SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by
Rule 14a-6(e)(2)]
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AURIC ENTERPRISES, INC.
(name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>2
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
AURIC ENTERPRISES, INC. (the "Company")
Robert Hinchey is hereby authorized to represent and to vote the shares
of the undersigned in the Company at a Special Meeting (hereinafter
referred to as ("Special Meeting") of Stockholders to be held on
December 10, 1999 and at any adjournment as if the undersigned were
present and voting at the meeting.
NOTE: Cumulative voting for directors is not allowed.
1. Proposed Acquisition of Freedom Golf Corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approval of the name change of the Company to Freedom Golf
Corporation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Election of Directors
FOR all nominees (except as written on the line below) [ ]
WITHHOLD AUTHORITY TO VOTE
for all nominees listed below [ ]
NOMINEES: John Johnson, Robert W. Claar, John F. Arney
J. Kevin Weinhoeft and Danny D. Grigsby
4. Approval of the authorization of preferred shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(INSTRUCTIONS: To withhold authority to vote for any individual
nominees write the nominee's name on the line below.)
-------------------------------------------------
4. In their discretion, on any other business that may properly come
before the meeting.
The shares represented hereby will be voted. With respect to items 1 -
4 above, the shares will be voted in accordance with the specifications
made and where no specifications are given, said proxies will vote for
the proposals. This proxy may be exercised by a majority of those
proxies or their substitutes who attend the meeting.
Please sign and date and return to Auric Enterprises, Inc., 10 Office
Park Rd, Suite 222, Carolina Building, Hilton Head, SC 29928.
Dated November 17, 1999
- ----------------------
Signature
- ----------------------
Signature
Joint Owners should each sign. Attorneys-in-fact, executors,
administrators, trustees, guardians or corporation officers, should
give full title.
<PAGE>3
AURIC ENTERPRISES, INC.
10 Office Park Rd, Suite 222,
Carolina Building
Hilton Head, SC 29928
(843) 686-5590
November 17, 1999
To the Stockholders of
Auric Enterprises, Inc.
You are cordially invited to attend a Special Meeting (hereinafter
referred to as "Special Meeting") of Stockholders of Auric Enterprises,
Inc. (the "Company"), to be held on Wednesday, December 10, 1999 at 10
Office Park Rd, Suite 222, Carolina Building, Hilton Head, SC 29928, at
1:00 P.M., Eastern time, to consider and vote upon the matters set
forth in the accompanying Notice of Special Meeting of Stockholders.
In addition to the election of directors, shareholders will be asked to
approve the proposed acquisition of Freedom Golf Corporation along with
a name change. This acquisition will result in a change of control of
the Company with an initial issuance of an additional 9,820,206 Common
Shares to current shareholders of Freedom Golf Corporation. Freedom
Golf Corporation's Articles of Incorporation authorize the issuance of
10,000,000 preferred shares. Shareholders will be asked to approve
the creation of 10,000,000 preferred shares and the amendment of the
Articles of Incorporation to reflect same. Approval of the proposals
would allow the Company to move forward with its new business plan and
would be economically beneficial to the Company.
Since it is important that your shares be represented at the meeting
whether or not you plan to attend in person, please indicate on the
enclosed proxy your decisions about how you wish to vote and sign, date
and return the proxy promptly in the envelope provided. If you find it
possible to attend the meeting and wish to vote in person, you may
withdraw your proxy at that time. Your vote is important, regardless
of the number of shares you own.
Sincerely,
- -------------------------
Robert Hinchey
Chairman of the Board of Directors
Chief Executive Officer
<PAGE>4
AURIC ENTERPRISES, INC.
NOTICE OF
SPECIAL MEETING
OF STOCKHOLDERS
To Be Held
December 10, 1999
To the Stockholders of
Auric Enterprises, Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Auric
Enterprises, Inc. (the "Company") will be held on December 10, 1999 at
1:00 o'clock in the afternoon, eastern time at the for the following
purposes; all as more specifically set forth in the attached Proxy
Statement.
1. To consider and vote upon the proposal to acquire Freedom Golf
Corporation.
2. Approval of the name change of the Company to Freedom Golf
Corporation.
3. To consider and vote upon the election of the Officers and
Directors of the Company.
4. Approval of amendment to the Articles of Incorporation
authorizing 10,000,000 Preferred Shares.
5. To transact such other business as may properly be brought before
this meeting.
Only holders of record of Common Stock of the Company as of the close
of business on November 12, 1999, are entitled to notice of or to vote
at the meeting or any adjournment thereof. The stock transfer books of
the Corporation will not be closed.
Stockholders are encouraged to attend the meeting in person. To ensure
that your shares will be represented, we urge you to vote, date, sign
and mail the Proxy Card in the envelope, which is provided, whether or
not you expect to be present at the meeting. The prompt return of your
Proxy Card will be appreciated. It will also save the Company the
expense of a reminder mailing. The giving of such Proxy will not
affect your right to revoke such Proxy by appropriate written notice or
to vote in person should you later decide to attend the meeting.
