UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending September 30, 1998
Commission File Number 0-21914
AGTsports, Inc.
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(Exact name of Issuer as specified in its charter)
Colorado 84-1022287
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(State of incorporation) (I.R.S. Employer Identification
No.)
621 17th Street, Suite 1730, Denver, Colorado 80293
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(Address of principle executive offices) (Zip Code)
(303) 297-9656
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(Issuer'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
Check mark whether the Issuer (1) 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 [ ] No [X ]
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 the Issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [X ]
Issuer's revenues for its most recent fiscal year: $ - 0 -
The aggregate market value of the voting stock of the Issuer held by
non-affiliates as computed by reference to the prices at which the stock was
sold and the average of the bid and ask prices of such stock within the prior
sixty days as of September 30, 1998, was $512,025. A total of 25,601,260 shares
were owned by non-affiliates as of September 30, 1998.
The number of shares of Common Stock, $.001 par value, outstanding on
September 30, 1998 was 27,554,726 shares. Transitional Small Business Disclosure
(check one): Yes ( ) No ( X )
Documents Incorporated by Reference
None.
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Table of Contents
Part I
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security
Holders
Part II
Item 5. Market for Common Equity and
Related Stockholder Matter
Item 6. Management's Discussion and Analysis
or Plan of Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements with
Accountants and Financial Disclosure
Part III Item 9. Directors and Executive Officers, Promoters
and Control Persons; Compliance with Section
16(a)of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial
Owners and Management
Item 12. Certain Relationships and Related
Transactions
Item 13. Exhibits and reports on Form 8-K
SIGNATURES
FINANCIAL STATEMENTS AND SCHEDULES
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PART I
Item 1. Description of Business.
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AGTsports, Inc. (the "Company") was formerly engaged in developing
technology applications for the sports and recreation industries. The Company
has terminated these former endeavors in favor of pursuing a new business plan
unrelated to sports technology and involving proposed business combinations with
other entities yet to be identified. The Company was incorporated in Colorado on
January 6, 1986 as American Merger Control, an investment holding company
designed to invest in all types of assets, businesses and/or properties. From
1991 to 1993, the Company operated as Ultratech Knowledge Systems, Inc., before
changing its name to AGTsports, Inc. During the fiscal year ended September 30,
1991, and through September 30, 1998, the Company's business plan was to provide
technological and software services to golf and sports related industries.
For the fiscal year ending September 30, 1998, the Company produced limited
revenues and recorded a net loss of ($336,535), with a working capital
deficiency of $630,365 and a stockholders deficit of $690,365. As of the date of
filing of this report, the Company has abandoned its business plan and
management is pursuing alternative business opportunities to establish a new
source of revenues and to create shareholder value. No assurance can be provided
management will be successful in these efforts. In addition, the auditors of the
Company have raised considerable doubt as to the ability of AGTsports, Inc. to
continue as a going concern. (See "Notes to Consolidated Financial Statements,
Note 1.").
Activities
On January 10, 1997, the Company acquired 100% of the outstanding stock of
Tee Times of America, Inc., (TTA) of Dallas, Texas. TTA's primary business
activity is the development of computer software for a golf tee times
reservation system. The operational activities of TTA substantially ceased
subsequent to the acquisition, and the corporate charter was terminated in
February 1999. (See "Notes to Consolidated Financials - Note 2.").
The Company owns 49% of Super Women's Systems, or SWSI, an integrated
software solutions consulting firm based in Dallas, Texas. During fiscal 1998,
key employees of SWSi resigned and management disagreements and working capital
difficulties resulted in the cessation of significant operations at SWSi. Due to
the uncertainty of the recoverability of the SWSi investment, the item was
expensed as of September 30, 1997, and the Company does not expect to realize
any benefit from this investment. (See the Company's Form 10-KSB for the fiscal
year ended September 30, 1997).
In fiscal 1998, the Company negotiated a proposed business combination with
Sinties Corporation, a sports technology company based in Tulsa, Oklahoma. The
transaction was cancelled by a vote of the Sinties Corporation shareholders in
September, 1998. (See the Company's Form 8-k dated October 14, 1998.)
Business of the Issuer
AGTsports, Inc. (the "Company") was formerly engaged in developing
technology applications for the sports and recreation industries. The Company
has terminated these former endeavors in favor of pursuing a new business plan
unrelated to sports technology and involving proposed business combinations with
other entities yet to be identified. Management can provide no assurances the
Company will succeed in these endeavors and the auditors have raised significant
doubts as to the ability of AGTsports, Inc. to continue as a going concern. (See
"Notes to Consolidated Financial Statements - Note 1.").
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Management and Executive Offices of AGT
The Company maintains an administrative office at 621 17th Street, Suite
1730, Denver, Colorado 80293. During fiscal 1998, no overhead or rent was
charged to the Company for the use of this office.
Subsequent Events
On October 14, 1998, certain major shareholders of the Company authorized
management to preserve and restructure the public company and provided short
term loans totaling approximately $30,000. The funds were employed primarily to
maintain the corporation's charter and good standing, to obtain certified audits
and legal assistance, and to prepare and file up-to-date reports as required by
the Securities Exchange Commission. As of the date of the filing of this report,
the Company continues to work with its auditors and attorneys to complete these
items, and to identify potential new business combinations with other entities.
In February, 1999, AGT vendor Bloomberg Communications obtained a default
judgement against the Company for $61,430 concerning information services
provided to the Company and former management in prior years. As of the date of
filing of this report, no payments have been made and the Company must pay
interest on the unpaid judgement at 8% per annum. Management is attempting to
negotiate a settlement of the outstanding item and cannot predict the outcome of
such negotiations.
Compliance with Government Regulations
The operations of AGT do not involve mandatory compliance with
non-environmental federal regulations other than employer-related issues such as
the 1995 Federal Family Medical Leave Act ("FMLA"). As of September 30, 1998,
AGT fully complies with the terms of this legislation as a U.S. employer.
Research and Development Costs
As of September 30, 1998, the Company is not engaged in material research
and development activities and has not incurred related material R&D costs in
the prior three fiscal periods.
Trademarks and Trade Names.
The Company owns the following trademarks: The Golf Players System, Players
Merit, Course Merit, and Company Logos, and holds a number of copyrights and
licenses covering different versions and modules of The Golf Players System. The
Company also owns a patent on the "Micro-Caddie" golf distance measuring device,
U.S. Patent #5,644,880.
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.
