6
December 18, 1995
Mr. Charles A. Sjoquist
Branch Chief
Securities and Exchange Commission
Washington, D.C. 20549
RE: AGTsports, Inc.
Form 10-KSB (FYE September 30, 1994)
Form 10-QSB (Quarter ended June 30, 1995)
File No. 0 21914
Dear Mr. Sjoquist:
This letter is in response to your November 28, 1995 letter
regarding the AGTsports, Inc. (AGT) Form 10-KSB and Form 10-QSB
filing. Concurrently with the transmittal of this letter, we
have filed an amended Form 10-KSB, Form 10-QSB and Form 8-K to
reflect the changes made as a result of your comment letter. The
paragraphs in this letter correspond those in your comment
letter.
Both the Chief Executive Officer and the President of AGTsports,
Inc. were working out of the country in November and early
December. Your facsimile of November 28, 1995 was not available
for review until December 5, 1995. The Company and its
management have made efforts to provide all additional
information as requested.
Please note the company is current in all of its filings and
reports with the filing of the Form 8-K and is not required to
file any delinquent reports. The audit of the fiscal year ending
September 30, 1995 is in process and the Form 10-KSB for this
fiscal year will be filed upon its completion.
General
Item 1: The firm of T. Alan Walls, CPA, P.C. original agreement
was with American Consolidated Growth Corporation (AMGC), an
affiliated company of AGT. The original agreement with AMGC was
that AMGC would accept responsibility for payments to the firm
for all services rendered to AMGC or its affiliates. In
February, 1995 it became clear that AMGC would not be able to
fulfill this responsibility thus causing the firm to be a
creditor and therefore no longer independent. The firm gave
notice to AMGC, AGT and its other affiliated companies of its
resignation. AGT inadvertently failed to file a form 8-K. A new
auditor has been engaged to complete the audit of the fiscal year
ended September 30, 1995. The changes at AMGC in early 1995 also
caused AMGC to change its management, as well as the termination
by AGT of the accounting contractor preparing monthly financial
statements for AGT. The CEO of AGT later approached T. Alan
Walls about continued work with the company. In July, 1995, T.
Alan Walls became president of AGTsports, Inc. as noted in a Form
8-K filing.
Management, Discussion and Analysis, Pages 8-9
Item 2 - The requested revision has been made.
Item 3 - The requested revision has been made. The issue of
going concern is only required for consideration over the twelve
months following the date of the financial statement. It may be
noted that your letter to the company is dated after the end of
that twelve month period.
Item 4 - The requested revision has been made.
Item 5 - The appropriate disclosure has been added.
Item 6 - The requested wording changes have been made for
clarification.
Item 7 - The appropriate discussion has been added as requested.
Item 8 - The appropriate discussion has been added as requested.
Item 9 - The requested wording changes have been made for
clarification.
Item 10 - The appropriate discussion has been added as requested.
Auditor's Report
Item 11 - The requested information is presented in the last
paragraph of the opinion.
Item 12 - The opinion has been amended as appropriate.
Item 13 - The audit report of the prior auditors will be
requested and included in an amended filing as soon as it is made
available.
Item 14 - The opinion has been revised as appropriate.
Consolidated Balance Sheet, Page F-3
Item 15 - The appropriate disclosure has been added.
Item 16 - The appropriate disclosure has been added.
Item 17 - The appropriate disclosure has been added.
Item 18 - The capital structure in the balance sheet has been
revised for the common stock split in May of 1993 and the reverse
preferred stock split in fiscal year 1994. The disclosures of
these matters have been revised as appropriate.
Consolidated Statements of Income, Page F-4
Item 19 - The appropriate disclosure has been added.
Item 20 - The appropriate disclosure has been added.
Item 21 - The per share computation retroactively restated based
on the number of shares outstanding as a result of the reverse
split in May 1993 was properly completed in the initial filing.
Consolidated Statements of Shareholders' Equity, Pages F-5 - F-7
Item 22 - The appropriate disclosure has been added.
Item 23 - The appropriate disclosure has been added.
Note 1 - Organization and summary of Significant Accounting
Policies, Pages F-11 - F-13
Item 24 - The appropriate disclosure has been added.
Item 25 - The appropriate disclosure has been added.
Item 26 - The appropriate disclosure has been added.
Note 2 - Related Party Transactions and Note 17 - Restatement of
September 30, 1993 Financial Statements, Pages F-13 - F-23
Item 27 - The appropriate disclosure has been added.
Item 28 - The accounting treatment of the rescission of the
repayment of the related party loan in fiscal year ended
September 30, 1994 was to record the transaction in this fiscal
year only. The assets were recorded on the books and the related
liability was also recorded on the books. There was no gain or
loss recorded on the transaction.
Item 29 - The paragraph discussing the 90 day unsecured loans in
the footnote is from a note in the 1993 audit report utilized in
the 1994 audit report since comparative information was provided
in Footnote 6 of the 1994 report. The anticipated private
placement for early fiscal year 1994 was not completed, otherwise
it would have been fully discussed in the 1994 audit report. One
of the notes was converted to common stock and one of the notes
continued to get periodic cash payments.
Item 30 - The appropriate disclosure has been added.
Note 4 - Limited Partnership, Page F-15
Item 31 - The appropriate disclosure has been added.
Note 5 - Property, Plant and Equipment, Page F-16
Item 32 - The appropriate disclosure has been added.
Item 33 - The appropriate disclosure has been added.
Note 7 - Leases, Page f-18
Item 34 - The appropriate disclosure has been added.
Note 11 - Key Employees and Relationships, Page F-20
Item 35 - The appropriate disclosure has been added.
Note 12 - Company Stock Option Plans, Page F-21
Item 36 - The appropriate disclosure has been added.
Note 16 - Investments, Page F - 22
Item 37 - The appropriate disclosure has been added.(Reference
Note 4)
Note 18 - Major Customers, Page F-23
Item 38 - The legal matter is a dispute over a billing for
services. It was deemed to be immaterial. Some accrual for
liability has been allowed for in the financial statements. The
legal matter was deemed not to be material. The appropriate
disclosure has been added as requested.
Note 19 - Subsequent Events, Page F-23
Item 39 - The appropriate disclosure has been added.
Form 10-QSB For the Quarter Ended June 30, 1995
Item 40 - Please refer to "item 1".
Quarterly Income Consolidation, Page 4
Item 41 - The appropriate revision has been made.
Management's Discussion and Analysis, Page 6
Item 42 - The appropriate disclosure has been added.
Item 43 - The appropriate disclosure has been added.
Item 44 - The appropriate disclosure has been added.
Item 45 - There was no write down of investment in the first
quarter of 1995. The decrease in the investment carrying amount
is due to either sale of or issuance for services of some of the
investment holdings.
Item 46 - The appropriate disclosure has been added.
GENERAL INFORMATION
Questions concerning accounting should be directed to Alan Walls,
(423) 434-2220. All other questions should be directed to David
Wagner (303)793-0304.
Very truly yours,
AGTsports, Inc.
T. Alan Walls
President
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 3
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ending September 30, 1994
Commission File Number 0-21914
AGTsports, Inc.
(Exact name of registrant as specified in its charter)
Colorado
84-1165916
(State of incorporation ) (I.R.S.
Employer Identification No.)
6890 S. Tucson Way, Suite 202, Englewood, Colorado
80112
(Address of principle executive offices)
(Zip Code)
(303) 792-5000
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Common Stock $.001 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of Securities
Exchange Act of 1934 during the preceding 12 months (or for such
a shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is 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. [ ]
State issuer's revenues for its most recent fiscal year:
$1,208,456.
The aggregate market value of the voting stock held by non-
affiliates of the registrant, computed as the average bid and
asked prices as of September 30, 1994, was $14,687,667.
The number of shares of Common Stock, $.001 par value,
outstanding on September 30, 1994 was 4,641,124 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference are found in Item
13.
PART I
Item 1. Description of Business
Organization
AGTsports, Inc. has been a developmental Colorado
corporation since 1991 and intends to engage in the marketing and
development of The Golf Players System (GPS). AGTsports, Inc.
(the "Company"), was incorporated under the laws of the State of
Colorado on January 6, 1986, under the name, American Merger
Control, Inc., as a blind pool for the purpose of investing in
any and all types of assets, properties and businesses.
On May 15, 1991, the Company entered into an agreement with
American Consolidated Growth Corporation (ACGC) to acquire a
division of ACGC known as Advance Golf Technologies, Inc.
("AGT"). The Company issued 15,851,940 shares (Pre 1 for 10
reverse split.) to ACGC. Pursuant to this agreement, the Company
formally established the name "Advance Golf Technologies, Inc."
as its trade name or dba. As a result of this transaction, ACGC
became the majority shareholder of the Company. Through the
additional financing of the Company, ACGC has reduced its
holdings of the Company to 8.37% of the outstanding shares. ACGC
also has 1,000,000 shares of preferred stock of AGTsports, Inc.
which accounts for 100% of the outstanding preferred shares.
In May 1993, the Company reverse split its common stock on
the basis of one share for every ten shares previously
outstanding. In June 1993, the Company changed its name to
AGTsports, Inc. The Company has not been subject to any
bankruptcies, receiverships or similar proceedings.
Proposed Business
AGTsports, Inc. is creating a family of strategically
located subsidiary companies that will develop a global computer
information network for the recreation industry. The Golf
Players System Network (GPSN) blends leading edge hardware
technology with a series of proprietary software modules. This
unique integrated system allows individuals, recreational
facilities and corporations to link together forming an effective
and efficient golf information network. This system's
integration process enables AGTsports, Inc. and its golf
technology partners to act as a single point of technology
contact. The Company will plan, design, implement and manage
solutions that integrate hardware, software and services to
address a customer's business needs and specific organizational
requirements.
The Company is building a series of wholly owned companies
that will be responsible for the operation and expansion of the
network in a particular region of the world including all
marketing and sales decisions for each region or country. Each
Company will begin to link its local consumers together to form a
local area network with access to a national or geographic wide
area network. AGTsports, Inc. then links each of these
organizations together forming the global GPS network. Regional
headquarters will be strategically located throughout the world.
Initially, these companies will be wholly owned by AGTsports,
Inc., except in countries like Japan where the amount of foreign
ownership is restricted. Gradually, ownership will change over
to the local companies and AGTsports, Inc. will retain a revenue,
rather than an ownership, position within each subsidiary.
AGTsports, Inc. has taken a unique approach to providing
business solutions for recreation markets. The Company has
developed numerous Microsoft Windows driven software products
that manage networked applications. This allows AGTsports to
introduce recreational participants, organizations and businesses
to many different software applications that are easy to use.
Once users become familiar with these unique products and
services, the Company can provide them with other innovative
business or consumer service applications.
Products of AGTsports, Inc
The Golf Players System
The Company has developed an integrated software package for
the golf industry. The Golf Players System (GPS) is a complete
tournament management and statistical analysis system that is the
front end for the network being built by the Company. The GPS
has the ability to set up, handicap and score tournaments using
the standard handicaps sanctioned by national and international
golf associations (U.S.G.A., Royal & Ancient, etc.).