By order of the Board of Directors
Robert Hinchey
November 17, 1999 Chairman of the Board of Directors
Chief Executive Officers
<PAGE>5
PROXY STATEMENT
AURIC ENTERPRISES, INC.
SPECIAL MEETING OF STOCKHOLDERS
To Be Held December 10, 1999
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Auric Enterprises, Inc., a
Nevada corporation (the "Company"), to be voted at an Special Meeting
of Stockholders of the Company to be held on Wednesday, December 10,
1999 at 1:00 P.M., Eastern time, at 10 Office Park Rd, Suite 222,
Carolina Building, Hilton Head, SC 29928 and at any adjournment thereof
(the "Meeting"). The Proxy may be revoked by appropriate written
notice at any time before it is exercised. See "Voting and
Solicitation of Proxies".
This Proxy Statement and the accompanying Notice and Form of Proxy are
being mailed on or about November 30, 1999 to record holders of the
Company's Common Stock as of November 12, 1999 (the "Record Date").
As of Record Date, 1,605,000 shares of Common Stock of the Corporation
were issued and outstanding. Each share of Common Stock entitles the
holder to one vote on all matters brought before the Special Meeting.
Auric Enterprises, Inc. ("Auric") was incorporated in the State of
Nevada on February 12, 1999 for the purpose of engaging in the
exploration, and if warranted, development of its four Wild Mountain
mining claims located in Trinity County, California. Auric pursued
unsuccessful negotiations with several mining companies for the purpose
of entering into an agreement to conduct further, detailed exploration
on each of the claims. Auric has no operating assets and has not
engaged in any material business activities since inception, other than
its unsuccessful negotiations and its subsequent decision to seek out
and investigate other businesses for potential merger or acquisition
after.
ACQUISITION OF FREEDOM GOLF CORPORATION
Auric is acquiring 100% of Freedom in exchange for the initial issuance
of 9,820,206 Common Shares of the Company to the current shareholders
of Freedom. As a result, the control of Auric will be transferred to
the shareholders of Freedom.
Freedom was incorporated in Colorado on December 18, 1996. Freedom has
developed and is marketing a line of custom fitted golf clubs.
Limited sales of Freedom's products began in 1998.
The executive offices of Freedom are located at 7334 South Alton Way,
Building 14, Suite A, Englewood, Colorado 80112. Freedom's phone
number is (303) 221-0331.
Freedom has developed and is marketing a line of custom fitted golf
clubs. Limited sales of Freedom's products began in 1998. Freedom
has entered into an agreement with golf club designer, Pat Simmons. to
design a set of irons and woods for Freedom. Mr. Simmons designed
the "Alien Wedge". All golf clubs marketed by Freedom will conform to
the rules of the USGA. Freedom will do ongoing research with Mr.
Simmons and his son, Mark Simmons to develop "Specialty Clubs".
The Products
Freedom's main focus is in the marketing and distribution of high-end
quality golf clubs and golf schools. Freedom will establish its golf
schools in major cities and states where golfers and golfing is
abundant. These areas will help dictate growth and national format.
Freedom will also market and distribute golf apparel for both men and
women, golf caps, shoes, hats, golf bags and golf travel bags. The
price ranges for each of the products will vary.
According to the National Golf Foundation, the number of golfers in the
United States is increasing approximately 13.5% annually, is now
apporximately 30 million golfers and is continuing to grow each year.
In the year 2000, the number of golfers is expected to reach 40
million. The current purchase of golf products by the consumer is in
excess of 20 billion dollars annually.
<PAGE>6
Competition
There is significant competition in the golf products industry.
Freedom competes with established companies and other entities (many of
which possess substantially greater resources than Freedom). Almost
all of the companies with which Freedom competes are substantially
larger, have more substantial histories, backgrounds, experience and
records of successful operations, greater financial, technical,
marketing and other resources, more employees and more extensive
facilities than Freedom now has, or will have in the foreseeable
future. It is also likely that other competitors will emerge in the
near future. There is no assurance that Freedom will continue to
compete successfully with other established golf equipment and
accessories companies. Freedom shall compete on the basis of price
and quality. Inability to compete successfully might result in
increased costs, reduced yields and additional risks to the investors
herein.
Marketing.
Marketing of the Freedom product line will be direct to the consumer
through Freedom's Independent Representative program, infomercials
televised nationally on cable channels such as, Fox Sports Network and
the Golf Channel. In addition, Freedom will be the exclusive golf
club manufacturer to demo and display golf clubs at each of the
tournaments scheduled to the National Amateur Golf Tour, (the National
Amateur Golf Association), the Freedom Golf Schools, the Freedom Tour
and Demo Days.
In addition to infomercials and also to aid in the recruitment of new
Independent Representatives to sell Freedom's line of golf products,
the staff of Freedom will conduct ongoing seminars, golf clinics and
demo days at golf resorts, private and public golf courses as well as
larger driving ranges throughout the United States.
