U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number: 0-17436
LAS VEGAS DISCOUNT GOLF & TENNIS, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1034868
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(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118
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(Address of principal executive offices including zip code)
(702) 798-7777
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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___
As of May 8, 1996, 5,319,000 shares of common stock, no par value per share,
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
PART I: FINANCIAL INFORMATION Page No.
Item 1. Financial Information:
Unaudited Condensed Consolidated Balance Sheets 3-4
Unaudited Condensed Consolidated Statements of Income 5
Unaudited Condensed Consolidated Statements of Cash Flows 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis or
Plan of Operations 7-9
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 754,000 $1,043,000
Accounts receivable from franchisees, net 534,000 422,000
Lease termination receivable 3,000,000 3,000,000
Inventories 2,314,000 2,588,000
Prepaid expenses and other 42,000 696,000
Total current assets 6,644,000 7,749,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 1,107,000 1,522,000
OTHER ASSETS 144,000 140,000
$7,895,000 $9,411,000
NOTE: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
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(Unaudited)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $2,644,000 $3,872,000
Deferred franchise fees 141,000 120,000
Total current liabilities 2,785,000 3,992,000
NOTE PAYABLE TO SHAREHOLDER 663,000 663,000
DEFERRED INCOME TAX LIABILITY 743,000 743,000
MINORITY INTEREST 1,176,000 1,252,000
STOCKHOLDERS' EQUITY:
Convertible, preferred stock,
Series A, no par value:
authorized-5,000.00 shares;
issued and outstanding-512,799
shares 5,000 5,000
Common stock, no par value:
authorized-15,000,000 shares,
issued and outstanding-
5,319,008 shares 3,871,000 3,871,000
Accumulated deficit (1,348,000) (1,115,000)
Total stockholders' equity 2,528,000 2,761,000
$7,895,000 $9,411,000
NOTE: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
For the Three Months
Ended March 31,
--------------------
1996 1995
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REVENUES:
Net merchandise sales $3,222,000 $1,784,000
Franchise fees 80,000 43,000
Royalties 240,000 219,000
Other 60,000 56,000
Total revenues 3,602,000 2,102,000
EXPENSES:
Cost of sales 2,659,000 1,505,000
Selling, general and administrative 1,158,000 841,000
Golf centers and driving range
development costs 94,000 0
Total expenses 3,911,000 2,346,000
LOSS BEFORE BENEIT/PROVISION FOR
INCOME TAXES AND MINORITY INTEREST (309,000) (244,000)
PROVISION FOR INCOME TAXES 0 0
LOSS BEFORE MINORITY INTEREST (309,000) (244,000)
MINORITY INTEREST 76,000 53,000
NET LOSS $ (233,000) $ (191,000)
LOSS PER COMMON SHARE: $ (.04) $ (.02)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
--------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (233,000) $ (191,000)
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest (76,000) (53,000)
Depreciation and amortization 27,000 14,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (112,000) 81,000
Decrease in inventory 274,000 43,000
(Increase) decrease in prepaid expenses
and other 654,000 (376,000)
(Increase) decrease in other assets (4,000) 1,000
Increase (decrease) in accounts payable (773,00) 658,000
Increase in deferred franchise fees 21,000 0
Net cash provided by(used in) operating activities (222,000) 177,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (152,000) (1,545,000)
Refund development costs 85,000 0
Net cash flows used by investing activities (67,000) (1,545,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS (289,000) (1,368,000)
CASH AND CASH EQUIVALENTS - Beginning of period 1,043,000 3,586,000
CASH AND CASH EQUIVALENTS - End of period $ 754,000 $ 2,218,000
The accompanying notes are an integral part of these condensed consolidated
financial statements.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 1996 and
for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1995 audited financial statements. The results of operations for the periods
ended March 31, 1996 and 1995 are not necessarily indicative of the operating
results for the full year.
NOTE 2. STATEMENT OF CASH FLOWS
For the purposes of the statements of cash flows, the Company
considers all highly liquid debt investments purchased with a maturity of
three months or less to be cash equivalents.
Supplemental disclosures of cash flow information:
Cash paid during the three months ended on:
March 31,
1996 1995
-------------------
Interest $17,000 $15,000
Income taxes $ 0 $ 0
NOTE 3. RELATED PARTY TRANSACTIONS
Las Vegas Retail - related party purchases inventory at cost from
the Company. Such purchases amounted to $355,000 and $190,000 for the three
months ended March 31, 1996 and 1995, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
SEASONALITY
Las Vegas Discount Golf & Tennis, Inc.'s (the "Company") business is
seasonal. The Company typically experiences sales peaks in the Spring and
pre-Christmas seasons. Accordingly, the results of interim periods may not be
indicative of results for the full year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
During the three months ended March 31, 1996, the Company had a net
loss of $233,000 as compared to a net loss of $191,000 for the same period in
1995. Total revenues for the first three months of 1996 increased by
approximately $1,500,000 (71%) as compared to the same period in 1995. The
increase in revenues was primarily attributable to a $1,438,000 increase in
merchandise sales coupled with a $62,000 net increase in all other revenue
categories. Merchandise sales increased due to the two new stores opened
after the first quarter of 1995. Since franchise fees are recognized when the
applicable franchise stores opened, the increase in franchise fees reflects an
increase in the number of stores opened in the three months ended March 31,
1996 as compared to the three months ended March 31, 1995.
