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 August 31, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ___________________
Commission file number 0-10093
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Golf Rounds.com, Inc.
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(Name of Small Business Issuer in Its Charter)
Delaware 59-1224913
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
111 Village Parkway, Building #2, Marietta, Georgia 30067
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(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (770) 951-0984
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Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value
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
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not 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: $144,184.
At December 11, 2000, the aggregate market value of the common stock held
by non-affiliates of the issuer was $4,204,031.
As of December 11, 2000, the issuer had 3,447,377 shares of common stock,
par value $.01 per share, outstanding.
Documents incorporated by reference: None
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GOLF ROUNDS.COM, INC.
ANNUAL REPORT ON FORM 10-KSB FOR FISCAL YEAR ENDED AUGUST 31, 2000
TABLE OF CONTENTS
SECTION PAGE NO.
PART I ................................................................... 3
Item 1. Description of Business...................................... 3
Item 2. Description of Properties.................................... 8
Item 3. Legal Proceedings............................................ 8
Item 4. Submission of Matters to a
Vote of Security Holders..................................... 8
PART II .................................................................. 9
Item 5. Market For Common Equity and
Related Stockholder Matters.................................. 9
Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations.... 10
Item 7. Financial Statements......................................... 11
Item 8. Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure...... 22
PART III ................................................................. 23
Item 9. Directors and Executive
Officers of the Registrant.................................. 23
Item 10. Executive Compensation...................................... 24
Item 11. Security Ownership of Certain
Beneficial Owners and Management............................ 25
Item 12. Certain Relationships and Related
Transactions................................................ 27
Item 13. Exhibits and Reports on Form 8-K............................ 28
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Introduction
Golf Rounds.com, Inc. was incorporated in 1968. Until the fourth
quarter of fiscal 1992, we were engaged in the wholesale distribution of
aluminum alloys, steel and other specialty metals under the name American Metals
Service, Inc. In the fourth quarter of fiscal 1992, we liquidated our assets and
did not conduct any business operations until May 1999. At that time, we
acquired the assets of PKG Design, Inc., the developer of our two websites,
golfrounds.com and skiingusa.com. The golfrounds.com website provides news and
stories on professional and amateur golf, local tee time services, local golf
course reviews and information on tournaments and activities. Skiingusa.com is a
similar website devoted to skiing. In connection with the acquisition of these
websites, we changed our name to Golf Rounds.com, Inc.
Recent Events
On February 3, 2000, Paul O. Koether, John W. Galuchie, Jr. and Thomas
K. Van Herwarde resigned as directors of our board of directors and Robert H.
Donehew, Larry Grossman and John F. McCarthy, III took office as our new
directors. The change in composition of the board occurred in connection with
the sale on January 24, 2000 by Messrs. Koether, Galuchie and Van Herwarde and
certain other sellers of an aggregate of 500,000 shares of our common stock to
seven purchasers, some of whom are affiliated with the brokerage firm of M.H.
Meyerson & Co., Inc. ("MHM").
On March 16, 2000, we sold 1,333,005 shares of our common stock at a
purchase price of $1.375 per share, representing aggregate gross proceeds of
approximately $1,833,000, to 29 accredited investors in a private placement
offering. MHM acted as the placement agent for the offering.
On October 31, 2000, Thomas Van Herwarde resigned as our president. We
have not designated a successor at this time.
Current Business Plan
Although we are seeking to maintain and, possibly, to expand our
websites, our primary business objective is to locate a target business that we
believe will have significant growth potential and effect a business combination
with that target. We intend to use our available cash (currently approximately
$3 million), capital stock, debt or a combination of these to effect the
business combination. A business combination may involve the acquisition of, or
merger with, a financially stable, mature company that desires to establish a
public trading market for its securities while avoiding what it may deem to be
adverse consequences of undertaking a public offering itself, such as time
delays, significant expense, loss of voting control and other burdens (including
significant professional fees) related to compliance with various federal and
state securities laws. In the alternative, a business combination may involve a
company that may be financially unstable or in its early stages of development
or growth.
In seeking to attain our business objective, we will not restrict our
search to any particular industry. Rather, we may investigate businesses of
essentially any kind or nature and participate in any type of business that may,
in our management's opinion, meet our business objectives as described in this
report. We emphasize that the description contained in this report of our
business objectives is extremely general and is not meant to restrict the
discretion of our management to search for and enter into potential business
opportunities. Since we have not chosen the particular business in which we will
engage we are unable to provide you with any basis to evaluate the possible
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merits or risks of the target business or the particular industry in which we
may ultimately operate. To the extent we enter into a business combination with
a financially unstable company or an entity in its early stage of development or
growth, including entities without established records of sales or earnings, we
will become subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies. In
addition, to the extent that we effect a business combination with an entity in
an industry characterized by a high level of risk, we will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries that experience rapid growth.
In addition, although we will endeavor to evaluate the risks inherent in a
particular industry or target business, we cannot assure you that we will
properly ascertain or assess all significant risk factors.
Sources of Target Businesses
We anticipate that target business candidates will be brought to our
attention from various unaffiliated sources, including securities
broker-dealers, investment bankers, venture capitalists, bankers and other
members of the financial community, who may present solicited or unsolicited
proposals. Our officers and directors and their affiliates may also bring to our
attention target business candidates. We may pay a finder's fee or other
compensation for such introductions if they result in consummated transactions.
These fees are customarily between 1% and 5% of the size of the overall
transaction, based upon a sliding scale of the amount involved.
Selection of a Target Business and Structuring of a Business Combination
Our management will have significant flexibility in identifying and
selecting a prospective target business. In evaluating a prospective target
business, our management will consider, among other factors, the following:
o the financial condition and results of operation of the
target;
o the growth potential of the target and that of the industry
in which the target operates;
o the experience and skill of the target's management and
availability of additional personnel;
o the capital requirements of the target;
o the competitive position of the target;
o the stage of development that the target's products,
processes or services are at;
o the degree of current or potential market acceptance of the
target's products, processes or services;
o proprietary features and the degree of intellectual property
or other protection of the target's products, processes or
services;
o the regulatory environment of the industry in which the
target operates;
o the prospective equity interest in, and opportunity for
control of, the target; and
o the costs associated with effecting the busines combination.
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These criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular business combination will be based, to the extent
relevant, on the above factors as well as other considerations deemed relevant
by our management in connection with effecting a business combination consistent
with our business objective. In connection with our evaluation of a prospective
target business, we anticipate that we will conduct an extensive due diligence
review that will encompass, among other things, meetings with incumbent
management and inspection of facilities, as well as a review of financial or
other information that will be made available to us.