Additionally, the Company has formulated a proprietary handicap
(Players Merit) and course rating (Course Merit) method based
on real data rather than subjective evaluation. This tournament
scoring method lets the Company manage competitions played
simultaneously on multiple courses. By networking golf courses,
associations, corporations and individual golfers, the Company
can also provide a variety of products and services to all facets
of the golf industry.
The GPS system uses a specially designed, copyrighted
scorecard that is optically scanned. Each mark on the card can
generate over 1,100 different statistics on golfer ability and
course difficulty. The golf course can be rated after 50 rounds
of golf are played by golfers representing different skill
levels. However, the more data on a golf course, the more
accurate the course rating. At 500 rounds, the course will hit
its statistical tolerance (meaning it will not move very much).
The course is constantly being re-rated as it weighs the most
recent 50 rounds after it hits statistical tolerance on any given
golf course. This will help golfers when they must play in bad
weather or in seasons when golf courses can play much
differently. This concept is very similar to the "Standard
Scratch" theory used by the R & A, Union of Ireland and
Australia. In essence, they change what we would call par in the
United States to reflect the current conditions. The difference
being, the GPS uses hard data and these other systems use a
subjective judgment. Using this technology, the average U.S.
course can be rated in less than a week.
The Players Merit and the Course Merit are the factors
comprising the Company's proprietary handicapping method. The
Players Merit is the equitable computation of a golfer's ability
level derived from the proper input of real data by the player or
system administrator. Course information (i.e. bunkers, penalty
shots and excessive putts) is figured into the Course Merit
whereas the physical strokes, tee to green, are part of the
Players Merit with an adjustment for course distance.
Additionally, all accumulated course information generates a
course difficulty rating for each tee box and every level of
ability. These Course Merits are 'real time' and based on real
data. The GPS Course Merits are derived from how each level of
ability plays the course. The USGA's slope rating is the same
for all skill levels.
The GPS and on-line network are written for the Microsoft NT
and Windows environment, making the system very user friendly.
The GPS gathers data using optical scanning, touch screen and
standard input devices. These combined technologies enable the
system to compute statistical analysis, time-efficient tournament
scoring and the Company's proprietary handicap method. The basic
GPS contains 24 separate modules which are currently in various
stages of development. The GPS begins with a core statistical
software program that administers player and course information
and lets the user access additional applications and service
modules. One of these modules, International Handicapping,
calculates the handicap formulas used by golf associations
throughout the world. This International Handicapping module is
an integral part of tournament management. An individual league,
corporation, golf course or local organization can use any one of
the different mathematical equations to score their competitions
as they wish. It is not the Company's intent to sanction
handicaps used by the various other golf associations with the
exception of the Players Merit.
A Tournament Statistical Program was developed for use by
the PGA European Tour. This program is a Windows based
application. The program provides the PGA European Tour members
with over 1100 different statistics about their games. As part
of our 1994 Tour Agreement, AGTsports provided information for
all of the tournament events held in Europe from February 22
through the end of the season. The Company will be making some
modifications to the current program to supply additional
information to the players.
AGTsports saw a need in the market place for a consumer golf
show. In April of 1994, the Company started its first golf show
and exhibition. The show was a success and the Company has
decided to make the consumer golf show an annual event in Denver.
Markets of AGTsports, Inc.
The Company's initial marketing plan was focused completely
within the United States but now has expanded to include Europe
and Asia. Under the original plan, the United States was to
regionalized and then territorialized. Two regions were sold
under this plan and the Company is negotiating to regain
marketing control in those two regions. The market conditions
have changed since this plan was implemented. The Company will
market its products and services through electronic and print
media in the United States, through the PGA European Tour
throughout Europe and through the PGA Tour of Australasia in the
Asian market.
Customers and Competition of AGTsports, Inc.
The principal customers of AGTsports are golf courses,
associations, golf leagues, corporations and individual golfers
throughout the United States and Europe. There are no companies
which sell competing software utilizing the proprietary scoring
method developed by AGTsports, Inc.
The United States Golf Association was formed to enforce the
rules and regulations of the game established by the Royal &
Ancient Golf Society of Scotland. Within each country, the R & A
has established a similar governing body. The USGA is the only
one of the other 43 associations that attempts to collect fees
for handicapping. Currently, there are 1,700,000 USGA members of
the 3,800,000 handicapped golfers in the U.S., declining from
5,300,000 members only ten years ago. The Association has lost
members since it changed from the R & A handicapping method in
1970 to what it believes is a more equitable rating system.
AGTsports became involved in handicapping because of the American
golfer's continuing dissatisfaction with the USGA rating system.
AGTsports' method is close to the current R & A system practiced
in all other countries because it rates golfers on a hole-by-hole
basis, rather than by their total score.
AGTsports and the PGA European Tour have established an
agreement and have begun to work on other projects in late 1994.
AGTsports has also organized a staff of PGA professionals to
serve in an advisory capacity and assist with product promotion.
As of September 30, 1994, there were eight members on this staff,
and management plans to extend the size of this advisory staff in
the near future.
AGTsports offers calculations for 43 different types of
handicaps which includes the original method developed in 1692 by
the Royal & Ancient. With the Company's software, an individual
league, corporation, golf course or local organization can use
any one of the different mathematical equations to score their
competitions as they wish. The Company is not aware of other
systems that facilitate multiple scoring methods.
It is not the Company's intent to sanction the various
handicaps used by the various other golf associations. The
Players Merit and Course Merit are not considered handicaps but
rather, true measurements of a players ability and the course
difficulty.
There are several unique product attributes that will be
difficult for competitors to replicate or imitate. AGTsports
scorecard is patented and copyrighted. The type of paper, ink
and process has been patented while the card design was
copyrighted.
Competition in this area is expected to be intense.
Further, the market is still relatively new and probably has
limited barriers to entry for other competing scoring systems.
Consequently, AGTsports cannot predict the size of the market.
The number of competitors may increase although AGTsports is
aware of none at the present time.
AGTsports and the PGA Tour of Austrlasia establised a twenty
year partnership for the development of golf throughout Asia.
The first of the partnership agreements was to supply the
statistical information for the Tour. This will begin in October
of 1994.
Operations During Fiscal Year
During the fiscal year ended September 30, 1994, the Company
was engaged in additional financing and refinement of its
marketing strategies and products. The Company was active at
numerous professional and amateur events of golf events during
the year. However, the Company had inadequate liquidity during
this period and was unable to fully pursue its business
objectives. Marketing has been accomplished primarily through
newspapers, magazines and visits to golf facilities.
Commissioned sales representatives perform the direct marketing
in each of the sales territories.
The Company began golf operations in May, 1991. The Company
has done and currently has projects with a number of
organizations. The first operational project of the System was
the 1991 MCI Heritage Classic. The first sale took place in
July, 1991. The Company has beta tested its Systems at over
sixty golf clubs in California, Colorado, New Mexico, South
Carolina and Florida. As of October 21, 1993, all 62 field
systems were returned to the Company's headquarters. The field
systems were recovered for retrofitting and will be reinstalled
sometime in fiscal 1996. The focus of company resources in
fiscal year 1995 in Australia for the full implementation of its
marketing subsidiary has caused a delay in the reinstallation of
systems in U.S. golf clubs. The reinstallation of these systems
will help generate cash flows to cover a portion of the company
fixed monthly expenses. During the 1994-1995 fiscal year, the
Company plans on installing up to 320 systems world wide. The
Company's revenues to date have been from the sale of territorial
rights, golf lessons, the Individual Golf Players System, Players
Goff House memberships, tournament management and merchandise.
AGTsports has not yet attempted to market its systems due to the
lack of the necessary capital to fully support golf course
systems and the continued development and beta testing by its
affiliate particularly on the communications software. Because
the GPS transmits graphics, having fully operational graphics
communications software is very important. AGTsports is using
the five Colorado facilities to test the system and will
distribute the remaining systems when this test is completed with
satisfactory results. However, the total fiscal impact, if any,
cannot be determined at this time. The Company believes the
release and installation of "Individual Golf Players System,"
"Goff House" and Multiple User Version of the "Golf Players
System" in the Company's second, third and fourth quarters of
1994 should result in its first profitable year.
AGTsports was directly involved with twenty-nine events for
the PGA European Tour through September 30, 1994. At these
events, certain statistical information was collected, processed
and dissiminated to the media and to the PGA European Tour
members. We also supply statistical information to television at
selected events. We have established a working office in Dublin,
Ireland and an operational office in PGA European Tour
Headquarters in England. The Company is confining its non-tour
business such as tournament management to Ireland and England.
It has also developed the contacts to establish a UK and Ireland
Tee Time Reservation System for delivery in 1995.
Segment Reporting
Information with respect to revenues, operating profit or
loss and identifiable assets of this segment for the fiscal year
ended September 30, 1994 is set forth in financial statements
annexed hereto. Such information is incorporated herein by
reference and made a part hereof.
Trademarks and Trade Names
The following are the trademarks of the Company. The Company
also holds a number of copyrights and licenses covering different
versions and modules of "The Golf Players System" software
packages and products.
The Golf Players System
Denver Public Golf Expo
Players Merit
Course Merit
Company Logos
Compliance with Environmental Laws and Regulations
The Company does not believe that it is subject to any
local, state and federal statutory and regulatory requirements
with respect to environmental safety.
Employees
The Company has fourteen full-time and two part-time
employees at present. These employees and are engaged in every
facet of the Company's Business. The Company's employees are not
represented by any union or collective bargaining group and there
is no history of any strikes, slow-downs or other labor disputes.
The Company does not have the human or capital resources to
fulfill its business plan.
Executive Officers of the Company
Information about each individual can be found in Item 10
Directors and Executive Officers of the Registrant, section
Biographical Information. Executive Officers of the Company are
as follows:
Gregory Jablonski, 46, joined the company in January of
1991. Mr. Jablonski currently serves as Chief Executive Officer.
Mr. Jablonski at present runs the operations of the Company with
the assistance of a President (Michael D. Tanner) and a
Secretary/Treasurer (Robert W. Wetzel) and a Board of Directors
of nine individuals.
Michael D. Tanner, 41, serves as President of the Company,
with the assistance of a Vice President, Philbert D. Harvanek and
a Secretary/Treasurer, Robert W. Wetzel.
Philbert D. Harvanek, 45, serves as Vice President of the
Company. Mr. Harvanek is the assistant for the President.
Robert W. Wetzel, 43, serves as Secretary/Treasurer of the
Company. Mr. Wetzel is the assistant for the President and Chief
Executive Officer.
International Operations.
AGTsports, Inc. has established an operational facility in
Dublin, Ireland called AGTsports (Europe) Ltd. to serve as a
gateway to the Company's European market. AGTsports (Europe)
Ltd. will provide the sales, service, programming and
communication link between the United States and the European
recreational markets.
This European headquarters in Dublin will become an integral
part of AGTsports' expansion plans. This facility will become a
major communications and software development center for the rest
of Europe.
Each of the European objectives will be accomplished through
a series of acquisitions and/or licensing agreements with the
Ireland based center (AGTsports (Europe) Ltd.) or directly with
the Company. The Company will provide products and services for
these European markets.
The construction of the network and market penetration will
be successfully achieved due to the finalization of contracts
with the PGA European Tour. Additional contracts are expected to
be signed with the Senior PGA European Tour, LPGA European Tour,
Golf Federation Handicaps and various tourist boards such as Bord
Failte.