Necessary individuals on the management team of Freedom will spend a
large majority of their time on the road for at least the next two
years introducing the entire line of Freedom clubs throughout the
United States via the Freedom Tour. The Freedom Tour will initially
be held as volume and sales dictates at difference high-end resorts or
private country clubs. The Freedom Tour will initially be a three day
event commencing on Friday afternoon with group and individual
training. Beginning at approximately 8:00 a.m. on Saturday mornings,
the staff of Freedom will conduct Demo Days open to the public and will
be giving free instruction to individuals who are willing to try the
Freedom line of clubs. This day will also serve as a recruiting tool
for new Representatives into Team Freedom.
Freedom has a signed contract to establish its first Freedom Golf
School at the Cobblestone Country Club in Pont St. Lucie, Florida.
Freedom will open additional golf schools as mandated by sales.
Freedom shall utilize an Independent Representative Marketing Program
which will include the following:
National Format and Sales Hierarchy
1. Regional managers and PGA golf instructors will be
trained to oversee and support all Independent Representatives for
Freedom and its customers and Representatives within their region.
2. Regional golf outings, training programs and seminars
known as the Freedom Tour will explain and display its entire line of
clubs and its marketing concept. Freedom will initially have one
corporately sponsored three day event as necessary at either a private
country club or a high-end golf resort throughout the United States
depending on the season and the number of Representatives Freedom has
in a given area.
Direct Marketing
The use of videos and infomercials will greatly enhance
Freedom's ability to get its golf clubs and Freedom Golf Swing (an
alternate swing for those golfers with back or shoulder problems. or a
substitute for those golfers that are having problems learning the
traditional golf swing.) into the hands and minds of all golfers.
Freedom will negotiate to show the infomercial on the Fox Sports
Network.
<PAGE>7
Recognizable Freedom Logo.
Freedom shall pursue various strategies to promote
corporate identification.
Consumer and Direct Market Segment Industry: Conference and
Trade Shows
Freedom shall be visible at large functions such as the
PGA Golf Show, industry trade shows and conferences. In addition,
Freedom management will conduct extensive clinics displaying its golf
clubs and the Freedom Golf Swing.
Media Options
Freedom will pursue the following:
1. Public Relations
2. Videos
3. Magazine
4. Editorial Support
5. Spot TV
6. Endorsements
Endorsements
1. As management deems proper, Freedom may implement
recognizable personalities to aid in the promotion of its golf clubs.
2. Freedom has five professional golfers on its staff
a. Bud Bellis (Director of Training)
b. Adam Horal (Professional Golfer)
c. Jim Lacy (international known long driver)
d. Jenni Sherwood (golf professional) and
Other endorsements may come through Freedom's endeavors from various
golf associations, as well as Freedom customers.
Direct Sales and Long-Term Marketing Considerations.
Freedom will establish a professional and highly
skilled sales and support staff. Freedom is currently developing a
selection, training and monitoring process of its regional managers as
well as Independent Representatives. Additionally, Freedom shall seek
to continuously upgrade and add quality products.
Develop and Implement a Sales Track and Procedure Program.
Freedom will:
1. monitor and record its sales and sales
methods
2. have its management carefully record and
sales and profitability coming from each of its marketing segments such
as, network marketing, direct sales through the golf schools and each
driving range and
3. customer objections and concerns, as well as
likes and dislikes will be monitored.
Legal Proceedings
There are no legal proceedings pending.
Employees
Freedom currently has four full time and no part time employees.
Freedom's employees do not belong to any unions. Freedom shall hire
additional employees as required.
Property
Freedom leases its executive offices and plant located at 7334
South Alton Way, Building 14, Suite A, Englewood, Colorado 80112. The
lessor is not affiliated in any way to Freedom or its officers,
directors or principal shareholders. The facility is 2,900 square feet
with a monthly lease payment of $2,882.94 for a least term of three
years beginning in February 1999.
Freedom's facilities are adequate for its current operations.
<PAGE>8
Management
The following individuals have served in the capacities with Freedom
indicated below and will serve as officers and directors of Auric
Enterprises, Inc. or in other capacities after the approval and
consummation of the acquisition/exchange of shares:
Name Age Position with Freedom
Gaylen P. (John) Johnson 50 President/CEO/Director
Robert Claar 46 Treasurer/Director
John Arney 53 Secretary/Director
Danny Grigsby 52 Director
Kevin Weinhoeft 42 Director/Marketing Director
Certain Transactions
At September 30, 1997, Freedom had outstanding cash working capital
advances from its president amounting to $28,094. During the years
ended September 30, 1999 and 1998, Freedom made repayments against the
advances of $9,787 and $6,154, respectively. Additionally the officer
advanced $5,500 to Freedom during the year ended September 30, 1999.
The advances are non-interest bearing and are expected to be repaid
currently.