We will endeavor to structure a business combination so as to achieve
the most favorable tax treatment to us, the target business and both companies'
stockholders. We cannot assure you, however, that the Internal Revenue Service
or appropriate state tax authority will agree with our tax treatment of the
business combination.
Until we are presented with a specific opportunity for a business
combination, we are unable to ascertain with any degree of certainty the time
and costs required to select and evaluate a target business and to structure and
complete the business combination. We do not have any full time employee who
will be devoting 100% of his or her time to our affairs. Any costs incurred in
connection with the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will
result in a loss to us and reduce the amount of capital otherwise available to
complete a business combination.
Limited Ability to Evaluate the Target Business' Management
Although we intend to carefully scrutinize the management of a
prospective target business before effecting a business combination, we cannot
assure you that our assessment of the target's management will prove to be
correct, especially in light of the possible inexperience of our officers and
directors in evaluating certain types of businesses. In addition, we cannot
assure you that the target's future management will have the necessary skills,
qualifications or abilities to manage a public company intending to embark on a
program of business development. Furthermore, the future role of our officers
and directors, if any, in the target business cannot presently be stated with
any certainty. While it is possible that one or more of our officers and
directors will remain associated in some capacity with us following a business
combination, it is unlikely that any of them will devote their full efforts to
our affairs after a business combination. Moreover, we cannot assure you that
our officers and directors will have significant experience or knowledge
relating to the operations of the particular target business.
We may seek to recruit additional managers to supplement the incumbent
management of the target business. We cannot assure you, however, that we will
be able to recruit additional managers who have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Investment Company Act
We may participate in a business or opportunity by purchasing, trading
or selling the securities of a business. We do not intend to engage primarily in
these activities and we are not registered as an "investment company" under the
Investment Company Act of 1940. We do not believe that registration under the
act is required based upon our proposed activities. We intend to conduct our
activities so as to avoid being classified as an "investment company" and to
avoid application of the costly and restrictive registration and other
provisions of the Investment Company Act and its regulations.
The Investment Company Act may, however, also be deemed to be
applicable to a company that does not intend to be characterized as an
"investment company" but that, nevertheless, engages in activities that may be
deemed to be within the definitional scope of certain provisions of the
Investment Company Act.
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While we do not believe that our anticipated principal activities will subject
us to regulation under the Investment Company Act, we cannot assure you that we
will not be deemed to be an "investment company," especially during the period
prior to a business combination. In the event we are deemed to be an "investment
company," we may become subject to certain restrictions relating to our
activities and regulatory burdens, including:
o restrictions on the nature of our investments; and
o the issuance of securities,
and have imposed upon us certain requirements, including:
o registration as an investment company;
o adoption of a specific form of corporate structure; and
o compliance with certain burdensome reporting, recordkeeping,
voting, proxy and disclosure requirements and other rules
and regulations.
Compliance with these additional regulatory burdens would require additional
expense.
Websites
We had been engaged in the wholesale distribution of aluminum alloys,
steel and other specialty metals until we liquidated our assets in the fourth
quarter of our fiscal year of 1992. In May 1999, we became a publisher of
Internet websites through the acquisition of PKG Design, Inc., the developer and
owner of two Internet websites: golfrounds.com and skiingusa.com. The
golfrounds.com website provides news and stories on professional and amateur
golf, local tee time services, local golf course reviews and information on
tournaments and activities. Skiingusa.com is a similar website devoted to
skiing. In connection with the acquisition of these websites, we changed our
name to Golf Rounds.com, Inc.
Prior to the acquisition, PKG Design had entered into an agreement
with Lycos, Inc., a major Internet guide. Under the agreement, Lycos
incorporated golfrounds.com into the Lycos website so that its customers could
use Lycos to obtain information about golf. The revenues from this agreement
were insignificant and almost all were derived from selling advertisements,
often called banners, to reach Lycos customers. The Lycos Agreement was canceled
by Lycos effective December 5, 1999.
On December 2, 1999, we entered into a content licensing and
distribution agreement with TicketMaster OnLine - CitySearch, Inc. Under the
agreement, TicketMaster will include our golf content on the TicketMaster
Internet websites. In exchange, we will receive a portion of net receipts
generated from advertising banners, sponsorships or other devices on the
TicketMaster sites. As of the date hereof, we have not earned any revenue from
this agreement.
Competition
We expect to encounter intense competition from other entities having
a business objective similar to ours. Many of these entities, including
financial consulting companies and venture capital firms, have longer operating
histories and have extensive experience in identifying and effecting business
combinations, directly or through affiliates. Many of these competitors possess
significantly greater financial, technical and other resources than we do. We
cannot assure you that we will be able to effectively compete with these
entities. In the event we are unable to compete effectively with these entities,
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we may be forced to evaluate less attractive prospects for a business
combination. If we are forced to evaluate these less attractive prospects, we
cannot assure you that our stated business objectives will be met.
With respect to our websites, we are subject to competition from other
sports-based Internet websites and on-line companies, some of which have longer
operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than we do. The
on-line commerce market is intensely competitive. We expect competition in our
present industry to increase due to the relative ease with which new websites
can be developed and the growing popularity of golf and skiing, in particular,
and sports, in general. If we remain in our present industry, we cannot assure
you that we will be able to compete successfully in the future with our
competitors.
Proprietary Rights
We regard the protection of our intellectual property, including our
URLs "golfrounds.com" and "skiingusa.com" as important to our present business
operations. Unauthorized use of the intellectual property used in our business
by third parties may damage our brand and our reputation and may limit our
ability to engage in a business combination. We primarily rely on intellectual
property laws to protect our intellectual property rights. Because of the
complexity and growing importance of intellectual property rights, there can be
no assurance that we will be able to protect our proprietary rights on a global
basis. Moreover, the expense of enforcing our rights may limit or prohibit us
from effective protection.
Internet and on-line activities are increasingly becoming the subject
of patent applications and patent grants. Recently Amazon.com was granted a
patent in connection with aspects of the linking function from one site to
another for cross selling purposes. Our website has cross selling and linking
functions, some or all of which may be covered by this recent patent. To the
extent we engage in any activity that is found to be the proprietary right of
another, we may have to cease our use or obtain a license. We cannot assure you
that we will be able to continue business as we currently conduct it in this
changing environment.
Government Regulation
Our current business operations is not directly regulated by
governmental entities. It is possible that as the Internet develops, there will
be greater oversight or the introduction of direct regulation of the Internet
and transactions conducted on it. To the extent that there is oversight and
regulation, if we continue in our present business operations, we may be
adversely impacted. We may encounter additional direct costs in our operations
such as various taxes or telecommunication charges or increased compliance
expense. The laws governing Internet transactions remain largely unsettled, even
in the areas where there has been some legislative action. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel, consumer protection and taxation apply to the
Internet.
