<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-29015
INTERNET GOLF ASSOCIATION, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 84-0605867
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
24921 Dana Point Harbor Drive, Suite B-200
Dana Point, California 92629
(Address of Principal Executive Offices) (Zip Code)
(949) 493-9546
(Issuer's Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(None)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $0.001
(Title of Class)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of the latest practicable date:
Title of each class of Common Stock Outstanding as September 30, 2000
----------------------------------- ---------------------------------
Common Stock, $0.001 par value 32,084,750
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
1
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TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets at September 30, 2000 (Unaudited) and 2
December 31, 1999.
Consolidated Statements of Operations (Unaudited) for the 4
three months ended September 30, 2000 and for the three months
ended September 30, 1999.
Consolidated Statements of Operations for the nine months 5
ended September 30, 2000 (unaudited), for the nine months ended
September 30, 1999, and for the period from inception
on February 4, 1999 through September 30, 2000 (unaudited).
Consolidated Statements of Cash Flows for the nine months 6
ended September 30, 2000 (unaudited), for the nine months ended
September 30, 1999 and for the period from inception
on February 4, 1999 to September 30, 2000 (unaudited).
Notes to Interim Financial Statements (Unaudited) 7
at September 30, 2000.
Item 2. Plan of Operations. 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 15
Item 2. Changes in Securities. 15
Item 3. Defaults Upon Senior Securities. 15
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 5. Changes in Registrat's Certifying Accountant. 15
Item 6. Exhibits and Reports on Form 8-K. 15
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,328 $ 3,775
Accounts Receivable 3,413
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 22,706 22,705
Other current assets . . . . . . . . . . . . . . . . . . . . . 65,350 652
-------------- --------------
Total current assets . . . . . . . . . . . . . . . . . . . . 93,797 27,132
-------------- --------------
Property and equipment, at cost:
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,936 18,935
Computers. . . . . . . . . . . . . . . . . . . . . . . . . . . 15,118 15,118
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . 1,195 1,195
-------------- --------------
35,249 35,248
Less accumulated depreciation. . . . . . . . . . . . . . . . . (15,447) (4,616)
-------------- --------------
Total property and equipment, net. . . . . . . . . . . . . . 19,802 30,632
-------------- --------------
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 500 -
-------------- --------------
$ 114,099 $ 57,764
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses. . . . . . . . . . . . . $ 185,752 $ 237,660
Accrued officers' salary . . . . . . . . . . . . . . . . . . . 64,590 -
Notes payable to officers. . . . . . . . . . . . . . . . . . . 40,000 -
-------------- --------------
Total current liabilities. . . . . . . . . . . . . . . . . . 290,342 237,660
-------------- --------------
Long-term liabilities:
Convertible note payable, net of unamortized discount
of $116,665 and $204,166 at September 30, 2000 and
December 31, 1999, respectively. . . . . . . . . . . . . . . 216,668 129,167
-------------- --------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . 507,010 366,827
-------------- --------------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding . . . . . . . . - -
Common stock, $0.001 par value; 100,000,000 shares
authorized; 32,084,750 and 31,394,250 shares issued
and outstanding at September 30, 2000 and December
31, 1999, respectively (including 32,000 and 108,750
shares committed and not issued at September 30,
2000 and December 31, 1999, respectively). . . . . . . . . . 32,085 31,395
Additional paid-in capital . . . . . . . . . . . . . . . . . . 1,289,111 958,376
Deficit accumulated during the development stage . . . . . . . (1,714,107) (1,298,834)
-------------- --------------
Total stockholders' deficit. . . . . . . . . . . . . . . . . (392,911) (309,063)
-------------- --------------
$ 114,099 $ 57,764
============== ==============
</TABLE>
3
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INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED SEPTEMBER ENDED SEPTEMBER
30, 2000 30, 1999
-------------- --------------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . $ 70 $ -