The Company has established relationships in Australia and
by October of 1994, will establish an office in Hornby,
Australia.
Further information is hereby referenced in the Financial
Section; hereby incorporated by reference and attached.
Item 2. Description of Property
On July 31, 1994, the Company expanded its space at 6890 So.
Tucson Way, Suite 202, Englewood, CO 80112 for a term expiring on
July 31, 1996. The minimum monthly rental payments required
under the operating lease as of September 30, 1994 are $5,923
which is slightly more than last year due to the accumulation of
additional office space.
The following is a schedule of future minimum rental
payments required under the above operating leases as of
September 30, 1994 until January 31, 1996:
Year Ending September 30, Amount
1995 $ 71,073
1996 $ 53,305
1997 -0-
1998 -0-
1999 $ -0-
Total $ 124,378
Rental Expense amounted to $72,878, and $45,597 for the years
ended September 30, 1994 and 1993, respectively.
The Company will periodically rent equipment on short-term
operating leases. The Company does own computer equipment and
office furniture. Otherwise, the Company owns no material
equipment.
Item 3. Legal Proceedings
As of September 30, 1994, a disputed claim of $21,556.65 has
been filed against AGTsports, Inc. in the State of Colorado
District Court, City and County of Denver, by Desktop Concepts,
Inc. on an open account. The dispute involves certain contracted
desktop publishing and graphic design supplied to AGTsports, Inc.
The matter is set for trial on February 6, 1995.
Item 4. Submission of Matters to a Vote of Security Holders
At September 30, 1994, there were no matters to be put to a
vote of the Security Holders.
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Market Information
The Company's common stock has been listed on the over-the-
counter market since 1986. Market makers and other dealers
provide bid and ask quotations for the Company's common stock.
The common shares of the Company are currently traded Over The
Counter on the National Association of Securities Dealers'
Bulletin Board. The Bulletin Board symbol is AGTP.
The table below illustrates the range of high and low bid
quotations for the Company's common shares as tracked by NASDAQ
or Corporate Stock Transfer agency during each reporting period.
These bid price market quotations represent prices between
dealers and do not include retail mark-up, markdown or
commissions. Therefore, they may not represent actual
transactions.
For comparison purposes, all periods reflect the 10 for 1 reverse
stock split which occurred May 5, 1993.
HIGH LOW
Fiscal Year 1994
First Quarter
Common Shares $ 2.62 $ 2.25
Second Quarter
Common Shares $ 3.75 $ 3.00
Third Quarter
Common Shares $ 4.25 $ 3.75
Fourth Quarter
Common Shares $ 4.75 $ 4.25
Fiscal Year 1993
First Quarter
Common Shares $ 3.75 $ 1.20
Second Quarter
Common Shares $ 3.75 $ 1.20
Third Quarter
Common Shares $ 3.00 $ 2.00
Fourth Quarter
Common Shares $ 3.00 $ 2.00
Fiscal Year 1992
First Quarter
Common Shares $ 4.10 $ 2.20
Second Quarter
Common Shares $ 2.70 $ 1.50
Third Quarter
Common Shares $ 4.00 $ 2.20
Fourth Quarter
Common Shares $ 6.00 $ 2.50
Approximate Number of Holders of Common Stock
As of September 30, 1994, the Company had a total of
4,444,624 outstanding shares of common stock and approximately
967 holders of common stock on record. However, the Company has
a greater number of shareholders because a number of the
Company's shares are held in nominee names by the Company's
market makers.
Dividends
The Company does not intend to pay dividends in the
foreseeable future. The Company's anticipated capital
requirements are such that it intends to follow a policy of
retaining earnings to finance the development of its business.
Item 6. Management's Discussion and Analysis or Plan of
Operation
In the opinion of Management, the Company has progressed
significantly in the year ending September 30, 1994, as compared
to the year ending September 30, 1993 as the Company had
increased sales and made significant progress in improving its
products and market position. Management does not believe the
losses which are more fully described below are necessarily
indicative of results for past or future years and should be
viewed with the factors that the Company changed the primary
business focus in May of 1991 and it has been engaged primarily
in reorganization and the gradual evolution from R and D to
operating company. Therefore, the Company has had limited net
operating revenues for the year ended September 30, 1994, and is,
for all intents and purposes, a startup Company. In May of 1991,
the Company acquired the division known as "Advance Golf
Technologies" from American Consolidated Growth Corporation and
changed its primary business focus. With the said acquisition,
the Company has been able to begin to generate operating
revenues.
The Company's activities since May of 1991 have been
primarily the financing and organization of its business. The
increase in expenses to $4,547,136 for the period ending
September 30, 1994, as compared with $2,453,437 for the period
ended September 30, 1993, is primarily due to the accumulation of
Salaries and Wages of $672,253 in this current year end as
compared to $601,390 in the year ending September 30, 1993, and
General and Administrative of $562,291 in the fiscal year ended
September 30, 1994, as compared to $295,409 in the year ending
September 30, 1993, and also due to the significant change of
Contract Services from expenses in fiscal 1993 of $169,392 to
$2,782,441 in the fiscal year ending September 30, 1994, the
majority of this increase came from the payment of services
rendered to the Company through equity stock. These expenses
range from promotion of the Company's PGA tour business to
marketing the Company's ancillary products and incentives to its
employees. The Company also had significant expenses in
professional services due to accelerated activity in accounting
and legal requirements of the Company. Depreciation and
Amortization expense decreased to $259,900 during the fiscal year
ended September 30, 1994 as compared to $684,512 expensed for the
year ended September 30, 1993, due to a transfer of assets to
AGTsports Limited Partnership I during the current fiscal year.
Travel and Entertainment expenses decreased in this current year
by 12% due to the declining demand for travel and related
expenses.
The Company anticipates it will sustain more losses through
the first quarter of fiscal 1995, but will obtain substantial
income with the installation of systems into golf clubs in
Australia. The installation of these systems has been delayed
due to the addition of a new Board member on the Austalian
subsidiary. The time needed to bring all Board members of the
Australian subsidiary up to date with information about the
Company and its operations further caused delay of implemented
operations in Australia. This is based on information available
at the date of this amendment to the Form 10-KSB in December
1995.
The agreement with the PGA Tour of Australasia has allowed
the Company to position itself as a technology leader in the
field of Golf in Australia. This agreement is having a major
impact on the Company and its operations. The Company has been
able to bring an influencial and respected group of individuals
onto the the Board of Directors of its marketing subsidiary in
Australia as well as strengthen its relationships with the
Australian State Golf Associations. It is the hope of management
that these relationships will assist the Company in marketing its
products to the golf clubs and to the individual golfer as the
agreements position the company as a market leader.
The Company has been successful in beginning to generate
revenues starting in September of 1991, and continuing through
1994 including the period just ended. Operating Revenues are
$1,208,456 in this year end as compared to $26,946 in the fiscal
year end September 30, 1993. The increase in revenues from fiscal
year ending September 30, 1994 over 1993 is due to the Company
completion of its contract with the European PGA Tour. AGTsports
was directly involved with twenty-nine events for the PGA
European Tour through September 30, 1994. It should be noted
that 100% of the revenues in September of 1992 were non recurring
and are from the sole sale of territorial rights by the Company.
Operating Revenues for 1993 and 1994 were derived solely from the
sale of products and services. The reduction on Equity Services
for the fiscal year end September 30, 1993 is due to an advance
of $784,012 to AGTsports, Inc. from ACGC for the use in its
operations. All other expense remained fairly constant when
comparing actual operating months for the two years ended in
September 30, 1993 and 1994. The Company sustained losses for
the year ended September 30, 1993, of $7,620,061 and for the year
ended September 30, 1994 of $3,783,365. A substantial portion of
the loss sustained by the company was due to non-cash
expenditures. Obligations of the company were satisfied through
the issuance of common stock and the transactions were valued at
the estimated fair market value of the stock issued. The Company
does not expect any substantial recurring revenues until the
second quarter of fiscal 1995. The Company anticipates it will
sustain more losses through the first quarter of fiscal 1995.
Management of the Company plans continued pursuit of its existing
operations and strategic alliances. In addition, management will
seek to restructure the staffing of the company to better reflect
the immediate needs of the Company. Management of the Company
will satisfy the cash needs of the Company through equity
investors, shareholder loans and cash generated from operations,
including Golf Expo, providing statistical information to
individuals and limited sales of individual players system
software. It is the intent of management to continue its plans
to establish marketing subsidiaries in Australia, Europe and the
United States. It is the intent of managment that these
marketing subsidiaries each are to be structured with influencial
Board members and obtain sufficient funding to service operations
in those geographic areas. These marketing subsidiaries are to
maximize the relationships the Company has established with
various PGA Tour groups and State Associations.
The Company obtained liquidity during the year ended September
30, 1994 from various sources to enable it to sustain operations.
Cash flows form investing activities amounted to a net of
$481,259 primarily from the establishment of a limited
partnership. The company also obtained positive net cash flows
of $125,695 from its financing activities including receipt of
$153,701 from proceeds from issuance of capital stock and
$210,500 from advances on notes payable. The net cash used by
operations was $605,765.
Liquidity and Capital Resources
Cash and cash equivalents balance on September 30, 1994, was
$1,189. There was an insignificant change in working capital
during the year ended September 30, 1993.
The Company, in management's opinion, has inadequate working
capital to pursue the business opportunities that are a part of
its business plan.
Item 7. Financial Statements
The response to this item is submitted as a separate section
of this report (see page F-1).
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
There have been no disagreements with the Company's
independent accountants on accounting and financial disclosure.
Part III
Item 9. Directors and Executive Officers, Promoters and
Control Persons:
Compliance with Section 16(a) of the Exchange Act
The Executive Officers and Directors of the Company, their
ages and present positions held in the Company for the year end
September 30, 1994, were:
NAME AGE POSITION HELD
Gregory F. 46 Chief Executive
Jablonski Officer and Director
Michael D. 41 President and Director
Tanner
Philbert D. 45 Vice
Harvanek President/Director
James H. Watson, 32 Vice President
Jr. Marketing/Sales and
Director
Robert W. Wetzel 43 Secretary/Treasurer
and
Director
Stanley E. Fenn 44 Managing Director
Michael T. 38 Outside Director
Rowlette
Robert B. Lange 69 Outside Director
The Company's Directors serve in such capacity until the
next annual meeting of the Company's shareholders and until their
successors have been elected and qualified. The officers serve
at the discretion of the Company's Directors. There are no
family relationships among the Company's officers and directors
nor are there any arrangements or understandings between any of
the directors or officers of the Company or any other person
pursuant to which any officer or director was or is to be
selected as an officer or director.
Biographical Information
Gregory F. Jablonski Mr. Jablonski has been the Chairman and
Chief Executive Officer of AGTsports since May, 1991. His
background in research and development, sales, marketing and
management has been invaluable to the continuing evolution of the
Company. Prior to joining AGT, he managed two multi-million
dollar organizations, Scandura, Inc. and Hollis & Co. Between
1971 and 1984, Mr. Jablonski used new computer technology to
develop an extensive distribution system to enhance sales. Under
his leadership, Hollis & Co.'s revenues grew from $14 million to
$700 million in just three years. Since 1986, Mr. Jablonski has
been involved in the golf industry in various capacities
including organizing several national amateur golf tournaments.
