SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended March 31, 1998 Commission file number 33-12664-D
Worldwide Golf Resources, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0335511
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
251 Saulteaux Crescent
Winnipeg, MB, Canada R3J 3C7
(Address of principal executive offices) (Zip Code)
(204) 885-5555
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 _____
As of March 31, 1998, there were 16,268,478 shares of common stock
outstanding.
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
AND SUBSIDIARIES
FOR THE QUARTER ENDED
March 31, 1998
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of March 31, 1998 and
March 31, 1997 3
Statement of Operations for the three months
ended March 31, 1998 and 1997 4
Statement of Cash Flows for the three months ended
March 31, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 6-8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults by the Company upon its
Senior Securities 8
Item 4. Submission of Matter to a Vote of
Security Holders 8
Item 5. Other Information 9
Item 6. Exhibits and Reports of Form 8-K 9
SIGNATURES 10
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998 AND MARCH 31, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ASSETS
1998 1997
<S> <C> <C>
Current
Cash $ 77,780 $ 41,353
Accounts Receivable 29,222 158,767
Prepaids 19,210 35,507
Inventory 192,180 138,487
----------- -----------
318,392 374,114
----------- -----------
Property and Equipment - Net
Equipment 1,260,469 377,386
Land, Driving Ranges 2,411,497 -
Buildings 375,360 -
Golf Course and Clubhouse 2,719,825 1,980,225
----------- -----------
6,767,151 2,357,611
----------- -----------
Other
Patents 52,748 -
Goodwill 293,649 276,332
---------- -----------
346,397 276,332
---------- -----------
$ 7,431,940 $ 3,008,057
=========== ===========
</TABLE>
<TABLE>
LIABILITIES
<S> <C> <C>
Current
Accounts Payable and Accrued Liabilities $ 542,570 $296,652
Other accruals 1,025,496 345,427
----------- ----------
1,568,066 642,079
----------- ----------
Long-Term
Shareholders Advances 1,273,306 91,500
Mortgages Payable 3,197,874 1,712,596
Obligations Under Capital Lease 571,970 238,787
---------- ----------
5,043,150 2,042,883
---------- ----------
6,611,216 2,684,962
---------- ----------
</TABLE>
<TABLE>
STOCKHOLDERS' EQUITY
<S> <C> <C>
Common Shares 1,625 487
Preferred Shares - -
Paid in Capital 1,633,199 (458)
Accumulated Deficit (4,410,655) (314,096)
Contributed Surplus 3,596,635 637,162
----------- ----------
820,724 323,095
----------- ----------
$ 7,431,940 $ 3,008,057
=========== ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS PERIOD ENDED MARCH 31, 1998 AND 1997
UNAUDITED
<TABLE>
1998 1997
<S> <C> <C>
Sales $ 476,562 $ 331,969
Cost of Goods Sold 248,735 370,765
----------- -----------
Gross Profit 227,827 (38,796)
Operating Expenses
Selling, General and Administrative 627,635 68,648
----------- -----------
Net Loss $ (399,808) $ (107,444)
=========== ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
UNAUDITED
<TABLE>
1998 1997
<S> <C> <C>
Cash Provided by (used in)
Operations
Net loss $ (399,808) $ (107,444)
Add Items Not Affecting Cash
Purchase Services Though Issuance of 107,900 -
Shares
Depreciation 49,427 7,606
Amortization 17,995 18,422
---------- ----------
(224,486) (81,416)
Net Change in Non-Cash Working Capital
Accounts Receivable 17,373 (158,767)
Prepaid 47,912 (34,885)
Inventory (5,268) (138,487)
Accounts Payable and Accrued (98,163) 609,019
Liabilities
Accrued Interest on Capital Lease 19,521 -
Deferred Revenue - (3,056)
---------- ---------
Cash Provided by (used in) Operations (143,111) 192,408
---------- ---------
Investments
Acquisition of Equipment (22,484) (427,871)
Land Held for Resale - (218,272)
Addition to Clubhouse (151,612) 469,493
---------- ---------
Cash (used in) investments (174,096) (176,650)
---------- ---------
Financing
Advances form Shareholder 350,193 44,093
Payments on Capital Lease - (3,716)
Payments on Mortgage - (26,659)
--------- ---------
Cash Provided by Financing 350,193 13,718
--------- ---------
Effect of Exchange Rate Changes on Cash Flows 6,246 7,675
--------- ---------
Cash Increase for Period 39,232 37,151
Cash, Beginning of Period 38,548 4,202
----------- ------------
Cash, End of Period $ 77,780 $ 41,353
=========== ============
Cash Paid for
Interest $ 20,982 $ 3,925
=========== ===========
Income Taxes $ - $ -
=========== ===========
</TABLE>
<PAGE>
WORLDWIDE GOLF RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
STATEMENT OF INFORMATION FURNISHED
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March
31, 1998, the results of operations for the three months ended March 31,
1998 and 1997 and the cash flows for the three months ended March 31, 1998
and 1997. These results have been determined on the basis of generally
accepted accounting principles and practices and applied consistently with
those used in the preparation of the Company's 1997 Annual Report on Form
10-K.