For example, although not yet enacted, Congress is considering laws
regarding Internet taxation. In addition, various jurisdictions already have
enacted laws that are not specifically directed to electronic commerce but that
could affect our business. The applicability of many of these laws to the
Internet is uncertain and could expose us to substantial liability if we remain
in our present business operations.
The growth of the Internet and electronic commerce, coupled with
publicity regarding Internet fraud, may lead to the enactment of more stringent
consumer protection laws. These laws may impose additional burdens on our
business.
Several telecommunications carriers are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission in the same manner as other telecommunications services.
Additionally, local telephone carriers have petitioned the Federal
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Communications Commission to regulate Internet service providers and online
service providers in a manner similar to long distance telephone carriers and to
impose access fees on these providers. If either of these petitions are granted,
the costs of communicating on the Internet could increase substantially. This,
in turn, could slow the growth of use of the Internet. Any legislation or
regulation could materially adversely affect our business if we continue in our
present industry.
In the event we effect a business combination with an entity that is
not in the Internet industry, we would become subject to any government
regulation already imposed on the new industry. We cannot assure you that we
would be in substantial compliance with the already existing regulations or that
we would be able to comply with additional regulations imposed on the acquired
business.
Employees
Our only employees at the present time consist of our officers who
will devote as much time to our business as they and our board of directors
determine to be necessary.
ITEM 2. DESCRIPTION OF PROPERTIES.
Our principal executive offices are located at 111 Village Parkway,
Building #2, Marietta, Georgia and our telephone number is (770) 951-0984. Our
office space, fixtures, furniture and equipment is provided to us by our current
officers and directors for approximately $900 per month on a month-to-month
basis. We are currently obligated under a lease for our prior space. The lease
requires us to pay $1,528.55 per month until March 2001, the expiration of the
lease. We will not renew the lease. We believe that our present business
property is adequate and suitable to meet our needs into the near future.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
Our common stock is traded on the OTC Bulletin Board under the symbol
"TEEE." Our common stock is only traded on a limited or sporadic basis and this
should not be deemed to constitute an established public trading market. There
is no assurance that the common stock will be actively traded in the future.
Therefore, there can be no assurance that there will be liquidity in the common
stock.
Below is a table indicating the range of high and low bid information
for the common stock as reported in the National Quotation Bureau since 1999.
Bid prices represent prices between broker-dealers and do not include retail
mark-ups and mark-downs or any commission to broker-dealers. In addition, these
prices do not necessarily reflect actual transactions.
Period High($) Low($)
------ ------- ------
Fiscal 2001
Second Quarter* 1.687 1.50
First Quarter 2.312 1.75
Fiscal 2000
Fourth Quarter 2.6875 1.78125
Third Quarter 3.75 2.50
Second Quarter 4.875 1.325
First Quarter 1.625 1.25
Fiscal 1999
Fourth Quarter 3.13 1.50
Third Quarter 2.69 .90
Second Quarter 1.44 .88
First Quarter 1.02 1.00
* Through December 11, 2000.
Holders
As of December 11, 2000, there were 3,635 holders of record of our
common stock.
Dividend Policy
We have not paid any dividends in the past two years and do not intend
to pay dividends prior to the consummation of a business combination. The
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payment of dividends after a business combination will be contingent upon our
revenues and earnings, if any, our capital requirements and our general
financial condition. The payment of any dividends after a business combination
will be within the discretion of our board of directors. We presently intend to
retain all earnings, if any, for use in our business operations and,
accordingly, we do not anticipate declaring any dividends in the foreseeable
future.
Recent Sales of Unregistered Securities
None.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward-Looking Statements
When used in this Report, words or phrases such as "will likely
result," "management expects," "we expect," "will continue," "is anticipated,"
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. You are cautioned not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. We have no obligation to publicly release the result
of any revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions, our
ability to find a suitable company to effect a business combination with,
competitive factors and other risk factors as set forth in Exhibit 99.1 of this
Report.
The following discussion should be read in conjunction with the
financial statements and related notes included in this Report.
Results of Operations
We have had no significant revenues (other than interest income) since
1999 and will not achieve any significant revenues (other than interest income)
until, at the earliest, the completion of a business combination. For the year
ended August 31, 2000 interest income was $138,217 compared to $89,068 for the
year ended August 31, 1999. The increase in interest income was due to
additional capital resulting from the private placement of common stock in March
2000 and higher rates of return on U.S. Treasury Securities that we owned.
General, administrative and other expenses were $513,367 for the year
ended August 31, 2000, compared to $137,110 for the year ended August 31, 1999.
The increase in general, administrative and other expenses was due primarily to
increases in salary expenses to develop the golfrounds.com and skiingusa.com
Internet sites, increased health insurance expenses and increased legal fees
relating to various corporate transactions. General, administrative and other
expenses for the year ended August 31, 2000 consisted primarily of salary
expenses of $165,475, health insurance expenses of $81,128, legal expenses of
$64,685, stockholder services expenses of $32,452, payroll tax expenses of
$14,190, website maintenance and services expenses of $33,816, audit and
accounting fee expenses of $17,100 and directors' and officers' liability
insurance expenses of $14,375. Amortization expense of $131,478 was incurred in
connection with the acquisition of PKG Design, Inc. Until March 31, 2000, a
management fee of $12,500 per quarter was paid to a company, with which we are
affiliated, for accounting, financial and administrative management. The fee was
based on the former affiliate's estimated costs. Since the change of control,
most of these
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services are being performed by our treasurer who received 15,000 shares of
common stock for performing these services during fiscal 2000.
We had previously self-insured various amounts of our employees-
medical claims. As of March 31, 2000, however, we stopped making such payments
and will not self-insure our employees' (and their families') medical claims in
the future.
Liquidity and Capital Resources
On March 16, 2000, we sold an aggregate of 1,333,005 shares of common
stock in a private placement that resulted in $1,566,672 of additional net
capital.
At August 31, 2000, cash and cash equivalents and working capital were
$3,250,674. U.S. Treasury Securities of approximately $3,107,112 bearing
interest at rates ranging from 5.995% to 6.216% matured as of November 30, 2000.
Year 2000 Compliance
The Year 2000 problem is the result of certain computer programs being
written using two digits, rather than four digits, to define the applicable
year. Any computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000, or not recognize the
date at all. If not corrected, this could result in system failures or
miscalculations that could result in service or other interruptions. To date, we
have not experienced any significant Year 2000 problems.
Testing and compliance monitoring as part of our Year 2000 program
will continue to ensure that system changes and additions are Year 2000
compliant.
ITEM 7. FINANCIAL STATEMENTS.