Since 1988, he has been involved with AGTsports to develop a
market for its software products. Mr. Jablonski earned a B.S.
Degree in Physics, Mathematics and Chemistry from the University
of Wisconsin and has a Master of Science Degree in Chemical
Engineering and Organic Chemistry from the University of Notre
Dame.
Michael D. Tanner Mr. Tanner joined AGTsports, Inc. in 1989 and
was elected President (COO) in June 1993. He currently serves on
the Board of Directors. From 1985 to 1988, Mr. Tanner was an
officer and director of Burning Bush Recreation Corporation, a
Colorado Corporation based in Glenwood Springs. During the same
period, he was also an officer and director of American Financial
Holding Corporation, a Colorado Corporation also located in
Glenwood Springs. From 1979 to 1985, Mr. Tanner coached football
at both the high school and college levels. Mr. Tanner studied
communications while attending the University of Colorado.
Philbert D. Harvanek Mr. Harvanek has been a Vice President of
the Company since January 1993. Prior to that, he was employed
by Bear Creek Golf Club from 1984 until he joined the Company.
He has spent the last nineteen years working as a golf
professional. Out of 22,000 registered PGA Professionals in the
United States, Mr. Harvanek is one (80th) of only 120 Master Golf
Professionals. He has also held a number of positions with the
U.S. Professional Golfer's Association including past President
of the Colorado Section and was a member of the National PGA
Board of Control. In 1990 and 1991, he was named the Colorado
Section PGA Professional of the Year. He is also a member of the
Colorado Golf Hall of Fame Board of Directors. Mr. Harvanek
graduated from Fort Hays State University in 1973 with a Bachelor
of Arts in Speech and Communication.
James H. Watson, Jr. Mr. Watson graduated from the University of
Tennessee at Chattanooga in 1984 with a B.S. in Political
Science/Pre-Law. He was a four-year letterman in football and
captain of their 1984 Championship team. After graduation, he
served as a district liaison to U.S. Congressman Lindsay Thomas.
In 1988, Mr. Watson moved to Denver, Colorado with Wells Fargo's
Cash Services Division. During his four years with Wells Fargo,
he was directly responsible for increasing annual revenues in his
sales organization over 290% with a corresponding 70% increase in
client retention. He left Wells Fargo in 1991 to pursue personal
interests, and formed a private corporation called The Watson
Group, Inc. From 1991-1993, this corporation povided consulting
services to the banking industry and briefly operated a retail
food business. The Watson Group currently distributes
premium/incentive products, primarily in the golf industry and
employs six sales representatives. Mr. Watson joined AGTsports
in March 1993.
Robert W. Wetzel Mr. Wetzel brings 16 years of business
management to AGTsports, Inc. He began his business career with
The Equitable Life Assurance Society of New York. After five
years, he branched out into the securities industry where he
served as Branch Manager and Compliance Officer for Denver-based
brokerage firms. In these capacities, he was responsible for the
planning, promotion, marketing and sales of public offerings to
institutional and individual investors. Mr. Wetzel graduated
from San Diego State University with a degree in Business
Administration.
Stanley E. Fenn Mr. Fenn has been a Managing Director of the
Company since January 1992. Prior to that, he was a Golf
Professional at Plum Creek Golf & Country Club in Castle Rock,
Colorado. He has been a PGA Member since 1978. Mr. Fenn
graduated in 1973 with a Bachelor of Science Degree from Colorado
State University.
Michael T. Rowlette Dr. Rowlette has been a Director of the
Company since June 1992. He has operated his own dental practice
for nearly ten years. He has been active in the golf community
for the past fifteen years. Dr. Rowlette has served and held
positions in men's organizations at various golf facilities.
Additionally, he has done volunteer work for the Minnesota and
Colorado Golf Associations, and has participated in as many as
thirty-five amateur and professional golf tournaments annually.
Robert B. Lange Mr. Lange attended Harvard University where he
majored in economics. In 1955, he founded the Lange Plastics
Company which he sold five years later. In 1960, he founded
Lange USA, developers of the world's first plastic ski boot and
plastic hockey skate, and served as chairman and CEO of this
company. In 1972, Lange USA was sold to Garcia Sporting Goods
and was later acquired by the Rossingnol Corporation. Mr. Lange
has provided business consulting services to many national and
international corporations including Elite Marketing
International of Geneva, Switzerland, A.M.F., Head Ski
Corporation and Aspen International Properties of Boulder,
Colorado. He also serves on the Board of Directors and Executive
Committee for the Matrix Medical Corporation of Minden, New York
which manufactures and markets orthopedic braces worldwide.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934 (the
"34 Act") requires the Company's officers and directors and
persons owning more than ten percent of the Company's Common
Stock, to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC").
Additionally, Item 405 of Regulation S-B under the 34 Act
requires the Company to identify in its Form 10-KSB and proxy
statement those individuals for whom one of the above referenced
reports was not filed on a timely basis during the most recent
fiscal year or prior fiscal years. Given these requirements, the
Company has the following report to make under this section:
Nothing to report.
Item 10. Executive Compensation
The following table summarizes compensation for the Chief
Executive Officer and President who are the most highly paid
executive officers serving in this capacity at the end of the
last completed fiscal year. No additional compensation was paid
or distributed by the Company to these officers during this time
period. Employee Directors receive no additional compensation
for service on the Board of Directors. Directors who are not
employees receive no compensation with the exception of Michael
T. Rowlette.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
AWARDS
NAME AND YEA DECLARE PAID ACCRUED STOCK
PRINCIPAL R D AWARD(S) IN
POSITION SALARY LIEU OF
($) ACCRUED
SALARY
Gregory F. 199 $72,000 $0 $72,000 101,500
Jablonski 4 $72,000 $37,00 $35,000 Shares
Chief 199 $60,000 0 $31,000 (3 Year
Executive 3 $29,00 Total)
Officer 199 0
2
Michael D. 199 $60,000 $0 $60,000 7,179 Shares
Tanner 4 $60,000 $55,00 $5,000 (3 Year
President 199 $50,000 0 $11,000 Total)
3 $39,00
199 0
2
The total issued and outstanding shares of stock in the
Company as of September 30, 1994 was 4,641,713 with 50,000,000
which have been authorized.
Item 11. Security Ownership of Certain Beneficial
Owners and Management
Security Ownership of Certain Beneficial Owners and Management
The following sets forth the number of shares of the
Registrant's $.001 par value common stock beneficially owned by;
(i) each person who, as of September 30, 1994, was known by the
Company to own beneficially more than five percent (5%) of its
common stock; (ii) the individual Directors of the Registrant,
and (iii) the Officers and Directors of the Registrant as a
group.
The outstanding shares as of September 30, 1994 are
4,641,713.
Name and Address of Amount and Nature
Beneficial Owner of Percent of Class
Beneficial
Ownership(1)(2)
American Consolidated
Growth Corporation 405,937 9.1%
6890 S. Tucson Way, Suite
106
Englewood, Colorado 80112
Renaissance Knowledge
Systems, Inc. 192,500 3.0%
6890 South Tucson Way,
Suite 105
Englewood, Colorado 80112
Taylor Land Company, Ltd.
7340 Windwood Circle 300,000 5.0%
Parker, Colorado 80134
JCJ & Associates, Inc. (3)
1935 Tee Lane 101,500 1.0%
Castle Rock, Colorado
80104
Gregory F. Jablonski (3)
1935 Tee Lane 121,683 2.0%
Castle Rock, Colorado
80104
Michael D. Tanner
7815 East Kettle Avenue 7,179 .1%
Englewood, Colorado 80112
Robert W. Wetzel
4760 S. Wadsworth Street 39,424 .7%
Littleton, Colorado 80123
Michael T. Rowlette
1001 S. Briscoe Street 13,975 .3%
Castle Rock, Colorado
80104
Philbert D. Harvanek
10840 Park Range Road 47,167 .9%
Littleton, Colorado 80127
All Officers & Directors as 229,428 0.04
a Group
(1) All ownership is beneficial and on record, unless
indicated otherwise.
(2) Beneficial owners listed above have sole voting and
investment power
with respect to the shares shown, unless otherwise
indicated.
(3) Includes the common shares owned of record by JCJ
& Associates Inc.,
of which Mr. Jablonski is a beneficial owner.
Item 12. Certain Relationships and Related Transactions
Michael D. Writer, Chairman of the Board of American
Consolidated Growth Corporation, a major shareholder of the
Company, is the founder and beneficial owner of Renaissance
Knowledge Systems, Inc. (RKS). RKS is the current developer of
The Golf Players System for the Company and will be involved in
the System's future development. As a result, RKS has direct
cash flow interests in the products of the Company, as well as
certain ownership interests to territorial rights for the
Company's "Western Region."
The Company plans to assign the maintenance and support of
The Golf Players System to other developers, thereby reducing
the Company's dependence on Mr. Writer and RKS. Nevertheless,
the Company believes that the loss of Mr. Writer could have a
serious impact on the future development and enhancements of its
products.
Item 13. Exhibits and Reports on Form 8-K
(a)(1) and (a)(2) List of Financial Statements and Schedules
(a)(3) List of Exhibits ( in accordance with Item 601 of
Regulation S-B.)
Exhibit Number Description of Exhibit
3A Articles and Bylaws *
3B Articles of Amendment +
PGA European Tour Contract #
* Cross Reference is made to the Form S-18 Registration Statement
of American Merger Control, Inc. filed with the Commission in
1986 and to the Form 10K for the fiscal year ended September 30,
1992, filed with the Commission filed on or about March 10, 1993.
The relevant documents are hereby incorporated by reference.
+ Previously filed under cover of Form 10-SB, filed June 15,
1993, SEC File No. 0-21914.
# Previously filed under cover of Form 8-K, filed January 14,
1994, SEC File No. 0-21914.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 13th of January 1995.
AGTsports, Inc.
By: /S/ Gregory F. Jablonski
Gregory F. Jablonski
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the date
indicated.
Signature Title Date
By: /S/ Michael D. Tanner President January
13, 1995
for Secretary
Signature
By: /S/ Michael D. Tanner President January
13, 1995
for Treasurer
Michael D. Tanner
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 18th of December, 1996.
AGTsports, Inc.
By:__________________________________
Gregory F. Jablonski
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the
date indicated.
Signature Title Date
Secretary December
18, 1995
Robert W. Wetzel
Treasurer
December 18, 1995
Robert W. Wetzel
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
SEPTEMBER 30, 1994
AGTsports, INC.
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditor's Report ......................... F-1 - F-2
Consolidated Balance Sheet:
September 30, 1994 ................................. F-3
Consolidated Statements of Operations:
Years Ended September 30, 1994 and 1993 ............ F-4
Consolidated Statements of Changes in Shareholders'
Equity: Years Ended September 30, 1994 and 1993 ... F-5 - F-8
Consolidated Statements of Cash Flows:
Years Ended September 30, 1994 and 1993 ............ F-9 - F-10
Notes to the Consolidated Financial Statements:
Years Ended September 30, 1994 and 1993 ............ F-11- F-24
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
AGTsports, Inc.