<PAGE>9
Financials
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Freedom Golf Corporation
We have audited the accompanying balance sheet of Freedom Golf
Corporation as of September 30, 1999, and the related statements of
operations, changes in stockholders' equity, and cash flows for
each of the two years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide 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 Freedom
Golf Corporation as of September 30, 1999, and the results of its
operations, and its cash flows for each of the two years then
ended, in conformity with generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
4-Nov-99
<PAGE>10
Freedom Golf Corporation
Balance Sheet
September 30, 1999
ASSETS
Current assets:
Cash $ 246
Accounts receivable - trade, net of allowance for
doubtful accounts of $2,281 746
Inventory 48,185
Prepaid expenses and deposits 30,524
----------
Total current assets 79,701
Property and equipment, at cost, net of
accumulated depreciation of $4,768 7,171
Deposit 2,000
Patents, net of accumulated amortization of $7,778 92,222
----------
$181,094
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - bank 20,945
Notes payable - others 140,626
Accounts payable - trade 43,971
Advances from officer 17,653
Accrued salaries 232,500
Accrued interest 6,092
----------
Total current liabilities 461,787
Stockholders' equity:
Common stock, no par value,
100,000,000 shares authorized,
9,694,880 shares issued and outstanding 1,288,080
Unearned services (201,389)
Accumulated deficit (1,367,384)
----------
(280,693)
----------
$181,094
See accompanying notes to financial statements.
<PAGE>11
Freedom Golf Corporation
Statements of Operations
Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Sales, net $ 88,736 $ 38,953
Cost of sales 94,837 8,847
---------- ----------
Gross profit (loss) (6,101) 30,106
Selling, general and administrative expenses 672,595 454,929
---------- ----------
(Loss) from operations (678,696) (424,823)
Other income and (expense):
Interest expense (17,836) (15,461)
Other income 39 174
---------- ----------
(17,836) (15,287)
(Loss) before income taxes (696,532) (440,110)
Provision for income taxes - -
---------- ----------
Net (loss) $ (696,532) $ (440,110)
Basic and fully diluted (loss) per share:
Net income (loss) $ (0.10) $ (0.07)
Weighted average shares outstanding 7,106,240 6,111,675
</TABLE>
See accompanying notes to financial statements.
<PAGE>12
Freedom Golf Corporation
Statement of Stockholders' Equity
Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION
Common Unearned Accumulated
Shares Amount Services Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1997 5,884,600 $ 160,060 $ - $ (230,742) $ (70,682)
Common stock sold for cash 367,400 145,643 - - 145,643
Compensation value of stock
sold at discounted price - 38,057 - - 38,057
Common stock issued for services 215,600 115,300 - - 115,300
Net (loss) for the year - - - (440,110) (440,110)
----------- ----------- ----------- ---------- ----------
Balance, September 30, 1998 6,467,600 459,060 - (670,852) (211,792)
Common stock sold for cash 1,139,280 239,720 - - 239,720
Compensation value of stock
sold at discounted price - 77,800 - - 77,800
Stock issue costs - (8,000) - - (8,000)
Common stock issued for services 1,932,400 468,800 (201,389) - 267,411
Common stock issued for interest 100,000 25,000 - - 25,000
Common stock issued for debt conversion 45,600 25,700 - - 25,700
Net (loss) for the year - - - (696,532) (696,532)
----------- ----------- ----------- ---------- ----------
Balance, September 30, 1999 9,684,880 $ 1,288,080 $ (201,389) $(1,367,384 $ (280,693)
</TABLE>
See accompanying notes to financial statements.
<PAGE>13
Freedom Golf Corporation
Statements of Cash Flows
Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net income (loss) $ (696,532) $ (440,110)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 8,151 3,363
Stock issued for services 337,211 153,357
Stock issued for interest 25,000 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (528) (221)
(Increase) decrease in inventory 1,864 (27,455)
(Increase) decrease in prepaid expenses (30,524) -
Increase (decrease) in accounts payable 709 39,296
Increase (decrease) in accrued salaries 78,800 103,585
Increase (decrease) in accrued expenses (508) 7,159
---------- ---------
Total adjustments 420,173 279,084
---------- ---------
Net cash provided by
operating activities (276,357) (161,026)
---------- ---------
Cash flows from investing activities:
Purchase of license agreement - (100,000)
Acquisition of property and equipment (2,727) (552)
Increase in lease deposit (1,000) (1,000)
---------- ---------
Net cash (used in) investing activities (3,727) (101,552)
---------- ---------
Cash flows from financing activities:
Common stock sold for cash 239,720 145,643
Proceeds from bank loan - 25,282
Repayment of bank loan (3,799) (538)
Officer aadvance 5,500 -
Repayment of officer loans (6,154) (9,787)
Proceeds from notes payanle 173,624 164,900
Repayment of notes payable (128,561) (63,473)
---------- ---------
Net cash (used in)
financing activities 280,330 262,027
---------- ---------
Increase (decrease) in cash 246 (551)
Cash and cash equivalents,
beginning of period - 551
---------- ---------
Cash and cash equivalents,
end of period $ 246 $ -
</TABLE>
See accompanying notes to financial statements.
Freedom Golf Corporation
Statements of Cash Flows
Years Ended September 30, 1999 and 1998
1999 1998
Supplemental cash flow information:
Cash paid for interest $ 10,661 $ 10,599
Cash paid for income taxes $ - $ -
<PAGE>14
Freedom Golf Corporation
Notes to Financial Statements
September 30, 1999
Note 1. Organization and Summary of Significant Accounting Policies.