Index to Financial Statements: Page
----
Independent Auditors' Report of Bederson & Co. LLP.................F-1
Balance Sheet as of August 31, 2000................................F-2
Statements of Operations for the years ended August 31 2000 and
1999............................................................F-3
Statements of Stockholders' Equity for the years ended
August 31, 2000 and 1999........................................F-4
Statements of Cash Flows for the years ended August 31, 2000
and 1999............. .........................................F-5
Notes to the Financial Statements..............................F-6 to F-10
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Golf Rounds.com, Inc.
We have audited the accompanying balance sheet of Golf Rounds.com, Inc., as of
August 31, 2000 and the related statements of operations, stockholders' equity
and cash flows for the years ended August 31, 2000 and 1999. 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 audits.
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 made 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 Golf Rounds.com, Inc., as of
August 31, 2000 and the results of its operations and cash flows for the years
ended August 31, 2000 and 1999 in conformity with generally accepted accounting
principles.
/s/ Bederson & Company LLP
---------------------------
BEDERSON & COMPANY LLP
West Orange, New Jersey
November 21, 2000,
except for Note 8, as to which
the date is December 11, 2000
F-1
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GOLF ROUNDS.COM, INC.
BALANCE SHEET
AUGUST 31, 2000
(000 Omitted)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,251
Prepaid expenses and other 29
-------
TOTAL CURRENT ASSETS 3,280
Intangible assets, net of accumulated
amortization of $197 --
Equipment, net of accumulated
depreciation of $3 10
-------
TOTAL ASSETS $ 3,290
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ 35
-------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
12,000 shares authorized,
3,447 issued and outstanding 34
Additional capital in excess of par value 4,774
Accumulated deficit (1,553)
-------
TOTAL STOCKHOLDERS' EQUITY 3,255
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,290
=======
The accompanying notes are an integral part of these financial statements.
F-2
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GOLF ROUNDS.COM, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 2000 AND 1999
(000 Omitted, except for per share data)
2000 1999
--------- ---------
REVENUES:
Interest $ 138 $ 89
Other 6 6
------- -------
TOTAL REVENUES 144 95
------- -------
EXPENSES:
General, administrative and other 513 137
Amortization and depreciation 134 66
------- -------
TOTAL EXPENSES 647 203
------- -------
NET LOSS $ (503) $ (108)
======= =======
BASIC AND DILUTED NET LOSS PER SHARE $ (.18) $ (.05)
======= =======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2,748 2,000
======= =======
The accompanying notes are an integral part of these financial statements.
F-3
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GOLF ROUNDS.COM, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED AUGUST 31, 2000 AND 1999
(000 Omitted)
<TABLE>
<CAPTION>
Accumulated
Common Stock Capital in Total
---------------------- Excess of Accumulated Stockholders'
Shares Par Value Par Value Deficit Equity
------ --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - September 1, 1998 1,969 $ 20 $ 3,070 $ (942) $ 2,148
Repurchase of common stock (20) - (21) - (21)
Issuance of common stock
in connection with acquisition 150 1 151 - 152
Net loss - - - (108) (108)
------- ------ -------- ------- -------
BALANCE - August 31, 1999 2,099 21 3,200 (1,050) 2,171
Issuance of common stock
in connection with
Private Placement 1,333 13 1,554 - 1,567
Issuance of common stock
as compensation to officer 15 - 20 - 20
Net loss - - - (503) (503)
------- ------- ------- ------- --------
BALANCE - August 31, 2000 3,447 $ 34 $ 4,774 $ (1,553) $ 3,255
======= ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GOLF ROUNDS.COM, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31, 2000 AND 1999
(000 Omitted)
2000 1999
------ -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (503) $ (108)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 134 66
Common stock issued as compensation 20 -
Increase or decrease in:
Prepaid expenses and other (20) (9)
Accrued liabilities 25 7
------- -------
NET CASH USED BY OPERATING ACTIVITIES (344) (44)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized costs in connection
with the asset purchase of PKG Design, Inc. - (45)
Purchase of equipment (8) (5)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (8) (50)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of Private Placement 1,567 -
Repurchase of common stock - (21)
------- -------
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES 1,567 (21)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,215 (115)
CASH AND CASH EQUIVALENTS - beginning 2,036 2,151
------- -------
CASH AND CASH EQUIVALENTS - ending $ 3,251 $ 2,036
======= =======
NON-CASH INVESTING AND FINANCING ACTIVITIES:
In May, 1999 the Company issued 150,000 shares of common
stock in connection with the asset purchase of PKG Design, Inc.
In March, 2000 the Company issued 15,000 shares of common stock as
compensation to an officer.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
GOLF ROUNDS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
NOTE 1 - CORPORATE OPERATIONS
Golf Rounds.com, Inc. (the Company) is a Delaware corporation that was
engaged in the wholesale distribution of aluminum alloys, steel and
other specialty metals until the fourth quarter of fiscal 1992. The
Company liquidated the assets of its former business and in May, 1999
the Company acquired the assets of PKG Design, Inc., the developer of
two (2) Internet websites: golfrounds.com and skiingusa.com. In
connection with the acquisition of these websites, the Company changed
its name to Golf Rounds.com, Inc.
Since May 1999, the Company has been engaged in the operation,
development and marketing of two (2) Internet websites. The
golfrounds.com website provides news and stories on professional and
amateur golf, local tee time services, local golf course reviews and
information on tournaments and activities. Skiingusa.com is a similar
website devoted to skiing.
The Company is seeking to maintain and possibly, to expand its
websites, and to locate a target business that it believes will have
significant growth potential and effect a business combination with
that target.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
The Company considers all U.S. Treasury securities purchased with an
original maturity of three (3) months or less to be cash equivalents.
U.S. Treasury securities are recorded at cost, which approximates
their fair value.
Equipment
The Company records equipment at cost. Depreciation is computed using
the straight-line method over the related estimated useful lives of
the assets.
The Company evaluates the carrying value of its long-lived assets
whenever there is a significant change in the use of an asset and
adjusts the carrying value, if necessary, to reflect the amount
recoverable through future operations.
Intangible Assets
Intangible assets, established in connection with the acquisition of
PKG Design, Inc., are amortized on a straight-line basis over a one
(1) year period.
Stock-Based Compensation
The Company accounts for employee stock options in accordance with
Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for
Stock Issued to Employees." Under APB 25, the Company recognizes no
compensation expense related to employee stock options, as no options
are granted at a price below the market price on the day of the grant.
In 1996, FAS No. 123, "Accounting for Stock-Based Compensation,"
became effective for the Company. FAS 123, which prescribes the
recognition of compensation expense based on the fair value of options
on the grant date, allows companies to continue applying APB 25 if
certain pro forma disclosures are made assuming hypothetical fair
value method application.