Englewood, Colorado
We have audited the accompanying consolidated balance sheet of
AGTsports, Inc. (a Development Stage Company) as of September 30,
1994 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the years September 30,
1994 and 1993 amounts included in the cumulative amounts from
inception (January 6, 1986) to September 30, 1994. 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. The consolidated
financial statements of AGTsports, Inc. (a Development Stage
Company) for the period from January 6, 1986 (date of inception)
to September 30, 1989 were examined by other auditors whose
opinion, dated January 26, 1990, on those statements was
unqualified.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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.
Effective September 30, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The
Company's investments in marketable equity securities are held
for an indefinite period and have been historically reported at
the lower of cost or market. The aggregate fair value of the
Company's marketable equity securities at September 30, 1994
totaled $2,530,676. As a result of the application of SFAS No.
115, the unrealized holding gains added $1,660,517 to
Shareholder's equity at September 30, 1994.
In our opinion, the consolidated financial statements referred to
in the first paragraph present fairly, in all material respects,
the financial position of AGTsports, Inc. (a Development Stage
Company) as of September 30, 1994, and the results of its
operations and its cash flows for the years ended September 30,
1994 and 1993 amounts included in the cumulative amounts from
inception (January 6, 1986) to September 30, 1994. in conformity
with generally accepted accounting principles.
As discussed in Note 8, the Company does not, as yet, have
significant revenues from the sale of its product. As shown in
the financial statements, the Company incurred a net loss of
$(3,783,365) during the year ended September 30, 1994 and, as of
that date, the Company had an accumulated deficit of $14,067,673.
In addition, the Company has a net deficiency in working capital
of $2,446,914.
The Company is seeking additional sources of capital, including
equity capital. There can be no assurance that the Company will
be successful in accomplishing its objectives. Because of the
uncertainties surrounding the ability of the Company to continue
its operations and to satisfy its creditors on a timely basis,
there is substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial
statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
T. Alan Walls, CPA, P.C.
Johnson City, Tennessee
December 7, 1994, except as to
Note 19 which is January 16, 1995
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 1994
ASSETS
Current:
Cash and cash equivalents
Inventory
Total Current Assets
Fixed Assets:
Property, Plant and Equipment (Note 5)
Less: Accumulated Depreciation
Total Fixed Assets
Other Assets:
Other Receivables (Note 13)
Deposits
Securities Available for Sale (Note 14)
Investment in AGTsports Limited Partnership (Note 4)
Due from Affiliates
Due from Related Party (Note 2)
Allowance for Loan Loss (Note 2)
Total Other Assets
Total Assets
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts Payable - Trade
Accounts Payable - Other
Due to Affiliates
Long Term Debt - Current Portion (Note 6)
Accrued Expenses (Note 10)
Total Current Liabilities
Long Term Debt - Less Current Portion (Note 6)
Shareholders' Equity:
Preferred stock, $4.00 par value; 50,000,000
shares authorized; 1,000,000 shares issued
and outstanding as of September 30, 1994
Common Stock, $.001 par value; 50,000,000
shares authorized; 5,196,124 shares issued
and 4,444,624 shares outstanding as of
September 30, 1994
Treasury Stock
Additional Paid-In Capital
Unrealized Holding Gain
Cumulative Translation Adjustment (Note 15)
Deficit Accumulated During the Development Stage
Total Shareholder's Equity
Total Liabilities and Shareholders' Equity
1994
$ 1,189
40,812
42,001
643,471
( 262,603)
380,868
335,000
6,652
2,530,676
1,111,036
599,054
305,780
( 305,780)
4,582,418
$ 5,005,287
$ 476,172
325,744
1,141,493
192,426
353,080
2,488,915
-0-
4,000,000
5,196
( 4,006,860)
14,934,085
1,660,517
( 8,893)
( 14,067,673)
2,516,372
$ 5,005,287
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended September 30,
Jan. 6, 1986
Inception
through
Revenue
Territory Sales
Revenue
Purchases
Gross Profit
Expenses
Salaries and Wages
Professional Services
General and Administrative
Depreciation and Amortization
Advertising
Contract Services
Travel and Entertainment
Total Expenses
Operating Income (Loss)
Other Income (Expenses)
Interest Income
Rent Income
Interest Expense
Loss on Equity Securities
Gain (Loss) on Disposal of Assets
Provision for Loan Loss
Other Income
Total Other Income (Expense)
Net Income (Loss) before Extraordinary Items and Provision for
Income Taxes
Provision for Income Taxes
Net Income (Loss) before
Extraordinary Items
Extraordinary Items:
Income Tax Benefit Realized
Debt Forgiveness
Net Income (Loss)
Net Income (Loss) per Common
Share before Extraordinary Items
Extraordinary Items per Common Share
Net Income (Loss) per Common Share
Weighted Average Shares
of Common Stock Outstanding
1994
$ --
1,222,932
( 14,476)
1,208,456
672,253
133,159
562,291
259,900
--
2,782,441
137,092
4,547,136
( 3,338,680)
7
--
( 212,922)
--
--
( 305,780)
47,264
( 471,431)
( 3,810,111)
--
( 3,810,111)
--
26,746
$( 3,783,365)
$( .82)
.01
$( .81)
4,641,713
1993
$ --
49,032
( 22,086)
26,946
601,390
484,195
295,409
684,512
63,374
169,392
155,165
2,453,437
( 2,426,491)
38
8,846
( 10,881)
( 5,216,480)
--
--
24,907
( 5,193,570)
( 7,620,061)
--
( 7,620,061)
--
--
$( 7,620,061)
$( 2.16)
--
$ 2.16)
3,524,748
Sept 30, 1994
$ 1,612,009
1,542,607
( 161,706)
2,992,910
1,502,943
1,607,683
1,674,608
1,811,987
242,290
3,609,892
574,166
11,023,569
( 8,030,659)
326
14,009
( 342,435)
( 8,896,078)
3,283,818
( 305,780)
72,171
( 6,173,969)
( 14,204,628)
( 1,793,033)
( 15,997,661)
1,793,033
136,955
$( 14,067,673)
$( 10.38)
1.25
$( 9.13)
1,540,671
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Balance: January 6, 1986
Balance: January 21, 1986
Issued Common Stock
Offering Costs
Net Loss
Balance: September 30, 1986
Net Loss
Balance: September 30, 1987
Net Loss
Balance: September 30, 1988
Stock Split: 3 to 1
Issued Common Stock to Acquire
Subsidiaries
Shares Purchased by Subsidiary
Balance: September 30, 1989
Reverse Stock Split: 15 to 1
Issued Common Stock for
Services
Issued Common Stock pursuant
to Debenture Agreement
Issued Common Stock for
Investment in Joint Venture
Issued Common Stock for
Professional Services
Issued Common Stock to Settle
Litigation
Treasury Stock Activity
Stock Split: 3 to 1
Net Loss
Balance: September 30, 1990
Preferred Stock
Number of
Shares Amount
-- $ --
-- --
-- --
-- --
-- --
-- $ --
-- --
-- $ --
-- --
-- $ --
-- --
-- --
-- --
-- $ --
-- --
-- --
-- --
-- --
-- --
-- --
-- --
-- --
-- --
-- $ --
Common Stock
Number of
Shares Amount
-- $ --
30,000 30
90,000 90
-- --
-- --
120,000 $ 120
-- --
120,000 $ 120
-- --
120,000 $ 120
-- --
99,943 100
-- --
219,943 $ 220
-- --
14,801 15
60,000 60
34,500 35
60,000 60
4,055 3
-- --
-- --
-- --
393,299 $ 393
Additional
Paid-In Treasury
Capital Stock
$ -- $ --
5,970 --
149,910 --
( 7,257) --
-- --
$ 148,623 $ --
-- --
$ 148,623 $ --
-- --
$ 148,623 $ --
-- --
5,534,840 --
-- ( 25,112)
$ 5,683,463 $ ( 25,112)
-- --
167,231 --
649,940 --
381,815 --
649,940 --
44,735 --
-- 25,112
-- --
-- --
$ 7,577,124 $ --
Memorandum
Total
Accumulated Shareholders'
(Deficit) Equity
$ -- $ --
-- 6,000
-- 150,000
-- ( 7,257)
( 5,247) ( 5,247)
$( 5,247) $ 143,496
( 44,583) ( 44,583)
$( 49,830) $ 98,913
( 98,913) ( 98,913)
$( 148,743) $ --
-- --
( 8,824) 5,526,116
-- ( 25,112)
$( 157,567) $ 5,501,004
-- --
-- 167,246
-- 650,000
-- 381,850
-- 650,000
-- 44,738
-- 25,112
-- --
( 5,783,853) ( 5,783,853)
$( 5,941,420) $ 1,636,097
Reference P. F-8
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Balance: September 30, 1990
Issued Common Stock to Settle
Litigation
Issued Common Stock to
acquire Intangible Assets
Distribution declared pursuant
to January 28, 1991 contract
Net Income
Balance: September 30, 1991
Issued Common Stock
Issued Common Stock for
Services
Issued Common Stock to
acquire Intangible Assets
Issued Common Stock through
Private Placement
Net Loss
Balance: September 30, 1992
Issued Common Stock
Issued Common Stock for
Services
Issued Common Stock to
Settle Debt
Reverse Stock Split: 10 to 1
Issued Common Stock to former
BBRC Shareholders
Issued Common Stock to
acquire Assets
Issued Preferred Stock to
Treasury
Cancellation of Distribution
Declared
Net Loss
Balance: September 30, 1993
Preferred Stock
Number of
Shares Amount
-- $ --
-- --
-- --
-- --
-- --
-- $ --
-- --
-- --
-- --
-- --
-- --
-- $ --
-- --
-- --
-- --
-- --
-- --
-- --
1,000,000 4,000,000
-- --
-- --
1,000,000 $4,000,000
Common Stock
Number of
Shares Amount
393,299 $ 393
3,000 3
1,585,194 1,585
-- --
-- --
1,981,493 $ 1,981
200,000 200
447,250 447
330,000 330
42,750 43
-- --
3,001,493 $ 3,001
263,000 263
166,916 167
76,379 77
-- --
161,401 161
200,000 200
-- --
-- --
-- --
3,869,189 $ 3,869
Additional
Paid-In Treasury
Capital Stock
$ 7,577,124 $ --
39,147 --
2,376,206 --
(6,142,907) --
-- --
$ 3,849,570 $ --
199,800 --
590,303 --
329,670 --
85,457 --
-- --
$ 5,054,800 $ --
516,737 --
277,097 --
106,836 --
-- --
( 161) --
199,800 --
-- (4,000,000)
6,142,907 --
-- --
$12,298,016 $(4,000,000)
Memorandum
Total
Accumulated Shareholders'
(Deficit) Equity
$( 5,941,420) $ 1,636,097
-- 39,150
-- 2,377,791
-- ( 6,142,907)
4,545,160 4,545,160
$( 1,396,260) $ 2,455,291
-- 200,000
-- 590,750
-- 330,000
-- 85,500
( 1,267,987) ( 1,267,987)
$( 2,664,247) $ 2,393,554
-- 517,000
-- 277,264
-- 106,913
-- --
-- --
-- 200,000
-- --
-- 6,142,907
( 7,620,061) ( 7,620,061)
$( 10,284,308) $ 2,017,577
Reference p. F-8
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Balance: September 30, 1993
Issued Common Stock
Issued Common Stock for
Services
Issued Common Stock to
Settle Obligations
Issued Common Stock to
acquire Software
Treasury Stock Activity
Preferred Stock Split 10 to 1
Net Loss
Balance: September 30, 1994
Preferred Stock
Number of
Shares Amount
1,000,000 $4,000,000
-- --
-- --
-- --
-- --
-- --
-- --
-- --
1,000,000 $4,000,000
Common Stock
Number of
Shares Amount
3,869,189 $ 3,869
80,871 81
907,237 907
305,827 306
33,000 33
-- --
-- --
-- --
5,196,124 $ 5,196
Additional
Paid-In Treasury
Capital Stock
$12,298,016 $(4,000,000)
153,620 --
1,901,355 --
522,139 --
58,955 --
-- ( 6,860)
-- --
-- --
$14,934,085 $(4,006,860)
Memorandum
Total
Accumulated Shareholders'
(Deficit) Equity
$( 10,284,308) $ 2,017,577
-- 153,701
-- 1,902,262
-- 522,445
-- 58,988
-- ( 6,860)
-- --
( 3,783,365) ( 3,783,365)
$( 14,067,673) $ 864,748
Reference p. F-8
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Balance: January 6, 1986
Balance: September 30, 1986
Balance: September 30, 1987
Balance: September 30, 1988
Balance: September 30, 1989
Balance: September 30, 1990
Balance: September 30, 1991
Balance: September 30, 1992
Balance: September 30, 1993
Memorandum Total Share-
holders' Equity
Unrealized Holding Gain
Unrealized Loss - Foreign
Currency Translation
Balance: September 30, 1994
Memorandum
Total
Shareholders'
Equity
$ --
$ 143,496
$ 98,913
$ --
$ 5,501,004
$ 1,636,097
$ 2,455,291
$ 2,393,554
$ 2,017,577
864,748
--
--
$ 864,748
Unrealized
Holding
Gain
$ --
--
--
--
--
--
--
--
--
--
1,660,517
--
$ 1,660,517
Cumulative
Translation
Adjustment
$ --
--
--
--
--
--
--
--
--
--
--
( 8,893)
$( 8,893)
Total
Shareholders'
Equity
$ --
$ 143,496
$ 98,913
$ --
$ 5,501,004
$ 1,636,097
$ 2,455,291
$ 2,393,554
$ 2,017,577
864,748
1,660,517
( 8,893)
$ 2,516,372
Supplemental Information:
The nature of the noncash consideration received by the company
was services rendered and the basis for assignment of the amount
of the noncash transactions by management is the estimated fair
market value of the common stock issued calculated as the average
of the bid and the ask prices on the date of the transaction
discounted due to being either restricted or blocks of common
stock issued.