The Company was incorporated in Colorado on December 18, 1996 and has
elected to be taxes as a "C" corporation. The Company has developed
and is marketing a line of custom fitted golf clubs. Limited sales of
the Company's products began in 1998. The Company has chosen
September 30th as the end of its fiscal year.
Inventory:
Inventory is valued at the lower of cost or market on a first-in
first-out basis and consists primarily of finished goods, which
includes fully assembled golf clubs and promotional items and raw
materials for the assembly of additional golf clubs.
Property, Plant and Equipment:
Property, plant and equipment are recorded at cost and are
depreciated based upon estimated useful lives using the straight-line
method. Estimated useful lives range from 3 to 5 years for furniture
and fixtures and from 5 to 10 years for equipment.
Revenue Recognition:
Revenue is recognized at the time the product is delivered or the
service is performed. Provision for sales returns will be estimated
based on the Company's historical return experience.
Intangible Assets and Long Lived Assets:
The Company makes reviews for the impairment of long-lived assets and
certain identifiable intangibles whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable. Under SFAS No. 121, an impairment loss would be
recognized when estimated future cash flows expected to result from
the use of the asset and its eventual disposition is less than its
carrying amount. No such impairment losses have been identified by
the Company for the period ended September 30, 1999.
Cash:
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with maturity of three
months or less to be cash equivalents.
Estimates:
The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
Advertising costs:
Advertising costs are charged to operations when the advertising
first takes place. Advertising costs charged to operations were
$76,720 and $87,928 for the years ended September 30, 1999 and 1998
respectively.
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and
cash equivalents, accounts and loans receivable, and payables and
accruals. The carrying amounts of these financial instruments
approximates fair value because of their short-term maturities.
Financial instrument that potentially subjects the Company to a
concentration of credit risk consists principally of cash. During
the year the Company did not maintain cash deposits at financial
institutions in excess of the $100,000 limit covered by the Federal
Deposit Insurance Corporation. The Company does not hold or issue
financial instruments for trading purposes nor does it hold or issue
interest rate or leveraged derivative financial instruments
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard No.
123 (FAS 123), Accounting for Stock-Based Compensation at its
inception. Upon adoption of FAS 123, the Company continued to measure
compensation expense for its stock-based employee compensation plans
using the intrinsic value method prescribed by APB No. 25, Accounting
for Stock Issued to Employees. The Company paid stock based
compensation during the years ended September 30, 1999 and 1998 as
described in Note 4.
<PAGE>15
New Accounting Pronouncements
SFAS No. 130, "Reporting Comprehensive Income", establishes
guidelines for all items that are to be recognized under accounting
standards as components of comprehensive income to be reported in the
financial statements. The statement is effective for all periods
beginning after December 10, 1997 and reclassification financial
statements for earlier periods will be required for comparative
purposes. The adoption of SFAS No. 130 has had no impact on the
Company, as the Company has not engaged in transactions that would
generate other comprehensive income as defined in the statement.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use ("SOP 98-
1"). SOP 98-1 provides authoritative guidance on when internal-use
software costs should be capitalized and when these costs should be
expensed as incurred. The Company adopted SOP 98-1 at its inception.
The adoption of SOP 98-1 has had no impact on the Company, as the
Company has not engaged in transactions that would are whose
accounting treatment is prescribed by the statement.
Effective December 31, 1998, the Company adopted SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information
("SFAS 131"). SFAS 131 superseded SFAS No. 14, Financial Reporting
for Segments of a Business Enterprise. SFAS 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that
those enterprises report selected information about operating
segments in interim financial reports. SFAS 131 also establishes
standards for related disclosures about products and services,
geographic areas, and major customers. To date, the Company has
operated in one business segment as defined by the statement.
Effective December 31, 1998, the Company adopted the provisions of
SFAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits ("SFAS 132"). SFAS 132 supersedes the disclosure
requirements in SFAS No. 87, Employers' Accounting for Pensions, and
SFAS No. 106, Employers' Accounting for Post-retirement Benefits
Other Than Pensions. The overall objective of SFAS 132 is to improve
and standardize disclosures about pensions and other post-retirement
benefits and to make the required information more understandable.
The Company has to date not adopted benefit plans that would require
the disclosures prescribed by the statement.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"), which is required to be adopted in years beginning
after June 15, 1999. SFAS 133 will require the Company to recognize
all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes
in the fair value of derivatives will either be offset against the
change in fair value of hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive
income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings.
Management believes that the adoption of SFAS No. 133 will have no
impact on the Company, as the Company has not engaged in transactions
whose accounting treatment is prescribed by the statement.
Note 2. Property, Plant and Equipment.
Property, plant and equipment consists of the following at September
30, 1999:
Office furniture an equipment $ 8,746
Manufacturing equipment 1,710
---------
10,456
Less accumulated depreciation (3,285)
---------
$7,171
Depreciation charged to operations was $1,484 and $2,252 for the
years ended September 30, 1999 and 1998, respectively.