Cost of revenues . . . . . . . . . . . . . . . . . . - -
-------------- --------------
Gross profit . . . . . . . . . . . . . . . . . . . . 70 -
-------------- --------------
Operating expenses:
General and administrative . . . . . . . . . . . . 251,944 208,373
Payroll and related. . . . . . . . . . . . . . . . 51,068 69,736
Advertising and related. . . . . . . . . . . . . . 226 249,044
Depreciation . . . . . . . . . . . . . . . . . . . 2,937 (9,542)
-------------- --------------
306,175 517,611
-------------- --------------
Loss from operations . . . . . . . . . . . . . . . . (306,105) (517,611)
Interest expense, net of interest income of $133
and $0, respectively . . . . . . . . . . . . . . . 40,682 1,549
Gain on Conversion of Debt to Stock. . . . . . . . . 484,875
-------------- --------------
Gain (Loss) before provision for taxes . . . . . . . 138,088 (519,160)
Provision for taxes. . . . . . . . . . . . . . . . . - -
-------------- --------------
Net Gain (loss). . . . . . . . . . . . . . . . . . . $ 138,088 $ (519,160)
============== ==============
Basic and diluted net loss per common share. . . . . $ 0.00 $ (0.04)
============== ==============
Basic and diluted weighted average common
shares outstanding . . . . . . . . . . . . . . . . 32,042,500 12,712,411
============== ==============
</TABLE>
4
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INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FEBRUARY 4,
1999 (DATE OF
INCEPTION)
NINE MONTHS NINE MONTHS THROUGH
ENDED SEPTEMBER ENDED SEPTEMBER SEPTEMBER
30, 2000 30, 1999 30, 2000
-------------- -------------- --------------
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . $ 20,645 $ - $ 62,645
Cost of revenues . . . . . . . . . . . . 9,972 - 43,281
-------------- -------------- --------------
Gross profit . . . . . . . . . . . . . . 10,673 - 19,364
-------------- -------------- --------------
Operating expenses:
General and administrative . . . . . . 611,013 381,466 1,215,612
Payroll and related. . . . . . . . . . 163,405 130,707 358,159
Advertising and related. . . . . . . . 6,097 425,719 472,344
Depreciation . . . . . . . . . . . . . 10,831 2,818 15,447
-------------- -------------- --------------
791,346 940,710 2,061,562
-------------- -------------- --------------
Loss from operations . . . . . . . . . . (780,673) (940,710) (2,042,198)
Interest expense, net of interest income
of $133, $0 and $2,100, respectively . 119,475 1,182 155,984
Gain on conversion of debt to stock. . . 484,875 484,875
-------------- -------------- --------------
Loss before provision for taxes. . . . . (415,273) (941,892) (1,713,307)
Provision for taxes. . . . . . . . . . . - 800 800
-------------- -------------- --------------
Net loss . . . . . . . . . . . . . . . . $ (415,273) $ (942,692) $ (1,714,107)
============== ============== ==============
Basic and diluted net loss per common
share. . . . . . . . . . . . . . . . . $ (0.01) $ (0.03)
============== ==============
Basic and diluted weighted average
common shares outstanding. . . . . . . 31,506,702 28,472,362
============== ==============
</TABLE>
5
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INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FEBRUARY 4,
1999 (DATE OF
INCEPTION)
NINE MONTHS NINE MONTHS THROUGH
ENDED SEPTEMBER ENDED SEPTEMBER SEPTEMBER
30, 2000 30, 1999 30, 2000
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . $ (415,273) $ (942,692) $ (1,714,107)
Adjustments to reconcile net loss to net
Cash used in operating activities:
Depreciation and amortization. . . . . . . 98,332 2,818 132,115
Value of shares issued for services. . . . 29,323 - 156,981
Estimated fair market value of warrants
Issued for services . . . . . . . . . . 157,800 - 157,800
Value of shares subscribed for services
and beneficial conversion in connection
with consulting services . . . . . . . . - 219,158 146,500
Issuance of stock for conversion of debt
to capital . . . . . . . . . . . . . . . (161,250) (161,250)
Write-off of note receivable to
stockholder. . . . . . . . . . . . . . . - - 10,000
Changes in operating assets and liabilities:
Accounts Receivable. . . . . . . . . . . . (3,413) - (3,413)
Inventories. . . . . . . . . . . . . . . . - (22,705) (22,705)
Other current assets . . . . . . . . . . . (64,698) - (65,350)
Accounts payable and accrued expenses. . (37,268) 147,385 185,752
Other assets . . . . . . . . . . . . . . (500) (3,241) (500)
Accrued officer salary . . . . . . . . . 64,950 - 64,590
-------------- -------------- --------------
Net cash used in operating activities. . . . (331,997) (599,277) (1,113,587)