F-6
<PAGE>
GOLF ROUNDS.COM, INC.
N0TES TO FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Current income taxes are based on the year's taxable income for
Federal and state income tax reporting purposes. Investment tax
credits are accounted for by the flow-through method.
Deferred taxes are provided on a liability basis whereby deferred tax
assets are recognized for deductible temporary differences and
operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax law and rates on the date of
enactment.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss to common
stockholders by the weighted average number of shares of common stock
outstanding for each fiscal year. Common stock equivalents are not
considered in loss years because they are anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities and assets 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.
NOTE 3 - ACQUISITION
In connection with the acquisition of the websites in May of 1999, the
Company issued 100,000 shares of common stock of the Company and
reserved another 280,000 shares, of which 100,000 shares would have
been issued if revenues for the first year had exceeded $200,000 and
the balance would have been issued if revenues for the year would have
exceeded $350,000. Such revenues were not achieved and the 280,000
reserved shares were subsequently canceled. Additionally, 50,000
shares of common stock were issued to the finder of the acquisition
for services rendered. The cost associated with the issuance of the
shares to the seller and to the finder, plus associated legal expenses
and liabilities assumed of approximately $45,000, comprise the cost of
the acquisition. The acquisition was accounted for by the purchase
method. The total purchase price for this transaction, of
approximately $197,000, was allocated to intangible assets,
representing the value assigned to the websites acquired in the
acquisition.
NOTE 4 - INCOME TAXES
The Company had net operating loss carryforwards ("NOLs") of
approximately $592,000 and $227,000 at August 31, 2000 and 1999,
respectively, for Federal income tax reporting purposes, and $512,000
and $147,000, respectively, for state income tax reporting purposes.
These losses create a deferred tax asset at August 31, 2000 and 1999.
The Company has recorded a 100% valuation allowance against deferred
tax assets due to the uncertainty of their ultimate realization.
F-7
<PAGE>
GOLF ROUNDS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
NOTE 4 - INCOME TAXES (Continued)
The tax effects of significant items composing the Company's net
deferred tax asset, as of the end of the indicated fiscal year, are as
follows (in $000's):
2000 1999
-------- ---------
Deferred tax asset:
Federal NOLs $ 100 $ 46
State NOLs 39 10
AMT credit carryforward 6 6
--------- ---------
145 62
Valuation allowance (145) (62)
--------- --------
Net deferred tax asset $ - $ -
========= ==========
The Federal - NOLs expire beginning in the year 2011 and the state
NOLs expire beginning in the year 2003. In addition, the Internal
Revenue Code contains provisions, which may limit the net operating
loss carryforward available for use in any given year based on
significant changes in ownership interest of the Company.
NOTE 5 - COMMON STOCK
From time to time since October 1996, the Company's Board of Directors
has authorized the repurchase of the Company's common stock in the
open market or in privately negotiated transactions. During the fiscal
year ended August 31, 2000 and 1999, the Company repurchased 123 and
20,520 shares, for an aggregate cost of approximately $163 and
$21,000, respectively. All shares acquired through August 31, 2000
have been canceled and returned to the status of authorized but
unissued common stock.
NOTE 6 - RELATED PARTY TRANSACTIONS
On January 24, 2000, Messrs. Paul O. Koether, John W. Galuchie, Jr.
and Thomas K. Van Herwarde and certain other sellers sold an aggregate
of 500,000 shares of the Company's common stock to seven (7)
purchasers, which caused a change in control of the Company and
composition of its Board of Directors.
On March 16, 2000, the Company sold 1,333,005 shares of common stock,
at a purchase price of $1.375 per share, representing aggregate gross
proceeds of approximately $1,833,000, to twenty-nine (29) accredited
investors in a private placement offering. M.H. Meyerson & Co., Inc.
(Meyerson) acted as the placement agent for the offering and was paid
commissions of $128,301 and a non-accountable expense allowance of
$54,986. Certain persons designated by Meyerson also received
five-year options to purchase 200,251 shares of common stock at a
price of $1.50 per share (Placement Agent Options). Several
stockholders and a director of the Company are associated with
Meyerson. The gross proceeds, less commissions, non-accountable
expenses, and other expenses of the offering of approximately $83,000,
resulted in net proceeds to the Company of approximately $1,567,000.
Prior to the change in control, the Company retained the firm of
Rosenman & Colin LLP ("R&C") for certain legal services. The wife of
the former Chairman of the Board and stockholder is of counsel to R&C.
The Company incurred fees for services provided by R&C of
approximately $26,000 and $31,000 for the fiscal years ended August
31, 2000 and 1999, respectively.
F-8
<PAGE>
GOLF ROUNDS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
NOTE 6 - RELATED PARTY TRANSACTIONS (Continued)
The Company paid a management fee to Kent Financial Services, Inc.
("Kent") of $29,167 in 2000 and $50,000 in 1999, respectively for
management services performed for the Company by Kent personnel
through March 31, 2000. These services included corporate governance,
financial management, and accounting services. Kent is the indirect
parent of Asset Value Holdings, Inc., which is a stockholder of the
Company. The management fees were based on Kent's estimated costs, and
management believes the cost allocation is reasonable. Since the
change in control, most of these services are being performed by the
Company's Treasurer, who received 15,000 shares of common stock of the
Company for performing these services during fiscal 2000.
On March 1, 2000, the Company executed a month-to-month agreement to
sub-lease office space and share office equipment and a bookkeeper's
time for $900 a month from R. D. Garwood, Inc. (Garwood). The
Company's Treasurer is associated with Garwood. The Company's expense
for these shared facilities for the fiscal year ended August 31, 2000
was $5,400.
On April 1, 2000 the Company executed a one-year lease for office
space with Gamma Realty Corp. (Lessor). The Lessor is associated with
several stockholders of the Company. The lease requires monthly
payments of $1,529. The Company's rent expense for this facility for
the fiscal year ended August 31, 2000 was $7,645. The remaining lease
commitment, which will be payable during the fiscal year ending August
31, 2001, is $10,703. There are no other non-cancelable leases or
other long-term financial obligations.
On November 15, 2000, the Company issued a letter of understanding
whereby Meyerson was offered 180,000 shares of common stock of the
Company if Meyerson is successful in finding a suitable merger partner
(with a pre-merger valuation of at least $10 million and merger terms
acceptable to the Board of Directors of the Company).
NOTE 7 - STOCK OPTION PLANS
In August 1983, the Company adopted an incentive stock option plan
covering 100,000 shares exercisable for a period of ten (10) years
from the date of grant. There have been no options granted or canceled
under the incentive stock option plan.