Certain information and footnote disclosures included in the financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
accompanying consolidated financial statements be read in conjunction with
financial statements and notes thereto incorporated by reference in the
Company's 1997 Annual Report on Form 10-K.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
General
Worldwide Golf Resources, Inc. (together with its subsidiaries, unless
the context requires otherwise, the "Company") is currently and has been
engaged in several golf-related ventures; the manufacture and sale of an
innovative golf practice and teaching device (680104 Alberta Ltd. d/b/a
GolfJackT); an 18 hole golf course and club house in Manitoba, Canada,
(Pelican Beach Golf and Country Club); and golf centers designed to provide
a wide variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play, (Worldwide Golf Centers, Inc.).
In addition, the Company manufactured and installed synthetic turf for use
in driving ranges, as well as other applications (Worldwide Golf Resources
of Georgia, d/b/a American Turf, Inc.).
Comparative Period (1st Quarter 97) Issues
On January 22, 1997, the Company entered into an agreement with
3422488 Manitoba Ltd. whereby the Company acquired all the issued and
outstanding shares of 2671914 Manitoba, Ltd. (Pelican), a Canadian
Corporation, which owns as its sole asset the real property generally
described as the Pelican Beach Golf and Country Club, located at Gimli,
Manitoba, Canada. Consideration for the purchase was common shares of the
Company which resulted in the original shareholder of Pelican owning
approximately 61% of the Company's total issued and outstanding common
shares following the acquisition. The transaction has been accounted for as
a reverse acquisition whereby, notwithstanding the legal acquisition of
Pelican by the Company, the transaction was accounted for as an acquisition
of the Company by Pelican. Application of reverse acquisition accounting
resulted in the following accounting: (i) the consolidated financial
statements for the companies are issued under the name of Worldwide Golf
Resources, Inc. but are considered to be a continuation of the financial
statements of Pelican, the legal subsidiary; (ii) as Pelican is deemed to
be the acquirer for accounting purposes, its assets and liabilities are
included in the consolidated balance sheets at their historical carrying
values; and (iii) control of the net assets and liabilities of the Company
were acquired by Pelican for deemed consideration being the fair value
ascribed to the net assets of the Company.
<PAGE>
Results of Operations for the three months ended March 31, 1998 and 1997
Synthetic Turf Manufacturing, Sales and Installation
Worldwide Golf Resources, Inc., a Georgia Corporation, earned revenues
for the first three months of 1998 of $333,269, an increase of $145,126
(77%) from American Turf Manufacturing's $188,043 in the first three months
of 1997. The Georgia subsidiary provided 70% of the Company's first three
months revenues. Management expects this subsidiary to increase its revenue
impact through the addition of increased working capital to fill orders
presently on hand.
The net loss for the first three months of 1998 decreased $119,479
(88%) to $16,297 from $135,775 in the first three months of 1997. The
increase was primarily due to an increase in cost of sales, due to
inventory adjustments and increased costs.
Golf Course Operations
Pelican Beach Golf Course and Country Club, located in Gimli,
Manitoba, Canada, was acquired by the Company on February 1, 1997. The Golf
Course recorded no sales during the first quarter of 1998. The net loss for
the first quarter of 1998 was $83,258. Pelican Beach Golf Course provided
0% of the Company's first quarter revenues. The Country Club showcases a
12,000 square foot, three-level clubhouse which accommodates a pro-shop, a
state of the art family amusement center, two cocktail lounges, and a large
open seat restaurant. The third floor's principal attraction will be
Video Lottery Terminal machines and off-track horse race betting. This
facility sustains year-round operations; complementing winter activities
such as cross-country skiing and snowmobiling, which enables the Company to
maintain year-round revenues.