-------------- -------------- --------------
Cash flows from investing activities:
Issuance of note receivable to stockholder . - (10,000) (10,000)
Purchases of property and equipment. . . . . - (35,248) (35,248)
Cash paid for transaction costs. . . . . . . - (125,000) (125,000)
-------------- -------------- --------------
Net cash used in investing activities. . . . - (170,248) (170,248)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from sale of common stock . . . . . - 616,250 616,250
Payments for redemption of common stock. . . (15,000) - (15,000)
Issuance costs of shares sold . . . . . . . (137,954) (120,637)
Proceeds from short-term note payable. . . . 187,500 - 187,500
Proceeds from notes payable to officers. . . 40,000 - 40,000
Proceeds from convertible note payable . . . - 200,000 200,000
Proceeds from other short-term borrowings. . 118,050 - 118,050
-------------- -------------- --------------
Net cash provided by financing activities. . 330,550 678,296 1,026,163
-------------- -------------- --------------
Net change in cash . . . . . . . . . . . . . . (1,447) (91,229) (257,672)
Cash at beginning of period. . . . . . . . . . 3,775 - -
Cash acquired. . . . . . . . . . . . . . . . . - 260,000 260,000
-------------- -------------- --------------
Cash at end of period. . . . . . . . . . . . . $ 2,328 $ 168,771 $ 2,328
============== ============== ==============
</TABLE>
6
<PAGE>
INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
STATEMENT OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
FEBRUARY 4,
1999 (DATE OF
INCEPTION)
NINE MONTHS NINE MONTHS THROUGH
ENDED SEPTEMBER ENDED SEPTEMBER SEPTEMBER
30, 2000 30, 1999 30, 2000
-------------- -------------- --------------
<S> <C> <C> <C>
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest. . . . . . . . . . . $ 119,475 $ - $ 155,984
============== ============== ==============
Income taxes. . . . . . . . . $ - $ - $ 800
============== ============== ==============
</TABLE>
7
<PAGE>
INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
-----------------------------------------------------------
PRINCIPLES
----------
Management's Representation
---------------------------
The financial statements included herein have been prepared by Internet Golf
Association, Inc. and subsidiaries (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information normally included in the financial statements prepared in accordance
with generally accepted accounting principles has been omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested that
the financial statements be read in conjunction with the audited financial
statements and notes for the fiscal year ended December 31, 1999 included in the
Company's amended registration statement on Form SB-2 filed with the Securities
and Exchange Commission on May 2, 2000. The interim results are not necessarily
indicative of the results for the full year.
Development Stage Company
-------------------------
The Company has been in the development stage since its formation. During the
development stage, the Company is primarily engaged in raising capital,
obtaining financing, advertising and promoting the Company and administrative
functions along with developing the interface and related web site
(www.igalinks.com). The Company will host state-of-the-art online interactive
multimedia golf tournaments via an online interface with Access Software's Links
LS '99. This site will allow golf enthusiasts to compete in interactive,
multi-media, PGA-style golf tournaments over the internet for potential cash
prizes and access a variety of related products and services.
Risks and Uncertainties
-----------------------
The Company is a start up company subject to the substantial business risks and
uncertainties inherent to such an entity, including the potential risk of
business failure.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern, which contemplates, among other things, the
realization of assets and satisfaction of liabilities in the normal course of
business. The Company's losses from operations through September 30, 2000 and
lack of operational history, among other matters, raise substantial doubt about
its ability to continue as a going concern. The Company intends to fund
operations through additional debt and equity financing arrangements which
management believes will be sufficient to fund its capital expenditures, working
capital requirements and other cash requirements through its proposed public
offering. There is no assurance the Company will be able to obtain sufficient
additional funds when needed, or that such funds, if available, will be
obtainable on terms satisfactory to the Company.