On March 13, 2000 the Board of Directors granted an option to purchase
20,000 shares of the Company's common stock, at a price $2.5625, to
three of the Company's Directors. On May 3, 2000 the Board of
Directors granted an option to purchase 20,000 shares of the Company's
common stock, at a price $2.625, to the Company's other Director. The
exercise price of these options (Director Options) was equal to or
exceeded the fair market value of the underlying shares of common
stock as of the grant date.
The fair value of the Director Options is estimated to be $76,800
($.96 per option share) based upon a financial analysis of the terms
of the options using the Black-Scholes Pricing Model with the
following assumptions: expected volatility of 102%; a risk free
interest rate of 6% and an expected holding period of five (5) years.
Financial reporting of the options issued to Directors has been
prepared pursuant to the Company's policy of following APB No. 25, and
related interpretations, in accounting for its employee stock options.
Had the Company accounted for these options in accordance with FAS 123
there would have been an immaterial difference in compensation
expense; therefore, the pro forma financial disclosure of the
amortization of the fair value of the options over a two (2) year
period has been omitted.
F-9
<PAGE>
GOLF ROUNDS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
NOTE 7 - STOCK OPTION PLANS (Continued)
A summary of the Company's stock option plan activity is as follows:
Weighted Average
Number of Exercise Price
Shares per Share
--------- ----------------
Options outstanding - August 31, 1999 - $ -
Director Options granted 80,000 2.578125
Placement Agent Options granted 200,251 1.500000
------- ---------
Options outstanding - August 31, 2000 280,251 $1.807760
======= =========
No options were exercised during the fiscal years ended August 31,
2000 and 1999. All options expire five (5) years after date of grant.
NOTE 8 - CONTINGENT LIABILITY
On November 28, 2000, the Company became aware of a potential claim of
approximately $145,000, which is reasonably possible of being asserted
under the Company's medical insurance plan. Management of the Company
has been advised that at least a portion of the potential claim may
have been for treatment that may have been considered experimental
under the plan documents on which the Company's "stop loss" (excess)
insurance was based. The plan of treatment was nevertheless approved
by the entity engaged as administrator of the plan. No demand for
reimbursement by the Company of this claim has been made as of
December 11, 2000. Although the outcome of any potential claim cannot
be predicted with certainty, if a claim is made, management of the
Company and the Company's legal counsel believe that it is reasonably
possible that the Company will recover at least a portion of the
potential claim from the administrator and/or others; however, the
amount of the potential loss, if any, and recovery cannot be
estimated. In the event a claim is asserted, management of the Company
intends to vigorously pursue its remedies.
F-10
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
22
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Our current directors and officers are as set forth in the table
below.
Name Age Position
---- --- ---------
John F. McCarthy, III 55 Chairman of the Board and Secretary
Robert H. Donehew 48 Vice President, Treasurer and Director
Larry S. Grossman 51 Director
Anthony Charos 36 Director
John F. McCarthy, III has served as chairman of our board of directors
and as secretary since February 2000. Since June 2000, Mr. McCarthy has served
as a director of Intercom Systems, Inc., which is a company that is primarily a
vehicle for the acquisition of a target business. Since February 1999, Mr.
McCarthy has been chairman of Pricing Dynamics Solutions, Inc., which operates a
dynamic pricing software developer with several related Internet sites. Since
October 1999, Mr. McCarthy has served as chairman of Ensoport.com, Inc., which
is developing an Internet service provider appliance for deployment in third
world countries. Mr. McCarthy was a director and general counsel of Globalink,
Inc., which is a company that developed language translation software, from 1993
until it was acquired by Lernout & Hauspie Speech Products N.V. in October 1998.
From October 1998 to January 1999, he was a consultant to Lernout & Hauspie
Speech Products N.V. From 1989 to 1993, he was vice president and general
counsel of Computone Corporation, a manufacturer of computer peripheral devices.
From 1985 to 1988, he was a partner in the law firm of Burnham, Connelly,
Osterle & Henry and from 1983 to 1985 he was a partner in the law firm of Rose,
Schmidt, Chapman, Duff & Hasley. In addition, since 1993, Mr. McCarthy has been
a principal in McCarthy, Johnston & Associates.
Robert H. Donehew has served as a director and our vice president and
treasurer since February 2000. Mr. Donehew has served as a director and the vice
president and treasurer of Intercom Systems, Inc. since June 2000. He has also
served as a director of Ensoport.com, Inc. since October 1999. Since July 1996,
Mr. Donehew has been the chief executive officer of Donehew Capital, LLC, the
general partner of Donehew Fund Limited Partnership, a private investment
partnership specializing in the securities market. In addition, since July 1997,
Mr. Donehew has been the chief executive officer of 3-D Capital, LLC, an
investment firm specializing in due-diligence consulting and investments in the
securities markets. Since 1983, he has also served as the chief financial
officer of the R.D. Garwood, Inc. Companies. From 1976 through 1983, Mr. Donehew
had his own tax and financial planning practice. Mr. Donehew has been on the
board of directors of MSDC, a medical software company, since 1986.
Larry S. Grossman has served as one of our directors since February
2000. Mr. Grossman has been the chairman of Thunderbolt Capital Corporation, a
venture capital firm he co-founded, since January 1998. From September 1997 to
January 1998 he was retired. From October 1996 to August 1997, Mr. Grossman was
chairman and chief executive officer of Trans Leasing International, Inc., a
company specializing in medical equipment and auto leasing. From 1989 to October
1996, he was chairman and chief executive officer of FluoroScan Imaging Systems,
Inc., a manufacturer of x-ray imaging devices. From 1987 to 1989 Mr. Grossman
was president, chief operating officer and a director of Pain Prevention Labs,
Inc., which manufactured a patented electronic anesthesia machine.
23
<PAGE>
Anthony Charos has served as one of our directors since March 2000.
Since June 2000, Mr. Charos has served as a director of Intercom Systems, Inc.
Since 1993, Mr. Charos has been an account executive with MHM and a
member of its investment banking team.