<PAGE>16
Note 3. Patents
During May 1998, the Company purchased the patent for certain of its
golf club technology from an unaffiliated company whose principal
owner is a recognized expert in golf club design. The Company paid
$100,000 in cash for the patent and is amortizing such cost over a
fifteen-year period, the remaining term of the patent. Amortization
expense amounted to $6,667 and $1,111 for the years ended September
30, 1999 and 1998, respectively.
Note 4. Stockholders' Equity
During the year ended September 30, 1998, the Company sold an
aggregate of 367,400 shares of its common stock for gross proceeds of
$145,643. The shares were sold to unaffiliated individuals at a
price of $.50 per share and to existing directors and shareholders at
a price of $.175 per share. The Company has recognized $38,057 as
compensation expense related to the shares sold at the discounted
price. Additionally, during the year ended September 30, 1998, the
Company issued an aggregate of 215,600 shares of its common stock to
certain individuals for services provided to the Company. The shares
were valued at $.50 per share except for 15,000 of the shares that
were valued at $1.00 per share pursuant to a consulting contract.
During the year ended September 30, 1999 the Company sold an
aggregate of 1,139,280 shares of its common stock for gross proceeds
of $239,72 and incurred $8,000 of costs related to the sales. The
shares were sold to unaffiliated individuals at a price of $.50 per
share through January 1999 and at $.25 per share thereafter and to
certain existing directors and shareholders at a price of $.125 per
share. The Company has recognized $77,800 as compen1sation expense
related to the shares sold at the discounted price. Additionally,
during the year ended September 30, 1999, the Company issued an
aggregate of 1,932,400 shares of its common stock to certain
individuals for services provided to the Company. The shares were
valued at $.25 per share as they were issued after January 1999.
Additionally, the Company issued 45,600 of its shares to certain note
holders as repayment of principal and interest and issued 100,000
shares as additional interest to a note holder. These shares were
valued at $.25 per share.
Certain of the shares issued for services in 1999 were for services
not yet completed by the shareholder pursuant to a consulting
contract. The shareholder became a director of the Company in
connection with the agreement. Services charged to expense during
the year amounted to $48,611 and the unearned services under the
contract amounted to $201,389 at September 30, 1999 and are
classified as a reduction of stockholders' equity. The services will
be charged to expense ratably over the remaining term of the contract
(29 months).
Note 5. Income Taxes.
Deferred income taxes may arise from temporary differences resulting
from income and expense items reported for financial accounting and
tax purposes in different periods. Deferred taxes are classified as
current or non-current, depending on the classifications of the
assets and liabilities to which they relate. Deferred taxes arising
from temporary differences that are not related to an asset or
liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.
The Company had no significant deferred tax items arise during any of
the periods presented.
The Company has not provided for income taxes during the years ended
September 30, 1999 and 1998 as a result of operating losses. The
Company has a net operating loss carryforward at September 30, 1999
of approximately $1,500,000, which will expire in the year 2012
($230,000), 2013 ($440,000) and 2014 ($830,000). The Company has
fully reserved the deferred tax asset (approximately $510,000), that
would arise from the loss carryforward since the Company believes
that it is more likely than not that future income from operations
will not be available to utilize the deferred tax asset.
<PAGE>17
Note 6. Commitments and contingencies
Operating leases:
The Company leases its office facilities under an operating lease
through April 15, 2000. Minimum future rentals payable under the
lease is as follows:
Year Amount
2000 $24,849
2001 $24,849
2002 $ 2,071
Rent expense amounted to $29,463 and $16,609 for the years ended
September 30, 1999 and 1998, respectively.
Note 7. Related Party Transactions
At September 30, 1997, the Company had outstanding cash working
capital advances from its president amounting to $28,094. During the
years ended September 30, 1999 and 1998, the Company made repayments
against the advances of $9,787 and $6,154, respectively.
Additionally the officer advanced $5,500 to the Company during the
year ended September 30, 1999. The advances are non-interest bearing
and are expected to be repaid currently.
ELECTION OF BOARD OF DIRECTORS
Pursuant to the Bylaws, each Director shall serve until the Special
meeting of the stockholders, or until his successor is elected and
qualified. The Company's basic philosophy mandates the inclusion of
directors who will be representative of management, employees and the
minority shareholders of the Company. Directors may only be removed
for "cause". The term of office of each officer of the Company is at
the pleasure of the Company's Board.
The principal executive officers, directors and nominees of the Company
are as follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Samantha Moody, age 31 Secretary/Director From Inception
To Present
Robert Hinchey, age 53 President/Treasurer From Inception
Director To Present
Robert E. Hunt, age 78 Director From April 23, 1999
To Present
Gaylen P. (John) Johnson nominee
Robert Claar nominee
John Arney nominee
Danny Grigsby nominee
Kevin Weinhoeft nominee
</TABLE>
(1) The nominees may be deemed "Promoters" of Freedom, as that term is
defined under the Securities Act.