GolfJackT
In October of 1997, the Company purchased 680104 Alberta Ltd. d/b/a
GolfJackT. GolfJackT developed an innovative and revolutionary new golf
practice and teaching product which enables the user to adjust a hitting
platform to create any type of downhill, sidehill or uphill lie, thereby
bringing the golf course to the driving range. The GolfJackT recorded
sales of $9,636 during the first quarter of 1998. The net loss for the
first quarter of 1998 was $20,486.
Worldwide Golf Centers
In January of 1998, the Company formed Worldwide Golf Centers, Inc.,
("WGC") for purposes of operating golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. The Golf Centers recorded sales
of $133,657 during the first quarter of 1998. The net loss for the first
quarter of 1998 was $56,599.
Currency Fluctuations
Although substantially all of the Company's contracts are denominated
in United States dollars, fluctuations in the value of foreign currencies,
namely the Canadian dollar, relative to the United States dollar impact the
Company's results of operations. The company does not currently engage in
hedging activities with respect to currency fluctuations, but may do so in
the future.
<PAGE>
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-Q contains forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. These forward looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control, including,
but not limited to, economic, competitive and other factors affecting the
Company's operations, markets, products and services, expansion strategies
and other factors discussed elsewhere in this report and the documents
filed by the Company with the Securities and Exchange Commission. Actual
results could differ materially from these forward-looking statements. In
light of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this report will in fact prove
accurate. The Company does not undertake any obligation to revise these
forward-looking statements to reflect future events or circumstances.
Liquidity and Capital Reserves
The Company has continued to fund its deficit cash flow from loans
from major shareholders of the Company. It is anticipated that these loans
will continue until such time as the Company generates sufficient revenues
from its subsidiaries to cover operating expenses.
Year 2000 Issues
Certain of the Company's computer systems and software may interpret
the year 2000 as some other date. The operating system generally employed
by the Company is Windows 95, which is year 2000 compliant. The networking,
general ledger and accounts payable and facility point-of-sale and software
programs require software updates or modifications to address the year 2000
problem. The Company is further addressing the matter by replacing certain
older computers and installing off-the-shelf and other third-party software
that is year 2000 compliant, at an estimated cost of less than $1,000. The
Company anticipates that installation of year 2000 compliant software and
hardware will be completed by the end of 1998. The Company does not believe
that the year 2000 problem will have a material affect on the Company's
operations, however, no assurance can be given that the software updates
and new computers will resolve the problem as scheduled or at all.
Change in Management
At a special meeting of Shareholders held January 15, 1998, the
shareholders voted to remove Jeffrey B. Johnson as a Director of the
Company effective immediately.
At a special meeting of Shareholders held January 15, 1998, Donald J.
Stoecklein was elected to serve on the Board of Directors until the next
annual meeting of shareholders.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
Pending litigation is deemed not to have any material impact on the
Company's financial position.
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
<PAGE>
Item 4. Submission of Matter to a Vote of Security Holders.
At a special meeting of Shareholders held January 15, 1998, the
shareholders voted to remove Jeffrey B. Johnson as a Director of the
Company effective immediately.
At a special meeting of Shareholders held January 15, 1998, Donald J.
Stoecklein was elected to serve on the Board of Directors until the next
annual meeting of shareholders.
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8--K.
A Form 8-K was filed on January 20, 1998 to report a change in the
Officers and Directors of the registrant. At a special meeting of
Shareholders Jeff Johnson was removed as Director and Don Stoecklein
elected to Board.
A Form 8-K was filed on March 9, 1998, to report the change in the
Company's certified account from Clancey and Co. to Arthur Andersen & Co.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WORLDWIDE GOLF RESOURCES, INC.
(Registrant)
By:/s/Mac Shahsavar By:/s/Jack Tapper
Mac Shahsavar Jack Tapper
President Chief Financial Officer
Date: October 20,1998 Date: October 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 77,780
<SECURITIES> 0
<RECEIVABLES> 29,222
<ALLOWANCES> 0
<INVENTORY> 192,180
<CURRENT-ASSETS> 318,392
<PP&E> 6,767,151
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,431,940
<CURRENT-LIABILITIES> 1,568,066
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,431,940
<SALES> 476,562
<TOTAL-REVENUES> 476,562
<CGS> 248,735
<TOTAL-COSTS> 248,735
<OTHER-EXPENSES> 627,635
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,503
<INCOME-PRETAX> (399,808)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
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</TABLE>