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30,
Period From
January 6, 1986
(Inception) to
Cash Flows from Operating Activities
Net Income (Loss)
Adjustments to Reconcile Net Income
(Loss) to Net Cash provided by
Operating Activities
Depreciation and Amortization
(Gain) Loss on Disposal of Assets
Loss on Sale of Investments
Loss on Equity Securities
Write Down of Investments to Market
Debt Forgiven
Territory Management
Territory Sales
Common Stock Issued for Software
Common Stock Issued for Services
Common Stock Issued for Obligations
(Increase) Decrease in Accounts
Receivable
(Increase) Decrease in Inventory
(Increase) Decrease in Other Assets
Increase (Decrease) in Accounts
Payable
Increase (Decrease) due to Employees
Increase (Decrease) in Accrued
Expenses
Net Cash used by Operating Activities
Cash Flows from Investing Activities:
Return of Capital - Limited Partnership
Receipts from Notes Receivable
Loans Made
Purchase of Assets
Purchase of Stock in Affiliate
Proceeds from Sale of Investments
Proceeds from Insurance Settlement
Total Cash Flows from Investing Activities
Cash Flows from Financing Activities:
Proceeds from Issuance of Capital Stock
Payments on Capital Lease Financing
Principal Payments on Notes Payable
Advances from Affiliates
Payments to Affiliates
Advances from Line of Credit
Advances from Notes Payable
Total Cash Flows from Financing Activities
Net Increase in Cash
Cash at Beginning of Year
Cash at End of Year
1994
$( 3,783,365)
259,900
--
--
--
--
( 26,746)
--
--
58,988
1,902,262
522,445
41,681
( 5,888)
( 82,243)
215,465
138,195
153,541
( 605,765)
500,000
--
--
( 18,741)
--
--
--
481,259
153,701
( 3,453)
37,500
236,764
( 509,317)
--
210,500
125,695
1,189
-0-
$ 1,189
1993
$( 7,620,061)
684,512
( 4,657)
--
5,216,480
--
--
--
--
--
277,264
35,913
( 41,681)
( 15,095)
( 2,512)
199,172
( 47,155)
12,518
( 1,305,302)
--
--
--
( 58,906)
--
--
12,029
( 46,877)
517,000
( 4,263)
--
784,030
--
--
50,000
1,346,767
( 5,412)
5,412
$ -0-
Sept 30, 1994
$( 14,067,673)
1,811,987
( 3,034,363)
35,072
5,216,480
3,567,628
( 136,955)
205,000
( 982,489)
58,988
3,562,923
558,358
( 335,000)
( 40,812)
( 227,369)
544,439
138,195
352,624
( 2,772,967)
500,000
80,772
( 237,328)
( 304,249)
( 10,000)
277,739
12,029
318,963
1,104,944
( 10,976)
37,500
1,421,542
( 509,317)
151,000
260,500
2,455,193
1,189
-0-
$ 1,189
AGTsports, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
Years Ended September 30,
Period From
January 6, 1986
(Inception) to
Financing Activities not Affecting Cash:
Marketable Securities received as
contribution to capital
Marketable Securities contributed
to capital
Additional paid in capital received
Additional paid in capital contributed
Transfer assets to limited partnership
Reference Note 9 - Securities Changes
Supplemental Information:
Interest Paid
Taxes Paid
1994
$ --
--
--
--
1,611,036
$ 2,929
$ 24,050
1993
$ --
--
--
--
--
$ 2,375
$ 6,191
Sept 30, 1994
$ 152,000
( 152,000)
5,314,678
( 5,314,678)
1,611,036
AGTsports, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
AGTsports, Inc. (the "Company") was incorporated under the laws
of the state of Colorado on January 6, 1986, and had no
operations through April 30, 1989. The Company has selected
September 30th as its accounting and fiscal year end. The
principal activities from inception have been organizational
matters, the sale and issuance of 500,000 shares of its $.001 par
value common stock to the public. During the fiscal year ended
September 30, 1991, the company began to pursue its current
principal activity of providing technological and software
services to golf and related industries. On March 1, 1990, the
Company's Management formally elected to change the corporate
name to Ultratech Knowledge Systems, Inc. (UKS) from its original
name of American Merger Control, Inc. On June 7, 1993, the
Shareholders of the Company voted to amend the Company's Articles
of Incorporation such that the name of the Company would be
changed to AGTsports, Inc. (AGT) from Ultratech Knowledge
Systems, Inc.
The original transaction between the Company and American
Consolidated Growth Corporation (ACGC) in January, 1991 was for
ACGC to purchase assets from the Company in exchange for
assumption of liabilities and issuance of 7,312,985 shares of
ACGC common stock. At that time it was the intent of ACGC that
the Company would distribute the ACGC stock and the Company would
cease to exist. The stock was valued at $6,142,907 and was to be
distributed to the Company shareholders on a "one for one" basis
and to Advance Display Technologies Shareholders on a "one for
three basis". It was later determined that the Company would
continue its existence as the operations for the golf division
after successful use of the Golf Players System at the MCI
Heritage Golf Classic in Hilton Head, S.C. Management of the
Company determined it appropriate to cancel the planned
distribution as the ACGC common stock was an asset which could be
used to the benefit of the company and its shareholders.
On May 15, 1991, the Company entered into an agreement with
American Consolidated Growth Corporation (ACGC) to acquire the
division of ACGC known as Advance Golf Technologies (AGT) by the
issue of 15,851,940 shares of AGT common stock to ACGC. The
transaction was valued at predecessor cost. There was no write-
up of the asset valuations from this transaction. Pursuant to
this agreement, the Management of the Company formally
established the "doing business as" or DBA name of Advance Golf
Technologies. Through this transaction, ACGC gained substantial
control over the Company. At September 30, 1994 and 1993, ACGC
owned 8.37% and 14.3% of the outstanding common stock of the
Company, respectively.
On March 16, 1992, the Company established an 80% owned
subsidiary to operate under the name of "Advance Golf
Technologies Systems, Inc." Advance Golf Technologies Systems,
Inc. was incorporated under the laws of the state of Colorado.
This affiliated company has not been capitalized or activated.
Therefore it is not consolidated into these financial statements.
In January, 1994, the Company established a wholly-owned foreign
subsidiary which operates under the name of AGTsports (Europe)
Ltd. The subsidiary is based in Dublin, Ireland. The subsidiary
will be used to facilitate the activities of the Company in the
European Common Market. The functional currency of the
subsidiary is the Irish Currency. Foreign operations that are
recorded in a foreign currency must be restated in U.S. Dollars
in accordance with generally accepted accounting principals and
any gains or losses on the translation recorded as a separate
component of shareholders' equity as promulgated by FASB
Statement No. 52, "Foreign Currency Translation." All revenues
and expenses related to the subsidiary will flow through the
parent. To date, the operations of the subsidiary are not
material.
Principles of Consolidation - The consolidated financial
statements include the accounts of AGTsports, Inc. and its wholly-
owned foreign subsidiary AGTsports (Europe) Ltd. All significant
intercompany transactions have been eliminated.
Development Stage Company/Going Concern - The Company is in the
development stage, has not commenced principal operations and has
not sold significant products to date. Its proposed operations
are subject to all of the risks inherent in the establishment of
a new business enterprise, including the absence of an operating
history. The Company's continued existence is dependent upon its
ability to either develop or purchase components and sell its
products and obtain profitable operations or on its ability to
obtain additional sources of funding through outside financing or
equity investments.
Income Taxes - During the year ended September 30, 1994, the
Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," which requires an
asset and liability approach for financial accounting and
reporting for income taxes. Under SFAS No. 109, deferred income
taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's
assets and liabilities. Deferred income taxes represent the
future tax return consequences of the temporary differences,
which will be taxable or deductible when assets and liabilities
are recovered or settled.
The deferred method, used in years prior to fiscal 1994, required
the Company to provide for deferred tax expense based on certain
items of income and expense which were reported in different
years in the financial statements and the tax returns as measured
by the rate in effect for the year the difference occurred.
As permitted by SFAS No. 109, the Company has not elected to
restate previously issued financial statements for the change in
accounting for income taxes. Pro forma effects of retroactive
application of SFAS No. 109 to prior years are not determinable,
and thus the effects on net income and earnings per share are not
shown.