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Employees
During the period ending September 30, 1998, the Company had 2 full time
employees. None of these employees are represented by any union or collective
bargaining group and there is no prior history of any strikes, slow-downs or
other labor disputes. Subsequent to fiscal year ending September 30, 1998, all
employees resigned and the Company hired Cory J. Coppage as acting President to
oversee a restructuring plan as described above. (See "Directors and Executive
Officers of the Registrant - Biographical Information").
International Operations
At present, the Company conducts business only in the United States.
Forward Looking Statements
This Form 10-KSB includes certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than statements of historical
fact included in this Form 10-KSB, including, without limitation, the statements
under "Item I. Description of Business," "Item 3. Legal Proceedings," and "item
6. Management's Discussion and Analysis or Plan of Operation" are
forward-looking statements. Although the Company believes that the limited
expectations reflected in such forward looking statements are reasonable, it can
give no assurnace that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed in this Form 10-KSB in conjunction with the
forward looking statements contained herein.
Item 2. Description of Property
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During fiscal 1998, the Company maintained a satellite executive office in
Tampa, Florida which was closed at fiscal year end. The Company's administrative
office is currently located at 621 17th Street, Suite 1730, Denver, CO 80293
Tel. 303.297.9656 Fax 303.297.9654. No rent expense has been or is being charged
to the Company for the use of these facilities. Total rent expense charged to
operations for the years ended September 30, 1997 and 1998 was $5,945, and $300
respectively. The Company maintains no operating leases as of September 30,
1998.
Item 3. Legal Proceedings
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During fiscal 1998, the Company was not a party to, nor aware of, any legal
proceedings involving the Company that, in the opinion of Management, were
material to the future of the Company.
As reported in the Company's Form 10-KSB for the period ending September
30, 1997, certain registration requirements under federal and state securities
laws may have been violated in 1997 in connection with the Company's sale of its
common stock to approximately 30 individuals raising an aggregate of $477,950.
With the assistance of legal counsel, the Company has attempted to identify the
nature of any potential violations and the means of curing any such violations.
In fiscal 1998, the Company implemented a remedial securities compliance program
designed to address any potential registration violations, undertaken efforts to
update the Company's public filings and ensure full compliance in the future. In
addition, the Company has suspended all securities-related activities. To the
extent that the Company may be unable to resolve and/or cure any potential
registration violations, the Company and its ability to continue as a going
concern may be adversely impacted. (See the Company's Form 10-KSB for the period
ending September 30, 1997 and "Notes to Consolidated Financial Statements, Notes
1 and 4" below).
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Item 4. Submission of Matters to a Vote of Security Holders
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During fiscal year ended September 30, 1998, there were no matters
submitted to a vote of the Stockholders.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
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Market Information
In fiscal 1998, the Company's common stock, par value $.001 per share
("Common Stock") traded in the over-the-counter market, NASDAQ, (OTC-BB) under
the stock trading symbol "AGTP."
(1) Bid
Quarter Ending (2) High (3) Low
-------------- ---- ---
September 30, 1998 $ 0.02 .00
June 30, 1998 0.08 .02
March 31, 1998 0.11 .08
December 31, 1997 0.13 .11
September 30, 1997 $ 0.18 .14
June 30, 1997 0.12 .10
March 31, 1997 0.25 .18
December 31, 1996 0.18 .14
September 30, 1996 0.25 .22
(1) Such over-the-counter market quotations reflect inter-dealer prices, without
any retail markup, markdown, or commission and may not necessarily represent
actual transactions.
(2)(3) At the time of this report, the only activities in the Company's trading
Common stock, of which the Company is aware, is by Broker/Dealers known as
wholesalers. Consequently, there has been little or no retail trading activity
in the Company's securities during the fiscal year ended September 30, 1998. The
quotes shown above were arrived at by averaging the bid and the ask price in the
marketplace during these periods and are provided for informational purposes
only. The Company believes these quotes to be estimates and therefore should not
be relied upon for investment purposes.
Holders of Record
As of September 30, 1998, there were approximately 900 shareholders of
record of Common Stock.
Dividends
For the fiscal years 1997 and 1998, no dividends were declared or issued by
the Company, excepting dividends on preferred shares as described in the "Notes
to Consolidated Financial Statements, Note 2."). The Company issued 1,000,000
preferred shares pursuant to the terms of a joint venture agreement which bear
6
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an aggregate dividend of $3,000 per month for 83 months. Due to insufficient
capital resources, the Company has been unable to declare or pay dividends. As
of September 30, 1998, the Company has accrued preferred stock dividend payments
of $42,000. There are no contractual or written limitations concerning the
Company's declaration of dividends in the by-laws or records of the Company.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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The Company's financial statements are presented on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. During the fiscal year ending at September 30,
1998, the Company incurred a sizable net loss and had a substantial working
capital deficit. There is no assurances that the Company will be successful in
its plans developed with the intent of remedying these conditions. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. See Independent Auditor's Report and "Notes to Financial
Statements, Note 1" included herein. The financial statements do not include any
adjustments that might result from the possible inability of the Company to
continue as a going concern.
Following a change in management and the termination of former unprofitable
business activities of the Company, net loss decreased from $3,776,475 in fiscal
1996 to $648,256 in fiscal 1997, and to $336,535 in fiscal 1998. The Company
produced no revenues in fiscal 1998, as compared to revenues of $63,304 in
fiscal 1997. For the year ended September 30, 1998, operating expenses were
$390,909 and interest expenses totaled $39,798. In the opinion of management,
the Company has not progressed significantly in its operations over prior
periods. Working capital shortages continue to limit the Company's ability to
conduct business. In the opinion of management, the future business of the
Company is dependent upon its ability to secure new business opportunities and
revenue sources to increase shareholder value. No assurances can be provided the
Company will be successful in this regard. In addition, the auditors of the
Company have raised considerable doubt as to the ability of AGTsports, Inc. to
continue as a going concern. (See "Notes to Consolidated Financial Statements"
below).
Liquidity and Capital Resources
Cash and cash equivalent's balance on September 30, 1998 was $685. Current
assets were $1,685 and current liabilities were $632,050. There was no
significant change in working capital during fiscal year 1998 as the Company
continued restructuring with the objective of pursuing new business
opportunities. At September 30, 1998, the Company has no underlying business or
investments and continues to experience severe working capital shortages. For
the fiscal year ending September 30, 1998, the Company had no sales or revenues
resulting in a net loss of ($336,535). The loss was attributed to costs
associated with the restructuring of the Company. At September 30, 1998, the
Company has working capital deficiency of $630,365 and a stockholders deficit of
$690,365. In the opinion of management, the Company continues to experience lack
of adequate funding to fully pursue its business plan. Given the severe working
capital problems of AGTsports, Inc., the auditors of the Company have raised
significant doubts as to the ability of AGTsports, Inc. to continue as a going
concern. (See "Notes to Consolidated Financial Statements" and "Legal
Proceedings" included herein).