Board Meetings and Committees
During the period September 1, 1999 to August 31, 2000, the board of
directors met on one occasion and took written action on six occasions. All the
members of the board of directors attended the meeting. The written actions were
by unanimous consent. The board of directors established an audit committee in
June 2000 and the audit committee had not met as of August 31, 2000. Directors
serve for a term of one year after election or until their earlier resignation
or their successor is elected or appointed and qualified.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires our officers,
directors and persons who beneficially own more than ten percent of a registered
class of our equity securities ("ten-percent shareholders") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and ten-percent shareholders also are required to furnish us
with copies of all Section 16(a) forms they file. Based solely on our review of
the copies of such forms furnished to us, and written representations that no
other reports were required, we believe that during the fiscal year ended August
31, 2000, all of our officers, directors and ten-percent shareholders complied
with the Section 16(a) reporting requirements.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth the compensation for the three years
ended August 31, 2000 for our chairman of the board. No other executive officers
compensation exceeded $100,000 (or would have exceeded $100,000 if employed for
the full year) for the year ended August 31, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation(1)(2) Long-Term Compensation
--------------------- -------------------------
Restricted All Other
Stock Compensation
Name and Principal Position Year Salary ($) Bonus ($) Awards ($)
---------------------------- ------ ---------- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
John F. McCarthy, III 2000 17,500(3) - - -
Chairman and Secretary 1999 - - - -
1998 - - - -
</TABLE>
(1) The above compensation does not include other personal benefits, the
total value of which do not exceed the lesser of $50,000 or 10% of
such person's or persons' cash compensation).
(2) Pursuant to the regulations promulgated by the SEC, the table omits
columns reserved for types of compensation not applicable to us.
(3) We began paying Mr. McCarthy a salary of $2,500 per month beginning on
February 1, 2000 for his services as Chairman and Secretary.
We do not have employment agreements with John F. McCarthy, III or
Robert H. Donehew, our other executive officer. We issued Mr. Donehew 15,000
24
<PAGE>
shares of our common stock on March 13, 2000 as compensation for his services as
our Vice President and Treasurer through August 31, 2000 valued at $1.375 per
share.
In May 1999, we entered into an employment agreement with Thomas K.
Van Herwarde, our then president, for an initial term of one-year at an annual
salary of $90,000. Mr. Van Herwarde was the sole stockholder of PKG Design,
Inc., which we acquired in May 1999. This agreement was not renewed in May 2000.
Effective October 31, 2000, Mr. Van Herwarde resigned as our president.
Our directors do not currently receive any cash compensation for their
services. On March 13, 2000, each of Robert H. Donehew, John F. McCarthy, III
and Larry Grossman were granted five-year options to purchase 20,000 shares of
common stock at an exercise price of $2.5625 per share, which options vested
immediately. On May 3, 2000, we issued Anthony Charos a five-year option to
purchase 20,000 shares of common stock at an exercise price of $2.625 per share,
which options vested immediately.
Option Grants
The following table represents the stock options granted in the fiscal
year ended August 31, 2000 to the executive officer identified in the Summary
Compensation table above.
Options Granted in the Last Fiscal Year
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price of Expiration
Name of Executive Granted (#) Fiscal Year (%) Options ($) Date
--------------------- ----------- ---------------- ---------- -----------
John F. McCarthy, III 20,000 25% 2.5625 3/12/05
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number of shares of common stock
beneficially owned as of December 11, 2000 by (1) those persons or groups known
to us who beneficially own more than 5% of our common stock, (2) each of our
current directors, (3) each executive officer whose compensation exceeded
$100,000 in the fiscal year ended August 31, 2000 and (4) all of our current
directors and executive officers as a group. The information is determined in
accordance with Rule 13d-3 promulgated under the Exchange Act based upon
information furnished by the persons listed or contained in filings made by them
with the SEC. Except as indicated below, the stockholders listed possess sole
voting and investment power with respect to their shares.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class(1)
---------------- -------------------- ------------
Robert H. Donehew 604,690(2) 17.4%
Donehew Fund Limited Partnership
111 Village Parkway, Building #2
Marietta, Georgia 30067
Ronald I. Heller 531,502(3) 15.2%
74 Farview Road
Tenafly, New Jersey 07670
25
<PAGE>
David S. Nagelberg 518,250(4) 14.9%
7012 Rancho La Cima Drive
Rancho Santa Fe, California 92067
Paul O. Koether
211 Pennbrook Road 484,690(5) 14.1%
Far Hills, New Jersey 07931
Shamrock Associates 409,470(6) 11.9%
211 Pennbrook Road
Far Hills, New Jersey 07931
John W. Galuchie, Jr. 212,166(7) 6.2%
376 Main Street
Bedminster, New Jersey 07921
Asset Value Holdings, Inc. 200,000 5.8%
211 Pennbrook Road
Far Hills, New Jersey 07931
Galt Asset Management 200,000 5.8%
c/o Brian Vitale
125 West Shore Road
Huntington, New York 11`743
Larry Grossman 60,000(8) 1.7%
c/o Thunderbolt Capital Corp.
1239 Shermer Road
Northbrook, Illinois 60062
Anthony Charos 40,000(9) 1.2%
273 Hickory Avenue
Tenafly, New Jersey 07670
John F. McCarthy, III 20,000(8) *
2401 Pennsylvania Avenue, N.W.
Washington, D.C. 20037
All current directors and executive
officers as a group (4 persons) 724,690(10) 20.5%
---------------------
* Less than 1%.
(1) Based on 3,447,377 shares of common stock outstanding as of December
11, 2000.
(2) Includes 100,000 shares of common stock owned by Donehew Fund Limited
Partnership, of which Donehew Capital LLC, a Georgia limited liability
company, is the general partner; Mr. Donehew is the manager of Donehew
Capital LLC. Also includes (i) 449,690 shares as to which Donehew Fund
Limited Partnership holds irrevocable proxies and (ii) 20,000 shares
of common stock issuable upon exercise of immediately exercisable
options.
(3) Includes 48,522 shares of common stock issuable upon exercise of
immediately exercisable options, 144,615 shares of common stock held
of record by the Ronald I. Heller Revocable Trust dated 12/23/97,
144,615 shares of common stock held of record by the Joyce L. Heller
26
<PAGE>
Revocable Trust dated 12/23/97, 70,000 shares of common stock held of
record by The Rachel Beth Heller 1997 Trust dated 7/9/97, 87,000
shares of common stock held of record by The Evan Todd Heller 1997
Trust dated 6/17/97 and 36,750 shares of common stock held of record
by the Delaware Charter Guarantee & Trust Co., for the benefit of the
Ronald I. Heller IRA. Mr. Heller disclaims beneficial ownership of the
shares held by The Evan Todd Heller 1997 Trust dated 6/17/97, The
Rachel Beth Heller 1997 Trust dated 7/9/97.
(4) Includes 39,250 shares of common stock held by the Delaware Charter
Guarantee & Trust Co., for the benefit of the David S. Nagelberg
Individual Retirement Account ("IRA"), 1,250 shares of common stock
held in a custodian account for the benefit of David Nagelberg's
children and 48,521 shares of common stock issuable upon exercise of
immediately exercisable options.