Foreign Currency Translation - The Company's primary functional
currency is the U.S. dollar. Most foreign entities translate
monetary assets and liabilities at year-end exchange rates while
nonmonetary items are translated at historical rates. Income and
expense accounts are translated at the average rates in effect
during the year, except for depreciation and cost of product
sales which are translated at historical rates. Gains or losses
from changes in exchange rates are recognized in consolidated
income in the year of occurrence. The remaining entities use the
local currency as the functional currency and translate net
assets at year-end rates while income and expense accounts are
translated at average exchange rates. Adjustments resulting from
these translations are reflected in the Shareholders' equity
section titled "Cumulative translation adjustment."
Property and Equipment - Fixed assets are carried at cost and are
depreciated over their estimated useful lives utilizing the
straight-line method of accounting. Reference Note 5 - Property,
Plant and Equipment
Inventory - Inventory is comprised of the Golf Players System
software, scorecards which can be scanned by a scanner for input
of data as a part of the automated player/course rating system
and merchandise. Reference Note 3 - Inventory
Cash and Cash Equivalents - For the purposes of the Statements of
Cash Flows, the Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.
Capitalization of Research and Development Costs - The policy of
the Company is to expense research and development costs as
incurred. Software products for which technological feasibility
has been established will be capitalized when purchased. During
the years ended September 30, 1994 and 1993, there were no
charges to expense for research and development costs.
Earnings Per Share - Earnings per share have been computed based
upon the weighted average number of shares outstanding during the
year of 4,641,713 and 3,524,748 for the years ended September 30,
1994 and 1993, respectively. Common stock equivalents in the
aggregate do not dilute earnings per share by more than 3%,
therefore, no change is presented.
Revenue Recognition - Revenue is recognized on the accrual basis
of accounting. Revenue for bartering type agreements is
recognized as services are provided on an accrual basis of
accounting.
Investments - Investments owned greater than 50% by the Company
will be reported on a consolidated basis of accounting.
Investments for which the Company owns greater than 20% but less
than 50% and for investments that are not corporate entities for
which the Company exercises significant influence are reported on
the equity method of accounting. Investments owned less than 20%
by the Company are reported on the lower of cost or estimated
fair market value.
NOTE 2 - RELATED PARTY TRANSACTIONS
During the year ended September 30, 1993, American Consolidated
Growth Corporation (ACGC) advanced $784,012 to the Company for
use in its operations. This advance was paid back by the
Company's issuance of 714,347 shares of ACGC common stock
acquired by the Company in the transaction dated January 28,
1991. During the year ended September 30, 1994 management of
these companies mutually agreed to rescind the repayment through
stock since it would be in the best interest of both companies.
As a result of the agreement to rescind the transaction, the
Company has restated its financial statements for the year ended
September 30, 1993 to reflect the liability and the investment in
equity securities written down consistent with the original
agreement. (Reference Note 16 - Rescission of Agreement). The
transferred common stock of ACGC was recorded on the books at
$6,000,492 during the fiscal year ended September 30, 1993 and
the write down of the investment to the estimated fair market
value at the time resulted in a loss on equity securities of
$5,216,480 for the year ended September 30, 1993.
On September 7, 1993, the Company entered into an agreement with
ACGC whereby the Company issued 1,000,000 shares of Preferred
Stock in exchange for the transfer by ACGC to the Company of
750,000 common shares of the Company. The common stock returned
to the Company represents 19.4% of the outstanding common stock
of the Company at September 30, 1993 and is being held as
treasury stock at September 30, 1994 and 1993. The preferred
stock of the Company issued is non-voting, $4.00 per share par
value which pays a dividend rate of the higher of 4% of the face
value of the Share or 13% of the net earnings of the Company,
computed at the end of each fiscal year and can be paid in cash
or common shares of the Company, at the discretion of the
Company's Board of Directors. Preferred stock will have the
right to receive up to $4,000,000 prior to distributions to other
shareholders upon dissolution of the Company.
The Chief Executive Officer of American Consolidated Growth
Corporation (ACGC), the Company's largest shareholder, is also an
owner of Renaissance Knowledge Systems, Inc. (RKS). RKS is the
primary provider of software products for the Company.
Specifically, software related to the "golf players system".
Reference Note 11
During the year ended September 30, 1993, two shareholders each
made a $25,000 90-day unsecured loan to the Company. The
shareholders have the option to convert all or part of the cash
settlement into common stock at the time of payment made by the
Company at the option price of $5.00 per share. Subsequent to
September 30, 1993 one shareholder elected to convert the loan to
common stock and the other shareholder continued to obtain
periodic payments from the Company.
During the year ended September 30, 1994, ten shareholders issued
unsecured loans with the Company totaling $404,726. The
shareholders have the option to convert all or part of the cash
settlement into common stock at the time of payment made by the
Company at the option price of $5.00 per share. $190,000 of
these loans were converted to stock during the current year.
(Reference Note 6)
During the year ended September 30, 1994, the Company made
payments to and on the behalf of Renaissance Knowledge Systems
(RKS) which amounted to $305,780. Since there currently is no
written contractual agreement the Management is accounting for
this as a loan to RKS. An allowance for loan loss for the entire
amount has been established since management is unable to
determine the ability of RKS to repay the amount.
NOTE 3 - INVENTORY
At September 30, inventories consisted of the following:
1994 1993
Merchandise $ 5,342 $ 3,494
Scorecards 31,440 24,500
Software 4,030 6,930
Total $ 40,812 $ 34,924
Inventories are stated at the lower of standard cost or market on
a first in, first out method.
NOTE 4 - Limited Partnership
On May 15, 1991, the Company entered into an agreement with ACGC
to acquire the division of ACGC known as "Advance Golf
Technologies" (AGT) by the issue of 15,851,940 shares of the
Company's common stock to ACGC. This transaction was valued at
predecessor cost of $2,377,791. There was no write-up in asset
value at May 15, 1991. Management valued this transaction at
$0.15 per share which is based on a discounting of estimated
market value. This intangible investment is being amortized over
five years on the straight line method. Amortization expense
amounted to $118,890 and $475,558 for the years ended September
30, 1994 and 1993, respectively. Equipment, software and the
tape library were evaluated for the purpose of the expenditure
and the future use of the items. For each of these areas, these
items were deemed appropriate to capitalize as assets due to
extended useful lives and/or due to the belief that technological
feasibility was proven. No expense has been recorded to write
down assets to net realizable values since it appears to
management that these values can be realized. The timing of the
realization has apparently changed due to the past change in the
short term management philosophy of the company and its products.
During the fourth (4th) quarter of the fiscal year ended
September 30, 1994, the Company established AGTsports, Inc.
Limited Partnership I. The Limited Partnership is accounted for
as an equity method investment. The Company transferred assets
with a book value of $1,611,036 to the partnership and is to
serve as the general manager. The assets transferred include the
Players System Software and Marketing Rights transferred at a net
book value of $1,129,451. This intangible asset is being
amortized over five years since 1991 with the annual amortization
expense of $475,558. These rights continue to have future value
in that they are the foundation of the contracts with the
European PGA Tour, the PGA Tour of Australasia and the Australian
State Associations. As of September 30, 1994, the only limited
partner is ACGC. ACGC paid $500,000 and offered a short term
note to the partnership for $500,000 for the balance of the
amount due. As a subsequent event, the maturity date has been
extended. Of the money received from ACGC, $161,000 was used to
satisfy obligations of the Company and the balance was used to
pay back some of the amounts due to ACGC. Management continues
to seek funding for its projects through this limited partnership
and through other sources. No assurances can be made that the
Company will be successful in its efforts to fully fund this
partnership. The initial $500,000 in the limited partnership was
paid to the Company as a return of capital to be utilized for
obligations as allowed by the limited partnership use of
proceeds. The balance of "Investment in AGTsports Limited
Partnership" is $1,111,036 and $-0- as of September 30, 1994 and
1993, respectively.
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
At September 30, Property, Plant and Equipment are summarized by
major classifications as follows:
1994 1993
Computer Equipment $ 250,693 $ 237,762
Equipment 71,293 63,492
Furniture and Fixtures 64,984 64,984
Players Software -- 676,582
Promotional Tape Library 57,514 57,514
Software Masters 198,987 200,000
643,471 1,300,334
Less Accumulated Depreciation
and Amortization ( 262,603) (
416,639)
$ 380,868 $ 883,695
Property, plant and equipment are stated at cost. Total
depreciation and amortization expense amounted to $259,900 and
$684,512 for the years ended September 30, 1994 and 1993,
respectively. Amortization of computer software costs amounted
to $58,829 and $33,839 for the years ended September 30, 1994 and
1993, respectively. There were no amounts written down to a net
realizable value for the years ended September 30, 1994 and 1993.
All items capitalized are deemed to have future value in
relationship to the activities of the company, including its
agreements with the professional and amateur groups. (Reference
Note 4 - Limited Partnership).
The estimated useful lives of the listed assets is as follows:
Estimated Useful Lives
Computer Equipment 5 years
Equipment 5 years
Furniture and Fixtures 7 years
Players Software 5 years
Promotional Tape Library 5 years
Software Masters 5 years
NOTE 6 - LONG-TERM DEBT
Long-Term Debt consists of the following:
September
30,
Installment note payable at $737.52 per
Month plus 10% Interest, collateralized
by Equipment
Unsecured, non-interest bearing Note payable
at Maturity, 10-22-93
Unsecured 90-Day Note payable at Maturity
plus 10% Interest, matures 11-23-93,
extended to 2-28-94. Past due and payable
in full upon demand
Unsecured Note, payable in full plus 10%
Interest simple from 3-19-92, payable
upon demand
Unsecured Note, payable in full plus 10%
interest at 5-22-94. Past due and payable
in full upon demand
Unsecured Note, payable in full plus 10%
interest at 5-30-94. Past due and payable
in full upon demand
Unsecured Note, payable in full plus 10%
interest at 6-20-94. Past due and payable
in full upon demand
Unsecured Note, payable in full plus 10%
interest upon demand
Unsecured Note, payable in full plus 10%
interest upon demand
Unsecured Note, payable in full plus 18%
interest at 10-28-94
Less Amount Due Within One Year
1994
$ 18,200
--
12,500
--
25,000
25,000
10,000
61,226
2,000
38,500
( 192,426)
$ -0-
1993
$ 26,653
25,000
25,000
80,000
--
--
--
--
--
--
( 136,251)
$ 20,402
NOTE 7 - COMMITMENTS AND CONTINGENCIES
(a) The Company relocated its offices December 21, 1992, and
entered into a lease which expires July 31, 1996. The Company
periodically rents equipment on short-term operating leases. For
the years ended September 30, 1994 and 1993, rental expense
amounted to $72,878 and $45,597, respectively.
The following is a schedule of future minimum rental payments
required under the above operating lease as of September 30,
1994:
Year Ending
September 30, Amount
1995 $ 71,073
1996 53,305
1997 --
1998 --
1999 --
$ 124,378
(b) As of September 30, 1994, a disputed claim of $21,557 has
been filed against the Company in the State of Colorado District
Court, City and County of Denver, by a vendor on an open account.
The dispute involves certain contracted desktop publishing and
graphic design supplied to the Company. The disputed amount is
included in accounts payable.
