<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 1999.
[ ] 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: 0-14146
S2 GOLF INC.
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-2388568
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18 Gloria Lane, Fairfield, NJ 07004
(Address of Principal Executive Office) (Zip Code)
(201) 227-7783
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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
--- ---
On October 1, 1999, 2,220,112 shares of common stock, $.01 par value, were
issued and outstanding.
<PAGE> 2
S2 GOLF INC.
FORM 10-Q
FOR QUARTERLY PERIOD ENDED OCTOBER 1, 1999
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page Number
-----------
<S> <C>
Item 1 Financial Statements 1
--------------------
Balance Sheets -
October 1, 1999 and December 31, 1999 1
Statements of Operations -
Three Months Ended October 1, 1999 and
September 27, 1998 2
Nine Months Ended October 1, 1999 and 3
September 27, 1998
Statements of Cash Flows -
Nine Months Ended October 1, 1999 and
September 27, 1998 4
Notes to Financial Statements 5
Item 2 Management's Discussion and Analysis of 8
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Item 3 Quantitative and Qualitative Disclosures About 10
----------------------------------------------
Market Risk
-----------
PART II. OTHER INFORMATION 10
Item 1 Legal Proceedings 10
-----------------
Item 6 Exhibits and Other Reports on Form 8-K 10
--------------------------------------
Exhibit Index 11
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
----------------------
<TABLE>
<CAPTION>
BALANCE SHEETS
AS OF OCTOBER 1, 1999 (UNAUDITED)
AND DECEMBER 31, 1998 (UNAUDITED)
October 1 December 31
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 1,450 $ 1,576
Accounts Receivable (Net of Allowance
for Doubtful Accounts of $367,703 in 1999
and $313,025 in 1998 2,158,223 3,312,878
Inventory 2,649,483 3,640,123
Prepaid Expenses 101,585 32,418
Deferred Income Taxes 238,368 215,972
----------- -----------
Total Current Assets 5,149,109 7,202,967
Plant and Equipment - Net 91,282 59,442
Non-Current Deferred Income Taxes 103,527 118,056
Other Assets - Net 141,892 153,615
----------- -----------
Total Assets 5,485,810 7,534,080
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short term Borrowings $ 219,590 $ 2,766,879
Accounts Payable 516,276 324,849
Accrued Expenses 296,144 288,178
Other Current Liabilities 73,800 56,075
----------- -----------
Total Current Liabilities 1,105,810 3,435,981
Non-Current Liabilities 95,430 146,157
----------- -----------
Total Liabilities 1,201,240 3,582,138
Commitments and Contingencies
Shareholders' Equity
Common Stock, $.01 Par; 12,000,000 Authorized
Shares: 2,220,112 and 2,219,313 Issued and
Outstanding at October 1, 1999 and December 31, 1998
respectively 22,193 22,193
Additional Paid in Capital 4,040,795 4,040,795
Accumulated Retained Earnings /(Deficit) 221,582 (111,046)
----------- -----------
Total Shareholders' Equity 4,284,570 3,951,942
----------- -----------
Total Liabilities and Shareholders' Equity $ 5,485,810 $ 7,534,080
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 4
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
OCTOBER 1, 1999 AND SEPTEMBER 27, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
October 1 September 27
1999 1998
----------- -----------
<S> <C> <C>
Net Sales $ 2,536,905 $ 2,411,982
Cost of Goods Sold 1,682,880 1,653,719
----------- -----------
Gross Profit 854,025 758,263
----------- -----------
Operating Expenses:
Selling 375,399 336,104
General & Administrative 320,887 267,342
----------- -----------
Total Operating Expenses 696,286 603,446
----------- -----------
Operating Income 157,739 154,817
----------- -----------
Other Income (Expense)
Interest Expense (22,584) (85,486)
Other Income (Expense) -- (4,828)
----------- -----------
Other - Net (22,584) (90,314)
----------- -----------
Income Before Income Taxes 135,155 64,503
Provision for Income Taxes 43,567 26,124
----------- -----------
Net Income $ 91,588 $ 38,379
=========== ===========
Earnings per Common Share - Basic $ 0.04 $ 0.02
=========== ===========
Diluted $ 0.04 $ 0.02
=========== ===========
Weighted Average Number of Shares Outstanding -