8
<PAGE>
INTERNET GOLF ASSOCIATION, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
-----------------------------------------------------------
PRINCIPLES, CONTINUED
---------------------
The future of the Company's operations depends in part on its continuing
alliance with Access Software, creator of Links LS '99 (the golf software
program the Company plans to use to provide the gameplay for the online
tournaments). The Company has no reason to believe that this alliance will not
continue; however, if it does not continue, it could have a significant adverse
effect on the Company's operations.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of CVI Systems, Inc.
and IGAT, Inc., wholly owned subsidiaries and non-operating entities in their
development stages and Executive Golf Outings, LLC ("EGO"), a company that
organizes and hosts corporate golf events. All significant intercompany balances
and transactions have been eliminated in consolidation. Minority interest
related to EGO is not reported separately in the financial statements as the
amount is immaterial as of and for the period ended September 30, 2000.
Earnings Per Share
------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing income available to common shareholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same as additional potential common shares would be
anti-dilutive.
Segment Information
-------------------
The Company has adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 changes the way public companies report information about
segments of their business in their annual financial statements and requires
them to report selected segment information in their quarterly reports issued to
shareholders. It also requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues and its major customers. As the Company is currently in the
development stage, the Company does not yet have any reportable segments.
9
<PAGE>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
-----------------------------------------------------------
PRINCIPLES, CONTINUED
---------------------
Recent Accounting Pronouncements
--------------------------------
The FASB issued Statement of Financial Accounting Standards No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities on the balance sheet at their fair value. This
statement, as amended by SFAS 137, is effective for financial statements for all
fiscal quarters of all fiscal years beginning after June 15, 2000. The Company
does not expect the adoption of this standard to have a material impact on its
results of operations, financial position or cash flows as it currently does not
engage in any derivative or hedging activities.
In March 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-2 "Accounting for Web Site Development Costs" to be applicable to
all web site development costs incurred for the quarter beginning after June 30,
2000. The consensus states that for specific web site development costs, the
accounting for such costs should be accounted for under AICPA Statement of
Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." Accordingly, certain web site
development costs which are presently being expensed as incurred, will be
capitalized and amortized. The Company has not yet assessed the potential effect
of the adoption of EITF Issue No. 00-2 on the financial statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101 ("SAB 101"), "Revenue Recognition," which outlines the basic
criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the Securities and Exchange
Commission. The effective date of this pronouncement is the fourth quarter of
the fiscal year beginning after December 15, 1999. The Company believes that
adopting SAB 101 will not have a material impact on its financial position and
results of operations.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),"Accounting for
Certain Transactions involving Stock Compensation," an interpretation of APB 25.
FIN 44 clarifies the application of APB 25 for (a) the definition of employee
for purposes of applying APB 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence for various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
10
<PAGE>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
-----------------------------------------------------------
PRINCIPLES, CONTINUED
---------------------
combination. FIN 44 is effective July 1, 2000, but certain provisions cover
specific events that occur after either December 15, 1998, or January 12, 2000.
The adoption of certain other provisions of FIN 44 prior to March 31, 2000 did
not have a material effect on the financial statements. The Company does not
expect that the adoption of the remaining provisions will have a material effect
on the financial statements.
Reclassification
----------------
Certain reclassifications have been made to the February 4, 1999 (date of
inception) through September 30, 2000 financial statements in order to conform
to the classification used in the current quarter.
NOTE 2 - NOTES PAYABLE
----------------------
Short-Term Note Payable
-----------------------
On January 12, 2000, the Company borrowed $187,500 for working capital purposes
from a third party. The note requires monthly interest payments of 8%, with all
unpaid principal and accrued interest due August 31, 2000. During the quarter
ending September 30, 2000, $1,875 of interest expense was recognized. This note
was converted into 196,250 shares of the Company's common stock at $1.00 per
share on August 14, 2000.