Pursuant to the proposed acquisition of Freedom, none of the current
officers and directors are being re-nominated for directors. The
resumes of current nominees for Directors of the Company are as
follows:
Gaylen P. (John) Johnson. Mr. Johnson, founder of Freedom was Vice
President of the National Golfers Association from 1991 to 1992, where
he was directly responsible for establishing a national Distribution
Sales Program. Prior to Freedom, Mr. Johnson was the President of
"FORE" Improvement Corporation, a multi-dimensional golf company from
1994 to 1995.
Mr. Johnson was in the investment banking industry for approximately
nine years prior to entering the golf industry. While in the
brokerage business, he held positions ranging from Sales Manager with
<PAGE>18
First Financial Securities from 1982 to 1983, to National Sales manager
and Senior Vice president with First Eastern Securities from 1985 to
1986. Mr. Johnson attended Moorhead Statge College in Moorhead,
Minnesota from 1967 to 1970. Mr. Johnson was honorably discharged form
the United States Army in 1977.
Robert W. Claar. Mr. Claar has been a partner of Bradeen, Campbell &
Claar, a public accounting from located in Denver, Colorado from 19
to 19 . From 19 to 19 , Mr. Claar was employed as the Chief
Financial Officer of WW Capital Corporation, a publicly-held
corporation located in Northglenn, Colorado, engaged (through three
wholly owned subsidiaries) in the manufacture of livestock handling
equipment and the distribution of environmental products. From
September 1978 through May 1994, Mr. Claar served as a partner of
Miller and McCollom, a public accounting firm in Denver Colorado where
he specialized in mergers and acquisitions. Mr. Claar received a B.S.
degree in accounting from the University of Nebraska in 1977 and is a
member of the Colorado Society of Certified Public Accountants and the
American Institute of Certified Public Accountants.
John F. Arney. Mr. Arney is President of Heritage Real Estate
Development Corporation (since 1995). His company provides consulting
services and operates real estate projects in the United States and
Central America ranging in size from 100-2000 acres. Since 1990, Mr.
Arney has served as the General Manager for Markborough's Hunters Glen
Golf Course community, and as Director of Sales and Marketing for Black
Creek Capital's Bell Mountain Ranch custom home development and the
Canterberry Crossing golf course community. Mr. Arney received a
Bachelor of Science degree in 1970 and a Masters Degree in 1971 in
urban planning, design and economics from Iowa State University.
Danny D. Grigsby. Since March, 1996, Mr. Grigsby has been the Senior
Staff Engineer in charge of System Safety at Lockheed Martin
Astronautics. From 1992 to 1995 , Mr. Grigsby was the chief system
safety engineer at martin Marrieta, an aerospace company. Mr. Grigsby
received a Bachelor of Science degree from the University of Southern
Colorado in 19 .
J. Kevin Weinhoeft. Mr. Weinhoeft is the founder and CEO of the
Boulder Marketing Agency (established in 1995). The Boulder Marketing
Agency specializes in advertising, retail promotion, public relations,
creative services, sponsorship, event marketing and internet services.
Mr. Weinheoft attended Lincoln Land Community College in Springfield,
Illinois from 1975-1976,
The Board of Directors unanimously recommends a vote FOR the election
of the above nominees to the Board of Directors of Auric. Proxies
solicited by management will be so voted unless stockholders specify
otherwise.
The affirmative vote of a majority of the shares of Common Stock of
Auric represented and voting at the Special Meeting is required for
approval of the above Directors.
CHANGE OF NAME
Upon approval of the proposed acquisition of Freedom Golf, Auric will
be primarily pursuing the current business of Freedom. Moreover, the
Board of Directors determined that it would be economically beneficial
to change the name of Auric to Freedom Golf Corporation to maintain
continued goodwill of the acquired business and to more accurately
reflect the change in focus of Auric's operations.
The Board of Directors unanimously recommends a vote FOR the Name
Change. Proxies solicited by management will be so voted unless
stockholders specify otherwise.
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is necessary to approve the name
change.
AUTHORIZATION OF PREFERRED STOCK
Freedom has the authority to issue 10,000,000 Preferred Shares. There
are currently no Preferred Shares outstanding. Current management of
Freedom (and nominees for Director of Auric) want to maintain similar
capitalization structure of Freedom after the merger. Freedom's
<PAGE>19
Articles of Incorporation state that the Preferred Shares have the
designations, preferences, limitations and relative rights of the
shares as follows:
The Corporation may divide and issue the shares of preferred stock in
series. Shares of preferred stock of each series, when issued, shall
be designated to distinguish them from the shares of all other series.
The Board of Directors is vested with authority to divide the class of
shares of preferred stock into series and to fix and determine the
relative rights and preferences of the shares of any such series so
established in respect to the following:
(i) The number of shares to constitute such series, and the
distinctive designations thereof;
(ii) The rate and preference of dividends, if any, the time of
payment of dividends, whether dividends are cumulative and the date
from which any dividends shall accrue;
(iii) Whether shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(iv) The amount payable upon shares in event of involuntary
liquidation;
(v) The amount payable upon shares in event of volunary
liquidation;
(vi) Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
(vii) The terms and conditions upon which shares may be
converted, if the shares of any series are issued with the privilege of
conversion;
(viii) Voting powers, if any; and
(ix) Any other relative rights and preferences of shares of such
series, including, without limitation, any restriction on an increase
in the number of shares of any series theretofore authorized and any
limitation or restriction of rights or powers to which shares of any
future series shall be subject.