Material Commitments for Capital Expenditures
As of September 30, 1998, the Company has no material commitments for
capital expenditures.
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Unfavorable Trends or Uncertainties
The business of AGT is not subject to unfavorable trends or uncertainties
other than the potential significant decline the health of the U.S. economy
and/or a significant rise or decline in interest rates and the U.S. trading
markets. The Company can make no determination as to the effect of these factors
on operations or the probability such factors will occur.
Seasonal Aspects Bearing Upon Operations
AGT is not subject to seasonal fluctuations in its business cycle which
have a material impact on operations.
Item 7. Financial Statements and Supplementary Data
- ------- -------------------------------------------
This response is submitted as a separate section of this report (see
"Consolidated Financial Statements" below).
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
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After the Company's former auditors declined to stand for reappointment,
the firm of Brimmer, Burek, Keelan & McNally, Certified Public Accountants of
Tampa, Florida, was retained as the Company's auditors for the fiscal year ended
September 30, 1998. (See the Company's Form 8-K dated October 14, 1998.).
In connection with their audits of the Registrant's financial statements
for the two most recent fiscal years and during subsequent interim, the
Registrant has not had any disagreements with either firm on any matter of
accounting principals or practices, financial statement disclosure, or auditing
scope or procedure. In connection with their audits of the Registrant's
financial statements for the fiscal year ended September 30, 1997, the prior
auditors report was qualified for uncertainties related to possible securities
violations and for going concern issues. The audit report for the year ended
fiscal 1998 also contains a qualification for the going concern issue.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
As of September 30, 1998, the Executive Officers and Directors of the
Company, their ages and positions held in the Company were as follows:
Name Age Positions held
- ---- --- --------------
Cory J. Coppage 35 President/Treasurer/Secretary/
Director
B. Mack DeVine 53 Director
Louis F. Coppage 62 Director
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Directors of the Company serve for a term of three years and will be
formally nominated at the Company's annual meeting to be held at a future date
yet to be announced. If elected at the annual meeting, the directors will serve
until their successors are duly elected and qualified or until their earlier
resignation or removal.
Biographical Information
Cory J. Coppage - President, Treasurer, Secretary and Director
Mr. Coppage, 35, joined the Company in fiscal 1996 and was became Secretary
and Treasurer in fiscal 1997. In fiscal 1998, Mr. Coppage became acting
President and is presently serving as the sole officer of the Company pending
completion of restructuring measures. He has over nine years of business
management experience working with various public and private companies. From
1989 to 1994 he was a licensed property & casualty insurance agent and field
manager for Liability Insurance Operations Network, Inc., and W.J. Plemons
Insurance Agency of Atlanta, GA. From 1994 to 1998, he was Secretary and a
member of the board of directors of American Consolidated Growth Corporation, a
Colorado corporation. Mr. Coppage is an officer of Citadel Environmental Group,
Inc., a public company based in Denver, Colorado. He earned a bachelor's of
science in business administration at Regis University in 1985.
B. Mack DeVine - Director
Mr. Devine, 53, is the former Chairman and Chief Executive Officer of the
Company. He has more than twenty years experience in both the public and private
sectors as chief executive officer and/or president of operating companies
listed on NASDAQ, AMEX and NYSE. Since 1989 he has been the CEO of DeVine &
Associates, Inc., a company providing management consulting services to clients
in the Southeast United States. From 1988 to 1989, he was CEO, President and
Director of Devco Petroleum Company, Inc., where he directed operations of ten
convenience store/petroleum outlets. From 1982 to 1988, Mr. DeVine was Chairman,
CEO and President of Key Energy Enterprises, Inc. He was also President and
Director of American Agronomics Corporation from 1976 to 1982, where he was
responsible for the turnaround and restructuring of a $200,000,000 vertically
integrated citrus company. Prior to 1976, Mr. DeVine held positions as Chief
Financial Officer of companies such as Great Southern Equipment Company,
Automatic Merchandising, Inc., and Bay-Con Industries, Inc. He was first
lieutenant in the U.S. Army and is a private pilot.
Louis F. Coppage - Director
Mr. Coppage, 62, accepted a nomination to serve as an outside member of the
board of directors of the Company on May 13, 1996. He has over twenty years of
executive and managerial experience with both domestic and international
operations involving finance and business development for both private and
public corporations. From 1993 to present, he has held advisory positions and
has provided investment banking consulting services for the Company and its
former affiliate, American Consolidated Growth Corporation, ("AMGC"). From 1986
to 1993, Mr. Coppage served as financial consultant for numerous clients in real
estate, energy, insurance management and investment holdings-related businesses.
From 1978 to 1984, Mr. Coppage was founder and a major shareholder of American
Energy Investments, Inc., of Denver, Colorado. From 1973 to 1979 he was
president of Foresee, Ltd., a an energy development company in Denver, Colorado.
From 1969 to 1973 he was president of Coppage & Associates, a financial planning
company. Since 1979, he has provided advisory services for corporate clients
with an emphasis on the capital formation process. Mr. Coppage began his career
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in business as an account executive for Conneticut General Life Insurance
Company in 1964, where he was honored as a top producer and featured in the
Company's advertisements in publications such as Time, Newsweek and U.S. World
Report. He was a founding member of the insurance and financial planning groups,
Top of the Table and The Forum. Since 1993, Mr. Coppage has served as an
investment banking consultant and a special advisor to the AGT Board of
Directors.
None of the above directors have held any equity stake in any business that
has declared bankruptcy; nor have been convicted of any criminal offense other
than minor traffic violations, nor have had any judgements entered against them
which would restrict or preclude the director from being involved in securities
transactions; nor have any record of violations of securities or commodities
laws.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities Exchange Commission.
Executive officers and directors are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, as of the
date of this report, the Company is unable to make a determination as to whether
or not any officers or directors failed to file on a timely basis any reports
relating to transactions involving common stock of the Company owned by them.
The Company has implemented internal procedures for the purpose of determining
whether officers or directors have failed to file timely reports relating to
transactions involving common stock of the Company, and, if necessary, to file
any such reports in the appropriate time and manner.