Notes Payable to Officers
-------------------------
In March 2000, the Company borrowed $40,000 for working capital purposes from an
officer of the Company. The notes require monthly interest payments of 8% with
all unpaid principal and accrued interest due on demand. The due date on this
note has been extended until January 1, 2001.
Other Short-Term Borrowings
---------------------------
During the quarter ended September 30, 2000, the Company borrowed an aggregate
Of $48,250 for a total outstanding of $118,050 from an unrelated third party.
The principal amount is unsecured, bears no interest, and is due on demand. This
borrowing was converted into $118,050 of the Company's common stock at $1.00 per
share on August 14, 2000.
11
<PAGE>
NOTE 3 - STOCKHOLDERS' EQUITY
-----------------------------
On January 3, 2000, the Company issued warrants to purchase 40,000 shares of the
Company's common stock to outside consultants pursuant to various agreements.
The warrants, which have exercise prices ranging from $1.83 to $2.00, vest
immediately and are exercisable through January 1, 2002. During the nine months
ended September 30, 2000, $8,200 of SFAS 123 expense was recognized.
On March 1, 2000, the Company issued warrants to purchase 19,000 shares of the
Company's common stock to outside consultants pursuant to a consulting
agreement. The warrants, which have an exercise price of $2.00, vest immediately
and are exercisable through March 1, 2002. During the nine months ended
September 30, 2000, $9,600 of SFAS 123 expense recognized.
On February 24, 2000, the Company issued 2,000 restricted shares and warrants to
purchase 200,000 shares of the Company's common stock to directors. The
warrants, which have an exercise price of $1.00, vest immediately and are
exercisable through February 24, 2002. During the nine months ended September
30, 2000, $1,750 of expense for the stock issuance and $140,000 of SFAS 123
expense for the warrant issuance recognized.
On August 14, 2000 the Company issued 332,200 shares of the Company's common
stock at $1.00 to the Company's attorney for services rendered, and a
independent consultant for services rendered or to be rendered.
NOTE 4 - SUBSEQUENT EVENTS
--------------------------
The Company is currently preparing a Private Placement memorandum to raise
approximately $700,000. This money will be used to complete the projects
necessary to market the Company.
As of November 2, 2000 the Company has entered into a consulting contract with
Creative Capital Management Corp. for the purposes of financial consulting.
Creative Capital Management is to receive $25,000 and an option to purchase one
Million (1,000,000) shares of the company's common stock with an expiration date
of November 2, 2004. In year one, 250,000 shares at an option price of $.25 per
share. In year 2, 250,000 shares at an option price of $.50 per share. In year
3, 250,000 shares at an option price of $.75 per share. In year 4, 250,000
shares at an option price of $1.00 per share. In addition, Creative Capital
Management Corporation is to receive a commission of 10% of any debt financing,
equity financing or merger, acquisition, or business combination initiated by
them or consulted on by them.
The Company's SB-2 expired on October 31, 2000. From the registration,
approximately 805,000 shares of the Company's common stock were for the
conversion of Company debt.
12
<PAGE>
ITEM 2. Management Discussion and Analysis
CAUTIONARY STATEMENTS:
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company intends that such
forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Quarterly Report contains forward-looking statements
regarding the financial condition, operating results, business prospects or any
other aspect of the Company, please be advised that the Company's actual
financial condition, operating results and business performance may differ
materially from that projected or estimated by the Company in forward-looking
statements. The differences may be caused by a variety of factors, including but
not limited to adverse economic conditions, intense competition, including
intensification of price competition and entry of new competitors and products,
adverse federal, state and local government regulation, inadequate capital,
unexpected costs and operating deficits, increases in general and administrative
costs, lower sales and revenues than forecast, loss of customers, customer
returns of products sold to them by the Company, termination of contracts, loss
of supplies, technological obsolescence of the Company's products, technical
problems with the Company's products, price increases for supplies, inability to
raise prices, failure to obtain new customers, litigation and administrative
proceedings involving the Company, the possible acquisition of new businesses
that result in operating losses or that do not perform as anticipated, resulting
in unanticipated losses, the possible fluctuation and volatility of the
Company's operating results, financial condition and stock price, inability of
the Company to continue as a going concern, losses incurred in litigating and
settling cases, adverse publicity and news coverage, inability to carry out
marketing and sales plans, loss or retirement of key executives, changes in
interest rates, inflationary factors and other specific risks that may be
alluded to in this Quarterly Report or in other reports issued by the Company.
