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 Commission file number
September 30, 1998 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 September 30, 1998, there were 16,939,748 shares of common stock
outstanding.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of September 30, 1998 and
September 30, 1997 3
Statement of Operations for the three months
ended September 30, 1998 and 1997 4
Statement of Operations for the nine months
ended September 30, 1998 and 1997 5
Statement of Cash Flows for the nine months ended
September 30, 1998 and 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 11
Item 3. Defaults by the Company upon its
Senior Securities 11
Item 4. Submission of Matter to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports of Form 8-K 11
SIGNATURES 12
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ASSETS
1998 1997
<S> <C> <C>
Current
Cash $ (26,581) $134,323
Accounts Receivable 10,032 28,451
Prepaids 18,425 8,517
Inventory 192,041 10,458
----------- -----------
193,917 181,749
----------- -----------
Property and Equipment - Net
Equipment 1,219,577 491,888
Land, Driving Ranges 2,411,497 -
Buildings 353,050 -
Golf Course and Clubhouse 2,750,680 2,513,384
----------- -----------
6,734,804 3,005,272
----------- -----------
Other
Patents 48,263 -
Goodwill 162,010 239,488
----------- -----------
210,273 239,488
----------- -----------
$7,138,994 $3,426,509
=========== ===========
</TABLE>
<TABLE>
LIABILITIES
<S> <C> <C>
Current
Accounts Payable and Accrued Liabilities $918,173 $614,294
----------- ------------
Long-Term
Shareholders Advances 2,212,445 26,769
Mortgages Payable 3,071,094 1,712,596
Obligations Under Capital Lease 538,301 236,968
----------- -----------
5,821,840 1,976,333
----------- -----------
6,740,013 2,590,627
----------- -----------
</TABLE>
<TABLE>
STOCKHOLDERS' EQUITY
<S> <C> <C>
Common Shares 1,071 710
Preferred Shares 26 -
Paid in Capital 2,205,359 2,697,129
Accumulated Deficit (5,183,033) (2,573,511)
Contributed Surplus 3,375,558 711,554
----------- -----------
398,981 835,882
----------- -----------
7,138,994 3,426,509
=========== ===========
</TABLE>
<PAGE>
<TABLE>
1998 1997
<S> <C> <C>
Sales $749,697 $551,321
Cost of Goods Sold 276,163 244,511
--------- ----------
Gross Profit 473,534 306,810
Operating Expenses
Selling, General and Administrative 870,948 1,798,409
--------- -----------
Net Loss $(397,414) $(1,491,599)
========== ============
</TABLE>
<PAGE>
<TABLE>
1998 1997
<S> <C> <C>
Sales $1,859,909 $ 1,611,507
Cost of Goods Sold 804,684 1,160,726
---------- -----------
Gross Profit 1,055,225 405,781
Operating Expenses
Selling, General and Administrative 2,321,372 2,703,033
---------- ------------
Net Loss $1,266,147) $(2,252,252)
=========== ============
</TABLE>
<PAGE>
<TABLE>
1998 1997
<S> <C> <C>
Cash Provided by (used in)
Operations
Net loss $(1,266,147) $(2,252,252)
Add Items Not Affecting Cash
Purchase Services Though Issuance of
Shares 185,900 -
Depreciation 280,975 77,939
------------- -------------
(799,272) (2,174,313)
Net Change in Non-Cash Working Capital
Accounts Receivable 136,563 (28,451)
Prepaid 48,696 (7,895)
Inventory (5,129) (10,458)
Accounts Payable and Accrued
Liabilities (435,314) 741,233
------------- -------------
Cash Provided by (used in) Operations (1,054,456) (1,479,884)
------------- -------------
Investments
Acquisition of property and equipment (308,158) (508,295)
------------- -------------
Cash (used in) investments (308,158) (508,295)
------------- -------------
Financing
Issuance of Capital Stock 12,500 1,480,000
Advances form Shareholder 1,450,468 670,494
Payments on Capital Lease (38,269) (5,535)
Payments on Mortgage (74,052) (26,659)
------------- -------------
Cash Provided by Financing 1,350,647 2,118,300
------------- -------------
Cash Increase (decrease) for Period (11,967) 130,121
Cash, Beginning of Period 38,548 4,202
------------- ------------
Cash, End of Period $ (26,581) $ 134,323
============= ============
Cash Paid for
Interest $ 136,020) $ 13,186
============= =============
Income Taxes $ - $ -
============= =============
</TABLE>
<PAGE>
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
September 30, 1998, the results of operations for the nine months ended
September 30, 1998 and 1997 and the cash flows for the nine months ended
September 30, 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
Worldwide Golf Resources, Inc. (together with its subsidiaries, unless
the context requires otherwise, the "Company") is currently, and has been
in a state of reorganization for the past year. As a result of the
reorganization, the Company closed down various non-profit generating
subsidiaries and attempted to establish new lines of business associated
with the golf industry.
Worldwide Golf Resources, Inc., a Georgia Corporation, the Company's
American Turf division, was sold on or about August, 1998 as the result of
insufficient capital to invest, in addition to an analysis by management
which indicated that the ability of the business to continue on a
profitable basis was marginal.