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Item 10. Executive Compensation The following table sets forth the salary, bonus
and other compensation approved by Board of Directors of the Company for the
President and the Company's four other most highly compensated executive
officers (the "named executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long term Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Restricted
Prinicpal Fiscal Annual Stock Options/ LTIP All Other
Position Year Salary($) Bonus($) Compensation ($) Awards ($) SARs (#) Payouts ($) Compensation($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B. Mack DeVine 1998 $100,000 * -- -- -- 1,000,000 -- 60,330
Chairman and CEO 1997 $ 94,500 -- -- -- 533,300 -- 34,080
(1)(2) 1996 $ 46,150 -- -- 250,000 -- -- --
Gary Crews 1998 $ 31,730 -- -- -- 200,000 -- --
President 1997 $ 48,000 -- -- 250,000 533,300 -- --
(3) 1996 0 -- -- -- -- --
Cory J. Coppage 1998 $ 36,000 * -- -- -- -- -- --
Secretary & 1997 $ 36,000 -- -- -- -- -- --
Treasurer (4) 1996 0 -- -- 50,000 -- -- --
</TABLE>
* Actual 1998 salary paid to Devine was $20,504.67, and to Coppage was
$6,914.84, with related balances accrued as note payables at 9/30/98.
(1). Indicates compensation provided under Mr. DeVine's employment agreement
with the Company. The agreement provided the incentive stock grant shares
and authorizes consecutive options of up to 1,000,000 shares annually of
the Company's issued and outstanding common stock for a period of five
years. The agreement also provides that Mr. DeVine may at any time during
the term of the agreement purchase up to $100,000 of the Company's common
stock at fair market value, or 533,300 shares @ $0.18 per share as of
September 30, 1997. As of the date of filing of this report, the Company
has not issued the options nor have any options been exercised by Mr.
DeVine. Subsequent to September 30, 1998, Mr. DeVine resigned as Chairman
and CEO of the Company.
(2). Indicates compensation provided under Mr. Crews' employment agreement with
the Company. The agreement authorizes options of up to 200,000 shares
annually of the Company's issued and outstanding common stock exercisable
for a period of five years. The exercise market price at January1 1998 is
$0.13 per share. As of the date of filing of this report, the Company has
not issued the options nor have any options been exercised by Mr. Crews.
Mr. Crews resigned effective March 1, 1998.
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(3). Indicates restricted stock award provided to Mr. Coppage in fiscal 1996 as
an incentive stock grant pursuant to his joining the Company. There is
currently no formal employment agreement between the Company and Mr.
Coppage.
OPTION GRANTS IN LAST FISCAL YEAR
See above.
INDIVIDUAL GRANTS
See above.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
See above.
Other Compensation
Additional compensation paid to officers of the Company during fiscal 1998
included automobile allowances paid to DeVine and Coppage in the amounts of
$500/mo, and $200/mo., respectively. The compensation was accrued due to the
Company's working capital shortages.
During fiscal 1998, the Company issued 50,000 restricted common shares to
Kyle Ragsdale, a former employee of the subsidiary, Tee Times of America, Inc.
The compensation was paid in connection with the original acquisition agreement.
During fiscal 1998, the Company did not provide group medical insurance to
AGT officers and employees and did not adopt a comprehensive employee health
plan. The Company made no contributions to any Defined Contribution Benefit
Plans on behalf of its employees in fiscal 1998.
Meetings of the Board of Directors
During fiscal 1998, the Company's board of directors met on two occasions.
There were no incumbent directors who attended less than 75% of these meetings
of the Board during that period.
Director Agreements and Compensation
The Company's director agreements provide for a three year term of service
and compensation in the form of a one time restricted common stock award of
100,000 shares and $1,500 for attending each of the four quarterly scheduled
meetings of the Board, plus reimbursement of expenses. Compensation for meeting
attendance is payable at the Company's option in cash or in equivalent AGTP
restricted common shares set at the market price on the day of issue. Directors
who are U.S. residents are entitled to participate in the Company's health and
welfare benefit programs. Employee directors are not entitled to receive
compensation for Board service. During fiscal 1998, no compensation was paid or
distributed to any directors of the Company.
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Item 11. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Stock Ownership
The following table sets forth certain information regarding the beneficial
and economic ownership of AGTP common stock as of September 30, 1998 by: (1)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock; (2) each director and nominee for director; (3)
all directors and executive officers as a group. The beneficial ownership
reflected in the following table is calculated in accordance with Section 13(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"). Shares issuable on
exercise of options exercisable within 60 days of September 30, 1998 are deemed
to be outstanding for the purpose of computing the percentage of ownership of
persons beneficially owning such options, but have not been deemed to be
outstanding for the purpose of computing the percentage ownership of any other
person. As of September 30, 1998, the total outstanding shares of the Company's
common stock were 27,554,726.
Name, Position and Address Number of Shares (1) Percent of Class
- -------------------------- ----------------- ----------------
Cory J. Coppage --- 0 %
President, Treasurer,
Secretary, Director
621 17th Street Suite 1730
Denver, CO 80293
B. Mack DeVine, Director 1,783,300 (2) 6 %
c/o DeVine & Associates
P.O. Box 620
Tampa, FL 33601
Louis F. Coppage, Director 120,166 (3) .0 %
5668 S. Rex Road
Memphis, TN 38119
Officers and Directors
as a Group (three persons) 1,953,466 (4) 7 % (5)
(1) Includes all stock options available at September 30, 1998, pursuant to the
terms of employment agreements with the Company. As of the date of filing
of this report, none of the options have been issued or exercised.
(2) Pursuant to Mr. DeVine's employment agreement with the Company, the figure
includes an incentive stock grant and option shares as follows: options
granted January 19998 to purchase up to 1,000,000 shares of the Company's
common stock @ $0.13 per share and options granted January 1997 to 533,300
shares @ $0.18 per share. As of the date of filing of this report, none of
the options have been issued or exercised.
(3) Includes 100,000 share common stock option provided under the Company's
director service agreement. As of the date of filing of this report, none
of the options have been issued or exercised.
(4) At September 30, 1998, 1,000,000 preferred shares issued and outstanding
were held by a third party, Global Links Trading, Ltd. The shares are
non-voting and convertible at the option of the holder into 2 shares of the
Company's common stock upon demand. (See "Notes to Consolidated Financial
Statements, Note 2 below).
13
<PAGE>
All ownership is beneficial and of record except as specifically indicated
otherwise. Beneficial owners listed above have sole voting and investment power
with respect to the shares shown unless otherwise indicated. Economic interest
is calculated by including shares directly owned and, in the case of individuals
and all directors and executive officers as a group, shares such individuals or
group are entitled to receive upon exercise of outstanding options exercisable
within 60 days of September 30, 1998. Beneficial ownership is calculated in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder.