In addition, the business and operations of the Company are subject to
substantial risks that increase the uncertainty inherent in the forward-looking
statements. The inclusion of forward-looking statements in this Quarterly Report
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved.
COMPANY OVERVIEW
Internet Golf organizes and conducts interactive golf tournaments on the
internet. Through our web site, which became operational in May 1999 and which
is located at www.IGALinks.com, persons interested in participating can become a
member of the Internet Golf Association, also called the IGA. Once a member,
participants can enroll in one or more virtual golf tournaments and, if their
score is good enough relative to other members playing in the same tournament,
potentially win cash prizes. To date we have held two test tournaments on our
web site.
On February 4, 1999, our founders formed Internet Golf Association, Inc. in the
State of Nevada for the purpose of organizing and hosting internet based,
interactive golf tournaments. On May 7, 1999, Internet Golf Association, Inc.
was acquired by another Nevada corporation named Champion Ventures, Inc.
Champion had previously been in several different industries, most recently
mining, but had no significant operations for the three years prior to their
acquisition of us. Immediately following the transaction, our founders owned a
majority of the outstanding stock of Champion, and thus had control of Champion.
For accounting purposes we recorded the transaction as a reverse acquisition
whereby Internet Golf Association, Inc. was treated as having acquired Champion.
Following the transaction, Champion changed its name to Internet Golf
Association, Inc., and the former Internet Golf Association, which is now a
wholly-owned subsidiary of Champion, changed its name to IGAT, Inc.
The material steps in the organization and development of our business during
the next twelve months (assuming receipt of adequate funding) include the
following:
* Complete the functionality of our web site;
* Form new strategic alliances in the golf industry to enhance our golf
portal and improve our name recognition in the golf industry;
* Develop and subsequently increase our advertising revenues; and
* Increase IGA memberships.
These steps involve substantial risk to our business. The biggest risks to our
Company's success involve the potential inability to generate sufficient members
for our site which would make generation of advertising revenues difficult or
impossible.
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RESULTS OF OPERATIONS
Internet Golf has been in its development stage since its inception on February
4, 1999. The Company had no operations prior to the May 7, 1999 combination with
Champion. Consequently, the operating results for the period ended September 30,
1999 are not meaningful for comparison purposes. For the three month period
ended September 30, 2000, the Company generated $70 in revenues and gross profit
of $70, and a total loss from operations of $306,105. From inception through
September 30, 2000, Internet Golf has generated $62,645 in gross revenues with
gross profit of $19,364 and a total loss of operations of $2,042,198
Operating expenses and costs for the three month period ended September 30, 2000
were $306,175 and consisted primarily of payroll and general and administrative
expenses. A gain of $484,875 from the conversion of debt to 646,250 shares of
common stock at $1.00 per share was recognized. The net gain for the quarter
ended September 30, 2000 was $138,088.
FINANCIAL CONDITION
Our financial statements at December 31, 1999 include an auditors' report
containing a modification regarding an uncertainty about our ability to continue
as a going concern. Our financial statements also include an accumulated deficit
of $1,714,107 as of September 30, 2000 and other indications of weakness in our
present financial position.
As of September 30, 2000, Internet Golf had assets of $114,099, consisting
primarily of cash of $2,328, accounts receivable of $3,413, inventories of
$22,706, prepaid expenses of $65,350, property, plants and equipment of $35,249
and other long term assets of $500.