Basic 2,220,072 2,219,300
Diluted 2,277,451 2,306,652
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 5
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED
OCTOBER 1, 1999 AND SEPTEMBER 27, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
October 1 September 27
1999 1998
----------- -----------
<S> <C> <C>
Net Sales $ 8,730,735 $ 9,409,041
Cost of Goods Sold 5,881,080 6,328,589
----------- -----------
Gross Profit 2,849,655 3,080,452
----------- -----------
Operating Expenses:
Selling 1,305,291 1,238,274
General & Administrative 912,803 857,954
----------- -----------
Total Operating Expenses 2,218,094 2,096,228
----------- -----------
Operating Income 631,561 984,224
----------- -----------
Other Income (Expense)
Interest Expense (147,033) (300,389)
Other Income (Expense) 562 30,364
----------- -----------
Other - Net (146,471) (270,025)
----------- -----------
Income Before Income Taxes 485,090 714,199
Provision for Income Taxes 152,461 289,405
----------- -----------
Net Income $ 332,629 $ 424,794
=========== ===========
Earnings per Common Share - Basic $ 0.15 $ 0.19
=========== ===========
Diluted $ 0.14 $ 0.18
=========== ===========
Weighted Average Number of Shares Outstanding -
Basic 2,219,567 2,218,997
Diluted 2,296,888 2,408,706
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
-3-
<PAGE> 6
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
OCTOBER 1, 1999 AND SEPTEMBER 27, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
October 1 September 27
1999 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net Income $ 332,628 $ 424,794
Adjustments to Reconcile Net Income to Net Cash Provided
By (Used in) Operating Activities:
Depreciation and Amortization 44,398 42,376
Deferred Income Taxes (7,867) (87,822)
Issuance of Stock for Compensation -- 4,000
Changes in Assets and Liabilities:
Accounts Receivable 1,154,655 726,807
Inventory 990,640 (1,270,573)
Prepaid Expenses (69,167) (38,092)
Other Assets (890) (3,906)
Accounts Payable 191,427 55,068
Accrued Expenses 7,966 106,978
Other Current and Non-Current Liabilities (33,002) (30,477)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATIONS 2,610,788 (70,847)
------------ ------------
INVESTING ACTIVITIES
- --------------------
Purchase of Equipment (63,625) (21,017)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (63,625) (21,017)
FINANCING ACTIVITIES
- --------------------
Proceeds from Line of Credit 7,311,721 10,405,964
Payments on Line of Credit (9,859,010) (10,435,531)
------------ ------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (2,547,289) (29,567)
------------ ------------
(DECREASE) INCREASE IN CASH (127) (121,431)
CASH - BEGINNING OF PERIOD 1,576 121,431
------------ ------------
CASH - END OF PERIOD $ 1,449 $ --
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES
- ----------------------------------
Cash Paid During the Year For:
Interest $ 147,033 $ 277,852
Income Taxes (Net of Refund) 152,842 124,571
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
-4-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of S2 Golf Inc. (the "Company")
have been prepared in accordance with generally accepted accounting principals
for interim financial reporting. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all material
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine months
ended October 1, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1999. The unaudited financial
statements and related notes are presented as permitted by Form 10-Q and do not
contain certain information included in the Company's annual financial
statements and notes thereto. For further information, refer to the Company's
annual financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.
1) EARNINGS PER SHARE
During the fiscal year ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 revises a certain methodology for computing earnings per share ("EPS") and
requires the dual presentation of basic and diluted earnings per share. Basic
EPS excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if stock
options or other contracts to issue common stock were exercised and resulted in
the issuance of common stock that then shared in the earnings of the Company.