Item 12. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
On May 27, 1997, the joint venture agreement dated September 15, 1995
between Global Links Trading, Ltd., ("GLT), AGTsports, Inc., and AMGC was
amended as follows:
Revenue sharing arrangement was revised to provide for 85% of revenues to
the Company and 15% to AMGC.
GLT exchanged 6,850,000 common shares of the Company and a note payable
with an outstanding principal balance of $172,500 for 1,000,000 shares of
preferred stock, plus $15,000. The $15,000 cash payment was applied to the note
payable resulting in settlement of a note payable of $157,500 in connection with
this transaction. The preferred stock is convertible at the option of GLT at a
ratio of 2 restricted common shares for each preferred share tendered. The
preferred stock bears an aggregate dividend of $3,000 per month for 83 months.
As of September 30, 1998, accrued dividend payments of $42,000 were unpaid. The
agreement requires the Company to reissue all common stock surrendered by GLT
under this amendment and all future payments due by the Company shall be
suspended. (See Related Party Transactions in Notes to Consolidated Financial
Statements below".)
On July 10, 1998, GLT and the Company entered into a settlement agreement.
Significant provisions of the settlement agreement are as follows: the Company
agreed to pay GLT $1,000 upon execution of the settlement agreement, and $10,000
on September 1, 1998. The Company failed to make the September 1, 1998 payment,
and GLT may, at its sole option, void the settlement agreement and exercise all
of its rights under the May 27, 1997 agreement discussed above.
The former president of the Company resigned effective March 1, 1998. A
claim was filed with the Oklahoma Department of Labor with respect to accrued
unpaid wages and expenses incurred on behalf of the Company for an aggregate
total of $14,615. In addition, the former president's employment agreement
provided for 200,000 stock options to be granted annually beginning December 31,
1997 through December 31, 2001. The options are exercisable at the average
closing bid price during the twenty trading days immediately preceding the date
of grant. The options are exercisable for a period of five years following the
date of grant. Although the Company is in dispute with the former president as
to whether the former president is entitled to common stock options subsequent
to employment termination, the options have been accrued as of September 30,
1998.
14
<PAGE>
Subsequent to fiscal 1997, the Company has determined it may have violated
Section 5 of the Securities Act of 1993, as amended (the 93 Act) in connection
with the sale of $477,950 of the Company's common stock to approximately thirty
individuals in 1997. The Company has not complied with the provisions of either
Rule 505 or 506 and no Form D or other similar fillings have been made which
claim or substantiate the availability of a registration exemption under certain
Federal and State securities laws. Violation of Section 5 of the Act entities
the purchaser of the security to recover from the Company the consideration paid
for the security together with interest thereon. The Company may also have
violated certain Blue-Sky laws of the various states, in which investors reside.
The Company has taken remedial actions which it believes, based on the
advice of legal counsel, may cure the potential violations and ensure full
compliance in the future. (See Related Party Transactions in Notes to
Consolidated Financial Statements below".)
15
<PAGE>
AGTsports, Inc.
Tampa, Florida
Audited Financial Statements
September 30, 1998
<PAGE>
CONTENTS
--------
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS BALANCE SHEET F-2
STATEMENT OF OPERATIONS F-3
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) F-4
STATEMENT OF CASH FLOWS F-5 - F-6
NOTES TO FINANCIAL STATEMENTS F-7 - F-17
<PAGE>
Independent Auditors' Report
The Board of Directors
AGTsports, Inc.
Tampa, Florida
We have audited the accompanying balance sheet of AGTsports, Inc. (the
"Company") at September 30, 1998, and the related statements of operations,
shareholders' equity (deficit), and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the fiscal 1998 financial statements referred to above present
fairly, in all material respects, the financial position of the Company at
September 30, 1998 and the results of operations and cash flows for the year
then ended.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a shareholders' deficit and a working capital deficit which all raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
BRIMMER, BUREK, KEELAN & McNALLY LLP
Certified Public Accountants
July 23, 1999
F-1
<PAGE>
AGTsports, Inc.
Tampa, Florida
Balance Sheet
September 30, 1998
ASSETS
Current:
Cash $ 685
------------
Total current assets 685
Deposits 1,000
------------
Total assets $ 1,685
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 201,475
Accrued expenses 58,950
Notes payable - current 371,625
------------
Total current liabilities 632,050
Notes payable (less current portion) 60,000
-------------
Total liabilities 692,050
Shareholders' deficit:
Convertible Preferred stock, $1.00 par value;
5,000,000 shares authorized; 1,000,000
shares issued and outstanding (Note 2) 1,000,000
Common stock, $.001 par value; 50,000,000
shares authorized; 27,554,726 shares issued
and outstanding 27,555
Treasury stock (17,459)
Additional paid-in capital 22,392,893
Accumulated deficit (24,093,354)
------------
Total shareholders' deficit (690,365)
------------
Total liabilities and shareholders' deficit $ 1,685
============
Please read accompanying notes.
F-2
<PAGE>
AGTsports, Inc.
Tampa, Florida
Statement of Operations
September 30, 1998
Revenue:
Sales $ --
Expenses:
Salaries and director compensation 39,215
Professional services 214,516
General and administrative 106,431
Travel and entertainment 30,747
------------
Total expenses 390,909
------------
Loss from operations (390,909)
Interest expense (39,798)
------------
Net loss before extraordinary items and
provision for income taxes (430,707)
Provision for income taxes --
------------
Loss before extraordinary items (430,707)
Extraordinary items:
Debt forgiveness 94,172
------------
Net loss $ (336,535)
============
Loss per common share before extraordinary items $ (.015)
Extraordinary items per common share .003
------------
Net loss per common share $ (.012)
------------
Weighted-average shares of common stock outstanding 27,120,218
============
Please read accompanying notes.
F-3
<PAGE>
<TABLE>
<CAPTION>
AGTsports, Inc.