NOTE 8 - REALIZATION OF ASSETS
As shown in the accompanying financial statements, the Company
incurred a net loss of $3,783,365 and $7,620,061 during the years
ended September 30, 1994 and 1993, respectively, and as of those
dates, the Company's current liabilities exceeded its current
assets by $2,446,914 and $575,678, respectively. These factors,
as well as continued operating losses and lack of working
capital, create an uncertainty as to the Company's ability to
continue as a going concern. The Company is developing a plan to
reduce its liabilities through possible issuance of additional
stock to shareholders. The ability of the Company to continue as
a going concern is dependent upon the success of the plan and the
agreement to the plan by the Company's creditors. The financial
statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
Management of the Company plans continued pursuit of its existing
operations and strategic alliances. In addition, management will
seek to restructure the staffing of the company to better reflect
the immediate needs of the Company. Management of the Company
will satisfy the cash needs of the Company through equity
investors, shareholder loans and cash generated from operations,
including Golf Expo convention show, providing statistical
information to individuals and limited sales of individual
players system software. It is the intent of management to
continue its plans to establish marketing subsidiaries in
Australia, Europe and the United States. It is the intent of
management that these marketing subsidiaries each are to be
structured with influential Board members and obtain sufficient
funding to service operations in those geographic areas. These
marketing subsidiaries are to maximize the relationships the
Company has established with various PGA Tour Entities and State
Associations.
NOTE 9 - SECURITIES CHANGES
On August 31, 1992, the Company issued a Securities and Exchange
Commission Regulation "D" 504 common stock offering memorandum.
The offering is for a per share price of $0.20 for a total of
$500,000. The purpose of the offering is the funding of "The
Golf Players System." "The Golf Players System" is a computer
software application developed by Renaissance Knowledge Systems,
Inc. for the purposes of generating and assimilating statistics
on golfers and golf facilities. This offering was completed
during the year ended September 30, 1993.
On April 21, 1993, the Company's Board of Directors authorized
the split of the common stock of the Company on a basis of one
share for every ten shares previously outstanding.
During the year ended September 30, 1993, the Company issued
common stock totalling 263,000 shares for $517,000. The shares
sold approximated market price as calculated by the average of
the bid and the ask price quotations.
During the year ended September 30, 1993, the Company issued
166,916 shares of its common stock for services. This included
payments to employees in lieu of cash. The transactions were
valued by management at the estimated fair market value as
calculated by the average of the bid and the ask quotations. The
transactions amounted to $277,264.
During the year ended September 30, 1993, the Company issued
76,379 shares of its common stock as payment for debts
outstanding which totalled $106,913. The transactions were
valued by management as the total of the debt paid.
The Company previously operated a subsidiary which was written
off in prior years. The former subsidiary operated under the
name "Burning Bush Recreation Corporation." During the year
ended September 30, 1993, management elected to issue stock to
those former shareholders who once participated in this activity
so they will become a part of the current corporate activities.
The corporation issued 161,401 of the Company's common stock as
part of this reorganization.
During the year ended September 30, 1993, the Company issued
100,000 shares to Renaissance Knowledge Systems, Inc. (issued at
the time RKS was a sole proprietorship of the Chief Executive
Officer of ACGC) to acquire the rights to the latest versions of
Goff House and 100,000 shares of common stock to the Chief
Executive Officer of ACGC for ownership rights to "The Golf
Players System" in his connection with the development of the
Golf Players System. These transactions were valued by
management at $200,000 which approximates the average of the bid
and the ask quotations and discounted approximately fifty percent
(50%) since the transaction was with a related party.
During the year ended September 30, 1994, the Company issued
common stock totalling 80,871 shares for $153,701. The shares
sold approximated market price as calculated by the average of
the bid and the ask price quotations.
During the year ended September 30, 1994, the Company issued
907,237 shares of its common stock for services. The
transactions were valued by management at the estimated fair
market value as calculated by the average of the bid and the ask
quotations discounted 45% since the stock issued was restricted
and has a limited trading market. The transactions were valued
at $1,902,262.
During the year ended September 30, 1994, the Company issued
305,827 shares of its common stock as payment for debts
outstanding which totalled $522,445. The transactions were
valued by management as the total of the debt paid.
During the year ended September 30, 1994, the Company issued
33,000 shares as a partial payment for the acquisition of
software. The partial payment was valued at $58,988 which is the
estimated fair market value as calculated by the average of the
bid and the ask quotations discounted 45% since the stock issued
was restricted and has a limited trading market.
NOTE 10 - ACCRUED EXPENSES
Accrued Expenses are summarized by components as follows:
September 30,
1994 1993
Accrued Payroll Expense $ 316,324 $ 190,676
Accrued Interest Payable 11,756 8,863
Accrued Expense - Other 25,000 --
Total $ 353,080 $ 199,539
NOTE 11 - KEY EMPLOYEES AND RELATIONSHIPS
Currently, all software development and maintenance for the
Company is being provided by Renaissance Knowledge Systems,
(RKS). RKS is, in part, owned by a former officer of the Company
who is also a shareholder of the Company and Chief Executive
Officer of American Consolidated Growth Corporation, the
Company's largest shareholder. The former officer is one of the
primary programmers of the software for the "golf players
network" and its related software products. (Notes 2 and 5)
As of this point in the Company's history, Management believes
the continued operation of RKS and the participation of the
current Chief Executive Officer of the Company are vital to the
Company's ability to realize the total potential of its products
in the market.
NOTE 12 - COMPANY STOCK OPTION PLANS
The Company established a common stock compensation plan whereby
each full-time employee of the Company employed at the current
fiscal year end will be issued common stock of the Company during
the first quarter following the fiscal year end. The value of
the common stock is determined to be ten percent (10%) of the
fiscal year wages paid to the employee. The option is based on
base salary and hourly wages only, which would exclude profit
sharing, bonus payments, commissions or any other form of
compensation. The number of shares to be issued under this plan
will be calculated as the average of the bid and the ask stock
price on the last trading day prior to the company's fiscal year
end divided into the allowed wages. This is not a tax deferred
plan. All compensation under this plan is treated as a taxable
fringe benefit. The first implementation of this plan by the
Company was in the quarter ending December 31, 1993.
In addition, the Company established an employee common stock
purchase plan whereby each employee has the option to purchase
two-times the equivalent number of shares as calculated under the
common stock compensation plan. The price of the shares will be
fifty percent (50%) of the average price per share calculated for
the common stock compensation plan. This option must be
exercised when the employee signs the Company Option Plan
Agreement. This is not a tax deferred plan. Discounts to the
employee are to be treated as taxable fringe benefits. The first
implementation of this plan by the Company was in the quarter
ending December 31, 1993.
The two stock related plans are compensation plans which have
been established by the Board of Directors of the Company. These
compensation benefits remain in existence at the discretion of
the Board of Directors of the Company.
During the year ended September 30, 1994, the Company issued
25,634 shares of its common stock under the common stock
compensation plan and 37,878 shares of its common stock under the
employee common stock purchase plan. The transactions were
valued by management at the estimated fair market value as
calculated by the average of the bid and the ask quotations
discounted 45% since the stock issued was restricted and has a
limited trading market. The transactions were valued at $44,834
and $66,249 respectively.
For the fiscal year ended September 30, 1994, there are 2,684
shares of common stock to be issued during the first quarter of
fiscal year September 30, 1995 valued at a price of $4.25 per
share as determined under the common stock compensation plan.
Under the employee common stock purchase plan, there are 5,368
shares of common stock under option, of which 1,622 are
exercisable, at an option price of $2.13 per share.
NOTE 13 - CONCENTRATIONS OF CREDIT
The other receivables of $335,000 at September 30, 1994,
represents an amount receivable from one company pursuant to a
territory sales agreement. An initial payment of $15,000 was
paid to the Company. The territory was sold on March 25, 1992,
for $350,000 with the balance due of $335,000 financed over a
term of three years, maturing March 25, 1995.
NOTE 14 - INVESTMENTS IN EQUITY SECURITIES
Effective September 30, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The
Company's investments in marketable equity securities are held
for an indefinite period and have been historically reported at
the lower of cost or market. The aggregate fair value of the
Company's marketable equity securities at September 30, 1994
totaled $2,530,676. As a result of the application of SFAS No.
115, the unrealized holding gains added $1,660,517 to
Shareholder's equity at September 30, 1994.
NOTE 15 - FOREIGN CURRENCY TRANSLATION
AGTsports (Europe) Ltd., a wholly owned-subsidiary of AGTsports,
Inc. conducts its operations in Dublin, Ireland. According to
FASB-52, monetary assets and liabilities are translated using
year end exchange rates while nonmonetary items are translated
using historical rates. Revenues and expenses are translated
using an average exchange rate for the period except for
depreciation and cost of product sales which are translated at
historical rates. Accordingly, the current rate at September 30,
1994, was 1.5302, average rate was 1.5302 and the Historical rate
used was 1.5584. (Reference Note 1)
As of September 30, 1994, the separate component of shareholders'
equity consisted of the following:
Cumulative Translation Adjustment - January, 1994 $ --
Translation Adjustment ( 8,893)
Cumulative Translation Adjustment - September 30, 1994 $ (
8,893)
NOTE 16 - RESCISSION OF AGREEMENT
The financial statements of the Company reflect the agreement
between the Company and ACGC to rescind the repayment of related
party loans amounting to $784,012 by the transfer to ACGC of
714,347 shares of ACGC common stock. It was mutually agreed that
it would be in the best interest of both companies for those
equity securities be available to the Company as assets or
available for sale to aid in funding the company. Reference Note
2 - Related Party Transactions
NOTE 17 - MAJOR CUSTOMER
The Company's principle operations during the year ended
September 30, 1994, consisted of providing services to the PGA
European Tour pursuant to a contractual agreement. Under the
terms of the contract, the Company is to provide specified
services at specified rates and the Tour is also to provide
specified services at specified rates at each tournament event.
This resulted in the company reporting revenues from services in
the amount of $1,100,000 and expenses related to providing these
services in the amount of $1,125,000.
NOTE 18- SUBSEQUENT EVENTS
The Company entered into an agreement with the New South Wales
Golf Association (NSWGA) whereby the Company will provide to the
NSWGA, at no cost to the NSWGA, the hardware and software
computer components which make up the Company's "Golf Players
System". In return, the NSWGA agrees to use the Golf Players
System, to make the Company's optical scan cards the official
score cards of the NSWGA tournament events and to use the NSWGA's
best endeavors to help the Company introduce its products and
services to affiliated members of NSWGA and to have the Company's
optical scan score card adopted in all tournament events in New
South Wales. The agreement is for a period of five years,
effective in January 1995, and can be renewed for a like period
by mutual consent.
The Company and the PGA Tour of Australasia established a twenty
year partnership for the development of golf throughout Asia.
The first of the partnership agreements was to supply the
statistical information for the Tour. The contract commenced on
October 20, 1994 at the Foodlink Queensland Open. As of January
1995, the Golf Players System has been utilized at a total of
nine Australasian professional tournaments.
AGTsports, Inc. is the official software company of the PGA Tour
of Australasia and will provide software solutions for all its
operations and tournament management. A professional tournament
version of The Golf Players System is being customized to
facilitate all of the scoring for the Australian professional
events. The Company's technology will allow the Tour to generate
the next days draw within one minute after the last group has
completed play. It will also instantly calculate the prize money
and print the checks for the event as well as generate the
current Order of Merit (money list). This information and the
statistics will then be disseminated, via a computerized network,
to the media and can also be sold to the book making operations
in Australia and Europe.