Diluted EPS is computed using the treasury stock method when the effect of
common stock equivalents would be dilutive. All prior periods have been restated
to comply with the provisions of SFAS No. 128. The only reconciling item between
the denominator used to calculate basic EPS and the denominator used to
calculate diluted EPS is the dilutive effect of stock options issued to
employees of the Company and other parties. The Company has issued no other
potentially dilutive common stock equivalents.
2) REPORTING COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which was effective for the company for the
year ended December 31, 1998. This statement establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial statements. SFAS
No. 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company has evaluated SFAS No. 130 and determined that
it has no impact on the accompanying financial statements.
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<PAGE> 8
3) SEGMENTS OF AN ENTERPRISE
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," which was
effective for the Company for years beginning after December 15, 1997. SFAS No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company operates in only one segment, the manufacturing and
marketing of golf equipment. Profitability and investment decisions are made on
a company-wide basis.
4) ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes new disclosure requirements, which provide a comprehensive standard
for recognition and measurement of derivatives and hedging activities. This will
require all derivatives to be recorded on the balance sheet at fair value and
special accounting for certain types of hedges. SFAS No. 133 will take effect in
2000. The Company has not entered into any derivative or hedge transactions and,
therefore, does not believe that SFAS No. 133 will have a material effect on its
financial condition or results of operations.
5) THE LADIES PROFESSIONAL GOLF ASSOCIATION AGREEMENT
The Company has entered into an agreement with the Ladies Professional Golf
Association (LPGA), an Ohio nonprofit corporation, which grants the Company the
exclusive right to use the LPGA name and logo on its women's golf clubs and the
non-exclusive right to use the LPGA name and logo on certain of its other
products, including golf bags. The Company has renewed and restated this
licensing agreement effective January 1, 1999 through December 31, 2003, at
which time the Company has the option to renew the agreement for two consecutive
years under the same terms and conditions. The agreement entitles the Company to
use the license granted on a worldwide basis. The Company is obligated to pay to
the LPGA a license fee and a royalty fee based on sales volume.
The minimum annual license fee for the term of the agreement is $200,000 each
consecutive year through 2003. In the event that the sum of (A) 5% of the net
sales of the licensed products (other than golf shoes) up to $1,000,000 in any
calendar year, (B) 2.5% of the net sales of the licensed products (other than
golf shoes) in excess of $1,000,000 and less than $5,000,000 in any calendar
year, (C) 1% of the net sales of the licensed products (other than golf shoes)
in excess of $5,000,000 and (D) 1% of the net sales of golf shoes in any
calendar year, exceeds the minimum license fee, the excess shall be paid as a
royalty fee.
Under the agreement, the Company is obligated to be a "Title Sponsor" of the
LPGA Teaching and Club Professionals Division Team Classic at an annual cost of
$35,000 beginning in 1999 and increasing by
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<PAGE> 9
$2,500 per year through 2003. In addition, the Company is obligated to spend a
minimum of $100,000 per year on various advertising programs.
6) INVENTORY
Inventory is valued at the lower of cost, determined on the basis of the
first-in, first-out method, or market.
Inventory at October 1, 1999 and December 31, 1998 consisted of the following
components:
<TABLE>
<CAPTION>
10/1/99 12/31/98
<S> <C> <C>
Raw Materials $2,073,342 $2,919,298
Work in Process 25,000 25,000
Finished Goods 551,141 695,825
---------- ----------
$2,649,483 $3,640,123
</TABLE>
7) PLANT AND EQUIPMENT
Plant and equipment is stated at cost, less accumulated depreciation and
amortization. Depreciation is provided over the estimated useful service life.
The estimated lives used in determining depreciation are:
<TABLE>
<CAPTION>
<S> <C>
Machinery and Equipment 5 Years
Furniture and Fixtures 7 Years
</TABLE>
Leasehold improvements are amortized over the lives of the respective leases or
the service lives of the improvements, whichever is shorter.