Tampa, Florida
Statement of Changes in Shareholders' Equity (Deficit)
September 30, 1998
Preferred Stock Common Stock
------------------------- ------------------------
Number Number Additional
of of Paid-In Treasury Accumulated
Shares Amount Shares Amount Capital Stock Deficit
---------- ------------ ----------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 9/30/97 1,000,000 $ 1,000,000 24,871,947 $ 24,872 $ 22,009,477 $ (16,720) $(23,720,819)
Common stock issued
for services -- -- 263,785 264 50,282 -- --
Common stock issued
to settle debt obligation -- -- 331,194 331 57,628 -- --
Common stock issued
for cash -- -- 2,087,800 2,088 275,506 -- --
Common stock returned
to Company in settlement
of SWSI acquisition -- -- -- -- -- (739) --
Preferred stock dividends -- -- -- -- -- -- (36,000)
Net loss -- -- -- -- -- -- (336,535)
---------- ------------ ------------ ------------ ------------ ------------ ------------
Balance at 9/30/98 1,000,000 $ 1,000,000 27,554,726 $ 27,555 $ 22,392,893 $ (17,459) $ 24,093,354
========== ============ ============ ============ ============ ============ ============
Please read accompanying notes. F-4
</TABLE>
<PAGE>
AGTsports, Inc.
Tampa, Florida
Statement of Cash Flows
September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(336,535)
Adjustments to reconcile net loss
to net cash used in operating activities:
Debt forgiven (94,172)
Common stock issued for services 50,546
(Increase) decrease in:
Prepaid expenses 581
Other assets (1,000)
Increase (decrease) in:
Accounts payable (176)
Accrued expenses 20,584
---------
Net cash provided (used)
by operating activities (360,172)
---------
CASH FLOWS FROM INVESTING ACTIVITIES: --
---------
Net cash provided (used)
by investing activities --
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 276,855
Principal payments on notes payable (16,875)
Preferred stock dividends (3,000)
Proceeds from issuance of notes payable 100,000
---------
Net cash provided (used)
by financing activities 356,980
---------
Net (decrease) increase in cash (3,192)
Cash at beginning of year 3,877
---------
Cash at end of year $ 685
=========
F-5
<PAGE>
AGTsports, Inc.
Tampa, Florida
Statement of Cash Flows (Continued)
September 30, 1998
NONCASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued in connection with the
settlement of certain accrued liabilities $120,005
========
Common stock issued in connection with the
settlement of accounts payable $ 57,959
========
Preferred stock dividends included in accounts payable $ 36,000
========
SUPPLEMENTAL INFORMATION:
Interest paid $ 7,065
========
Taxes paid $ --
========
Please read accompanying notes. F-6
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AGTsports, Inc. (the "Company") has not sold significant products or services in
several years. The Company was incorporated under the laws of the state of
Colorado on January 6, 1986 as American Merger Control, Inc. In 1990, the
Company changed its name to Ultratech Knowledge Systems, Inc., and in 1993 the
Company changed its name again to AGTsports, Inc. (AGT). During the fiscal years
ended September 30, 1991 and through September 30, 1998, the Company's business
plan was to pursue providing technological and software services to golf and
related industries. In 1998, the Company abandoned this business plan.
Management of the Company is now pursuing other alternatives such as possible
business combinations with other entities.
On January 10, 1997, the Company acquired 100% of the outstanding stock of Tee
Times of America, Inc. ("TTA"). TTA's primary business activity is the
development of computer software for a golf tee time reservation system (see
Note 2). The operational activities of TTA substantially ceased subsequent to
the acquisition and the corporate charter was terminated in February 1999.
In fiscal 1994 and fiscal 1995, the Company established two wholly-owned
subsidiaries, AGTsports (Europe) Ltd. and AGTsports Australia Pty. Ltd. During
fiscal 1996, AGTsports Australia undertook an unsuccessful public offering which
failed to meet the "minimum" and was abandoned in April 1996. Neither company
ever achieved operational revenues and the Company suspended their operations in
fiscal 1996 due to lack of working capital in order to concentrate on markets
within the United States (U.S.). The Australian company was terminated in June
1997. The European subsidiary was terminated in May 1999.
The Company owns 49% of Super Woman Systems, Inc. (SWSI). However, because of
uncertainties created by management disagreements and cash flow problems at
SWSI, the Company does not expect to realize any benefit from this investment.
No income or expense was recognized during the year ended September 30, 1998.
Summary of Significant Accounting Policies
A summary of the significant accounting policies used in preparing the
accompanying financial statements follows:
F-7
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Basis of Presentation
The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company has incurred a net loss of $325,206 for the year ended
September 30, 1998. At September 30, 1998, the Company has a net working capital
deficit of $619,036 and a shareholder's deficit of $679,036, all of which raise
substantial doubt about the Company's ability to continue as a going concern.
Management has developed plans intended to remedy these conditions. These plans
include seeking other sources of financing such as the completion of a possible
business combination and the sale of common stock. No assurances can be given as
to the success of these plans. The financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates, however,
management does not believe these differences would have a material effect on
operating results.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short
term, highly liquid investments with maturities of three months or less to be
cash equivalents.
Revenue Recognition
Revenue is recognized when services are rendered or when computer software
products are delivered.
F-8
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. The Company has
chosen to account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the carrying amounts of
existing assets and liabilities measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Comprehensive Income
Financial Accounting Standards No. 130 establishes standards for reporting
comprehensive income which is defined as the change in equity of an enterprise
except those resulting from stockholder transactions. All components of
comprehensive income are required to be reported in the income statement. The
Company adopted this Standard effective October 1, 1998. During 1998, the
Company did not engage in any transactions required to be reported under this
new Standard.
Loss Per Share
Loss per common share has been computed based upon the weighted-average number
of shares outstanding during the period. Although the Company's preferred stock
(Note 2) and options (Note 5) are common stock equivalents, they are
antidilutive for the year ended September 30, 1998.
F-9
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company has an agreement with Devine and Associates, Inc. and B. Mack Devine
("Mr. Devine") (the "Agreement") for Mr. Devine to serve as Chairman of the
Board of Directors, President and Chief Executive Officer of the Company through
December 31, 2001. B. Mack Devine receives no direct cash compensation from the
Company, he is however an officer of Devine and Associates, Inc. The Agreement
provides for annual consulting fees payable to Devine and Associates, Inc.