Liabilities at September 30, 2000 consist of accounts payable and accrued
expenses of $185,872, a note to two principal shareholders and officers of the
company for $40,000 due January 1, 2001 and accrued salary and payroll taxes for
the same two officers of $64,590. Effective August 14, 2000, a short-term note
of $187,500 and accrued interest of $8,750 was converted into 196,250 shares of
the Company's common stock at a rate of $1.00 per share. Additionally, $100,000
of accrued legal fees and $350,000 of debt and accrued expenses was converted to
the Company's common stock at $1.00 per share.
Stockholders' deficit consists of common stock of $32,085 (31,054,750 shares at
$.001 par value), and additional paid-in capital of $1,298,111, offset by an
accumulated deficit of $1,714,107.
LIQUIDITY AND CAPITAL RESOURCES
To date Internet Golf has financed its operations through the sale of securities
in private placements to investors, which to date have totaled $616,250 in gross
proceeds to Internet Golf, as well as a convertible note of $200,000 from an
unaffiliated investor, a note from another unaffiliated investor for $187,500,
and loans from officers of $40,000.
On May 18, 2000, Internet Golf commenced a registered offering of common stock
through an offering registered on Form SB-2. This offering is for a total of
3,000,000 shares of common stock at $1.00 per share. The offering provided that
only after $650,000 had been placed in escrow could the Company receive proceeds
from this offering. The escrow had to be met by August 15, 2000. As of August
14, 2000 the Company had received sufficient proceeds and has advised the escrow
agent to release the escrow.
Internet Golf had cash of $2,328 as of September 30, 2000.
For the nine-month period ended September 30, 2000, Internet Golf used cash of
$331,997 for operations, and was provided cash of $330,550 from financing
activities (from the proceeds of a short term note of $187,500, a note payable
to two officers of $40,000 and other short term borrowings of $118,050 offset by
payments for redemption of common stock of $15,000).
Internet Golf presently has no outstanding commitments for material capital
expenditures.
On January 12, 2000, the Company entered into a promissory note with Alster
Finance, an unrelated entity. Alster invested $187,500 in Internet Golf in the
note. The note is unsecured, and is payable in one payment together with accrued
interest at 8% per annum on August 31, 2000. The due date for the note was
extended by Alster and Alster has converted the Note to common stock at $1.00
per share.
At the Company's current level of cash expenditures, cash needs can be met from
existing resources (assuming no substantial cash inflow from operations) through
October 31, 2000. If the Company is successful in selling the minimum amount of
stock In a proposed public offering of its stock which commenced in May 2000,
the cash needs would be met for a period through December 31, 2000. If the
Company is successful in selling the maximum amount of stock in that offering,
its cash needs would be met for a period of at least 18 months. If the Company
is unable to sell the stock in the proposed offering, it would be required to
seek alternative financing to remain in business. That financing could include
debt or equity offerings.
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PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation that it believes could
have a materially adverse effect on its financial condition or results of
operations.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders for a vote during the period
covered by this report
ITEM 5. CHANGES IN REGISTRAT'S CERTIFYING ACCOUNTANT
Effective September 30, 2000 Internet Golf Association Inc. (the "Company") has
engaged Larry O'Donnell, Certified Public Accountant to be its auditor,
replacing Corbin & Wertz. There were no disagreements between the Company and
Corbin & Wertz as to any matter of accounting principles or practices, financial
statement disclosures or audit scope or procedures. The decision to change
accountants was approved by the Board of Directors.
The Corbin & Wertz report of independent certified public accountants on the
financial statements of Internet Golf Association, Inc. for the year ended
December 31, 1999 did not contain an adverse opinion or disclaimer of opinion,
nor was it modified as to audit scope or accounting principles. It did, however,
contain a modification regarding the auditors' doubt about the Company's ability
to function as a going concern.
There were no discussions with Larry O'Donnell, Certified Public Accountant,
prior to be engaged as auditors regarding the application of accounting
principles to a specific transaction or the type of audit opinion that might be
rendered on the Company's financial statement.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
None.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET GOLF ASSOCIATION, INC.
By /s/ Vincent Castagnola
----------------------------------
Vincent Castagnola
President & CEO
Dated: January 4, 2001
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