Maintenance and repairs are charged to operations as incurred.
Plant and equipment at October 1, 1999 and December 31, 1998 were as follows:
<TABLE>
<CAPTION>
10/1/99 12/31/98
<S> <C> <C>
Machinery and Equipment $731,717 $668,092
Furniture and Fixtures 54,485 54,485
Leasehold Improvements 43,554 43,554
Total 829,756 766,131
Less: Accumulated Depreciation
and Amortization 738,474 706,689
$ 91,282 $ 59,442
</TABLE>
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<PAGE> 10
Depreciation and amortization for the nine months ended October 1, 1999 was
$31,785 and for the twelve months ended December 31, 1998 was $42,329.
8) SHORT TERM BORROWINGS
The Company has a secured revolving line of credit with PNC Bank, which was
amended and restated as of December 1, 1997, allowing a maximum credit limit of
$5,000,000, less 50% of the aggregate face amount of all outstanding Letters of
Credit, and subject to various borrowing bases through September 1, 2000. The
availability of funds under this line of credit varies as it is based, in part,
on a borrowing base of 80% of eligible accounts receivable and 50% of qualified
inventory. Substantially all of the Company's assets are used as collateral for
the credit line. Interest rates are at prime plus one-quarter percent, paid
monthly; the interest rate as of October 1, 1999 was 8.5%. Credit available to
the Company under the line of credit, as of October 1, 1999, was approximately
$2,149,637.
The credit facility contains certain covenants which, among other items, require
the maintenance of certain financial ratios including tangible net worth and
working capital. Any event of default under the credit facility permits the
lender to cease making additional loans thereunder. The Company was in
compliance with all covenants and conditions of the facility as of October 1,
1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
RESULTS OF OPERATIONS
Net Sales for the three-month and nine-month periods ended October 1, 1999 were
$2,536,905 and $8,730,735 respectively, compared to $2,411,982 and $9,409,041
for the same periods in 1998. The 7.2% decrease in sales for the nine-month
period compared to the prior year was primarily due to the soft conditions of
the golf equipment market in 1999 and the decision of management to decline
shipping to customers in tenuous financial condition. Net sales for the
three-month period ended October 1, 1999 was 5.2% higher than the same period in
1998. Management attributes this increase to the Company's national television
advertising campaign and continued strength in the women's segment.
Gross profit as a percentage of sales for the three-month and nine-month periods
ended October 1, 1999 was 33.7% and 32.7% respectively, as compared to 31.5% and
32.8% for the same periods in 1998. Management attributes those changes
primarily to differences in the mix of products shipped in the comparison
periods.
Selling expenses for the three-month and nine-month periods ended October 1,
1999 were $375,399 and $1,305,291 respectively, compared to $336,104 and
$1,238,274 for the same periods in 1998. The increase in selling expenses for
the nine-month period ended October 1, 1999 was primarily a result of an
increase in product advertising as well as an increase in sales commission
expense offset by a decrease in national trade show expense. The increased
advertising expense was the result of the Company's national television
advertisement, which ran for the first time in 1999.
General and Administrative expenses for the three-month and nine-month periods
ended October 1, 1999 were $320,887 and $912,803 respectively, compared to
$267,342 and $857,954 for the same
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<PAGE> 11
periods in 1998. These increases are due primarily to increased legal costs
associated with the preparation of the Company's Annual Report on Form 10-K and
player endorsement contracts.
Interest expense for the nine-month period ended October 1, 1999 was $147,033
which reflected a 51% decrease compared to the same period in 1998. This
reduction in interest expense was a direct result of the 55% decrease in the
average loan balance to PNC Bank. The average loan balance for the nine-month
period ended October 1, 1999 was $1,925,988 compared to an average loan balance
of $4,239,807 for the nine-month period ended September 27, 1998.