Royalties increased $21,000 (10%) in the first quarter to $240,000.
Cost of Sales as percentage of merchandise sales decreased from 84%
in 1995 to 83% in 1996 as a result of a shift in product mix to items with
higher average profit margins.
Selling, general and administrative expenses increased by $411,000
(49%) in 1996 as compared to 1995, primarily attributable to the expenses of
operating the two new company owned stores in Encino and Westwood, California
and research and development expenses.
In May of 1994 Saint Andrews Golf Corporation ("SAGC") entered into
a Ground Lease (the "Lease") for approximately 33 acres of land on Las Vegas
Boulevard which it intended to use for the development of a golf/sports park.
The lease contained provisions which allowed the lessor to terminate the lease
within the first 6 years of the 15 year lease term in the event that the
lessor entered into a sale of property as long as the intended use of the
property after the sale was not a golf/sports park as contemplated by the
Company.
In June 1995 the lessor notified the Company that it had entered
into a sale agreement for the parcel and that it was exercising its right of
termination. Pursuant to cancellation provisions contained within the Lease
the Company was entitled to reimbursement of unamortized construction costs
which it incurred, based upon criterion contained within the lease, up to an
aggregate amount of $3.5 million.
Upon notification of the Lease termination the Company ceased
construction activities and submitted substantiation for construction costs
totaling approximately $3.9 million. Utilizing applicable formulas derived
from the Lease, the Company believes that, based on the maximum expenditures
available for reimbursement of $3.5 million, $3,279,465 in costs are
reimbursable by the purchaser. The purchaser has reviewed such support and
has indicated that it believes that only a portion of the construction costs
submitted are reimbursable within the context of the Lease agreement.
No settlement was reached regarding the disputed amount and on
February 27, 1996 the Company filed a complaint with the District Court, Clark
County, Nevada, against the purchaser of the parcel seeking an unspecified
amount of compensatory damages, punitive damages, attorney fees and costs.
Management believes, and legal counsel concurs, that a recovery of
$3,000,000 is probable with regards to this litigation and that the amount
will be collected in 1996. The Company has, accordingly, recorded a lease
termination receivable for this amount in the accompanying balance sheet as of
March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had working capital of approximately
$3,859,000 as compared to $3,757,000 at December 31, 1995.
Cash decreased from $1,043,000 at December 31, 1995, to $754,000 at
March 31, 1996, primarily due to the net loss of $233,000, a $112,000 increase
in accounts receivable, and a $773,000 decrease in accounts payable. These
amounts were offset by a $274,000 decrease in inventory, a $654,000 decrease
in prepaid expenses, an $85,000 refund of development costs, $27,000 in
depreciation and amortization and a $21,000 increase in deferred franchise
fees.
The Company incurred $152,000 of capital expenditures during the
quarter related to the All-American SportPark.
The Company's sources of working capital include its curent cash
balance, cash flows from operating activities and a $400,000 bank line of
credit. Management believes that these sources of cash will be adequate to
fund operations throughout the balance of 1996.
Working capital requirements are the greatest in the first and
fourth quarters as the Company increase inventories to meet demands for the
Spring and pre-Christmas seasons. Since certain Company Brands inventory
items have a longer ordering cycle and will require the Company to stock
increasing levels of such items as the demand of franchisees increases, the
Company believes it will need greater working capital to finance inventory
requirements.
The Company does not expect to have any significant capital
expenditures until such time as a new site is secured for the development of
the SportPark.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See "Results of Operations" above for a discussion of the lawsuit
filed on February 27, 1996.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC.
By:/s/ Voss Boreta
Voss Boreta, President
and Chief Financial Officer
Date: May 15, 1996
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. FINANCIAL DATA SCHEDULE Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 3 and 4 of the
Company's Form 10-QSB for the year to date, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 754,000
<SECURITIES> 0
<RECEIVABLES> 3,534,000
<ALLOWANCES> 0
<INVENTORY> 2,314,000
<CURRENT-ASSETS> 6,644,000
<PP&E> 42,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,895,000
<CURRENT-LIABILITIES> 2,785,000
<BONDS> 0
<COMMON> 3,871,000
0
5,000
<OTHER-SE> (1,384,000)
<TOTAL-LIABILITY-AND-EQUITY> 7,895,000
<SALES> 3,222,000
<TOTAL-REVENUES> 3,602,000
<CGS> 2,659,000
<TOTAL-COSTS> 2,659,000
<OTHER-EXPENSES> 1,252,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (309,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (233,000)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
