C. Rainsford) 156 78.4%
Donald P. Howard 5 2.5%
Manager and officers as a group 161 80.9%
(1) MV Development Company, LLC is a majority-owned subsidiary of Mount Vintage
Property Co., Inc., which in turn is owned equally by Messrs. Bettis C.
Rainsford and Talmadge Knight, who are also the minority owners of MV
Development Company, LLC. See "Item 12. Certain Relationships and Related
Transactions".
ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Manager is MV Development Company, LLC, a South Carolina LLC
("Development"). A majority of the interests in Development is owned by Mount
Vintage Property Co., Inc., a South Carolina corporation ("Property"). Property
is primarily engaged in the business of owning and managing the approximately
4,000 acres of property which comprise Mount Vintage Plantation. Development is
primarily engaged in the business of developing lots within Mount Vintage
Plantation for residential use. The golf course will be located in Mount Vintage
Plantation. Property is owned in equal shares by Bettis C. Rainsford and
Talmadge Knight. Messrs. Rainsford and Knight own the minority interests in and
Mr. Rainsford has managerial control over Development. Donald P. Howard, in
addition to his service as the Company's President and CEO, performs services
for the Manager related to its property development activities.
27
<PAGE>
Bettis C. Rainsford Talmadge Knight
Mount Vintage
Property Co., Inc.
MV Development Company, LLC
Mount Vintage Plantation
Golf Club, LLC
Chart indicating that Messrs. Rainsford and Knight equally own Mount Vintage
Property Co., Inc. and MV Development Company, LLC. Part of their ownership of
MV Development Company, LLC is indirect ownership through Mount Vintage Property
Co., Inc. The chart also indicates that MV Development Company, LLC is an owner
of the Company.
The Manager received 48 Membership Units in a private placement in exchange for
its contribution of the land for the Golf Course to the Company. The number of
Membership Units received by the Company were determined by dividing the fair
market value of the land, as determined by independent appraisal to be
approximately $4,000 per acre, by the par value of a Membership Unit. The
Manager also purchased one Membership Unit for $20,000 upon formation of the
Company and one hundred seven (107) Membership Units, for $20,000 each, upon
consummation of the December 31, 1998 Offering. As of this filing, the Manager
owns 156, or 78.4%, of the Membership Units.
Donald P. Howard, the President of the Company, purchased five (5) Membership
Units, for $20,000 each, upon consummation of the December 31, 1998 Offering. As
of this filing, Mr. Howard owns 5, or 2.5%, of the Membership Units.
The Manager developed the Golf Course prior to consummation of the December 31,
1998 Offering. Subsequent to the Offering, Offering proceeds were used to
purchase $626,224 of development assets from the Manager and reimburse the
Manager for $106,792 in general and administrative expenses.
The Operating Agreement permits the Manager to make loans to the Company in the
future on terms that are at least as favorable to the Company as the terms the
Company could be reasonably expected to receive from unrelated third parties in
arm's length transactions.
The Operating Agreement provides that the Manager may designate a stated
compensation for itself subject to the approval of holders of a majority of the
membership interest in the Company entitled to vote. The Company expects to pay
the Manager a fee for its services of $1,000 per month beginning in October,
1999.
28
<PAGE>
Mr. Howard provides various marketing services to the Manager in connection with
matters unrelated to the Company for which he receives compensation. Mr. Howard
also expects to purchase a tract of real estate in Mount Vintage Plantation from
the Manager in connection with his services to the Manager on matters unrelated
to the Company.
ITEM 13
EXHIBITS AND RELATED REPORTS ON FORM 8-K
(a) Exhibits -
3.1 Articles of Organization of the Company: Incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-11 (Commission File No. 333-59029, hereinafter, the
"S-11").
3.2 Operating Agreement of the Company: Incorporated by reference to
the Prospectus contained in the S-11.
4.1 Articles of Organization of the Company: Included in Exhibit
3.1.
4.2 Operating Agreement of the Company: Included in Exhibit 3.2.
10.1 Construction Contract between the Company and Champion
Contracting Company: Incorporated by reference to Exhibit 10.3
to the S-11.
10.2 Design contract by and between MV Development Company, LLC and
Tom Jackson, Inc. dated March 17, 1998: Incorporated by
reference to Exhibit 10.1 to the S-11.
10.3 Letter Contract between MV Development Company, LLC and Donald
P. Howard dated December 1, 1997: Incorporated by reference to
Exhibit 10.2 to the S-11.
10.4 Credit facility agreement between the Company and Regions Bank
dated February 24, 1999: to be filed by amendment.
16.1 Letter from Serotta Maddocks Evans & Co., CPAs regarding change
in certifying accountant: Incorporated by reference to Exhibit
16.1 to the Company's report on Form 8-K dated March 19, 1999
(Commission File No. 333-59029)
27.1 Financial Data Schedule: Included in electronic filing only.
(b) Reports on Form 8-K.
A Form 8-K dated December 31, 1998, was filed with the Securities and Exchange
Commission on January 15, 1999. This filing discloses that the Company
consummated the offering of its membership units and that the Manager
transferred to the Company title to approximately 252.6 acres of land.
29
<PAGE>
A Form 8-K dated March 31, 1999, was filed with the Securities and Exchange
Commission on April 6, 1999. This filing discloses that the Company changed its
auditors for the audit of the December 31, 1998 financial statements. An amended
Form 8-K dated March 19, 1999 was filed on April 14, 1999.
30
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Mount Vintage Plantation Golf Club, LLC
/s/ Donald P. Howard
--------------------------------------------------
Donald P. Howard
President, duly authorized representative
Date: April 14, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and or the
dates indicated.
/s/ Donald P. Howard President & Chief 4/14/99
- ------------------------------- Executive Officer --------------
Donald P. Howard Date
/s/ Bettis C. Rainsford Secretary, Treasurer 4/14/99
- ------------------------------- Chief Financial Officer --------------
Bettis C. Rainsford Chief Accounting Officer Date
MV Development Company, LLC Manager
By: /s/ Bettis C. Rainsford 4/14/99
------------------------- --------------
Bettis C. Rainsford, Member Date
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(d) OF THE
EXCHANGE ACT BY NON-REPORTING ISSUERS
The Company will provide its Members with a copy of this Annual Report
on Form-10KSB in fulfillment of the requirement in its Operating Agreement which
provides its Members with an annual report containing audited financial
statements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the audited
financial statements of Mount Vintage Plantation Golf Club, LLC for the period
from inception to December 31, 1998, contained in the Annual Report on Form
10-KSB of Mount Vintage Plantation Golf Club, LLC and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 207,023
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 207,023
<PP&E> 1,878,977
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,086,000
<CURRENT-LIABILITIES> 1,233,726
<BONDS> 0
0
0
<COMMON> 1,168,000
<OTHER-SE> (315,726)
<TOTAL-LIABILITY-AND-EQUITY> 2,086,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 315,726
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 315,726
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315,726
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