The Company's net income for the nine-month period ended October 1, 1999 was
$332,629 compared to $424,794 for the same three-month period in 1998.
The provision for income taxes was $152,461 for the nine-month period ending
October 1, 1999 compared to $289,405 for nine-month period ending September 27,
1998.
FINANCIAL CONDITION AND LIQUIDITY
The Company's working capital increased by $276,313 for the nine-month period
which ended October 1, 1999. Current assets decreased by $2,053,858, offset by a
decrease in current liabilities of $2,330,171. Accounts receivable decreased by
$1,154,655 for the nine-month period ended October 1, 1999. Inventory decreased
during the same period by $990,640, or 27.3%, which reflected management's
decision to improve inventory turns and decrease the levels of raw materials.
The Company's short term borrowings decreased by $2,547,289, which was a result
of the decreases to both accounts receivable and inventory. In addition,
accounts payable increased by $194,427 for the nine-month period ended October
1, 1999 and accrued expenses increased by $7,966 for the same period. The
increases in accounts payable and accrued expenses are primarily a result of the
cyclical nature of the business.
Working capital increased by $208,403 from the period ending September 27, 1998
to the period ending October 1, 1999. This increase was the result of a
$2,746,275 decrease in current assets offset by a $2,954,678 decrease in current
liabilities.
Cash provided by operations for the nine-month period ended October 1, 1999 was
$2,610,788 compared to cash used in operations for the nine-month period ended
September 27, 1998 of $70,847. Cash used to reduce financing activities totaled
$2,547,289 for the nine-month period ended October 1, 1999 compared to cash
provided by financing activities for the same nine-month period in 1998 of
$29,567. During the nine-month period ended October 1, 1999, cash used for the
payment of income taxes totaled $152,842, and cash used for the payment of
interest charges on short and long term borrowings totaled $147,033.
YEAR 2000 COMPLIANCE
The Company has completed a review of its information systems and applications
in preparation for the Year 2000. The Company expects to incur internal staff
costs as well as outside consulting and other capital expenditures related to
this initiative. Total incremental expenses to remediate and bring current
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<PAGE> 12
systems into compliance are not expected to exceed $75,000. Software selections
have been finalized and the new systems became operational on November 1, 1999.
The Company believes that it will be Year 2000 compliant in the fourth quarter
of 1999. The Company believes its vendors and other third parties will be
converted timely and present no Year 2000 issues. None of the Company's products
or manufacturing systems will be affected by the Year 2000 issue. System
upgrades are scheduled to be implemented on a timely basis and should not impact
operations or financial reporting.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
-----------------------------------------------------------
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
------------------
On July 21, 1999, Michael R. Ross, a former Vice President, Sales of the
Company, filed a complaint against the Company in the Essex County Superior
Court of New Jersey in connection with options to purchase shares of the
Company's common stock granted to him pursuant to his employment contract. His
claims against the Company relate to his inability to immediately sell the
underlying restricted shares had he exercised his options. Mr. Ross claims
$49,100 in compensatory damages plus pre-judgment interest, attorneys' fees and
such other relief that the court might grant. The Company intends to defend
this lawsuit vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) The exhibits listed on the attached Exhibit Index are filed as part of this
report.
SIGNATURES
Pursuant to 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.
S2 GOLF INC.
November 11, 1999 /s/ Douglas A. Buffington
- ----------------- -------------------------
Date By:
Douglas A. Buffington
President and Chief
Operating Officer
-10-
<PAGE> 13
EXHIBIT INDEX
EXHIBIT
NUMBER
DESCRIPTION OF EXHIBIT*
3.1 Amended and Restated Certificate of Incorporation of the Company dated
June 28, 1991 (incorporated by reference to Exhibit 3.1 to the
registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1991).
3.2 Amended and Restated By-laws of the registrant dated December 6, 1991
(incorporated by reference to Exhibit 3.2 of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1991).