beginning January 1, 1997 payable as follows:
Year Ending December 31, Amount
------------------------ ------
1997 $ 100,000
1998 150,000
1999 200,000
2000 250,000
2001 300,000
In addition, the Agreement provided for an incentive bonus for the year ended
December 31, 1996 consisting of 250,000 shares of nondilutive restricted common
stock. These shares were issued to Devine and Associates, Inc. Such amount was
recorded during the year ended September 30, 1996. Commencing January 1, 1997
the Agreement provided for the payment of an annual cash bonus to Devine and
Associates, Inc. equal to 5% of earnings before taxes. In addition, the
Agreement provides for stock option incentives to Mr. Devine as follows:
Effective January 15, 1997 incentive stock options exercisable through
January 15, 2002 to purchase up to $100,000 in value of common stock at
the closing bid price (approximately 533,300 shares.) In addition, the
agreement provides for nonqualified stock options with no expiration
date to purchase common stock at the average closing bid price during
the twenty trading days immediately preceding the date of grant are to
be granted as follows:
Date of Grant Number of
December 31, Options
------------ -------
1997 1,000,000
1998 1,000,000
1999 1,000,000
2000 1,000,000
2001 1,000,000
Mr. Devine resigned as Chairman and CEO effective September 30, 1998. Based on
his employment contract, Mr. Devine retains all options granted prior to his
resignation. 10 AGTsports, Inc. Tampa, Florida Notes to Financial Statements
September 30, 1998
F-10
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 2 - RELATED PARTY TRANSACTIONS (Continued)
Per the Agreement, during the year ended September 30, 1998, fees earned by
Devine and Associates, Inc. were as follows:
Consulting fees $ 144,550
Administration and accounting 9,280
Automobile allowance 6,500
-----------
$ 160,330
===========
Approximately $102,200 of these fees were converted to a note payable at
September 30, 1998.
In addition, Devine and Associates, Inc. was reimbursed for certain expenses
incurred on behalf of the Company as follows:
Travel and entertainment $ 23,429
Other 7,428
-----------
$ 30,857
===========
On May 15, 1991, the Company entered into an agreement with American
Consolidated Growth Corporation ("AMGC") to acquire the division of AMGC known
as Advance Golf Technologies ("AGT") by the issue of 1,585,194 shares of AGT
common stock to AMGC. 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,
AMGC gained substantial control over the Company. At September 30, 1994, AMGC
owned 8.37% of the outstanding common stock of the Company.
On September 15, 1995 the Company entered into a resolution agreement with a
former affiliate, AMGC to resolve related party activities and outstanding
issues between the two companies from prior years. Pursuant to the Agreement,
AMGC returned 1,000,000 preferred shares to AGT and forgave an accounts
receivable of $671,000 in return for 40% of the then total outstanding and
issued common shares of AGT. A second agreement, a joint venture between AGT,
AMGC and Global Links Trading Ltd. (GLT) allowed for the payment by GLT of 10%
overriding royalties on gross sales of GLT products to AMGC and AGT,
respectively, in exchange for the transfer of 100% of AMGC's common AGT
shareholdings to GLT and the transfer by AGT of certain non-U.S. contracts and
resources to GLT. The common stock issued to AMGC was determined by the amount
of debt owed by the Company, net of assets received, or 7,850,000 shares of
common stock. Such shares were issued in October 1995. GLT subsequently sold
1,000,000 shares of common stock to third parties. In addition, GLT advanced the
Company $172,500 during the year ended September 30, 1996.
F-11
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 2 - RELATED PARTY TRANSACTIONS (Continued)
On May 27, 1997, the Joint Venture agreement dated September 15, 1995 between
Global Links Trading Ltd., AGTsports, Inc., and AMGC was amended as follows:
Revenue sharing arrangement was revised to provide for 85% of revenues
to the Company and 15% to AMGC.
GLT exchanged 6,850,000 shares of common stock and a note payable with
an outstanding principal balance of $172,500 for 1,000,000 shares of
preferred stock plus $15,000. The $15,000 cash payment was applied to
the note payable resulting in the settlement of a note payable of
$157,500 in connection with this transaction. The preferred stock is
convertible at the option of GLT at a ratio of two shares of
restricted common stock for each share of preferred stock. The
preferred stock bears an aggregate dividend of $3,000 per month for 83
months. As of September 30, 1998, accrued dividend payments of $42,000
were unpaid. Such amounts have been included in accounts payable at
September 30, 1998 in the accompanying balance sheet. The amended
joint venture agreement provides for a default in the event a
preferred stock dividend payment remains unpaid. The agreement
requires the Company to reissue all common stock surrendered by GLT
under this amendment and all future payments due by the Company shall
be suspended.
On July 10, 1998 GLT and the Company entered into a settlement agreement.
Significant provisions of the settlement agreement are as follows:
The Company agreed to pay GLT $1,000 upon execution of the settlement
agreement and $10,000 on September 1, 1998. The Company failed to make
the September 1, 1998 payment and GLT may, at its sole option, void
the settlement agreement and exercise all of its rights under the May
27, 1997 agreement discussed above. The $1,000 is reported as a
deposit on the September 30, 1998 balance sheet.
NOTE 3 - NOTES PAYABLE
Notes payable consist of the following:
Unsecured notes payable due on demand.
Interest at 10%. $ 146,226
Unsecured notes payable due on demand.
Non-interest bearing. 30,000
F-12
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 3 - NOTES PAYABLE (Continued)
Unsecured notes payable. Principal and
accrued interest at 10%, due February
and September 2000. $ 60,000
Demand note payable in full on June 10,
1998 with interest at 11.5% payable
monthly, guaranteed by a stockholder
of the Company. 70,000
Notes payable for $17,746 and $102,260 for
services, due December 31, 1998. Automatically
renewing for 60 and 90 days, respectively. If
not paid by December 31, 1998, the notes will
accrue interest at 12% as of July 1999. No
payments have been made. 120,006
Other 5,393
----------
Total notes payable 431,625
Less current portion 371,625
----------
Total long-term debt $ 60,000
==========
Required payments on long-term debt are as follows:
September 30,
-------------
1999 $ 371,625
2000 60,000
-----------
$ 431,625
===========
As of September 30, 1998, $58,950 of interest was accrued related to these
notes.
With the exception of the $30,000 in unsecured non-interest bearing notes, the
fair value of these obligations approximates fair market value based on current
market rates. Because the non-interest bearing notes have no fixed maturity, it
is impossible to determine a fair value for these non-interest bearing
obligations.
F-13
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The former president of the Company resigned effective March 1, 1998. A claim
was filed with the Oklahoma Department of Labor with respect to accrued unpaid
wages and expenses incurred on behalf of the Company for an aggregate total of
$14,615. In addition, the former president's employment agreement provided for
200,000 stock options to be granted annually beginning December 31, 1997 through
December 31, 2001. The options are exercisable at the average closing bid price
during the twenty trading days immediately preceding the date of grant. The
options are exercisable for a period of five years following the date of grant.
Although the Company is in dispute with the former president as to whether the
former president is entitled to common stock options subsequent to employment
termination, the options have been accrued as of September 30, 1998.