(5) Includes 209,470 shares of common stock beneficially owned by Shamrock
Associates, of which Mr. Koether is the general partner, 200,000
shares held by Asset Value Holdings, Inc., of which Mr. Koether is
President, 7,166 shares owned by Sun Equities Corporation, of which
Mr. Koether is Chairman and a principal stockholder; 1,666 shares held
by Mr. Koether's IRA, 20,000 shares owned by Mr. Koether's wife; and
15,000 shares held in discretionary accounts for Mr. Koether's
brokerage customers. Mr. Koether, Shamrock Associates, Asset Value
Holdings, Inc., Sun Equities Corporation and Mr. Koether's IRA have
given Donehew Fund Limited Partnership irrevocable proxies to vote an
aggregate of 449,690 shares that they own.
(6) Includes 200,000 shares of common stock held by Asset Value Holding,
of which Shamrock Associates is the ultimate parent. Shamrock
Associates disclaims beneficial ownership of these shares. Asset Value
Holdings has given Donehew Fund Limited Partnership an irrevocable
proxy to vote these shares.
(7) Includes 200,000 shares of common stock held by Asset Value Holdings,
Inc., of which Mr. Galuchie is the Treasurer. Mr. Galuchie disclaims
beneficial ownership of the shares held by Asset Value Holdings. Also
includes 7,166 shares owned by Sun Equities Corporation, of which Mr.
Galuchie is a director and officer. Mr. Galuchie disclaims beneficial
ownership of the shares held by Sun Equities Corporation. Asset Value
Holdings and Sun Equities Corporation have given Donehew Fund Limited
Partnership irrevocable proxies to vote an aggregate of 207,716 shares
that they own.
(8) Includes 20,000 shares of common stock issuable upon exercise of
immediately exercisable options.
(9) Includes 20,000 shares of common stock held with Kevin Charos, as
Tenants in Common, and 20,000 shares of common stock issuable upon
exercise of immediately exercisable options.
(10) Includes the shares of common stock deemed to be included in the
respective beneficial holdings of Robert H. Donehew, Larry Grossman,
John F. McCarthy, III and Anthony Charos.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On January 18, 2000, six of our stockholders entered into a stock
purchase agreement with seven purchasers, some of whom are associated with the
business of MHM, pursuant to which the sellers agreed to sell to the purchasers
an aggregate of 500,000 shares of our common stock at a price of $1.375 per
share. In connection with the execution of the purchase agreement, we entered
into a separate agreement with the purchasers pursuant to which, among other
things, Messrs. Koether, Galuchie and Van Herwarde, our former directors, agreed
to resign as directors and appoint new directors designated by the purchasers of
the shares. The purchasers designated Messrs. Donehew, Grossman and McCarthy for
appointment to our board of directors to take office upon the
27
<PAGE>
resignation of the then current directors. Mr. Koether and entities he controls,
including some of the other sellers, also agreed to give a designee of the
purchasers irrevocable proxies to vote an additional 449,690 shares of our
common stock that he and such other entities own.
The sale of shares contemplated by the purchase agreement was
consummated on January 21, 2000, and on that date the proxies given by Mr.
Koether and certain entities controlled by him to a designee of one of the
purchasers became effective.
On March 16, 2000, we sold 1,333,005 shares of common stock at a
purchase price of $1.375 per share, representing aggregate gross proceeds of
approximately $1,833,000, to 29 accredited investors in a private placement
offering. MHM acted as the placement agent for the offering and was paid
commissions of $128,301.60 and a non-accountable expense allowance of
$54,986.40. We also issued to certain persons designated by MHM five year
options to purchase 200,251 shares of our common stock at a price of $1.50 per
share. Of these options, options to purchase 48,522 shares were issued to Ronald
I. Heller and options to purchase 48,521 shares were issued to David S.
Nagelberg. Messrs. Heller and Nagelberg are both associated with MHM. Anthony
Charos, one of our directors, is also associated with MHM.
On November 15, 2000, we agreed to issue 180,000 shares of our common
stock to MHM if MHM introduces to us an entity with which we consummate a
business combination, if such entity has pre-merger valuation of at least $10
million.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits Filed.
See Exhibit Index appearing later in this Report.
(b) Reports on Form 8-K.
None.
28
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 12, 2000 GOLF ROUNDS.COM, INC.
(Registrant)
By: /s/ John F. McCarthy, III
-------------------------------------
Name: John F. McCarthy, III
Title: Principal Executive Officer
In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dated indicated.
/s/ John F. McCarthy, III Chairman and Secretary December 12, 2000
-------------------------- (Principal Executive
John F. McCarthy, III Officer)
/s/ Robert H. Donehew Vice President, Treasurer December 12, 2000
-------------------------- and Director (Principal
Robert H. Donehew Accounting and Financial Officer)
/s/ Larry S. Grossman Director December 12, 2000
--------------------------
Larry S. Grossman
/s/ Anthony Charos Director December 12, 2000
--------------------------
Anthony Charos
29
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated
Exhibit By Reference No. in
Number Description from Docuemnt Document Page
------ ----------- ------------- -------- -----
<S> <C> <C> <C> <C>
1.1 Agreement and Plan of Merger A 2.1
3.1 Articles of Incorporation A 3.1
3.1.1 Bylaws A 3.1.1
10.1 Employment Agreement, dated May 17, A 10.1
1999, between the Company and Thomas
K. Van Herwarde
10.2 Stock Purchase Agreement, dated January B 2.1
18, 2000, among Asset Value Holdings,
Inc., Bradford Trading Company, Paul
Koether, Shamrock Associates, Sun
Equities Corporation, Thomas K. Van
Herwarde, The Rachel Beth Heller 1997
Trust Dated 7/9/97, The Evan Todd Heller
Trust Dated 6/17/97, Martan & Co.,
Donehew Fund Limited Partnership,
Jonathan & Nancy Glaser Family Trust
Dated 12/16/98, W. Robert Ramsdell and
Nagelberg Family Trust Dated 9/24/97
10.3 Content Licensing and Distribution C 10.1
Aggreement, dated December 2, 1999,
between the Company and TicketMaster
OnLine - CitySearch, Inc
10.4 Form of option agreement for options C 10.2
issued as of March 13, 2000.
10.5 Form of subscription agreement for private C 10.3
offering.
10.6 Form of agency agreement for private C 10.4
offering.
10.7 Form of placement agent's purchase option C 10.5
for private offering.
10.8 Form of registration rights agreement C 10.6
between the Company and certain security
holders.
27.1 Financial Data Schedule - - Filed
Herewith
99.1 Risk Factors - - Filed
Herewith
</TABLE>
A. Company's Quarterly Report on Form 10-QSB for the quarter ende May 31,
1999.
B. Company's Current Report on Form 8-K, filed with the SEC on January
19, 2000.
C. Company's Quarterly Report on Form 10-QSB for the quarter ended
February 29, 2000.