The Board of Directors unanimously recommends a vote FOR the
authorization of 10,000,000 shares of Preferred Stock with similar
terms to Freedom's Preferred Stock. Proxies solicited by management
will be so voted unless stockholders specify otherwise.
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is necessary to approve the
authorization of a class of 10,000,000 shares of Preferred Stock.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tables list the Company's stockholders who, to the best
of the Company's knowledge, own of record or, to the Company's
knowledge, beneficially, more than 5% of the Company's outstanding
Common Stock; the total number of shares of the Company's Common Stock
beneficially owned by each Director; and the total number of shares of
the Company's Common Stock beneficially owned by the Directors and
elected officers of the Company, as a group. The following does not
reflect the 3,000,000 Common Shares to be issued to owners and managers
of Freedom upon completion of the proposed offering. Currently, none
of the nominees to the Board of Directors own any securities of the
Company,
<TABLE>
<CAPTION>
Percentage of Percentage of
Number & Class(1) Outstanding Outstanding Shares
Name and Address of Shares Common Shares Assuming Warrant Exercise
<S> <C> <C> <C>
Samantha Moody 10,000 .60% .17%
2 Ocean Breeze
Hilton Head, SC 29928
Robert Hinchey 10,000 .60% .17%
22 Woodbine Place
Hilton Head, SC 29928
Robert E. Hunt(2) 200,000 11.94% 3.45%
17-777 Langlois Rd. #38
Desert Hot Springs, Ca 92241
Bus: (760) 329-6650
<PAGE>20
Timothy Miles 885,000 52.84% 15.26%
1921 South Downing 442,500(3) 7.63%
Denver, CO 80210 442,500(4) 7.63%
1,770,000(5) 30.52%
Officers and Directors
As a group (3) 220,000 13.13% 3.79%
</TABLE>
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
2The 200,000 Common Shares are owned by R.E. Hunt Trust of which Robert
E. Hunt is the trustee. Robert E. Hunt is the beneficial owner of
R.E. Hunt Trust.
3Represents Common Shares to be issued upon exercise of A Warrants.
There are currently 687,500 A Warrants outstanding.
4Represents Common Shares to be issued upon exercise of B Warrants.
There are currently 687,500 B Warrants outstanding.
5Represents Common Shares to be issued upon exercise of C Warrants.
There are currently 2,750,000 C Warrants outstanding.
EXECUTIVE COMPENSATION
Auric
Auric has not compensated any officers, directors or employees to
date.
Freedom
Gaylen P. (John) Johnson has been accruing salary at $6,000
since . No other executive officers have received any
compensation.
VOTING AND SOLICITATION OF PROXIES
Stockholders represented by properly executed proxies received by Auric
prior to or at the Meeting and not duly revoked will be voted in
accordance with the instructions thereon. If proxies will be voted in
instructions are indicated thereon, such proxies will be voted in favor
of Items 1 through 4 inclusive. Execution of a proxy will not prevent
a stockholder from attending the Meeting and revoking his proxy by
voting in person (although attendance at the Meeting will not in itself
revoke a proxy). Any stockholder giving a proxy may revoke it at any
time before it is voted by giving to Auric's Secretary/Treasurer
written notice bearing a later date than the proxy, by delivery of a
later dated proxy, or by voting in person at the Meeting. Any written
notice revoking a proxy should be sent to Auric Enterprises, Inc., 10
Office Park Rd, Suite 222, Carolina Building, Hilton Head, SC 29928.
Auric's Board of Directors does not know of any other matters, which
will be presented for consideration at the Meeting. However, if any
other matters which will be presented for consideration at the Meeting.
However, if any other matters are properly presented for action at the
Meeting, it is the intention of the person(s) named in the accompanying
Form of Proxy to vote the shares represented thereby in accordance with
their best judgment on such matters.
All costs relating to the solicitation of proxies made hereby will be
borne by Auric. Proxies may be solicited by officers and directors of
Auric personally, by mail or by telephone or telegraph, and Auric may
pay brokers and other persons holding shares of stock in their names of
those of their nominees for their reasonable expenses in forwarding
soliciting material to their principals.
It is important that proxies be returned promptly. Stockholders who do
not expect to attend the Meeting in person are urged to sign and date
the accompanying Form of Proxy and mail it in a timely fashion so that
their vote can be recorded.
<PAGE>21
ADDITIONAL INFORMATION
Auric's Form 10SB filed October 18, 1999, including the financial
statements and related notes thereto, together with the report of the
independent auditors and other information with respect to Auric and
Form 10QSB for the quarter ended August 31, 1999, accompanies this
Proxy Statement.
OTHER MATTERS
Auric is not aware of any other business to be presented at the Special
Meeting. If matters other than those described herein should
properly arise at the meeting, the proxies will vote on such matters in
accordance with their best judgment.