Accounts payable includes $61,430 due to one of the Company's vendors. In
February 1999, the vendor obtained a judgement against the Company for this
amount. In addition, the Company must pay interest on the unpaid judgement at 8%
per annum.
In August 1995, the Securities and Exchange Commission (SEC) initiated a formal
private investigation regarding AGTsports, Inc. The SEC order authorizing the
investigation, and subsequent investigatory efforts, seem to focus upon, among
other things, the accuracy of public statements made by or about the Company,
the price at which the stock of the Company has traded, and whether the stock of
the Company was sold in violation of the registration provisions of the federal
securities laws.
The Company, may, have violated certain Federal and State laws in connection
with certain 1997 sales of common stock. Certain of the possible violations are
discussed below.
The Company's sales of common stock to approximately thirty persons aggregating
$477,950 in 1997 might be deemed to be in violation of Section 5 of the
Securities Act of 1993 as amended (the 93 Act). The Company has not complied
with the provisions of either Rule 505 or 506 and no Form D or other similar
fillings have been made which claim or substantiate the availability of a
registration exemption under certain Federal and State securities laws.
Violation of Section 5 of the Act entities the purchaser of the security to
recover from the Company the consideration paid for the security together with
interest thereon. The Company may also have violated certain Blue-Sky laws of
the various states, in which investors reside.
The Company sold certain common stock in 1997 and the purchasers were given
contractual nondilutive rights in the event of a reverse split or similar common
stock adjustment. The Company's Articles of Incorporation do not permit the sale
of nondilutive common stock.
The Company has taken actions which it believes, based on the advice of legal
council, may cure the above securities law and corporate law violations as well
as any additional securities and corporate law violations that may have
occurred. However, the effect on the Company, if any, as a result of the
ultimate disposition of these matters cannot be determined.
F-14
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 5 - STOCK BASED COMPENSATION AND STOCK OPTIONS
On August 29, 1996 the Company's Board of Directors approved a director stock
option plan whereby 417,964 shares were reserved for grant to members of the
board of directors. The exercise price will be the average stock price during
the twenty trading days immediately preceding the grant. No common stock options
were granted in connection with this plan during the year ended September 30,
1998.
In addition, the Company has stock option plans under which certain key
employees may be granted options to purchase shares of Company common stock
which are exercisable at market value at the date of grant. Options generally
vest immediately and either have no expiration date or expire five years from
the date of the grant.
The Company applies APB Opinion 25 and related interpretations in accounting for
its plans. Accordingly, compensation costs are recognized as the difference
between the exercise price of each option and the market price of the Company's
stock at the date of grant. No compensation costs were charged to income in
1998. Had compensation for the Company's stock option plans been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of FASB Statement 123, the Company's net income would
not have changed.
The following is a summary of the status of the Company's stock option plans as
of September 30, 1998:
Number Option Price
of Shares Per Share
--------- ---------
Outstanding at 9/30/97 908,333 $ .19 to .35
Granted 1,200,000 .13
Exercised - -
Expired (375,000) .35
---------- --------------
1,733,333 $ .13 to .19
========== ============
In addition, during fiscal 1997 certain purchasers of common stock were granted
875,250 options to purchase one share of common stock for each dollar invested.
Such options expire five years from the date of grant and are exercisable at 50%
of the market value of the common stock on the day of exercise. In addition,
175,000 options were issued to the selling shareholders of TTA. Such options are
exercisable at $1 per share. At September 30, 1998, 518,250 options are
outstanding with respect to options granted in connection with certain 1997
common stock sales and to the selling shareholders of TTA.
F-15
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 6 - INCOME TAXES
The tax effects of temporary differences that give rise to significant portions
of the deferred tax asset are:
Deferred tax assets:
Net operating loss carryforwards $ 4,852,854
Goodwill 18,413
-----------
Total gross deferred tax assets 4,871,267
Less valuation allowance (4,871,267)
-----------
Net deferred tax assets $ --
===========
A valuation allowance has been established to reduce the deferred tax assets to
an amount that management believes will ultimately be realized. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
the period that temporary differences and carryforwards are expected to be
available to reduce taxable income. Based on the Company's history of operating
losses and expectations for the future, management believes sufficient
uncertainty exists regarding the realizability of these items that a valuation
allowance is required. Both the deferred tax asset and related valuation
allowance decreased by approximately $3,600,000 because of a change in
assumptions about the tax rate which will apply when the differences reverse.
The change in assumptions has no effect on the financial statements.
At September 30, 1998, the Company has net operating loss carryforwards for tax
reporting purposes totaling approximately $22,753,000. These carryforwards will
expire in the following fiscal years:
Fiscal Year Amount
----------- ------
2004 $ 1,376,000
2006 1,182,000
2007 7,590,000
2008 3,789,000
2009 5,206,000
2010 3,026,000
2011 92,000
2012 492,000
------------
$ 22,753,000
============
F-16
<PAGE>
AGTsports, Inc.
Tampa, Florida
Notes to Financial Statements
September 30, 1998
NOTE 7 - DEBT FORGIVENESS
During the fiscal year ended September 30, 1998, the Company continued
negotiations to consolidate operations and terminate all subsidiaries. In
connection with these efforts, the Company was able to obtain forgiveness of
approximately $94,000 in accounts payable and accrued expenses related to these
subsidiaries.
F-17
<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 Form 10-KSB report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AGTsports, Inc.
Dated: July 29, 1999 By: /s/ Cory J. Coppage
--------------------------------
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Form
10-KSB report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: July 29, 1999 By: /s/ Cory J. Coppage
--------------------------------
President
16
<PAGE>
PART IV
Item 13. Exhibits, Financial Statement Schedules 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
- -------------- ----------------------
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company**
27 Financial Data Schedule
* (Incorporated by reference to the Company's Form S-18 Registration Statement
of American Merger Control, Inc. filed with the Commission in 1986 and to the
Form 10-K for the fiscal year ended September 30, 1992 filed with the Commission
on or about March 10, 1993.)
** Previously filed under cover of Form 10-SB, filed June 15, 1993, SEC File No.
0-21914.
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from balance sheet and
statement of operations accounts filed as for 10-KSB and is qualified in its
entirety by such registrant's annual report on 10-KSB for the year ended period
September 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 685
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,685
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,685
<CURRENT-LIABILITIES> 620,721
<BONDS> 0
0
1,000,000
<COMMON> 27,555
<OTHER-SE> (17,459)
<TOTAL-LIABILITY-AND-EQUITY> 1,685
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 390,909
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<INCOME-PRETAX> 0
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