<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR QUARTER ENDING JUNE 30, 1996
Commission file number 33-4309-D
AGTSPORTS, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1022287
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(State of incorporation) (IRS Employer ID number)
6890 South Tucson Way, Suite 202, Englewood, Colorado 80112
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(Address of principle executive office) (Zip Code)
(303) 792-5000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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June 30, 1996, 20,898,218 common shares, $.001 par value per share were
outstanding.
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AGTSPORTS, INC. &
INDEX
PAGE NUMBER
PART 1.
ITEM 1. Financial Information
STATEMENT BALANCE SHEETS JUNE 30, 1996 AND
SEPTEMBER 30, 1995 3
STATEMENT OF OPERATIONS THREE MONTHS AND
NINE MONTHS ENDED JUNE 30, 1996 AND 1995 4
STATEMENT OF CASH FLOWS NINE MONTHS ENDED
JUNE 30, 1996 AND 1995 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 6
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 7
ITEM 2. CHANGES IN SECURITIES 7
ITEM 3. DEFAULT ON SENIOR SECURITIES 8
ITEM 4. MATTERS TO A VOTE OF SECURITY HOLDERS 8
ITEM 5. OTHER INFORMATION 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 8
SIGNATURES 9
EXHIBIT 27 10
2
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AGTSPORTS, INC. &
WHOLLY OWNED SUBSIDIARIES
PART I, ITEM 1.
QUARTERLY CONSOLIDATION
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
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<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 119,698 $ 16,904
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Total Current Assets 119,698 16,904
Fixed Assets:
Property, Plant and Equipment 1,390,464 1,437,466
Less: Accumulated Depreciation (1,014,092) (960,685)
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Total Fixed Assets 376,372 476,781
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Other Assets:
Other Receivables 12,077 7,193
Prepaids & Other Assets 20,624 99,141
Intangibles - Net -0- 297,224
Investment 868,000 868,000
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Total Other Assets 900,701 1,271,558
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Total Assets $ 1,396,771 $ 1,765,243
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable - Trade 226,553 180,190
Other Liabilities 245,403 322,017
Due to Affiliates 253,000 -0-
Current portion - long term debt 469,666 348,142
Accrued Expenses 666,938 907,963
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Total Current Liabilities 1,881,560 1,758,312
Long-Term Liabilities 731,680 861,204
Liability to issue common stock to affiliate -0- 3,187,349
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2,593,240 5,806,865
Shareholders' Equity
Preferred stock, $4.00 par Value: 50,000,000
shares Authorized, -0- shares issued and
outstanding as of June 30, 1996 -0- -0-
Common Stock, $.001 par Value: 50,000,000
shares Authorized, 20,898,218 issued and
outstanding as of June 30, 1996 and
10,530,972 issued and outstanding as of
September 30, 1995 20,898 10,531
Treasury Stock (16,720) (16,720)
Additional Paid-In Capital 20,664,931 15,259,846
Cumulative Translation Adjustment (15,771) (11,191)
Deficit Accumulated During the Development Stage (21,849,807) (19,284,088)
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Total Shareholders Equity (1,196,469) (4,041,622)
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Total Liabilities and Shareholder's Equity $ 1,396,771 $ 1,765,243
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</TABLE>
3
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AGTSPORTS, INC.
& WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Operating Revenue
Revenue $ 8 $ 183,203 $ 59,329 $ 572,159
Total Operating Revenues 8 183,203 59,329 572,159
Expenses
Salaries and Wages 88,161 53,219 381,563 253,373
Professional Services 161,896 871,435 1,080,901 2,081,129
General and Administrative 242,077 299,618 516,162 949,718
Depreciation and Amortization 119,706 27,610 474,136 80,561
Territory Acquisition -0- 962,200 -0- 962,200
Travel and Expenses 29,364 6,133 105,976 46,701
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Total Expenses 641,204 2,220,215 2,558,738 4,373,682
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---------- ---------- ---------- ----------
Operating Income (Loss) (641,196) (2,037,013) (2,499,409) (3,801,523)
Other Income (Expenses)
Net Gain on Sale of Investment -0- (27,285) -0- 253,283
Interest Expense (25,516) (5,976) (70,385) (14,432)
Other Income (Expense) 2,666 17,011 4,881 12,315
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Total Other Income (Expense) (22,850) (16,250) (65,504) 251,166
---------- ---------- ---------- ----------
Net Income (Loss) before Extraordinary
Items and Provision for Income Taxes (664,046) (2,053,263) (2,564,913 (3,550,357)
Extraordinary Items:
Debt Forgiveness -0- 4,125 5,150 8,742
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Net Income (Loss) $(664,046) $(2,049,138) $(2,559,763) $(3,541,615)
---------- ---------- ---------- ----------
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Net Income (Loss) per Common Share
before Extraordinary Items (.03) (.29) (.15) (.50)
Extraordinary Items per Common Share -0- -0- -0- -0-
Net Income (Loss) per Common Share (.03) (.29) (.15) (.50)
Weighted Average Shares of Common
Stock Outstanding 20,444,672 7,094,211 17,524,907 7,094,211
</TABLE>
4
<PAGE>
AGTSPORTS, INC.
& WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities
Net Income/(Loss) $(2,559,763) $(3,541,615)
Adjustments to reconcile Net Income (Loss)
to net cash provided by operating activities
Depreciation and Amortization 474,136 80,561
(Gain) Loss on Sale of Investments -0- (253,283)
Forgiveness of Debt (5,150) (8,742)
Common Stock issued for Services 769,857 1,867,762
Common Stock issued for Obligations 3,880,333 103,203
Common Stock Issued for Territory Acquisition -0- 95,700
(Increase) Decrease in Inventory -0- 40,812
(Increase) Decrease in Other Assets 73,633 2,199,477
Increase (Decrease) in Accounts Payable 46,363 (410,003)
Increase (Decrease) in Other Liabilities (3,251,988) (146,494)
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Net Cash Used by Operating Activities (572,579) 27,378
Cash Flows from Investing Activities
Purchase of Assets (76,502) (48,807)
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Total Cash Used by Investing Activities (76,502) (48,807)
Cash Flows from Financing Activities
Proceeds from Issuance of Capital Stock 759,875 238,700
Principal payments on long-term borrowings (8,000) -0-
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Total Cash Provided by Financing Activities 751,875 238,700
Net Increase (Decrease) in Cash 102,794 217,271
Cash at Beginning of the Year 16,904 1,189
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Cash at June 30 $ 119,698 $ 218,460
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</TABLE>
5
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AGTSPORTS, INC. &
WHOLLY OWNED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. MANAGEMENT REPRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to form 10-QSB and does not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results of operations for any interim
period are not necessarily indicative of results for the year. These statements
should be read in conjunction with the financial statements and related notes
included in the Company's Annual Report to shareholders on form 10-KSB for the
year ended September 30, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In the fiscal quarter ending June 30, 1996, the Company had no sales
as compared to $183,203 for the fiscal quarter ending June 30, 1995. This
decrease in sales was primarily due to the inability of the Company to complete
and deliver a tee time reservation system pursuant to certain contractual
obligations and delays in the completion of the Joint Venture "Hand Wedge"
project. The Company incurred a loss of $664,046 for the quarter ended June 30,
1996. The loss was due to a large extent to depreciation and amortization
expense of $119,706 and professional service expense of $161,896 to maintain
domestic and international operations.
The increase in salaries and wages during the fiscal quarter ended June 30,
1996, as compared to fiscal quarter ended June 30, 1995, is attributable to the
Company moving its staff personnel in-house instead of relying on a temporary
agency to compensate employees. The decrease in professional services during
the fiscal quarter ended June 30, 1996 as compared to fiscal quarter ended June
30, 1995 is a result of the Company's attempt to reduce its reliance on outside
consultants necessary to the Company's pursuit of its global business plans,
marketing strategies and products. The Company plans to continue to restructure
its operational activities to improve efficiencies.
The decrease in general and administrative expenses during the fiscal
quarter ended June 30, 1996 as compared to fiscal quarter ended June 30, 1995 is
attributable to the number of events in which the Company participated pursuant
to its agreements with the European and Australasian PGA Tours and the
implementation of restructuring the Company's activities to reduce expenses.
6
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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents balance on June 30, 1996, was $119,698.
In Management's opinion, the Company has inadequate working capital to
pursue the business opportunities that are a part of its business plan.
Management is seeking funding opportunities which will allow implementation of
its business plans and opportunities. While management is confident it can
obtain sufficient funding to implement part or all of its business plan, there
is no guarantee that the Company will be successful in this respect. If
management is unsuccessful, the future growth of the Company could be
substantially diminished. The liquidity of the Company is currently not
significant enough to enable management to implement its business plans.