4.1 Common Stock Purchase Warrant in favor of Wesmar Partners dated
February 28, 1988 (incorporated by reference to Exhibit 4.4 of the
registrant's Registration Statement No. 33-37371 on Form S-3).
4.2 Common Stock Purchase Warrant in favor of Wesmar Partners dated
February 28, 1988 (incorporated by reference to Exhibit 4.5 of the
registrant's Registration Statement No. 33-37371 on Form S-3).
4.3 Stock Option Agreement between the registrant and Wesmar Partners dated
February 29, 1988 (incorporated by reference to Exhibit 4.6 of the
registrant's Registration Statement No. 33-37371 on Form S-3).
10.0 Credit Agreement and Security Agreement between the registrant and
Midlantic Bank, National Association dated December 29, 1994
(incorporated by reference to Exhibit 99 of the registrant's Current
Report on Form 8-K dated December 26, 1994).
10.1 United States Patent No. 4,203,598 issued to the registrant
(incorporated by reference to Exhibit 10.3 of the registrant's
Registration Statement No. 33-16931 on Form S-1).
10.2 Amended and Restated Licensing Agreement between Ladies Professional
Golf Association and the registrant dated July 1, 1996 (incorporated by
reference to Exhibit 12 of the registrant's Annual Report on Form 10-K
for the year ended December 31, 1996).
10.3 Lease Agreement between the registrant and 12 Gloria Lane Limited
Partnership dated June 22, 1989 (incorporated by reference to exhibit
10.6 of the registrant's Registration Statement No. 33-37371 on Form
S-3).
10.4 Modification of Lease Agreement between the registrant and 12 Gloria
Lane Industrial Partnership dated October 3, 1995 (incorporated by
reference to Exhibit 10.2 of the registrant's Annual Report on Form
10-K for the year ended December 31, 1995).
10.5 1984 Incentive Stock Option Plan of the registrant dated February 10,
1984 (incorporated by reference to Exhibit 10.7 to the registrant's
Registration Statement No. 33-16931 on Form S-1).
10.6 Consulting Agreement between the registrant and MR & Associates dated
January 1992 (incorporated by reference to exhibit 10.10 of the
registrant's Annual Report on Form 10-K for the year ended December 31,
1992).
10.7 Amendment of Consulting Services Agreement between the registrant and
MR and Associates effective as of February 1, 1996 (incorporated by
reference to Exhibit 10.6 to the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996).
10.8** 1992 Stock Plan for Independent Directors of S2 Golf, Inc. dated
December 28, 1992 (incorporated by reference to Exhibit 10.11 of the
registrant's Annual Report on form 10-K for the year ended December 31,
1992).
10.9** Employment Agreement between the registrant and Douglas A. Buffington
dated January 1, 1995 (incorporated by reference to Exhibit 10.10 to
the registrant's Annual Report on Form 10-K for the year ended December
31, 1994).
10.10** Agreement between the registrant and Randy A. Hamill dated January 2,
1997 (incorporated by reference to Exhibit 10.10 of the registrant's
Annual Report on Form 10-K for the year ended December 31, 1997).
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<PAGE> 14
10.11 Second amendment to loan and security agreement between registrant and
PNC Bank dated December 1, 1997 (incorporated by reference to Exhibit
10.12 of the registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
27 Financial Data Schedule.
- --------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Exchange Act, the registrant's file number under
the Act is 0-14146.
** Management contract or management compensatory plan or arrangement.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000782126
<NAME> S2 GOLF INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> OCT-01-1999
<CASH> 1,450
<SECURITIES> 0
<RECEIVABLES> 2,525,926
<ALLOWANCES> 367,703
<INVENTORY> 2,649,483
<CURRENT-ASSETS> 5,149,109
<PP&E> 829,756
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0
0
<COMMON> 22,193
<OTHER-SE> 4,262,377
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<CGS> 1,682,880
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<INCOME-TAX> 43,567
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<EPS-BASIC> .04
<EPS-DILUTED> .04
</TABLE>