In September, 1998 the Company closed down the driving range
facilities owned by the Company's subsidiary, Worldwide Golf Centers, Inc.
The ranges were initially closed down as the result of continued bad
weather; however the Company management determined to keep the facilities
closed as the result of the inability of the Company to raise sufficient
capital to rehabilitate the properties.
Results of Operations for the three months ended September 30, 1998 and
1997
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 sales of $220,863 during the third quarter of 1998. The net
loss for the third quarter of 1998 was $99,017. Pelican Beach Golf Course
provided 29% of the Company's third 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,
<PAGE>
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
The GolfJackT recorded sales of $21,349 during the third quarter of
1998. The net loss for the third quarter of 1998 was $56,543.
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.
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 continues to be funded through loans from major
shareholders of the Company, which funding is anticipated to continue until
such time as the Company has sufficient to cover its operating expenses
from ongoing revenues. The Company has made recent consolidations and
closures in an effort to reduce 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.
<PAGE>
Change in Management
On October 15, 1998, the Company accepted the resignations of Debra
Amigone as Secretary/Treasurer, Anthony DeMint as Vive President of
Operations/ Director and Seyed Torabian as Vice President/ Director,
concurrent with the shift of all administrative support to the Company's
executive headquarters in Canada.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
The Company has currently several pending items of litigation that may
have a material impact on the Company's financial position.
Worldwide Golf Resources, Inc. v Share Graves, et. al. This case was
filed by the Company in the United States District Court for the District
of Colorado (File No. 98B917) , to resolve a dispute which resulted from
the acquisition by the Company of certain patented technology relating to
the golf auto tee device and the subsequent counter claim by Graves
relating to a loan to the Company of approximately $45,000.
Lipson v. Worldwide Golf Resources, Inc. et al. This case was filed by
Gary Lipson, the trustee of the Legends Sports, Inc. investors in an
attempt to determine what if any liability the Company had as the result of
the transfer by Legends Sports to the Company of certain driving ranges in
the Orlando, Florida area. The suit was filed in the United States District
Court, Middle District of Florida Orlando Division (File No. 98-1222-CV-18-
B).
Suncorp Pacific Ltd. v 2671914 Manitoba Ltd., File No. CI 98-01-10803.
Claim by Suncorp Pacific Ltd. ("Suncorp") for $20,124.66(Cdn.) and general
damages. The allegations are for breach of an equipment lease and claims
for payments under the lease. 2671914 is defending the claim and has a
counter-claim against Suncorp for unspecified damages.
Suncorp Pacific Ltd. v 2671914 Manitoba Ltd., File No. CI 98-01-10985.
Claim by Suncorp Pacific Ltd. ("Suncorp") for judgment in the amount of
$2,527,645.82 (Cdn.) ad an order for an equitable interest in the land.
Allegations are that 267191 has committed several acts of default under the
mortgage and as such 2671914 is in default under the mortgage. 2671914 is
defending this claim and has requested paticulars of the allegations from
the plaintiff.
Suncorp Pacific Ltd. v 2671914 Manitoba Ltd., File No. CI 98-01-11064.
Applicaton by Suncorp Pacific Ltd. ("Suncorp") for an order directing that
the first mortgage held in priority to Suncorp's security be declared void
for uncertainity. This application is being defended by both the first
mortgage holder and 2671914.
<PAGE>
Suncorp Pacific Ltd. v 2671914 Manitoba Ltd., File No. BK 99-01-
057763. Petition by Suncorp Pacific Ltd. ("Suncorp") for an order that
2671914 be adjudged bankrupt and that a receiving order issue. A notice
disputing the petition has been filed and a motion to dismiss the petition
is scheduled for a court hearing.
2671914 Manitoba Ltd. v Suncorp Pacific Ltd., et al, file No. 98-01-
11082. Claim by 2671914 for unspecified damages from allegations that
Suncorp breached its duty of care and equitable obligations under the
mortgage. Further, that Suncorp's conduct toward 2671914 has been a
campaign of intimidation. Suncorp's defense is pending.
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8--K.
A Form 8-K filed on October 15, 1998 to report a resignation of some
of the Registrant's Officers and Directors.
<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:June 28, 1999 Date:June 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> (26,581)
<SECURITIES> 0
<RECEIVABLES> 10,032
<ALLOWANCES> 0
<INVENTORY> 192,041
<CURRENT-ASSETS> 193,917
<PP&E> 6,734,804
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<TOTAL-ASSETS> 7,138,994
<CURRENT-LIABILITIES> 918,173
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<TOTAL-LIABILITY-AND-EQUITY> 7,138,994
<SALES> 1,859,909
<TOTAL-REVENUES> 1,859,909
<CGS> 804,684
<TOTAL-COSTS> 804,684
<OTHER-EXPENSES> 2,321,372
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<INCOME-PRETAX> (1,266,147)
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<NET-INCOME> (1,266,147)
<EPS-BASIC> (.07)
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