PART II OTHER INFORMATION
An 11% Specific Collateral Debenture in the amount of $2,175,000 issued by
the Registrant in 1990 for the acquisition of certain Fiber Optic technology and
subsequently transferred has not been paid by subsequent holders of the
Technology Rights. The Registrant was notified February 23, 1996 of Acquisition
by Display Group LLC of Corporate Partners, Inc.'s Resolution Trust Corporation
Loan (Loan Package #349). The 11% Specific Collateral Debenture served as
collateral for the Resolution Trust Corporation Loan. On July 17, 1996, Display
Group, LLC, filed a lawsuit against the Company. Refer to Item 1 below.
The Registrant is in default on payment of debt which was principally
incurred through the repurchase of territorial marketing rights for the
Southeast Region of the United States. Management is negotiating this matter
but no resolution has been reached and no assurances of such resolution can be
offered by management.
ITEM 1 LEGAL PROCEEDINGS
As action is pending before the Court of Claims of the Country of
Ireland on behalf of a former contractor of AGTsports, Inc. for breach of
agreement, including some past due fees in the amount of 48,000L. such action is
disputed by the Company and local Counsel has been retained in Ireland to
represent the Company in the action.
On July 17, 1996, Display Group, LLC, filed a lawsuit in District
Court, Arapahoe County, State of Colorado, against American Consolidated Growth
Company and AGTsports, Inc. seeking from both parties damages in the amount of
the above referenced Debenture plus interest, attorney fees and costs. Should
Display Group prevail, it would have a material adverse effect on the ability of
the company to continue as a going concern. The Company will file an answer to
the lawsuit by August 29, 1996. Management believes that the suit is without
merit with respect to AGTsports, Inc. and has engaged council to pursue its
defense vigorously.
ITEM 2 CHANGES IN SECURITIES
The Registrant filed a Form S-8 Registration Statement under the
Securities Act of 1993 in January 1996 to register 1,600,000 shares of common
stock. As of June 30, 1996, there were 940,573 shares issued pursuant to the
January S-8 Registration Statement.
7
<PAGE>
ITEM 3 DEFAULT ON SENIOR SECURITIES
The Registrant is in default on payment of debt which was principally
incurred through the repurchase of territorial marketing rights for the
Southeast Region of the United States. Management is negotiating this matter
but no resolution has been reached and no assurances of such resolution can be
offered by management
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
An 11% Specific Collateral Debenture in the amount of $2,175,000
issued by the Registrant in 1990 for the acquisition of certain Fiber Optic
technology and subsequently transferred has not been paid by subsequent holders
of the Technology Rights. The Registrant was notified February 23, 1996 of
Acquisition by Display Group LLC of Corporate Partners, Inc.'s Resolution Trust
Corporation Loan (Loan Package #349). The 11% Specific Collateral Debenture
served as collateral for the Resolution Trust Corporation Loan on July 17, 1996,
Display Group, LLC, filed a Lawsuit against the Company. Refer to Item 1 above.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Form 8-K: April 22, 1996; AGTsports (Australia)
Form 8-K: May 14, 1996; Change in Officers and Directors.
8
<PAGE>
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.
AGTSPORTS, INC.
Dated: August 14, 1996 By: /s/B. Mack DeVine_
B. Mack DeVine
ACTING PRESIDENT
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 and
in the capacities and on the dates indicated.
Dated August 14, 1996 By: /s/B. Mack DeVine_
B. Mack DeVine
ACTING PRESIDENT
Dated August 14, 1996 By: /s/Dianne L. Harvanek
Dianne L. Harvanek
SECRETARY
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF OPERATIONS FILED AS FOR 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY SUCH REGISTRANT'S ANNUAL REPORT ON 10-KSB FOR THE YEAR END PERIOD
SEPTEMBER 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 119698
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 119698
<PP&E> 1390464
<DEPRECIATION> 1014092
<TOTAL-ASSETS> 1396771
<CURRENT-LIABILITIES> 1861560
<BONDS> 0
0
0
<COMMON> 20898
<OTHER-SE> (1217367)
<TOTAL-LIABILITY-AND-EQUITY> 1396771
<SALES> 8
<TOTAL-REVENUES> 2674
<CGS> 0
<TOTAL-COSTS> 641204
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25516
<INCOME-PRETAX> (664046)
<INCOME-TAX> 0
<INCOME-CONTINUING> (664046)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (664046)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
